<PAGE>
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
STEAKHOUSE PARTNERS, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $.0001 per share
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
offsetting 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:
<PAGE>
STEAKHOUSE PARTNERS, INC.
10200 WILLOW CREEK ROAD
SAN DIEGO, CALIFORNIA 92131
(619) 689-2333
May , 2000
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Steakhouse Partners, Inc. (the "Company"), to be held at 10:00
a.m., Pacific Time, on June 6, 2000, at the offices of the Company at 10200
Willow Creek Road, San Diego, California 92131.
At the Meeting, you will be asked to consider and vote upon
(i) the election of one Class 1 Director to serve a term of three years; (ii) a
proposal to approve an increase in the number of shares of our common stock from
10,000,000 to 25,000,000; (iii) a proposal to approve the Company's 1999
Steakhouse Partners Stock Option Plan; (iv) a proposal to approve the Company's
Year 2000 Incentive Plan; and (v) the ratification of the appointment of Singer
Lewak Greenbaum & Goldstein LLP as independent auditors for the year ending
December 26, 2000;
The vote of every stockholder is important. Whether or not
you plan to attend the meeting, it is important that your shares be represented.
Accordingly, we urge you to sign, date, and mail the enclosed proxy in the
envelope provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
Richard M. Lee
Chairman of the Board and
Chief Executive Officer
<PAGE>
STEAKHOUSE PARTNERS, INC.
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of
Steakhouse Partners, Inc.:
The Annual Meeting of Stockholders of Steakhouse Partners,
Inc. (the "Company") will be held on June 6, 2000, at 10:00 a.m., Pacific Time,
at 10200 Willow Creek Road, San Diego, California 92131 for the following
purposes:
1. To elect one Class 1 Director to serve a three year term;
2. To approve a proposal to increase the authorized number of shares of our
common stock from 10,000,000 to 25,000,000;
3. To consider and vote upon a proposal to approve the Company's 1999
Steakhouse Partners Stock Option Plan;
4. To consider and vote upon a proposal to approve the Company's Year 2000
Incentive Plan; and
5. To ratify the appointment of Singer Lewak Greenbaum & Goldstein LLP as
the Company's independent auditors for the fiscal year ending December
26, 2000;
6. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on
May 12, 2000, as the record date for determination of those stockholders who
will be entitled to notice of and to vote at the meeting and any adjournment
thereof.
If you plan to attend the meeting, please mark the
appropriate box on your proxy card. Upon receipt of the card, an admission
ticket will be sent to you.
Whether or not you expect to attend, STOCKHOLDERS ARE
REQUESTED TO SIGN, DATE AND RETURN THE ENCLOSED FORM OF PROXY IN THE ENVELOPE
PROVIDED. No postage is required if mailed in the United States.
By Order of the Board of Directors
Hiram J. Woo
Secretary
San Diego, California
May , 2000
<PAGE>
STEAKHOUSE PARTNERS, INC.
10200 WILLOW CREEK ROAD
SAN DIEGO, CALIFORNIA 92131
- --------------------------------------------------------------------------------
PROXY STATEMENT
- --------------------------------------------------------------------------------
GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of the
Common Stock, $.01 par value per share ("Common Stock"), of Steakhouse Partners,
Inc. (the "Company") in connection with the solicitation of proxies on behalf of
the Board of Directors of the Company for use at the Annual Meeting of
Stockholders to be held on June 6, 2000 at 10:00 a.m. (Pacific Time), at 10200
Willow Creek Road, San Diego, California 92131 and at any adjournment thereof.
The purposes of the meeting and the matters to be acted upon are set forth in
the accompanying Notice of Annual Meeting of Stockholders. At present, the Board
of Directors knows of no other business which will come before the meeting.
The Notice of Annual Meeting, Proxy Statement, and form of
proxy will be mailed to stockholders on or about May 12, 2000. The Company will
bear the cost of its solicitation of proxies. In addition to the use of the
mails, proxies may be solicited by personal interview, telephone, telegram, and
telefax by the directors, officers and employees of the Company. Arrangements
will also be made with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the beneficial owners
of stock held by such persons, and the Company may reimburse such custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the meeting and a return envelope
for the proxy are enclosed. Stockholders may revoke the authority granted by
their execution of proxies at any time before their effective exercise by filing
with the Secretary of the Company a written revocation or duly executed proxy
bearing a later date or by voting in person at the meeting. Shares of Common
Stock represented by executed and unrevoked proxies will be voted in accordance
with the instructions specified thereon. If no instructions are given, the
proxies will be voted FOR the election as Director of the person nominated by
the Board of Directors; FOR the proposal to approve an increase in the number of
authorized shares of our common stock from 10,000,000 to 25,000,000; FOR the
proposal to approve the Company's 1999 Steakhouse Partners Stock Option Plan;
FOR the proposal to approve the Company's Year 2000 Incentive Plan; and FOR
ratification of the appointment of Singer Lewak Greenbaum & Goldstein LLP as the
Company's independent auditors for the fiscal year ending December 26, 2000;
RECORD DATE AND VOTING RIGHTS
Only Common Stockholders and holders of the Company's
Preferred Stock (the "Preferred Stock") of record at the close of business on
May 12, 2000 (the "Record Date") are entitled to notice of the Annual Meeting
and to vote the shares of Common Stock and Preferred Stock held by them on that
date at the Annual Meeting or any adjournment or postponement thereof. Only
holders of Common Stock and holders of Preferred Stock will be entitled to vote
at the Annual Meeting. Each outstanding share of Common Stock and each
outstanding share of Preferred Stock entitles its holder to cast one vote on
each matter to be voted on at the Annual Meeting. The shares of Common Stock and
the shares of Preferred Stock shall vote together as one class. There were
outstanding on May 12,
<PAGE>
2000, the record date for stockholders entitled to notice of and to vote at the
Annual Meeting, [3,332,022] shares of Common Stock and 2,750,000 shares of
Preferred Stock.
Votes cast at the meeting will be tabulated by persons
appointed as inspectors of election of the meeting. The inspectors of election
will treat shares of Common Stock represented by a properly signed and returned
proxy as "present" at the meeting for purposes of determining a quorum, without
regard to whether the proxy is marked as casting a vote or abstaining. Likewise,
the inspectors of election will treat shares of Common Stock represented by
"broker non-votes" as present for purposes of determining a quorum. Abstentions
will also be counted for purposes of determining the presence of a quorum at the
Annual Meeting.
The nominees for election to the Board of Directors
receiving the greatest number of affirmative votes cast by the holders of Common
Stock and Preferred Stock, up to the number of directors to be elected, will be
elected as directors. Accordingly, abstentions or broker non-votes as to the
election of directors will have no effect on the election of directors.
QUORUM
The presence, either in person or by proxy, of the holders
of a majority of the shares of Common Stock and the shares of the Preferred
Stock, considered together as a single class, outstanding on May 12, 2000 is
necessary to constitute a quorum at the Annual Meeting.
OTHER MATTERS
Because of the required votes, abstentions will have the
same effect as a vote against the proposals to elect Class 1 Directors, to
ratify the appointment of the independent auditors, to approve the Company's
1999 Steakhouse Partners Stock Option Plan and to approve the Company's Year
2000 Incentive Plan. Broker non-votes will not be counted for purposes of
determining whether the proposals have been approved or not.
At May 1, 2000, directors and executive officers of the
Company and their affiliates beneficially owned 3,329,462 shares of the voting
stock of the Company, or 54.7% of the total shares of voting stock of the
Company outstanding on such date. Included in the above amount are 2,750,000
shares of the Preferred Stock beneficially owned by Richard M. Lee, the Chairman
of the Board, which constitutes all of the issued and outstanding shares of the
Series B and Series C Preferred Stock. It is anticipated that all of such shares
of Common Stock and Series B and Series C Preferred Stock will be voted in favor
of all of the proposals of the Board described herein.
The affirmative vote of the holders of 50.1% of the shares
represented at the meeting in person or by proxy and entitled to vote on the
proposals is required for the approval of the four proposals set forth in this
Proxy Statement.
BOARD AND MANAGEMENT OWNERSHIP
The following table sets forth certain information regarding
beneficial ownership of the Company's Common Stock, as of May 1, 2000, by (i)
each person known to the Company to beneficially own more than 5% of the
outstanding shares of Common Stock of the Company, (ii) each director of the
Company and each nominee for election as a director and (iii) all directors,
nominees for director and executive officers as a group.
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
OF SHARES (1) BENEFICIALLY OWNED
------------- ------------------
<S> <C> <C>
Richard M. Lee (2) (8)......................................... 540,420 14.8%
Hiram J. Woo (3) (9)........................................... 374,042 10.4%
Joseph L. Wulkowicz (10)....................................... 0 0%
Tom Edler (4) (11)............................................. 0 0%
Mark W. Goudge (5) (12)........................................ 0 0%
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
NUMBER PERCENTAGE
OF SHARES (1) BENEFICIALLY OWNED
------------- ------------------
<S> <C> <C>
Tod Lindner (6)................................................ 0 0%
RS Investment Management Co. LLC (7)........................... 815,800 24.2%
All officers and directors as a group (6 persons) (8) (9)...... 914,462 23.6%
</TABLE>
- ------------------------------------------------------------------------
(1) Except as otherwise indicated, the Company believes that the beneficial
owners of Common Stock listed above, based on information furnished by
such owners, have sole investment and voting power with respect to such
shares, subject to community property laws where applicable.
(2) Does not include an aggregate of 1,000,000 shares of Series B
Convertible Preferred Stock and 1,050,000 shares of Series C Convertible
Preferred Stock, which shares have rights to vote with the Common Stock
as one class on a one-vote-per-share basis. After giving effect to such
Series B and Series C Convertible Preferred Stock, Mr. Lee currently
holds 42.3% of the combined stockholder voting power of the Company. Mr.
Lee's business address is at 10200 Willow Creek Road, San Diego,
California 92131. Does not include options held by Mr. Lee to acquire up
to 554,137 shares of Common Stock.
