<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _______)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
J. Alexander's Corporation
- -------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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<PAGE> 2
J. ALEXANDER'S CORPORATION
3401 WEST END AVENUE
SUITE 260
P.O. BOX 24300
NASHVILLE, TENNESSEE 37202
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of J. Alexander's Corporation:
The Annual Meeting of Shareholders of J. Alexander's Corporation (the
"Company") will be held at the Nashville City Club, SunTrust Bank Building, 201
Fourth Avenue North, Nashville, Tennessee, at 10:00 a.m., Nashville time, on
Tuesday, May 20, 1997 for the following purposes:
(1) To elect six directors to hold office for a term of one year and
until their successors have been elected and qualified;
(2) To consider and act upon a proposal to amend the Company's 1994
Employee Stock Incentive Plan to increase the number of shares of Common
Stock reserved and authorized for issuance pursuant to the Plan; and
(3) To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on March 25, 1997 are
entitled to notice of and to vote at the meeting or any adjournment or
postponement thereof.
Your attention is directed to the Proxy Statement accompanying this notice
for a more complete statement regarding the matters to be acted upon at the
meeting.
We hope very much that you will be able to be with us. If you do not plan
to attend the meeting in person, you are requested to complete, sign and date
the enclosed proxy and return it promptly in the enclosed addressed envelope,
which requires no postage if mailed in the United States.
By Order of the Board of Directors
R. GREGORY LEWIS
Secretary
April 11, 1997
<PAGE> 3
J. ALEXANDER'S CORPORATION
3401 WEST END AVENUE
SUITE 260
P.O. BOX 24300
NASHVILLE, TENNESSEE 37202
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
TUESDAY, MAY 20, 1997
The enclosed proxy is solicited by and on behalf of the Board of Directors
of J. Alexander's Corporation (the "Company") for use at the Annual Meeting of
Shareholders to be held on Tuesday, May 20, 1997, at 10:00 a.m., Nashville time,
at the Nashville City Club, SunTrust Bank Building, 201 Fourth Avenue North,
Nashville, Tennessee, and at any adjournments or postponements thereof, for the
purposes set forth in the foregoing Notice of Annual Meeting of Shareholders.
Copies of the proxy, this Proxy Statement and the attached Notice are being
mailed to shareholders on or about April 11, 1997.
Proxies may be solicited by mail, telephone or telegraph. All costs of this
solicitation will be borne by the Company. The Company does not anticipate
paying any compensation to any party other than its regular employees for the
solicitation of proxies, but may reimburse brokerage firms and others for their
reasonable expenses in forwarding solicitation material to beneficial owners.
Shares represented by such proxies will be voted in accordance with the
choices specified thereon. If no choice is specified, the shares will be voted
FOR the election of the director nominees named herein and FOR approval of the
proposal to amend the 1994 Employee Stock Incentive Plan (the "1994 Plan"), as
described herein. The Board of Directors does not know of any other matters
which will be presented for action at the meeting, but the persons named in the
proxy intend to vote or act with respect to any other proposal which may be
properly presented for action according to their best judgment in light of the
conditions then prevailing.
A proxy may be revoked by a shareholder at any time before its exercise by
attending the meeting and electing to vote in person, by filing with the
Secretary of the Company a written revocation or by duly executing a proxy
bearing a later date.
Each share of the Company's Common Stock, $.05 par value (the "Common
Stock"), issued and outstanding on March 25, 1997 (the "Record Date"), will be
entitled to one vote on all matters to come before the meeting. As of the Record
Date, there were outstanding 5,384,994 shares of Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of the Record Date, certain information
with respect to those persons known to the Company to be the beneficial owners
(as defined by certain rules of the Securities and Exchange Commission (the
"Commission")) of more than five percent (5%) of the Common Stock, its only
voting security, and with respect to the beneficial ownership of the Common
Stock by all directors and nominees, each of the executive officers named in the
Summary Compensation Table, and all executive officers and
<PAGE> 4
directors of the Company as a group. Except as otherwise specified the shares
indicated are presently outstanding.
