<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:
/ / Preliminary Proxy Statement
/X/ 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 12, 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,
/s/ Richard M. Lee
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 12, 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, stock appreciation rights,
restricted stock grants or deferred stock grants, 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.
8
<PAGE>
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.
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
9
<PAGE>
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 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.
Stock Grants; Stock Appreciation Rights. The Year 2000 Incentive Plan
permits the granting of restricted stock or deferred stock awards either alone
or in addition to other awards under the Plan. The terms and conditions of any
such awards are to be set forth in an Award Agreement with the recipient. The
Year 2000 Incentive Plan also permits the granting of stock appreciation rights
in conjunction with any Options granted under the Plan. Stock Appreciation
Rights permit the holder of any Option to receive, under certain circumstances,
an amount in cash or Common Stock equal to the amount by which the fair market
value of the Common Stock exceeds the exercise price of the related Option.
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 January 12, 2001 for inclusion in the Board of Directors'
proxy statement and form of proxy relating to the meeting.
10
<PAGE>
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
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 12, 2000
11
<PAGE>
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 Corporation,
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 Corporation, or (ii) an acquisition of fifty percent
(50%) or more of the combined voting power of the Corporation'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
Corporation.
(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,
A-1
<PAGE>
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.
A-2
<PAGE>
(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.
A-3
<PAGE>
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
A-4
<PAGE>
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
A-5
<PAGE>
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.
A-6
<PAGE>
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
A-7
<PAGE>
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.
A-8
<PAGE>
EXHIBIT B
STEAKHOUSE PARTNERS, INC.
YEAR 2000 INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
Steakhouse Partners, Inc. (the "Corporation") hereby establishes the Year
2000 INCENTIVE PLAN (the "Plan"). The purpose of the Plan is to promote the
long-term growth and profitability of 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 non-qualified
stock options and incentive stock options qualifying under Section 422 of the
Code, in any combination (collectively, "Options"), director stock options
("Director Stock Options") stock appreciation rights ("SARs"), restricted stock
and deferred stock.
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 Corporation,
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 Corporation, or (ii) an acquisition of fifty percent
(50%) or more of the combined voting power of the Corporation'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
Corporation.
(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) "Deferred Stock" shall mean an award made pursuant to Section 10 of the
right to receive Common Stock at the end of a specified deferral period.
(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(h) "Fair Market Value" of a share of the Corporation's Common Stock for
any purpose on a particular date shall be 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
B-1
<PAGE>
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, 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.
(i) "Grant Agreement" shall mean a written agreement between the
Corporation and a grantee memorializing the terms and conditions of an Option,
Director Stock Option, SAR, restricted stock or deferred stock granted pursuant
to the Plan.
(j) "Grant Date" shall mean the date on which the Committee formally acts
to grant an Option, Director Stock Option, SARs, restricted stock or deferred
stock to a grantee or such other date as the Committee shall so designate at the
time of taking such formal action.
(k) "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.
(l) "Restricted Stock" shall mean an award of shares of Common Stock that
are subject to restrictions under Section 9.
(m) "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.
(n) "Securities Act" shall mean the Securities Act of 1933, as amended.
(o) "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.
Members of the Board or Committee who are either eligible for Options,
Director Stock Options, SARs, restricted stock or deferred stock grants or have
been granted same may vote on any matters affecting the administration of the
Plan or the grant of Options, Director Stock Options, SARs, restricted stock or
deferred stock pursuant to the Plan, except that no such member shall act upon
the granting of an Option, Director Stock Option, SAR, restricted stock or
deferred stock 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, SAR, restricted stock or deferred stock to him or her.
B-2
<PAGE>
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.
(b) Rule 16b-3 Requirements. The members of the Committee shall be both
"non-employee directors" within the meaning of Rule 16b-3, and "outside
directors" within the meaning of Section 162(m) of the Code. The Board shall
take all action necessary to cause the Plan to 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.
(c) 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 Director Stock Options, SARs,
restricted stock or deferred stock under the Plan, prescribe Grant Agreements
evidencing such Options, Director Stock Options, SARs, restricted stock or
deferred stock and establish programs for granting Options, Director Stock
Options, SARs, restricted stock or deferred stock. 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, Director Stock Options, SARs, restricted stock or deferred
stock shall be granted,
(ii) determine the types of Options, Director Stock Options, SARs,
restricted stock or deferred stock to be granted,
(iii) determine the number of shares to be covered by each Director
Stock Options, SARs, restricted stock or deferred stock Option,
(iv) impose such terms, limitations, restrictions and conditions upon
any such Director Stock Options, SARs, restricted stock or deferred stock
Option as the Committee shall deem appropriate,
(v) modify, extend Options, Director Stock Options, SARs, restricted
stock or deferred stock accept the surrender of outstanding Options,
Director Stock Options, SARs, restricted stock or deferred stock and
substitute new Options, Director Stock Options, SARs, restricted stock or
deferred stock provided that no such action shall be taken with respect to
any outstanding Option, Director Stock Options, SARs, restricted stock or
deferred stock which would adversely affect the grantee without the
grantee's consent, and
(vi) accelerate or otherwise change the time in which an Option,
Director Stock Options, SARs, restricted stock or deferred stock 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, Director Stock Options, SARs, restricted stock or deferred stock
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.