(3) Mr. Woo's business address is at 10200 Willow Creek Road, San Diego,
California 92131. Does not include options held by Mr. Woo to acquire up
to 287,462 shares of Common Stock. Does not include 700,000 shares of
Series C Convertible Preferred Stock, which shares have rights to vote
with the Common Stock as one class on a one-vote-per-share basis. After
giving effect to such Series C Convertible Preferred Stock, Mr. Woo
currently holds 17.6% of the combined stockholders voting power of the
Company.
(4) Mr. Edler's business address is c/o Grubb & Ellis Company, 770 L Street,
Suite 700, Sacramento, California.
(5) Mr. Goudge's business address is 24422 Avenida de la Carlta, Suite 400,
Laguna Hills, California 92653.
(6) Mr. Lindner's business address is 17 E. Sir Francis Drake Boulevard,
Suite 230, Larkspur, California 94939.
(7) RS Investment Management Co. LLC's business address is 388 Market
Street, Suite 200, San Francisco, California 94111.
(8) Includes the assumed exercise of options to purchase 283,500 shares
which are exercisable within 60 days by Mr. Lee.
(9) Includes the assumed exercise of options to purchase 216,500 shares
which are exercisable within 60 days by Mr. Woo.
(10) Does not include options held by Mr. Wulkowicz to acquire up to 45,000
shares of Common Stock.
(11) Does not include options held by Mr. Edler to acquire up to 15,000
shares of Common Stock.
(12) Does not include options held by Mr. Goudge to acquire up to 15,000
shares of Common Stock.
PROPOSAL 1 -- ELECTION OF DIRECTORS
At the meeting, one Class 1 director, Mark Goudge, is to be
elected. The Company's Restated Certificate of Incorporation provides that the
Directors shall be divided into three classes with each class consisting, as
nearly as possible, of one-third of the total number of Directors. In this way,
one class will stand for election to a three-year term each year. Each elected
Director will serve until the next Annual Meeting following the completion of
their terms or until their successors are elected.
The shares represented by the enclosed Proxy will be voted
for the election as directors of the nominee named below. Mr. Goudge is a member
of the present Board. If Mr. Goudge becomes unavailable to stand for re-election
for any reason or if a vacancy on the Board shall occur before the
3
<PAGE>
election (which events are not anticipated), the holders of the Proxy may vote
for such other person in accordance with their best judgment, but not more than
one person may be voted to serve as director.
The information appearing in the following table, with notes
thereto, has been furnished to the Company by the respective nominees.
<TABLE>
<CAPTION>
TERM OF PRINCIPAL OCCUPATION DIRECTOR
NAME OF NOMINEE CLASS ELECTION AGE FOR PAST FIVE YEARS SINCE
- ------------------------- ----- ------------ ---- ----------------------------------- --------
<S> <C> <C> <C> <C> <C>
Mark W. Goudge(1)(2)..... 1 3 Years 37 Mr. Goudge has been a financial 1998
consultant in the private client
group at Merrill Lynch in Laguna
Hills, California since June 1992.
Prior to joining Merrill Lynch, Mr.
Goudge served from April 1990 to
June 1992 as an Assistant President
in the Commercial Lending Division
at Orange National Bank in Orange,
California. Prior thereto Mr.
Goudge worked at the Landmark Bank
in Whittier, California rising to
the position of Assistant Vice
President of the Business Bank
Group. Mr. Goudge graduated from
the University of Alaska-Fairbanks
in December 1987 with a B.A. in
Finance.
</TABLE>
- ------------------------
(1) Member Compensation Committee
(2) Member Audit Committee
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE NOMINEE LISTED ABOVE.
MEETING OF THE BOARD OF DIRECTORS
During the Company's fiscal year ended December 28, 1999,
the Board of Directors held two meetings and acted four times by unanimous
written consent. Each Director attended more than seventy-five percent (75%) of
the Board meetings and meetings of the Board committees on which he served. The
Company does not have a standing nominating committee, the functions of which
are performed by the entire Board.
During the Company's fiscal year ended December 28, 1999,
the Compensation Committee of the Board met once.
During the Company's fiscal year ended December 28, 1999,
the Audit Committee of the Board met once. The Audit Committee has the
responsibility of recommending the firm to be chosen as independent auditors,
overseeing and reviewing the audit results and monitoring the effectiveness of
internal audit functions. The Audit Committee has recommended the selection of
Singer Lewak Greenbaum & Goldstein LLP as independent auditors for the year
ended December 26, 2000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16 (a) of the Securities Exchange Act of
1934, and the rules issued thereunder, the Company's directors and executive
officers are required to file with the Securities and Exchange Commission and
the National Association of Securities Dealers, Inc. reports of ownership and
changes in ownership of Common Stock and other equity securities of the Company.
Copies of such reports are required to be furnished to the Company. Based solely
on a review of the copies of such reports furnished to the Company, or written
representations that no other reports were required, the Company believes that,
during the Company's fiscal year ended December 28, 1999, all of its executive
officers and directors complied with the requirements of Section 16 (a).
4
<PAGE>
DIRECTOR COMPENSATION
None of the Company's directors received any compensation
during the most recent fiscal year for serving in his position as a director.
EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid
to executive officers of the Company for the three fiscal years ended December
28, 1999.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
NAME AND OTHER ANNUAL AWARDS - SECURITIES ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION(3) UNDERLYING OPTIONS(#) COMPENSATION
- ----------------------- ---- --------- -------- --------------- --------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Richard M. Lee(1)...... 1999 $ 100,000 $175,500 $19,248 -- --
Chairman of the 1998 $ 87,500 $294,689 $15,892 201,000 0
Board and Chief 1997 $ 50,000 0 5,809 -- 0
Executive Officer
Hiram J. Woo(2)........ 1999 $ 80,000 $ 94,500 $ 7,870 -- --
President and Chief 1998 $ 71,250 $111,567 $ 7,870 134,000 0
Financial Officer 1997 $ 45,000 0 1,968 -- 0
</TABLE>
- ------------------------
(1) Mr. Lee's base salary increased to $100,000 per annum as of April 1,
1998.
(2) Mr. Woo's base salary increased to $80,000 per annum as of April 1,
1998.
(3) Other annual compensation consists in each case of the car allowance
paid by the Company for the named executive officer.
OPTIONS GRANTS IN LAST FISCAL YEAR
The following table contains information concerning stock
option grants made to each of the named executive officers in fiscal 1999. No
stock appreciation rights were granted to these individuals during such year.
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
NUMBER OF SECURITIES PERCENT OF TOTAL OPTIONS
UNDERLYING OPTIONS GRANTED TO EMPLOYEES
NAME GRANTED(#) IN FISCAL YEAR EXERCISE PRICE ($/SH) EXPIRATION
- --------------------- -------------------- ------------------------ --------------------- ----------------
<S> <C> <C> <C> <C>
Richard M. Lee....... 554,137 43.7% 70,087 ($5.95) May 2009
484,050 ($6.90) July 2009
Hiram J. Woo......... 287,462 22.7% 42,412 ($5.40) May 2009
245,050 ($6.25) July 2009
</TABLE>
OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table sets forth information concerning option
exercises and option holdings for the fiscal year 1999 with respect to each of
the named executive officers. No named executive officers exercised any options
during such year.
5
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
VALUE AT FISCAL YEAR END(#) AT FISCAL YEAR END($)
NAME SHARES ACQUIRED REALIZED($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- --------------------- --------------- ----------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C>
Richard M. Lee....... 0 0 285,500 exercisable/ $694,438 exercisable/
554,137 unexercisable $0 unexercisable
Hiram J. Woo......... 0 0 216,500 exercisable/ $587,188 exercisable/
287,462 unexercisable $0 unexercisable
</TABLE>
- -----------------------
(1) Based on Black-Scholes pricing model, using discount rates ranging from 4.6%
to 5.9% and volatility rates ranging from 44% to 45%.
EMPLOYMENT AGREEMENTS
On June 3, 1996, the Company entered into a four-year
employment agreement with Richard M. Lee at an annual base salary of $50,000,
which was increased to $100,000 upon the closing of the Company's initial public
offering. Under the employment agreement, Mr. Lee's employment may not be
terminated by the Company without cause. In addition, Mr. Lee has agreed in his
employment agreement not to compete with the Company for a period of one (1)
year following his termination of employment for any reason. Mr. Lee's
employment agreement expires in June 2000.
On June 3, 1996, the Company entered into a four-year
employment agreement with Hiram Woo at an annual base salary of $45,000, which
was increased to $80,000 upon the closing of the Company's initial public
offering. Under the employment agreement, Mr. Woo's employment may not be
terminated by the Company without cause. In addition, Mr. Woo has agreed in his
employment agreement not to compete with the Company for a period of one (1)
year following his termination of employment for any reason. Mr. Woo's
employment agreement expires in June 2000.
LIMITS ON LIABILITY AND INDEMNIFICATION
The Company's Certificate of Incorporation eliminates the
personal liability of its directors to the Company and its stockholders for
monetary damages for breach of the directors' fiduciary duties in certain
circumstances. The Certificate of Incorporation further provides that the
Company will indemnify its officers and directors to the fullest extent
permitted by law. The Company believes that such indemnification covers at least
negligence and gross negligence on the part of the indemnified parties. Insofar
as indemnification for liabilities under the Securities Act may be permitted to
directors, officers, and controlling persons of the Company pursuant to the
foregoing provisions or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
CERTAIN TRANSACTIONS
Employment Agreements
The Company has entered into separate Employment Agreements
with Richard M. Lee and Hiram J. Woo which expire in June 2000. See "Employment
Agreements."
Company Policy
Any ongoing or future transactions between the Company and
its officers, directors, principal stockholders, or other affiliates will be on
terms no less favorable to the Company than could be obtained from unaffiliated
third parties on an arms-length basis and will be approved by a majority of the
Company's independent and disinterested directors. Any future loans to officers,
directors, principal stockholders, or affiliates will be made for a bonafide
business purpose, on terms no less favorable than could be obtained from
unaffiliated third parties and will be approved by a majority of the Company's
independent and disinterested directors.