<TABLE>
<CAPTION>
AMOUNT OF PERCENTAGE OF
COMMON STOCK OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED COMMON STOCK(1)
- ------------------------------------ ------------------ ---------------
<S> <C> <C>
RCM Capital Management, L.L.C............................. 526,600(2) 9.8%
Four Embarcadero Center
Suite 3000
San Francisco, CA 94111
The J. Alexander's Corporation............................ 443,687(3) 8.2
Employee Stock Ownership Trust
3401 West End Avenue
Nashville, TN 37203
Sackett & Company......................................... 388,439(4) 7.1
555 California Street
Suite 4490
San Francisco, CA 94104
Dimensional Fund Advisors, Inc............................ 293,600(5) 5.5
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Lonnie J. Stout II****.................................... 148,059(6) 2.7
E. Townes Duncan**........................................ 94,500(7) 1.7
Toby S. Wilt**............................................ 63,000(8) 1.2
R. Gregory Lewis***....................................... 58,571(9) 1.1
John L.M. Tobias**........................................ 39,992(10) *
Earl Beasley, Jr.**....................................... 36,274(11) *
Garland G. Fritts**....................................... 21,000(12) *
Dennis J. Cleary***(13)................................... 42,440(14) *
Richard D. May***(15)..................................... 16,291(16) *
All directors and executive officers as a group........... 535,345(17) 9.5
</TABLE>
- ---------------
* Less than one percent.
** Director.
*** Named Officer.
**** Director and Named Officer.
(1) Pursuant to the rules of the Commission, shares of Common Stock which
certain persons presently have the right to acquire pursuant to the
conversion provisions of the Company's 8 1/4% Convertible Subordinated
Debentures Due 2003 ("Conversion Shares") are deemed outstanding for the
purpose of computing such person's percentage ownership, but are not deemed
outstanding for the purpose of computing the percentage ownership of the
other persons shown in the table. Likewise, shares subject to options held
by directors and executive officers of the Company which are exercisable
within 60 days of the Record Date are deemed outstanding for the purpose of
computing such director's or executive
2
<PAGE> 5
officer's percentage ownership and the percentage ownership of all
directors and executive officers as a group. Unless otherwise indicated,
each individual has sole voting and dispositive power with respect to all
shares shown.
(2) RCM Capital Management, L.L.C. ("RCM") is a registered investment advisor.
RCM has sole voting power with respect to 414,300 shares and sole
dispositive power with respect to 526,600 shares. Information is based
solely on the Schedule 13G filed with the Commission by RCM. RCM is a
wholly-owned subsidiary of Dresdner Bank AG.
(3) Includes 169,454 shares that have been allocated to the J. Alexander's
Employee Stock Ownership Plan (the "ESOP") participants. Pursuant to the
terms of the ESOP that govern the J. Alexander's Corporation Employee Stock
Ownership Trust (the "Trust"), each ESOP participant instructs SunTrust
Bank, Nashville, N.A., as trustee of the Trust (the "Trustee"), how to vote
the shares allocated to his or her account. The ESOP provides that the
Trustee shall abstain from voting allocated shares for which no written
instructions are received. Shares of the Company's Common Stock held by the
ESOP but not yet allocated to the accounts of the participants will be
voted based on the percentage of stock allocated to the participants'
accounts which is voted for and against each proposal, including in the
tabulation of such percentages only those shares as to which written voting
instructions were received. The Trustee has shared dispositive power with
respect to the shares, subject to certain provisions of the ESOP.
(4) Includes 83,606 Conversion Shares. Sackett & Company ("Sackett") is a
registered investment advisor. Information is based solely on the Schedule
13G filed with the Commission by Sackett.
(5) Dimensional Fund Advisors, Inc. ("DFA") is a registered investment advisor.
DFA has sole voting power with respect to 147,500 shares and sole
dispositive power with respect to 293,600 shares. Information is based
solely on the Schedule 13G filed with the Commission by DFA.