(d) 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.
(e) 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.
(f) 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
B-3
<PAGE>
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,
Director Stock Options, SARs, restricted stock or deferred stock to be awarded
under the Plan, subject to adjustments as provided in Section 9 of the Plan. If
any Option, Director Stock Option, SAR, restricted stock or deferred stock, or
portion of same, 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, Director Stock Option, SAR,
restricted stock deferred stock or shall thereafter be available for further
Options, Director Stock Options, SARs, restricted stock or deferred stock under
the Plan unless such shares would not be deemed available for future Options,
Director Stock Options, SARs, restricted stock or deferred stock pursuant to
Section 16 of the Exchange Act.
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. 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, SAR,
restricted stock or deferred stock awarded thereunder, Committee members shall
not be eligible to receive awards of Options, SARs, restricted stock or deferred
stock while members of the Committee. Directors of the Corporation (other than
directors who are also officers or employees of the Corporation, its
Subsidiaries or its Parent) are eligible to be granted Director Stock Options
pursuant to Section 7 of the Plan.
Options, Director Stock Options, SARs, restricted stock or deferred stock
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, Director
Stock Option, SAR, restricted stock or deferred stock 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, Director Stock Options, SARs, restricted stock or
deferred stock 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 non-qualified 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
B-4
<PAGE>
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 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 non-qualified 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.
(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. DIRECTOR STOCK OPTIONS
Director Stock Options granted under this Plan shall be non-qualified stock
options which are not intended to be "incentive stock options" within the
meaning of Code Section 422. Subject to the other applicable provisions of the
Plan, the Committee may from time to time grant to eligible participants
Director Stock Options. The Director Stock Options granted shall be subject to
the following terms and conditions.
(a) Grant of Director Stock Option. The grant of a Director Stock 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 Director
Stock Option evidenced thereby and the terms and conditions of such Director
Stock 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 Director
Stock Option ("exercise price") shall be determined by the Committee.
B-5
<PAGE>
(c) Payment. Director Stock 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 Director Stock 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 Director Stock Options. The term during which each Director
Stock Option may be exercised shall be determined by the Committee. In no event
shall an Director Stock Option be exercisable less than six months nor more than
ten years from the date it is granted. Prior to the exercise of the Director
Stock 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 Director Stock Option.
(e) Other Terms and Conditions. Director Stock Options may contain such
other provisions, not inconsistent with the provisions of the Plan, as the
Committee shall determine appropriate from time to time.
8. STOCK APPRECIATION RIGHTS
(a) Grant and Exercise. SARs may be granted in conjunction with all or part
of any Option granted under this Plan. In the case of a non-qualified stock
option, such rights may be granted either at or after the time of the grant of
such non-qualified stock option. In the case of an incentive stock option, such
rights may be granted only at the time of the grant of such incentive stock
option.
A SAR or applicable portion thereof granted with respect to a given Option
shall terminate and no longer be exercisable upon the termination or exercise of
the related Option, except that, unless otherwise provided by the Committee at
the time of grant, a SAR granted with respect to less than the full number of
shares covered by a related Option shall only be reduced if and to the extent
that the number of shares covered by the exercise or termination of the related
Option exceeds the number of shares not covered by the SARs.
A SAR may be exercised by an optionee, in accordance with Section 8(b), by
surrendering the applicable portion of the related Option. Upon such exercise
and surrender, the optionee shall be entitled to receive amount determined in
the manner prescribed in Section 8(b). Stock Options having been so surrendered,
in whole or in part, shall no longer be exercisable to the extent the related
SAR have been exercised.
(b) Terms and Conditions. SARs shall be subject to such terms and
conditions, not inconsistent with the provisions of this Plan, as shall be
determined from time to time by the Committee, including the following:
(i) SARs shall be exercisable only at such time or times and to the
extent that the Stock Options to which they relate shall be exercisable in
accordance with the provisions of Section 6 and this Section; provided,
however, that any SAR granted subsequent to the grant of the related Stock
Option shall not be exercisable during the first six months of the term of
the SAR, except that this additional limitation shall not apply in the
event of death or Disability of the optionee prior to the expiration of the
six-month period.