6
<PAGE>
PROPOSAL 2 -- PROPOSAL TO INCREASE THE NUMBER OF SHARES
WHAT AM I VOTING ON?
A proposal to amend our Certificate of Incorporation to
increase the number of authorized shares of our common stock from 10,000,000
shares to 25,000,000 shares.
WHAT IS AUTHORIZED STOCK?
Our Certificate of Incorporation establishes the maximum
number of shares of common stock that we may issue without obtaining additional
stockholder approval. This is called authorized stock.
WHAT IS THE DIFFERENCE BETWEEN AUTHORIZED STOCK AND ISSUED STOCK?
Shares that have already been issued are referred to as
"issued" or "issued and outstanding." The difference between the total number of
authorized shares and the number of issued shares is the number of shares that
the Company may issue in the future without amending the Certificate of
Incorporation. Delaware law and the rules and regulations of the Nasdaq Stock
Market may require stockholder approval of issuances under certain
circumstances.
For example, as of May 1, 2000, we had 10,000,000 shares
authorized and 3,332,022 shares issued. As a result, the Company could have
issued an additional 6,667,978 shares. If the amendment to the Certificate of
Incorporation had been adopted prior to that date, the Company could have issued
an additional 15,000,000 shares, for a total of 21,667,978 shares available for
issuance. In the interest of simplicity, in this example we have ignored shares
reserved for issuance upon exercise of stock options, under our other employee
benefit plans and for other purposes.
WHAT RIGHTS WILL THE NEW AUTHORIZED SHARES HAVE?
If approved, the additional shares of common stock will have
the same voting and other rights as all other shares of our common stock.
COULD THE AUTHORIZATION OF ADDITIONAL SHARES HAVE ANY ADVERSE EFFECT ON THE
COMPANY'S STOCKHOLDERS?
Future issuances of shares of common stock or securities
convertible into common stock would have the effect of diluting the voting
rights and could have the effect of diluting earnings per share and book value
per share of existing stockholders. In addition, the availability of additional
shares of common stock for issuance could discourage or make more difficult
efforts to obtain control of the Company.
WHY DOES THE BOARD WANT TO INCREASE THE AUTHORIZED STOCK?
The larger we become, the greater our need for
capitalization. Although we have no current plans to issue any of the additional
shares, increasing the number of authorized shares will permit us to meet future
business and financial needs, as well as permit stock splits and stock dividends
should we determine that they are advisable in the future.
WHEN WOULD THIS AMENDMENT BECOME EFFECTIVE?
The Board of Directors has unanimously authorized this
amendment and voted to recommend it to the Company's stockholders. If approved
by the stockholders, the amendment will become effective upon filing an
appropriate certificate with the Delaware Secretary of State.
WE RECOMMEND THAT YOU VOTE FOR THE ADOPTION OF THIS PROPOSAL.
PROPOSAL 3 -- PROPOSAL TO APPROVE THE COMPANY'S 1999 STOCK OPTION PLAN
On July 29, 1999, the Board of Directors adopted the
Steakhouse Partners, Inc. 1999 Stock Option Plan for officers and key employees
of the Company and its subsidiaries. The principal features of the
7
<PAGE>
Plan, as amended, are summarized below, but such summary is qualified in its
entirety by reference to the full text of the Plan, which is attached hereto as
Exhibit A.
Under the Plan, up to an aggregate of 1,000,000 shares of
the Company's Common Stock may be issued pursuant to stock options, subject to
adjustment in the case of certain corporate transactions.
The options may be either options intended to qualify as
"incentive stock options", as that term is defined in the Internal Revenue Code
of 1986, as amended (the "Code"), or non-statutory options. The per share
exercise price of options granted under the Plan may not be less than 100% of
the Fair Market Value (as defined below) of a share of the Company's Common
Stock on the date of grant. Shares of Common Stock acquired under the Plan may
be treasury shares, including shares purchased in the open market for use in the
Plan, newly issued shares, or a combination thereof. Fair Market Value, as of
any date, means the closing sales price of a share of Common Stock as reported
by the National Association of Securities Dealers, Inc.
The affirmative vote of the holders of a majority of the
shares of Common Stock and the shares of Preferred Stock, voting together as a
single class, present in person or represented by proxy at the Annual Meeting
and entitled to vote is required for the Plan to be effective.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE PLAN.
PROPOSAL 4 -- PROPOSAL TO APPROVE THE COMPANY'S YEAR 2000 INCENTIVE PLAN
On March 15, 2000, the Board of Directors adopted the Year
2000 Incentive Plan for officers and key employees of the Company and its
subsidiaries. The principal features of the Plan, as amended, are summarized
below, but such summary is qualified in its entirety by reference to the full
text of the Plan, which is attached hereto as Exhibit B.
Under the Plan, up to an aggregate of 5,000,000 shares of
the Company's Common Stock may be issued pursuant to stock options, subject to
adjustment in the case of certain corporate transactions.
The options may be either options intended to qualify as
"incentive stock options", as that term is defined in the Internal Revenue Code
of 1986, as amended (the "Code"), or non-statutory options. The per share
exercise price of options granted under the Plan may not be less than 100% of
the Fair Market Value (as defined below) of a share of the Company's Common
Stock on the date of grant. Shares of Common Stock acquired under the Plan may
be treasury shares, including shares purchased in the open market for use in the
Plan, newly issued shares, or a combination thereof. Fair Market Value, as of
any date, means the closing sales price of a share of Common Stock as reported
by the National Association of Securities Dealers, Inc.
The affirmative vote of the holders of a majority of the
shares of Common Stock and the shares of Preferred Stock, voting together as a
single class, present in person or represented by proxy at the Annual Meeting
and entitled to vote is required for the Plan to be effective.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR
APPROVAL OF THE PLAN.
PROPOSAL 5 -- RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Although the By-Laws of the Company do not require the
submission of the selection of independent auditors to the stockholders for
approval, the Board of Directors considers it desirable that its appointment of
independent auditors be ratified by the stockholders. Singer Lewak Greenbaum &
Goldstein has been appointed to serve in that capacity for the 2000 fiscal year.
The Board of Directors will ask the stockholders to ratify the appointment of
this firm as independent auditors for the Company at the Annual Meeting.
In the event that such appointment is not ratified by the
stockholders, it is anticipated that Singer Lewak Greenbaum & Goldstein LLP will
continue to serve as the Company's independent auditors for the 2000 fiscal
year.
A representative of Singer Lewak Greenbaum & Goldstein LLP
will be present at the Annual Meeting and will be available to respond to
appropriate questions from stockholders.
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The affirmative vote of the holders of a majority of the
shares of Common Stock and the shares of Preferred Stock, voting together as a
single class, present in person or represented and entitled to vote is required
for the approval of Proposal 4.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE APPOINTMENT
OF SINGER LEWAK GREENBAUM & GOLDSTEIN LLP AS THE COMPANY'S INDEPENDENT AUDITORS.
STEAKHOUSE PARTNERS STOCK OPTION PLAN AND YEAR 2000 INCENTIVE PLAN
The Company has adopted the Steakhouse Partners Stock Option
Plan and Year 2000 Incentive Plan (collectively, the "Plans"), to promote the
long-term growth and profitability of the Company by (i) providing key
directors, officers and employees of the Company and its subsidiaries with
incentives to improve shareholder value and contribute to the growth and
financial success of the Company and (ii) enabling the Company to attract,
retain and reward the best available persons for positions of substantial
responsibility. As described more fully below, the Plans provide for grants of
options to purchase specified numbers of shares of Common Stock at predetermined
prices.
The following discussion represents only a summary of
certain of the Plan terms and is qualified in its entirety by reference to the
complete Plans, a copy of which is annexed hereto as Exhibits "A" and "B".
Shares Available; Maximum Awards; Participants. A total of
1,000,000 shares of the Company's Common Stock has been reserved for issuance
pursuant to options granted pursuant to the Steakhouse Partners Plan. A total of
5,000,000 shares have been reserved under the Year 2000 Plan. The Plans allow
the Company to grant options to employees, officers and directors of the Company
and its subsidiaries; provided that only employees of the Company and its
subsidiaries may receive incentive stock options under the Plans.
As of the date of this proxy statement, the Company has
granted all of the options available under the Steakhouse Partners Plan and none
of the options available under the Year 2000 Incentive Plan.
Stock Option Features. Under the Plans, options to purchase
the Company's Common Stock may take the form of incentive stock options ("ISOs")
under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")
or non-qualified stock options ("NQSOs"). As required by Section 422 of the
Code, the aggregate fair market value (as defined in the Plans) of shares of
Common Stock (determined as of the date of grant of the ISO) with respect to
which ISOs granted to an employee are exercisable for the first time in any
calendar year may not exceed $100,000. The foregoing limitation does not apply
to NQSOs.
Initially, each option will be exercisable over a period,
determined by the Board of Directors or the Compensation Committee of the Board
of Directors of the Company, in its discretion, of up to ten years from the date
of grant. Options may be exercisable during the option period at such time, in
such amounts, and in accordance with such terms and conditions and subject to
such restrictions as are determined by the Board or the Compensation Committee
and set forth in option agreements evidencing the grant of such options;
provided that no option may be exercisable less than one year from its date of
grant.