(6) Includes 116,947 shares issuable upon exercise of certain options held by
Mr. Stout and 5,355 ESOP shares allocated to Mr. Stout and held by the
Trust, as to which Mr. Stout has sole voting power and shared dispositive
power.
(7) Includes 17,000 shares issuable upon exercise of certain options held by
Mr. Duncan, 300 shares that Mr. Duncan holds as custodian for his children,
2,400 shares that are owned by a partnership in which Mr. Duncan and a
trust for the benefit of Mr. Duncan's children are partners, and 73,800
shares owned by a limited liability company in which Mr. Duncan is the
principal manager and a member. Does not include 700 shares owned by Mr.
Duncan's wife, as to which Mr. Duncan disclaims beneficial ownership.
(8) Includes 13,000 shares issuable upon exercise of certain options held by
Mr. Wilt.
(9) Includes 39,000 shares issuable upon exercise of certain options held by
Mr. Lewis and 3,829 ESOP shares allocated to Mr. Lewis and held by the
Trust, as to which Mr. Lewis has sole voting power and shared dispositive
power.
(10) Includes 1,126 Conversion Shares, 1,000 shares owned by Mr. Tobias' wife,
and 18,000 shares issuable upon exercise of certain options held by Mr.
Tobias.
(11) Includes 112 Conversion Shares, 1,332 shares that Mr. Beasley holds as
custodian for his children, and 5,000 shares issuable upon exercise of
certain options held by Mr. Beasley.
(12) Includes 5,000 shares issuable upon exercise of certain options held by Mr.
Fritts.
(13) Mr. Cleary resigned as Vice President of the Company effective March 3,
1997.
(14) Includes 35,500 shares issuable upon exercise of certain options held by
Mr. Cleary and 3,875 ESOP shares allocated to Mr. Cleary and held by the
Trust, as to which Mr. Cleary has sole voting power and shared dispositive
power.
3
<PAGE> 6
(15) Mr. May resigned as Vice President of the Company effective December 18,
1996. See "Executive Compensation -- Separation Agreement."
(16) Includes 3,965 ESOP shares allocated to Mr. May and held by the Trust, as
to which Mr. May has sole voting power and shared dispositive power.
(17) Includes 1,238 Conversion Shares, 261,613 shares issuable upon exercise of
certain options held by the directors and executive officers, and 18,497
ESOP shares allocated to the executive officers and held by the Trust, as
to which such officers have sole voting power and shared dispositive power.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Six directors are to be elected at the annual meeting for a term of one
year and until their successors shall be elected and qualified. Election of
directors requires a plurality of the votes cast in such election. It is
intended that shares represented by the enclosed proxy will be voted FOR the
election of the nominees named in the table set forth below unless a contrary
choice is indicated. All of such nominees are presently directors of the
Company. Management believes that all of the nominees will be available and able
to serve as directors, but if for any reason any should not be available or able
to serve, it is intended that such shares will be voted for such substitute
nominees as may be proposed by the Board of Directors of the Company. The
following schedule includes certain information with respect to each of the
nominees.
<TABLE>
<CAPTION>
NAME BACKGROUND INFORMATION
- ---- ----------------------
<S> <C>
Earl Beasley, Jr..... Mr. Beasley, 63, has been a director of the Company since
March 1991. Since 1981, Mr. Beasley has been President of
Homer B. Brown Co., an investment firm. Mr. Beasley was
President and a director of the Company from 1971 to 1980.
E. Townes Duncan..... Mr. Duncan, 43, has been a director of the Company since May
1989. Since 1993, Mr. Duncan has been the Chairman of the
Board and Chief Executive Officer of Comptronix Corporation,
a manufacturer of printed circuit board assemblies
("Comptronix"). Mr. Duncan is also President and a director
of Solidus, LLC, a private investment firm. From 1985 to
1993, Mr. Duncan was a Vice President and principal of
Massey Burch Investment Group, Inc. Mr. Duncan is also a
director of Sirrom Capital Corporation, a specialty finance
company.