B-6
<PAGE>
(ii) Upon the exercise of a SAR, an optionee shall be entitled to
receive up to, but not more than, an amount in cash or shares of Common
Stock equal in value to the excess of the Fair Market Value of one share of
Common Stock over the option price per share specified in the related
Option multiplied by the number of shares with respect to which the SAR
shall have been exercised, with the Committee having the sole and exclusive
right to determine the form of payment.
(iii) SARs shall be transferable only when and to the extent that the
underlying Option would be transferable under Section 6.5.
(iv) Upon the exercise of a SAR, the Option or part thereof to which
such SAR is related shall be deemed to have been exercised for the purpose
of the limitation set forth in Section 4 on the number of shares of Stock
to be issued under this Plan.
(v) A SAR granted in connection with an incentive stock option may be
exercised only if and when the market price of the Common Stock subject to
the incentive stock option exceeds the exercise price of such Stock Option.
In its sole discretion, the Committee may provide, at the time of grant of
a SAR under this Section, that such SAR can be exercised only in the event of a
Change of Control.
9. RESTRICTED STOCK
(a) Administration. Shares of Stock may be issued either alone or in
addition to other awards granted under this Plan. The Committee shall determine
the officers and key employees of the Corporation and its Subsidiaries to whom,
and the time or times at which, grants of Restricted Stock will be made, the
number of shares to be awarded, the price, if any, to be paid by the recipient
of Restricted Stock (subject to Section 9(b), the time or times within which
such awards may be subject to forfeiture, and all other conditions of the
awards). The Committee may also condition the grant of Restricted Stock upon the
attainment of specified performance goals, or such other criteria as the
Committee may determine, in its sole discretion. The provisions of Restricted
Stock awards need not be the same with respect to each recipient.
(b) Awards and Certificates. The prospective recipient of an award of
shares of Restricted Stock shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
(a "Restricted Stock Award Agreement") and has delivered a fully executed copy
thereof to the Corporation, and has otherwise complied with the then applicable
terms and conditions.
(i) Awards of Restricted Stock must be accepted within a period of 90
days (or such shorter period as the Committee may specify) after the award
date by executing a Restricted Stock Award Agreement and paying whatever
price, if any, is required.
(ii) Each participant who is awarded Restricted Stock shall be issued
a stock certificate with respect to those shares of Restricted Stock. The
certificate shall be registered in the name of the participant, and shall
bear an appropriate legend referring to the terms, conditions, and
restrictions applicable to such award, substantially in the following form:
"The transferability of this certificate and the shares of stock
represented hereby are subject to the terms and conditions (including
forfeiture) of the Incentive Plan and a Restricted Stock Award Agreement
entered into between the registered owner and the Corporation. Copies of
the Plan and the Agreement are on file in the offices of the Corporation,
10200 Willow Creek Road, San Diego, CA 92131.
(iii) The Committee shall require that the stock certificates
evidencing such shares will be held in custody by the Corporation until the
restrictions thereon shall have lapsed, and that, as a condition of any
Restricted Stock award, the participant shall have delivered a stock power
to the Corporation, endorsed in blank, relating to the Stock covered by
such award.
B-7
<PAGE>
(c) Restrictions and Conditions. The shares of Restricted Stock awarded
pursuant to this Section shall be subject to the following restrictions and
conditions:
(i) Subject to the provisions of this Plan and the Restricted Stock
Award Agreements, during such period as may be set by the Committee
commencing on the grant date (the "Restriction Period"), the participant
shall not be permitted to sell, transfer, pledge or assign shares of
Restricted Stock awarded under this Plan. Within these limits, the
Committee may, in its sole discretion, provide for the lapse of such
restrictions in installments and may accelerate or waive such restrictions
in whole or in part based on performance and/or such other factors as the
Committee may determine, in its sole discretion.
(ii) Except as provided in Section 9.3(a), the participant shall have,
with respect to the shares of Restricted Stock, all of the rights of a
stockholder of the Corporation, including the right to receive any
dividends. Dividends paid in stock of the Corporation or stock received in
connection with a stock split with respect to Restricted Stock shall be
subject to the same restrictions as on such Restricted Stock. Certificates
for shares of unrestricted Stock shall be delivered to the participant
promptly after, and only after, the period of forfeiture shall expire
without forfeiture in respect of such shares of Restricted Stock.
(iii) Subject to the provisions of the Restricted Stock Award
Agreement and this Section, upon the participant's termination of
employment for any reason during the Restriction Period, all shares still
subject to restriction shall be forfeited by the participant, and the
participant shall only receive the amount, if any, paid by the participant
for such forfeited Restricted Stock.
(iv) In the event of special hardship circumstances of a participant
whose employment is involuntarily terminated (other than for Cause), the
Committee may, in its sole discretion, waive in whole or in part any or all
remaining restrictions with respect to such participant's shares of
Restricted Stock.