The exercise price of options granted pursuant to the Plans
is determined by the Board or the Compensation Committee, in its discretion;
provided that the exercise price of an ISO may not be less than 100% of the fair
market value (as defined in the Plans) of the shares of the Company Common Stock
on the date of grant. The exercise price of options granted pursuant to the
Plans is subject to adjustment as provided in the Plans to reflect stock
dividends, splits, other recapitalizations or reclassifications or changes in
the market value of the Company Common Stock. In addition, the Plans provide
that, in the event of a proposed change in control of the Company (as defined in
the Plans), the Board or the Compensation Committee is to take such actions as
it deems appropriate to effectuate the purposes of the Plans and to protect the
grantees of options, which action may include (i) acceleration or change of the
exercise dates of any option; (ii) arrangements with grantees for the payment of
appropriate consideration to them for the cancellation and surrender of any
option; and (iii) in any
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case where equity securities other than Common Stock are proposed to be
delivered in exchange for or with respect to Common Stock, arrangements
providing that any option shall become one or more options with respect to such
other equity securities. Further, in the event the Company dissolves and
liquidates (other than pursuant to a plan of merger or reorganization), then
notwithstanding any restrictions on exercise set forth in the Plans or any grant
agreement pursuant thereto (i) each grantee shall have the right to exercise his
option at any time up to ten days prior to the effective date of such
liquidation and dissolution; and (ii) the Board or the Compensation Committee
may make arrangements with the grantees for the payment of appropriate
consideration to them for the cancellation and surrender of any option that is
so canceled or surrendered at any time up to ten days prior to the effective
date of such liquidation and dissolution. The Board or the Compensation
Committee also may establish a different period (and different conditions) for
such exercise, cancellation, or surrender to avoid subjecting the grantee to
liability under Section 16(b) of the Exchange Act.
The shares purchased upon the exercise of an option are to
be paid for by the optionee in cash or cash equivalents acceptable to the
Compensation Committee.
Except as permitted pursuant to Rule 16b-3 under the
Exchange Act, and in any event in the case of an ISO, an option is not
transferable except by will or the laws of descent and distribution. In no case
may the options be exercised later than the expiration date specified in the
option agreement.
Plan Administration. The Plans will be administered by the
Compensation Committee of the Board of Directors, consisting of at least two
directors who are "non-employee directors" within the meaning of Rule 16b-3, and
"outside directors" within the meaning of Section 162(m) of the Code.
The Compensation Committee will decide when and to whom to
make grants, the number of shares to be covered by the grants, the vesting
schedule, the type of awards and the terms and provisions relating to the
exercise of the awards. The Compensation Committee may interpret the Plans and
may at any time adopt such rules and regulations for the Plans as it deems
advisable. The Board of Directors may at any time amend or terminate the Plans
and change its terms and conditions, except that, without shareholder approval,
no such amendment may (i) materially increase the maximum number of shares as to
which awards may be granted under the Plans; (ii) materially increase the
benefits accruing to Plans participants; or (iii) materially change the
requirements as to eligibility for participation in the Plans.
Accounting Effects. Under current accounting rules, neither
the grant of options at an exercise price not less than the current fair market
value of the underlying Common Stock, nor the exercise of options under the
Plans, is expected to result in any charge to the earnings of the Company.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented
at the Annual Meeting of Stockholders of the Company in the Year 2000 must be
received by the Company no later than ,
2001 for inclusion in the Board of Directors' proxy statement and form of proxy
relating to the meeting.
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OTHER BUSINESS
The Board of Directors knows of no other business to be
acted upon at the meeting. However, if any other business properly comes before
the meeting, it is the intention of the persons named in the enclosed proxy to
vote on such matters in accordance with their best judgment.
The prompt return of the proxy will be appreciated and
helpful in obtaining the necessary vote. Therefore, whether or not you expect to
attend the meeting, please sign the proxy and return it in the enclosed
envelope.
ANNUAL REPORT, QUARTERLY REPORT AND REPORTS ON FORM 8-K
The Company's Annual Report on Form 10-KSB for the fiscal
year ended December 28, 1999 (the "Annual Report") is being mailed with this
proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS
Hiram J. Woo
Secretary
Dated: May , 2000
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EXHIBIT A
STEAKHOUSE PARTNERS, INC.
1999 STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
Steakhouse Partners, Inc. hereby establishes the STEAKHOUSE
PARTNERS, INC. 1999 STOCK OPTION PLAN (the "Plan"). The purpose of the Plan is
to promote the long-term growth and profitability of Steakhouse Partners, Inc.
(the "Corporation") by (i) providing key people with incentives to improve
stockholder value and to contribute to the growth and financial success of the
Corporation and (ii) enabling the Corporation to attract, retain and reward the
best available persons for positions of substantial responsibility.
The Plan permits the granting of stock options, including
nonqualified stock options and incentive stock options qualifying under Section
422 of the Code, in any combination (collectively, "Options").
2. DEFINITIONS
Under this Plan, except where the context otherwise indicates, the following
definitions apply:
(a) "Board" shall mean the Board of Directors of the
Corporation.
(b) "Change in Control" shall mean: (i) an acquisition of
the Company, which in the sole discretion of the Board immediately prior to such
acquisition, is determined to be an acquisition hostile to, and not in the best
interests of, the stockholders of the Company, or (ii) an acquisition of fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities by any person (other than Richard M. Lee), as such term
is used in Sections 13(d) and 14(d)(ii) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or (iii) a change in the composition of the
Board so that a majority of the members of the Board immediately prior to such
change of control or change in composition of the Board, is determined to be a
change hostile to, and not in the best interests of, the stockholders of the
Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any regulations issued thereunder.
(d) "Committee" shall mean the Board or committee of Board
members appointed pursuant to Section 3 of the Plan to administer the Plan.
(e) "Common Stock" shall mean shares of the Corporation's
common stock, $.01 par value.
(f) "Fair Market Value" of a share of the Corporation's
Common Stock for any purpose on a particular date shall be determined in a
manner such as the Committee shall in good faith determine to be appropriate;
provided, however, that if the Common Stock is publicly traded, then Fair Market
Value shall mean the last reported sale price per share of Common Stock, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on a national securities exchange or included for
quotation on a system established by the National Association of Securities
Dealers, Inc. ("Nasdaq System"), or if the Common Stock is not so listed or
admitted to trading or included for quotation, the last quoted price, or if the
Common Stock is not so quoted, the average of the high bid and low asked prices,
regular way, in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or, if such
system is no longer in use, the principal other automated quotations system that
may then be in use or, if the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices, regular way, as
furnished by a professional market maker making a market in the Common Stock as
selected in good faith by the Committee or by such other source or sources as
shall be selected in good faith by the Committee; and,
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provided further, that in the case of incentive stock options, the determination
of Fair Market Value shall be made by the Committee in good faith in conformance
with the Treasury Regulations under Section 422 of the Code. If, as the case may
be, the relevant date is not a trading day, the determination shall be made as
of the next preceding trading day. As used herein, the term "trading day" shall
mean a day on which public trading of securities occurs and is reported in the
principal consolidated reporting system referred to above, or if the Common
Stock is not listed or admitted to trading on a national securities exchange or
included for quotation on the Nasdaq System, any day other than a Saturday, a
Sunday or a day in which banking institutions in the State of New York are
closed.
(g) "Grant Agreement" shall mean a written agreement between
the Corporation and a grantee memorializing the terms and conditions of an
Option granted pursuant to the Plan.
(h) "Grant Date" shall mean the date on which the Committee
formally acts to grant an Option to a grantee or such other date as the
Committee shall so designate at the time of taking such formal action.
(i) "Parent" shall mean a corporation, whether now or
hereafter existing, within the meaning of the definition of "parent corporation"
provided in Section 424(e) of the Code, or any successor thereto of similar
import.
(j) "Rule 16b-3" shall mean Rule 16b-3 as in effect under
the Exchange Act on the effective date of the Plan, or any successor provision
prescribing conditions necessary to exempt the issuance of securities under the
Plan (and further transactions in such securities) from Section 16(b) of the
Exchange Act.
(k) "Subsidiary" and "subsidiaries" shall mean only a
corporation or corporations, whether now or hereafter existing, within the
meaning of the definition of "subsidiary corporation" provided in Section 424(f)
of the Code, or any successor thereto of similar import.
3. ADMINISTRATION
(a) Procedure. The Plan shall be administered by the Board.
In the alternative, the Board may appoint a Committee consisting of not less
than two (2) members of the Board to administer the Plan on behalf of the Board,
subject to such terms and conditions as the Board may prescribe. Once appointed,
the Committee shall continue to serve until otherwise directed by the Board.
From time to time, the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and, thereafter, directly administer the Plan. In
the event that the Board is the administrator of the Plan in lieu of a
Committee, the term "Committee" as used herein shall be deemed to mean the
Board. The Plan shall be administered in accordance with the then effective
provisions of Rule 16b-3, provided that any amendment to the Plan required for
compliance with such provisions shall be made in accordance with Section 10 of
the Plan.
Members of the Board or Committee who are either eligible
for Options or have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of Options pursuant to the Plan, except
that no such member shall act upon the granting of an Option to himself or
herself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board or the Committee during which action is taken
with respect to the granting of an Option to him or her.
The Committee shall meet at such times and places and upon
such notice as it may determine. A majority of the Committee shall constitute a
quorum. Any acts by the Committee may be taken at any meeting at which a quorum
is present and shall be by majority vote of those members entitled to vote.
Additionally, any acts reduced to writing or approved in writing by all of the
members of the Committee shall be valid acts of the Committee.
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(b) Powers of the Committee. The Committee shall have all
the powers vested in it by the terms of the Plan, such powers to include
authority, in its sole and absolute discretion, to grant Options under the Plan,
prescribe Grant Agreements evidencing such Options and establish programs for
granting Options. The Committee shall have full power and authority to take all
other actions necessary to carry out the purpose and intent of the Plan,
including, but not limited to, the authority to:
(i) determine the eligible persons to whom, and the
time or times at which Options shall be granted,
(ii) determine the types of Options to be granted,
(iii) determine the number of shares to be covered by
each Option,
(iv) impose such terms, limitations, restrictions and
conditions upon any such Option as the Committee shall deem appropriate,
(v) modify, extend or renew outstanding Options,
accept the surrender of outstanding Options and substitute new Options,
provided that no such action shall be taken with respect to any
outstanding Option which would adversely affect the grantee without the
grantee's consent, and
(vi) accelerate or otherwise change the time in which
an Option may be exercised, in whole or in part, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an Option following termination of any grantee's
employment.
The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable and to interpret same,
all within the Committee's sole and absolute discretion.