Garland G. Fritts.... Mr. Fritts, 67, has been a director of the Company since
December 1985. Since 1993, Mr. Fritts has been a consultant
for Fry Consultants, Inc., a management consulting firm. Mr.
Fritts was a consultant for McManis Associates, Inc., a
management consulting firm, from 1989 to 1993.
Lonnie J. Stout II... Mr. Stout, 50, has been a director and President and Chief
Executive Officer of the Company since May 1986. Since July
1990, Mr. Stout has also served as Chairman of the Company.
From 1982 to May 1984, Mr. Stout was a director of the
Company, and served as Executive Vice President and Chief
Financial Officer of the Company from October 1981 to May
1984. Mr. Stout is also a director and a member of the
compensation committee of Comptronix.
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
NAME BACKGROUND INFORMATION
- ---- ----------------------
<S> <C>
John L.M. Tobias..... Mr. Tobias, 76, has been a director of the Company since
February 1983. He has served as President of J.M.T.
Associates, Inc., a Columbia, South Carolina-based
investment firm, since 1979 and as that corporation's Board
Chairman since January 1987.
Toby S. Wilt......... Mr. Wilt, 52, has been a director of the Company since July
1993. He has served as President and Chief Executive Officer
of TSW Investment Company, a private investment firm, since
1987 and as Chairman of the Board of The Christie Cookie
Company, a privately-held gourmet cookie company, since
1989. Mr. Wilt is also a director of First American
Corporation, a bank holding company, and Titan Holdings,
Inc., an insurance company.
</TABLE>
The Board of Directors of the Company held six meetings in 1996. The Board
of Directors has an Audit Committee and a Compensation/Stock Option Committee
(the "Compensation Committee"), the members of each of which are Messrs.
Beasley, Duncan, Fritts, Tobias and Wilt. The Audit Committee, which held two
meetings during 1996, generally meets with the Company's independent auditors to
review the Company's consolidated financial statements. It is the function of
this committee to ensure that the Company's financial statements accurately
reflect the Company's financial position and results of operations. The
Compensation Committee is responsible for the periodic review of management's
compensation and administration of the Company's stock option plans. The
Compensation Committee held two meetings during 1996. The Company's Board of
Directors has no standing nominating committee.
Each of the incumbent directors of the Company attended at least 75% of the
aggregate of (i) the total number of meetings held during 1996 by the Board of
Directors and (ii) the total number of meetings held during 1996 by all
committees of the Board of which he was a member.
CERTAIN PROCEEDINGS
Mr. Duncan serves as Chairman of the Board and Chief Executive Officer, and
Mr. Stout serves as a director of Comptronix. Comptronix filed for
reorganization under Chapter 11 of the Bankruptcy Code in August 1996. In
November 1996, Comptronix sold substantially all of its assets pursuant to an
agreement approved by the Bankruptcy Court. Comptronix intends to distribute all
of its remaining assets, including the proceeds from the November 1996 sale, to
its creditors pursuant to a plan of liquidation to be consummated in May 1997.
5
<PAGE> 8
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term or other
compensation during fiscal years 1996, 1995 and 1994 for the Company's Chief
Executive Officer and each of the other executive officers of the Company whose
cash compensation exceeded $100,000 (collectively, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION SECURITIES
--------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION($)(1)(2)
- --------------------------- ---- --------- -------- ------------ ---------------------
<S> <C> <C> <C> <C> <C>
Lonnie J. Stout II,.................. 1996 250,000 -- -- 1,669(3)
President and 1995 242,500 75,000 50,000 7,887
Chief Executive Officer 1994 230,000 58,750 40,000 7,706
R. Gregory Lewis,.................... 1996 117,000 -- -- 2,459(4)
Chief Financial Officer 1995 113,500 29,250 9,000 7,947
1994 105,958 24,000 9,000 6,838
Dennis J. Cleary,.................... 1996 144,000 -- -- 2,225(6)
Vice President, 1995 133,000 48,300 12,000 8,986
J. Alexander's Division(5) 1994 126,500 33,000 9,000 6,928
Richard D. May,...................... 1996 119,000 -- -- 1,224(8)
Vice President, 1995 117,000 17,850 5,000 8,457
Wendy's Division(7) 1994 110,443 27,000 9,000 7,059
</TABLE>
- ---------------
(1) Each amount in this column for 1996 includes the $510 premium cost of term
life insurance maintained for the benefit of such Named Officer.