10. DEFERRED STOCK AWARDS
(a) Administration. Deferred Stock may be awarded either alone or in
addition to other awards granted under this Plan. The Committee shall determine
the officers and key employees of the Corporation, its Subsidiaries and
Affiliates to whom, and the time or times at which, Deferred Stock shall be
awarded, the number of shares of Deferred Stock to be awarded to any
participant, the duration of the period (the "Deferral Period") during which,
and the conditions under which, receipt of the Stock will be deferred and the
terms and conditions of the award in addition to those set forth in Section
10(b). The Committee may also condition the grant of Deferred Stock upon the
attainment of specified performance goals, or such other criteria as the
Committee shall determine, in its sole discretion. The provisions of Deferred
Stock awards need not be the same with respect to each recipient.
(b) Terms and Conditions. The shares of Deferred Stock awarded pursuant to
this Section shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award agreement,
Deferred Stock awards may not be sold, assigned, transferred, pledged, or
otherwise encumbered during the Deferral Period. At the expiration of the
Deferral Period (or Elective Deferral Period, where applicable), share
certificates shall be delivered to the participant, or his legal
representative, in a number equal to the shares covered by the Deferred
Stock award.
(ii) At the time of the award, the Committee may, in its sole
discretion, determine that amounts equal to any dividends declared during
the Deferral Period with respect to the number of shares covered by a
Deferred Stock award will be: (a) paid to the participant currently, (b)
deferred and deemed to be reinvested, or (c) forfeited because the
participant has no rights with respect thereto.
B-8
<PAGE>
(iii) Subject to the provisions of the award agreement and this
Section, upon termination of employment for any reason during the Deferral
Period for a given award, the Deferred Stock in question including any
deferred and reinvested dividends thereon shall be forfeited by the
participant.
(iv) Based on performance and/or such other criteria as the Committee
may determine, the Committee may, at or after the grant, accelerate the
vesting of all or any part of any Deferred Stock award and/or waive the
deferral limitations for all or any part of such award.
(v) In the event of special hardship circumstances of a participant
whose employment is involuntarily terminated (other than for Cause), the
Committee may, in its sole discretion, waive in whole or in part any or all
of the remaining deferral limitations imposed hereunder with respect to any
or all of the participant's Deferred Stock.
(vi) A participant may elect to defer further receipt of the award for
a specified period or until a specified event (the "Elective Deferral
Period"), subject in each case to the Committee's approval and to such
terms as are determined by the Committee, all in its sole discretion.
Subject to any exceptions adopted by the Committee, such election must be
made at least six months prior to the completion of the Deferral Period for
a Deferred Stock award (or for an installment of such an award).
(vii) Each award shall be confirmed by, and subject to the terms of, a
Deferred Stock award agreement executed by the Corporation and the
participant.
11. LOAN PROVISIONS
With the consent of the Committee, the Corporation may make,
guarantee, or arrange for, a loan or loans to an employee with respect to
the exercise of any Option granted under this Plan and/or with respect to
the payment of the purchase price, if any, of any Restricted Stock awarded
hereunder and/or with respect to the payment by optionee of any or all
federal and/or state income taxes due on account of the granting or
exercise of any stock option or other awards hereunder. The Committee shall
have full authority to decide whether to make a loan or loans hereunder and
to determine the amount, terms and provisions of any such loan or loans,
including the interest rate to be charged in respect of any such loan or
loans, whether the loan or loans are to be with or without recourse against
the borrower, the terms on which the loan is to be repaid and the
conditions, if any, under which the loan or loans may be forgiven.
12. 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.
13. 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.
B-9
<PAGE>
14. 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 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 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 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.
15. TERMINATION AND MODIFICATION OF THE PLAN
The Board, without further approval of the stockholders, may modify or
terminate the Plan, except that no modification shall become effective
without prior approval of the stockholders of the Corporation if
stockholder approval would be required for continued compliance with Rule
16b-3.
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.
16. 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.
17. 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
B-10
<PAGE>
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.
18. 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.
19. 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.
20. 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.
21. 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.
22. 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 restrictions. 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
B-11
<PAGE>
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.
23. 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 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.
24. 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.
25. 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.
B-12
<PAGE>
STEAKHOUSE PARTNERS, INC.
10200 WILLOW CREEK ROAD
SAN DIEGO, CALIFORNIA 92131
P
R
O
X
Y
- --------------------------------------------------------------------------------
REVOCABLE PROXY
- --------------------------------------------------------------------------------
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 6, 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
<PAGE>
<TABLE>
<S> <C>
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:
<CAPTION>
FOR PROPOSAL 4, FOR PROPOSAL 5 AND FOR PROPOSAL 6.
</TABLE>
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.