(c) Limited Liability. To the maximum extent permitted by
law, no member of the Committee shall be liable for any action taken or decision
made in good faith relating to the Plan or any Option thereunder.
(d) Indemnification. To the maximum extent permitted by law,
the members of the Committee shall be indemnified by the Corporation in respect
of all their activities under the Plan.
(e) Effect of Committee's Decision. All actions taken and
decisions and determinations made by the Committee on all matters relating to
the Plan pursuant to the powers vested in it hereunder shall be in the
Committee's sole and absolute discretion and shall be conclusive and binding on
all parties concerned, including the Corporation, its stockholders, any
participants in the Plan and any other employee of the Corporation, and their
respective successors in interest.
4. SHARES AVAILABLE FOR THE PLAN: MAXIMUM AWARDS
Subject to adjustments as provided in Section 9 of the Plan,
the shares of stock that may be delivered or purchased under the Plan, including
with respect to incentive stock options intended to qualify under Section 422 of
the Code, shall not exceed an aggregate of 1,000,000 shares of Common Stock of
the Corporation. The Corporation shall reserve said number of shares for Options
to be awarded under the Plan, subject to adjustments as provided in Section 9 of
the Plan. If any Option, or portion of an Option, under the Plan expires or
terminates unexercised, becomes unexercisable or is forfeited or otherwise
terminated, surrendered or canceled as to any shares, the shares subject to such
Option shall thereafter be available for further Options under the Plan unless
such shares would not be deemed available for future Options pursuant to Section
16 of the Exchange Act.
The maximum number of shares of Common Stock subject to
Options of any combination that may be granted during any 12 consecutive month
period to any one individual shall be limited to 500,000 shares. To the extent
required by Section 162(m) of the Code, shares of Common Stock subject to the
foregoing limit with respect to which the related Option is terminated,
surrendered or canceled shall not again be available for grant under this limit.
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5. PARTICIPATION
Participation in the Plan shall be open to all employees,
officers and directors of the Corporation, or of any Parent or Subsidiary of the
Corporation, as may be selected by the Committee from time to time.
Notwithstanding the foregoing, participation in the Plan with respect to awards
of incentive stock options shall be limited to employees of the Corporation or
of any Parent or Subsidiary of the Corporation. To the extent necessary to
comply with Rule 16b-3 or to constitute an "outside director" within the meaning
of Section 162(m) of the Code, and only in the event that Rule 16b-3 or Section
162(m) of the Code is applicable to the Plan or an Option awarded thereunder,
Committee members shall not be eligible to participate in the Plan while members
of the Committee.
Options may be granted to such eligible persons and for or
with respect to such number of shares of Common Stock as the Committee shall
determine, subject to the limitations in Section 4 of the Plan. A grant of any
type of Option made in any one year to an eligible person shall neither
guarantee nor preclude a further grant of that or any other type of Option to
such person in that year or subsequent years.
6. STOCK OPTIONS
Subject to the other applicable provisions of the Plan, the
Committee may from time to time grant to eligible participants nonqualified
stock options or incentive stock options as that term is defined in Section 422
of the Code. The Options granted shall be subject to the following terms and
conditions.
(a) Grant of Option. The grant of an Option shall be
evidenced by a Grant Agreement, executed by the Corporation and the grantee,
stating the number of shares of Common Stock subject to the Option evidenced
thereby and the terms and conditions of such Option, in such form as the
Committee may from time to time determine.
(b) Price. The price per share payable upon the exercise of
each Option ("exercise price") shall be determined by the Committee; provided,
however, that in the case of incentive stock options, the exercise price shall
not be less than 100% of the Fair Market Value of the shares on the date the
Option is granted.
(c) Payment. Options may be exercised in whole or in part by
payment of the exercise price of the shares to be acquired in accordance with
the provisions of the Grant Agreement, and/or such rules and regulations as the
Committee may have prescribed, and/or such determinations, orders, or decisions
as the Committee may have made. Payment of the exercise price shall be made in
cash (or cash equivalents acceptable to the Committee) or by such other means as
the Committee may prescribe. The Corporation may make or guarantee loans to
grantees to assist grantees in exercising Options.
The Committee, subject to such limitations as it may
determine, may authorize payment of the exercise price, in whole or in part, by
delivery of a properly executed exercise notice, together with irrevocable
instructions, to: (i) a brokerage firm designated by the Corporation to deliver
promptly to the Corporation the aggregate amount of sale or loan proceeds to pay
the exercise price and any withholding tax obligations that may arise in
connection with the exercise, and (ii) the Corporation to deliver the
certificates for such purchased shares directly to such brokerage firm.
(d) Terms of Options. The term during which each Option may
be exercised shall be determined by the Committee. In no event shall an Option
be exercisable less than six months nor more than ten years from the date it is
granted. Prior to the exercise of the Option and delivery of the shares
certificates represented thereby, the grantee shall have none of the rights of a
stockholder with respect to any shares represented by an outstanding Option.
(e) Restrictions on Incentive Stock Options. The aggregate
Fair Market Value (determined as of the Grant Date) of shares of Common Stock
with respect to which all incentive stock options first become exercisable by
any grantee in any calendar year under this or another plan of the Corporation
and its Parent and Subsidiary corporations may not exceed $100,000 or such other
amount as may be permitted from time to time under Section 422 of the Code. To
the extent that such aggregate Fair
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Market Value shall exceed $100,000, or other applicable amount, such Options
(taking Options into account in the order in which they were granted) shall be
treated as nonqualified stock options. In such case, the Corporation may
designate the shares of Common Stock that are to be treated as stock acquired
pursuant to the exercise of an incentive stock option by issuing a separate
certificate for such shares and identifying the certificate as incentive stock
option shares in the stock transfer records of the Corporation.
The exercise price of any incentive stock option granted to
a grantee who owns (within the meaning of Section 422(b)(6) of the Code, after
the application of the attribution rules in Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of shares of the
Corporation or its Parent or Subsidiary corporations (within the meaning of
Sections 422 and 424 of the Code) shall be not less than 110% of the Fair Market
Value of the Common Stock on the grant date and the term of such Option shall
not exceed five years.
Incentive stock options shall only be issued to employees of
the Corporation or of a Parent or Subsidiary of the Corporation.
(f) Other Terms and Conditions. Options may contain such
other provisions, not inconsistent with the provisions of the Plan, as the
Committee shall determine appropriate from time to time. No Option shall be an
incentive stock option unless so designated by the Committee at the time of
grant or in the Grant Agreement evidencing such Option.
7. WITHHOLDING OF TAXES
The Corporation may require, as a condition to any exercise
of an Option under the Plan or a Grant Agreement (hereinafter referred to as a
"taxable event"), that the grantee pay to the Corporation, in cash, any federal,
state or local taxes of any kind required by law to be withheld with respect to
any taxable event under the Plan. The Corporation, to the extent permitted or
required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to a grantee any federal, state or
local taxes of any kind required by law to be withheld with respect to any
taxable event under the Plan, or to retain or sell without notice a sufficient
number of the shares to be issued to such grantee to cover any such taxes.
8. TRANSFERABILITY
To the extent required to comply with Rule 16b-3, and in any
event in the case of an incentive stock option, no Option granted under the Plan
shall be transferable by a grantee otherwise than by will or the laws of descent
and distribution. Unless otherwise determined by the Committee in accord with
the provisions of the immediately preceding sentence, an Option may be exercised
during the lifetime of the grantee, only by the grantee or, during the period
the grantee is under a legal disability, by the grantee's guardian or legal
representative.
9. ADJUSTMENTS; BUSINESS COMBINATIONS
In the event of a reclassification, recapitalization, stock
split, stock dividend, combination of shares, or other similar event, the
maximum number and kind of shares reserved for issuance or with respect to which
Options may be granted under the Plan as provided in Section 4 shall be adjusted
to reflect such event, and the Committee shall make such adjustments as it deems
appropriate and equitable in the number, kind and price of shares covered by
outstanding Options made under the Plan, and in any other matters which relate
to Options and which are affected by the changes in the Common Stock referred to
above.
In the event of any proposed Change in Control, the
Committee shall take such action as it deems appropriate to effectuate the
purposes of this Plan and to protect the grantees of Options, which action may
include, but without limitation, any one or more of the following: (i)
acceleration or change of the exercise dates of any Option; (ii) arrangements
with grantees for the payment of appropriate consideration to them for the
cancellation and surrender of any Option; and (iii) in any case where equity
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securities other than Common Stock of the Corporation are proposed to be
delivered in exchange for or with respect to Common Stock of the Corporation,
arrangements providing that any Option shall become one or more Options with
respect to such other equity securities.
In the event the Corporation dissolves and liquidates (other
than pursuant to a plan of merger or reorganization), then notwithstanding any
restrictions on exercise set forth in this Plan or any Grant Agreement (i) each
grantee shall have the right to exercise his Option at any time up to ten (10)
days prior to the effective date of such liquidation and dissolution; and (ii)
the Committee may make arrangements with the grantees for the payment of
appropriate consideration to them for the cancellation and surrender of any
Option that is so canceled or surrendered at any time up to ten (10) days prior
to the effective date of such liquidation and dissolution. The Committee may
establish a different period (and different conditions) for such exercise,
cancellation, or surrender to avoid subjecting the grantee to liability under
Section 16(b) of the Exchange Act Any Option not so exercised, canceled, or
surrendered shall terminate on the last day for exercise prior to such effective
date.
10. TERMINATION AND MODIFICATION OF THE PLAN
The Board, without further approval of the stockholders, may
modify or terminate the Plan or any portion thereof at any time, except that no
modification shall become effective without prior approval of the stockholders
of the Corporation if stockholder approval is necessary to comply with any tax
or regulatory requirement or rule of any exchange or Nasdaq System upon which
the Common Stock is listed or quoted; including for this purpose stockholder
approval that is required for continued compliance with Rule 16b-3 or
stockholder approval that is required to enable the Committee to grant incentive
stock options pursuant to the Plan.
The Committee shall be authorized to make minor or
administrative modifications to the Plan as well as modifications to the Plan
that may be dictated by requirements of federal or state laws applicable to the
Corporation or that may be authorized or made desirable by such laws. The
Committee may amend or modify the grant of any outstanding Option in any manner
to the extent that the Committee would have had the authority to make such
Option as so modified or amended. No modification may be made that would
materially adversely affect any Option previously made under the Plan without
the approval of the grantee.
11. NON-GUARANTEE OF EMPLOYMENT
Nothing in the Plan or in any Grant Agreement thereunder
shall confer any right on an employee to continue in the employ of the
Corporation or shall interfere in any way with the right of the Corporation to
terminate an employee at any time.
12. TERMINATION OF EMPLOYMENT
For purposes of maintaining a grantee's continuous status as
an employee and accrual of rights under any Options, transfer of an employee
among the Corporation and the Corporation's Parent or Subsidiaries shall not be
considered a termination of employment. Nor shall it be considered a termination
of employment for such purposes if an employee is placed on military or sick
leave or such other leave of absence which is considered as continuing intact
the employment relationship; in such a case, the employment relationship shall
be continued until the date when an employee's right to reemployment shall no
longer be guaranteed either by law or contract.
13. WRITTEN AGREEMENT
Each Grant Agreement entered into between the Corporation
and a grantee with respect to an Option granted under the Plan shall incorporate
the terms of this Plan and shall contain such provisions, consistent with the
provisions of the Plan, as may be established by the Committee.
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14. NON-UNIFORM DETERMINATIONS
The Committee's determinations under the Plan (including,
without limitation, determinations of the persons to receive Options, the form,
amount and timing of such Options, the terms and provisions of such Options and
the agreements evidencing same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, Options under
the Plan, whether or not such persons are similarly situated.
15. LIMITATION ON BENEFITS
With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3. To the extent any provision of the Plan or
action by the Committee fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee.
16. LISTING AND REGISTRATION
If the Corporation determines that the listing, registration
or qualification upon any securities exchange or upon any Nasdaq System or under
any law, of shares subject to any Option is necessary or desirable as a
condition of, or in connection with, the granting of same or the issue or
purchase of shares thereunder, no such Option may be exercised in whole or in
part and no restrictions on such Option shall lapse, unless such listing,
registration or qualification is effected free of any conditions not acceptable
to the Corporation.
17. COMPLIANCE WITH SECURITIES LAWS
The Corporation may require that a grantee, as a condition
to exercise of an Option, and as a condition to the delivery of any share
certificate, provide to the Corporation, at the time of each such exercise and
each such delivery, a written representation that the shares of Common Stock
being acquired shall be acquired by the grantee solely for investment and will
not be sold or transferred without registration or the availability of an
exemption from registration under the Securities Act and applicable state
securities laws. The Corporation may also require that a grantee submit other
written representations which will permit the Corporation to comply with federal
and applicable state securities laws in connection with the issuance of the
Common Stock, including representations as to the knowledge and experience in
financial and business matters of the grantee and the grantee's ability to bear
the economic risk of the grantee's investment. The Corporation may require that
the grantee obtain a "purchaser representative" as, that term is defined in
applicable federal and state securities laws. The stock certificates for any
shares of Common Stock issued pursuant to this Plan may bear a legend
restricting transferability of the shares of Common Stock unless such shares are
registered or an exemption from registration is available under the Securities
Act and applicable state securities laws. The Corporation may notify its
transfer agent to stop any transfer of shares of Common Stock not made in
compliance with these restric tions. Common Stock shall not be issued with
respect to an Option granted under the Plan unless the exercise of such Option
and the issuance and delivery of share certificates for such Common Stock
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any national
securities exchange or Nasdaq System upon which the Common Stock may then be
listed or quoted, and shall be further subject to the approval of counsel for
the Corporation with respect to such compliance to the extent such approval is
sought by the Committee.
18. GOVERNING LAW
The validity, construction and effect of the Plan, of Grant
Agreements entered into pursuant to the Plan, and of any rules, regulations,
determinations or decisions made by the Board or Committee relating to the Plan
or such Grant Agreements, and the rights of any and all persons having or
claiming
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to have any interest therein or thereunder, shall be determined exclusively in
accordance with applicable federal laws and the laws of the State of Delaware,
without regard to its conflict of laws rules and principles.
19. PLAN SUBJECT TO CERTIFICATE OF INCORPORATION AND BY-LAWS
This Plan is subject to the Certificate of Incorporation and
By-Laws of the Corporation, as they may be amended from time to time.
20. EFFECTIVE DATE; TERMINATION DATE
The Plan is effective as of July 29, 1999, the date on which
the Plan was adopted by the Board, subject to approval of the stockholders
within twelve months of such date. Unless previously terminated, the Plan shall
terminate on the close of business on July 29, 2009, ten years from the
effective date. Subject to other applicable provisions of the Plan, all Options
granted under the Plan prior to termination of the Plan shall remain in effect
until such Options have been satisfied or terminated in accordance with the Plan
and the terms of such Options.
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EXHIBIT B
STEAKHOUSE PARTNERS, INC.
YEAR 2000 INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
Steakhouse Partners, Inc. hereby establishes the STEAKHOUSE
PARTNERS, INC. YEAR 2000 INCENTIVE PLAN (the "Plan"). The purpose of the Plan is
to promote the long-term growth and profitability of Steakhouse Partners, Inc.
(the "Corporation") by (i) providing key people with incentives to improve
stockholder value and to contribute to the growth and financial success of the
Corporation and (ii) enabling the Corporation to attract, retain and reward the
best available persons for positions of substantial responsibility.
The Plan permits the granting of stock options, including
nonqualified stock options and incentive stock options qualifying under Section
422 of the Code, in any combination (collectively, "Options").
2. DEFINITIONS
Under this Plan, except where the context otherwise indicates, the following
definitions apply:
(a) "Board" shall mean the Board of Directors of the
Corporation.
(b) "Change in Control" shall mean: (i) an acquisition of
the Company, which in the sole discretion of the Board immediately prior to such
acquisition, is determined to be an acquisition hostile to, and not in the best
interests of, the stockholders of the Company, or (ii) an acquisition of fifty
percent (50%) or more of the combined voting power of the Company's then
outstanding securities by any person (other than Richard M. Lee), as such term
is used in Sections 13(d) and 14(d)(ii) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), or (iii) a change in the composition of the
Board so that a majority of the members of the Board immediately prior to such
change of control or change in composition of the Board, is determined to be a
change hostile to, and not in the best interests of, the stockholders of the
Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended, and any regulations issued thereunder.
(d) "Committee" shall mean the Board or committee of Board
members appointed pursuant to Section 3 of the Plan to administer the Plan.
(e) "Common Stock" shall mean shares of the Corporation's
common stock, $.01 par value.
(f) "Fair Market Value" of a share of the Corporation's
Common Stock for any purpose on a particular date shall be determined in a
manner such as the Committee shall in good faith determine to be appropriate;
provided, however, that if the Common Stock is publicly traded, then Fair Market
Value shall mean the last reported sale price per share of Common Stock, regular
way, or, in case no such sale takes place on such day, the average of the
closing bid and asked prices, regular way, in either case as reported in the
principal consolidated transaction reporting system with respect to securities
listed or admitted to trading on a national securities exchange or included for
quotation on a system established by the National Association of Securities
Dealers, Inc. ("Nasdaq System"), or if the Common Stock is not so listed or
admitted to trading or included for quotation, the last quoted price, or if the
Common Stock is not so quoted, the average of the high bid and low asked prices,
regular way, in the over-the-counter market, as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or, if such
system is no longer in use, the principal other automated quotations system that
may then be in use or, if the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices, regular way, as
furnished by a professional market maker making a market in the Common Stock as
selected in good faith by the Committee or by such other source or sources as
shall be selected in good faith by the Committee; and,
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provided further, that in the case of incentive stock options, the determination
of Fair Market Value shall be made by the Committee in good faith in conformance
with the Treasury Regulations under Section 422 of the Code. If, as the case may
be, the relevant date is not a trading day, the determination shall be made as
of the next preceding trading day. As used herein, the term "trading day" shall
mean a day on which public trading of securities occurs and is reported in the
principal consolidated reporting system referred to above, or if the Common
Stock is not listed or admitted to trading on a national securities exchange or
included for quotation on the Nasdaq System, any day other than a Saturday, a
Sunday or a day in which banking institutions in the State of New York are
closed.
(g) "Grant Agreement" shall mean a written agreement between
the Corporation and a grantee memorializing the terms and conditions of an
Option granted pursuant to the Plan.
(h) "Grant Date" shall mean the date on which the Committee
formally acts to grant an Option to a grantee or such other date as the
Committee shall so designate at the time of taking such formal action.
(i) "Parent" shall mean a corporation, whether now or
hereafter existing, within the meaning of the definition of "parent corporation"
provided in Section 424(e) of the Code, or any successor thereto of similar
import.
(j) "Rule 16b-3" shall mean Rule 16b-3 as in effect under
the Exchange Act on the effective date of the Plan, or any successor provision
prescribing conditions necessary to exempt the issuance of securities under the
Plan (and further transactions in such securities) from Section 16(b) of the
Exchange Act.
(k) "Subsidiary" and "subsidiaries" shall mean only a
corporation or corporations, whether now or hereafter existing, within the
meaning of the definition of "subsidiary corporation" provided in Section 424(f)
of the Code, or any successor thereto of similar import.
3. ADMINISTRATION
(a) Procedure. The Plan shall be administered by the Board.
In the alternative, the Board may appoint a Committee consisting of not less
than two (2) members of the Board to administer the Plan on behalf of the Board,
subject to such terms and conditions as the Board may prescribe. Once appointed,
the Committee shall continue to serve until otherwise directed by the Board.
From time to time, the Board may increase the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and, thereafter, directly administer the Plan. In
the event that the Board is the administrator of the Plan in lieu of a
Committee, the term "Committee" as used herein shall be deemed to mean the
Board. The Plan shall be administered in accordance with the then effective
provisions of Rule 16b-3, provided that any amendment to the Plan required for
compliance with such provisions shall be made in accordance with Section 10 of
the Plan.
Members of the Board or Committee who are either eligible
for Options or have been granted Options may vote on any matters affecting the
administration of the Plan or the grant of Options pursuant to the Plan, except
that no such member shall act upon the granting of an Option to himself or
herself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board or the Committee during which action is taken
with respect to the granting of an Option to him or her.
The Committee shall meet at such times and places and upon
such notice as it may determine. A majority of the Committee shall constitute a
quorum. Any acts by the Committee may be taken at any meeting at which a quorum
is present and shall be by majority vote of those members entitled to vote.
Additionally, any acts reduced to writing or approved in writing by all of the
members of the Committee shall be valid acts of the Committee.
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(b) Powers of the Committee. The Committee shall have all
the powers vested in it by the terms of the Plan, such powers to include
authority, in its sole and absolute discretion, to grant Options under the Plan,
prescribe Grant Agreements evidencing such Options and establish programs for
granting Options. The Committee shall have full power and authority to take all
other actions necessary to carry out the purpose and intent of the Plan,
including, but not limited to, the authority to:
(i) determine the eligible persons to whom, and the
time or times at which Options shall be granted,
(ii) determine the types of Options to be granted,
(iii) determine the number of shares to be covered by
each Option,
(iv) impose such terms, limitations, restrictions and
conditions upon any such Option as the Committee shall deem appropriate,
(v) modify, extend or renew outstanding Options,
accept the surrender of outstanding Options and substitute new Options,
provided that no such action shall be taken with respect to any
outstanding Option which would adversely affect the grantee without the
grantee's consent, and
(vi) accelerate or otherwise change the time in which
an Option may be exercised, in whole or in part, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an Option following termination of any grantee's
employment.
The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable and to interpret same,
all within the Committee's sole and absolute discretion.
(c) Limited Liability. To the maximum extent permitted by
law, no member of the Committee shall be liable for any action taken or decision
made in good faith relating to the Plan or any Option thereunder.
(d) Indemnification. To the maximum extent permitted by law,
the members of the Committee shall be indemnified by the Corporation in respect
of all their activities under the Plan.
(e) Effect of Committee's Decision. All actions taken and
decisions and determinations made by the Committee on all matters relating to
the Plan pursuant to the powers vested in it hereunder shall be in the
Committee's sole and absolute discretion and shall be conclusive and binding on
all parties concerned, including the Corporation, its stockholders, any
participants in the Plan and any other employee of the Corporation, and their
respective successors in interest.
4. SHARES AVAILABLE FOR THE PLAN: MAXIMUM AWARDS
Subject to adjustments as provided in Section 9 of the Plan,
the shares of stock that may be delivered or purchased under the Plan, including
with respect to incentive stock options intended to qualify under Section 422 of
the Code, shall not exceed an aggregate of 5,000,000 shares of Common Stock of
the Corporation. The Corporation shall reserve said number of shares for Options
to be awarded under the Plan, subject to adjustments as provided in Section 9 of
the Plan. If any Option, or portion of an Option, under the Plan expires or
terminates unexercised, becomes unexercisable or is forfeited or otherwise
terminated, surrendered or canceled as to any shares, the shares subject to such
Option shall thereafter be available for further Options under the Plan unless
such shares would not be deemed available for future Options pursuant to Section
16 of the Exchange Act.
The maximum number of shares of Common Stock subject to
Options of any combination that may be granted during any 12 consecutive month
period to any one individual shall be limited to 2,500,000 shares. To the extent
required by Section 162(m) of the Code, shares of Common Stock subject to the
foregoing limit with respect to which the related Option is terminated,
surrendered or canceled shall not again be available for grant under this limit.
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5. PARTICIPATION
Participation in the Plan shall be open to all employees,
officers and directors of the Corporation, or of any Parent or Subsidiary of the
Corporation, as may be selected by the Committee from time to time.
Notwithstanding the foregoing, participation in the Plan with respect to awards
of incentive stock options shall be limited to employees of the Corporation or
of any Parent or Subsidiary of the Corporation. To the extent necessary to
comply with Rule 16b-3 or to constitute an "outside director" within the meaning
of Section 162(m) of the Code, and only in the event that Rule 16b-3 or Section
162(m) of the Code is applicable to the Plan or an Option awarded thereunder,
Committee members shall not be eligible to participate in the Plan while members
of the Committee.
Options may be granted to such eligible persons and for or
with respect to such number of shares of Common Stock as the Committee shall
determine, subject to the limitations in Section 4 of the Plan. A grant of any
type of Option made in any one year to an eligible person shall neither
guarantee nor preclude a further grant of that or any other type of Option to
such person in that year or subsequent years.
6. STOCK OPTIONS
Subject to the other applicable provisions of the Plan, the
Committee may from time to time grant to eligible participants nonqualified
stock options or incentive stock options as that term is defined in Section 422
of the Code. The Options granted shall be subject to the following terms and
conditions.
(a) Grant of Option. The grant of an Option shall be
evidenced by a Grant Agreement, executed by the Corporation and the grantee,
stating the number of shares of Common Stock subject to the Option evidenced
thereby and the terms and conditions of such Option, in such form as the
Committee may from time to time determine.
(b) Price. The price per share payable upon the exercise of
each Option ("exercise price") shall be determined by the Committee; provided,
however, that in the case of incentive stock options, the exercise price shall
not be less than 100% of the Fair Market Value of the shares on the date the
Option is granted.
(c) Payment. Options may be exercised in whole or in part by
payment of the exercise price of the shares to be acquired in accordance with
the provisions of the Grant Agreement, and/or such rules and regulations as the
Committee may have prescribed, and/or such determinations, orders, or decisions
as the Committee may have made. Payment of the exercise price shall be made in
cash (or cash equivalents acceptable to the Committee) or by such other means as
the Committee may prescribe. The Corporation may make or guarantee loans to
grantees to assist grantees in exercising Options.
The Committee, subject to such limitations as it may
determine, may authorize payment of the exercise price, in whole or in part, by
delivery of a properly executed exercise notice, together with irrevocable
instructions, to: (i) a brokerage firm designated by the Corporation to deliver
promptly to the Corporation the aggregate amount of sale or loan proceeds to pay
the exercise price and any withholding tax obligations that may arise in
connection with the exercise, and (ii) the Corporation to deliver the
certificates for such purchased shares directly to such brokerage firm.
(d) Terms of Options. The term during which each Option may
be exercised shall be determined by the Committee. In no event shall an Option
be exercisable less than six months nor more than ten years from the date it is
granted. Prior to the exercise of the Option and delivery of the shares
certificates represented thereby, the grantee shall have none of the rights of a
stockholder with respect to any shares represented by an outstanding Option.
(e) Restrictions on Incentive Stock Options. The aggregate
Fair Market Value (determined as of the Grant Date) of shares of Common Stock
with respect to which all incentive stock options first become exercisable by
any grantee in any calendar year under this or another plan of the Corporation
and its Parent and Subsidiary corporations may not exceed $100,000 or such other
amount as may be permitted from time to time under Section 422 of the Code. To
the extent that such aggregate Fair
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Market Value shall exceed $100,000, or other applicable amount, such Options
(taking Options into account in the order in which they were granted) shall be
treated as nonqualified stock options. In such case, the Corporation may
designate the shares of Common Stock that are to be treated as stock acquired
pursuant to the exercise of an incentive stock option by issuing a separate
certificate for such shares and identifying the certificate as incentive stock
option shares in the stock transfer records of the Corporation.
The exercise price of any incentive stock option granted to
a grantee who owns (within the meaning of Section 422(b)(6) of the Code, after
the application of the attribution rules in Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of shares of the
Corporation or its Parent or Subsidiary corporations (within the meaning of
Sections 422 and 424 of the Code) shall be not less than 110% of the Fair Market
Value of the Common Stock on the grant date and the term of such Option shall
not exceed five years.
Incentive stock options shall only be issued to employees of
the Corporation or of a Parent or Subsidiary of the Corporation.
(f) Other Terms and Conditions. Options may contain such
other provisions, not inconsistent with the provisions of the Plan, as the
Committee shall determine appropriate from time to time. No Option shall be an
incentive stock option unless so designated by the Committee at the time of
grant or in the Grant Agreement evidencing such Option.
7. WITHHOLDING OF TAXES
The Corporation may require, as a condition to any exercise
of an Option under the Plan or a Grant Agreement (hereinafter referred to as a
"taxable event"), that the grantee pay to the Corporation, in cash, any federal,
state or local taxes of any kind required by law to be withheld with respect to
any taxable event under the Plan. The Corporation, to the extent permitted or
required by law, shall have the right to deduct from any payment of any kind
(including salary or bonus) otherwise due to a grantee any federal, state or
local taxes of any kind required by law to be withheld with respect to any
taxable event under the Plan, or to retain or sell without notice a sufficient
number of the shares to be issued to such grantee to cover any such taxes.
8. TRANSFERABILITY
To the extent required to comply with Rule 16b-3, and in any
event in the case of an incentive stock option, no Option granted under the Plan
shall be transferable by a grantee otherwise than by will or the laws of descent
and distribution. Unless otherwise determined by the Committee in accord with
the provisions of the immediately preceding sentence, an Option may be exercised
during the lifetime of the grantee, only by the grantee or, during the period
the grantee is under a legal disability, by the grantee's guardian or legal
representative.
9. ADJUSTMENTS; BUSINESS COMBINATIONS
In the event of a reclassification, recapitalization, stock
split, stock dividend, combination of shares, or other similar event, the
maximum number and kind of shares reserved for issuance or with respect to which
Options may be granted under the Plan as provided in Section 4 shall be adjusted
to reflect such event, and the Committee shall make such adjustments as it deems
appropriate and equitable in the number, kind and price of shares covered by
outstanding Options made under the Plan, and in any other matters which relate
to Options and which are affected by the changes in the Common Stock referred to
above.
In the event of any proposed Change in Control, the
Committee shall take such action as it deems appropriate to effectuate the
purposes of this Plan and to protect the grantees of Options, which action may
include, but without limitation, any one or more of the following: (i)
acceleration or change of the exercise dates of any Option; (ii) arrangements
with grantees for the payment of appropriate consideration to them for the
cancellation and surrender of any Option; and (iii) in any case where equity
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securities other than Common Stock of the Corporation are proposed to be
delivered in exchange for or with respect to Common Stock of the Corporation,
arrangements providing that any Option shall become one or more Options with
respect to such other equity securities.
In the event the Corporation dissolves and liquidates (other
than pursuant to a plan of merger or reorganization), then notwithstanding any
restrictions on exercise set forth in this Plan or any Grant Agreement (i) each
grantee shall have the right to exercise his Option at any time up to ten (10)
days prior to the effective date of such liquidation and dissolution; and (ii)
the Committee may make arrangements with the grantees for the payment of
appropriate consideration to them for the cancellation and surrender of any
Option that is so canceled or surrendered at any time up to ten (10) days prior
to the effective date of such liquidation and dissolution. The Committee may
establish a different period (and different conditions) for such exercise,
cancellation, or surrender to avoid subjecting the grantee to liability under
Section 16(b) of the Exchange Act Any Option not so exercised, canceled, or
surrendered shall terminate on the last day for exercise prior to such effective
date.
10. TERMINATION AND MODIFICATION OF THE PLAN
The Board, without further approval of the stockholders, may
modify or terminate the Plan or any portion thereof at any time, except that no
modification shall become effective without prior approval of the stockholders
of the Corporation if stockholder approval is necessary to comply with any tax
or regulatory requirement or rule of any exchange or Nasdaq System upon which
the Common Stock is listed or quoted; including for this purpose stockholder
approval that is required for continued compliance with Rule 16b-3 or
stockholder approval that is required to enable the Committee to grant incentive
stock options pursuant to the Plan.
The Committee shall be authorized to make minor or
administrative modifications to the Plan as well as modifications to the Plan
that may be dictated by requirements of federal or state laws applicable to the
Corporation or that may be authorized or made desirable by such laws. The
Committee may amend or modify the grant of any outstanding Option in any manner
to the extent that the Committee would have had the authority to make such
Option as so modified or amended. No modification may be made that would
materially adversely affect any Option previously made under the Plan without
the approval of the grantee.
11. NON-GUARANTEE OF EMPLOYMENT
Nothing in the Plan or in any Grant Agreement thereunder
shall confer any right on an employee to continue in the employ of the
Corporation or shall interfere in any way with the right of the Corporation to
terminate an employee at any time.
12. TERMINATION OF EMPLOYMENT
For purposes of maintaining a grantee's continuous status as
an employee and accrual of rights under any Options, transfer of an employee
among the Corporation and the Corporation's Parent or Subsidiaries shall not be
considered a termination of employment. Nor shall it be considered a termination
of employment for such purposes if an employee is placed on military or sick
leave or such other leave of absence which is considered as continuing intact
the employment relationship; in such a case, the employment relationship shall
be continued until the date when an employee's right to reemployment shall no
longer be guaranteed either by law or contract.
13. WRITTEN AGREEMENT
Each Grant Agreement entered into between the Corporation
and a grantee with respect to an Option granted under the Plan shall incorporate
the terms of this Plan and shall contain such provisions, consistent with the
provisions of the Plan, as may be established by the Committee.
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14. NON-UNIFORM DETERMINATIONS
The Committee's determinations under the Plan (including,
without limitation, determinations of the persons to receive Options, the form,
amount and timing of such Options, the terms and provisions of such Options and
the agreements evidencing same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, Options under
the Plan, whether or not such persons are similarly situated.
15. LIMITATION ON BENEFITS
With respect to persons subject to Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3. To the extent any provision of the Plan or
action by the Committee fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee.
16. LISTING AND REGISTRATION
If the Corporation determines that the listing, registration
or qualification upon any securities exchange or upon any Nasdaq System or under
any law, of shares subject to any Option is necessary or desirable as a
condition of, or in connection with, the granting of same or the issue or
purchase of shares thereunder, no such Option may be exercised in whole or in
part and no restrictions on such Option shall lapse, unless such listing,
registration or qualification is effected free of any conditions not acceptable
to the Corporation.
17. COMPLIANCE WITH SECURITIES LAWS
The Corporation may require that a grantee, as a condition
to exercise of an Option, and as a condition to the delivery of any share
certificate, provide to the Corporation, at the time of each such exercise and
each such delivery, a written representation that the shares of Common Stock
being acquired shall be acquired by the grantee solely for investment and will
not be sold or transferred without registration or the availability of an
exemption from registration under the Securities Act and applicable state
securities laws. The Corporation may also require that a grantee submit other
written representations which will permit the Corporation to comply with federal
and applicable state securities laws in connection with the issuance of the
Common Stock, including representations as to the knowledge and experience in
financial and business matters of the grantee and the grantee's ability to bear
the economic risk of the grantee's investment. The Corporation may require that
the grantee obtain a "purchaser representative" as, that term is defined in
applicable federal and state securities laws. The stock certificates for any
shares of Common Stock issued pursuant to this Plan may bear a legend
restricting transferability of the shares of Common Stock unless such shares are
registered or an exemption from registration is available under the Securities
Act and applicable state securities laws. The Corporation may notify its
transfer agent to stop any transfer of shares of Common Stock not made in
compliance with these restric tions. Common Stock shall not be issued with
respect to an Option granted under the Plan unless the exercise of such Option
and the issuance and delivery of share certificates for such Common Stock
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act, the rules and
regulations promulgated thereunder, and the requirements of any national
securities exchange or Nasdaq System upon which the Common Stock may then be
listed or quoted, and shall be further subject to the approval of counsel for
the Corporation with respect to such compliance to the extent such approval is
sought by the Committee.
18. GOVERNING LAW
The validity, construction and effect of the Plan, of Grant
Agreements entered into pursuant to the Plan, and of any rules, regulations,
determinations or decisions made by the Board or Committee relating to the Plan
or such Grant Agreements, and the rights of any and all persons having or
claiming
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to have any interest therein or thereunder, shall be determined exclusively in
accordance with applicable federal laws and the laws of the State of Delaware,
without regard to its conflict of laws rules and principles.
19. PLAN SUBJECT TO CERTIFICATE OF INCORPORATION AND BY-LAWS
This Plan is subject to the Certificate of Incorporation and
By-Laws of the Corporation, as they may be amended from time to time.
20. EFFECTIVE DATE; TERMINATION DATE
The Plan is effective as of March 15, 2000, the date on
which the Plan was adopted by the Board, subject to approval of the stockholders
within twelve months of such date. Unless previously terminated, the Plan shall
terminate on the close of business on March 15, 2010, ten years from the
effective date. Subject to other applicable provisions of the Plan, all Options
granted under the Plan prior to termination of the Plan shall remain in effect
until such Options have been satisfied or terminated in accordance with the Plan
and the terms of such Options.
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STEAKHOUSE PARTNERS, INC.
10200 WILLOW CREEK ROAD
SAN DIEGO, CALIFORNIA 92131
P
R
O
X
Y
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REVOCABLE PROXY
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THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF STEAKHOUSE
PARTNERS, INC. FOR USE ONLY AT THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
JUNE , 2000 AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
The undersigned hereby appoints Richard M. Lee or Hiram J. Woo
as Proxies, each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote as designated below, all the shares of
Common Stock of Steakhouse Partners, Inc. held of record by the undersigned on
May 12, 2000, at the Annual Meeting of Stockholders to be held on June 6, 2000,
or any adjournment or postponement thereof, with all the powers that the
undersigned would possess if personally present as indicated below.
SHARES OF COMMON STOCK OF THE COMPANY WILL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SHARES WILL BE VOTED FOR PROPOSAL1, FOR PROPOSAL 2, FOR
PROPOSAL 3, FOR PROPOSAL 4, FOR PROPOSAL 5, AND FOR PROPOSAL 6, AND OTHERWISE AT
THE DISCRETION OF THE PROXIES.
The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting
of Stockholders of the Company called for June 6, 2000, a Proxy Statement for
the Annual Meeting and the Company's Annual Report on Form 10-KSB for the fiscal
year ended December 28, 1999.
Continued and to be voted and signed on reverse
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR PROPOSAL 1, FOR PROPOSAL 2, FOR PROPOSAL 3,
FOR PROPOSAL 4, FOR PROPOSAL 5 AND FOR PROPOSAL 6.
THIS PROXY MAY BE REVOKED
AT ANY TIME BEFORE IT IS EXERCISED.
FOR AGAINST ABSTAIN
(1) ELECTION OF DIRECTOR: Nominee: Mark W. Goudge / / / / / /
(2) To approve a proposal to increase the number of authorized shares of our common stock
from 10,000,000 to 25,000,000. / / / / / /
(3) To consider and vote upon a proposal to approve the Company's 1999 Steakhouse Partners
Stock Option Plan. / / / / / /
(4) To consider and vote upon a proposal to approve the Company's Year 2000 Incentive Plan. / / / / / /
(5) To ratify the appointment of Singer Lewak Greenbaum & Goldstein LLP as the Company's
independent auditors for the fiscal year ending December 26, 2000. / / / / / /
(6) To transact such other business as may properly come before the meeting or any
adjournment thereof. / / / / / /
If you plan to attend the Annual Meeting please check the following
box: / /
THIS PROXY HAS BEEN MADE AVAILABLE TO:
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Signature ______________________________________________________________________
Signature ______________________________________________________________________
Date ___________________________________________________________________________
Please sign exactly as your name(s) appear(s) on this proxy. Only one signature
is required in case of a joint account. When signing in a representative
capacity, please give title.
PLEASE MARK, SIGN, DATE, AND PROMPTLY
RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE.