(2) The ESOP shares included in this column for 1996 are valued at $8.50 per
share, the closing price of the Company's Common Stock on December 27, 1996.
The number of ESOP shares included in this column for 1996 is an
approximation of the number of shares to be allocated to the participants.
(3) Includes 136 ESOP shares allocated to Mr. Stout as of December 31, 1996.
(4) Includes $819 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. Lewis and 133 ESOP shares allocated to Mr. Lewis as of
December 31, 1996.
(5) Mr. Cleary resigned as Vice President of the Company effective March 3,
1997.
(6) Includes $556 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. Cleary and 136 ESOP shares allocated to Mr. Cleary as of
December 31, 1996.
(7) Mr. May resigned as Vice President of the Company effective December 18,
1996. See " -- Separation Agreement."
(8) Includes $714 contributed by the Company to the Company's 401(k) Plan on
behalf of Mr. May.
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<PAGE> 9
OPTION/SAR EXERCISES AND YEAR-END VALUE TABLE
There were no grants of stock options to any of the Named Officers during
fiscal 1996 and no stock appreciation rights ("SARs") have ever been awarded by
the Company. The following table provides information as to options exercised by
the Named Officers during fiscal 1996. None of the Named Officers has held or
exercised separate SARs. In addition, this table includes the number of shares
covered by both exercisable and unexercisable stock options as of December 29,
1996. Also reported are the values for the "in-the-money" options, which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Common Stock.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FISCAL YEAR END(#) FISCAL YEAR-END($)(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lonnie J. Stout II.......... 17,021 73,403 103,388 86,612 528,812 41,189
R. Gregory Lewis............ -- -- 44,000 9,000 164,688 3,375
Dennis J. Cleary............ -- -- 35,500 11,000 127,875 3,375
Richard D. May.............. -- -- 42,500 --(2) 120,125 --(2)
</TABLE>
- ---------------
(1) Amounts reflect gains on outstanding options based on the average of the
high and low price of the Company's Common Stock on December 27, 1996.
(2) All options held by Mr. May vested upon his resignation as Vice President of
the Company, effective December 18, 1996. See " -- Separation Agreement."
SALARY CONTINUATION PLAN
Since 1978, the Company has provided a salary continuation plan for
eligible employees (the "Salary Plan") which will continue to operate in 1997.
The Salary Plan generally provides for a retirement benefit of 50% of the
employee's salary on the date of entry into the plan with adjustments based on
certain subsequent salary increases. The retirement benefit is payable over 15
years commencing at age 65. The Salary Plan also provides that in the event an
employee dies while in the employ of the Company after entering the Salary Plan
but before retirement, his or her beneficiaries, for a period of one year, will
receive 100% of such employee's salary at the applicable time under the Salary
Plan. Thereafter, for a period of 10 years, or until such time as the employee
would have attained age 65, whichever period is longer, the beneficiaries will
receive 50% of such salary yearly. All officers and certain other key employees
of the Company with three full years of service are eligible to participate in
the Salary Plan, which is funded by life insurance purchased by the Company and
payable to the Company on the death of the employee. An amount which
approximates the cash value of the life insurance policy for each employee vests
for the benefit of such employee at the rate of 10% per year for each year of
service, including the first three years of service required for eligibility
under the Salary Plan, and is payable to such employee upon termination of
service with the Company for any reason other than death or retirement at age
65. Directors of the Company who are not also executive officers or employees do
not participate in the Salary Plan.
The estimated annual benefits payable upon retirement at age 65 for each of
Messrs. Stout and Lewis are $107,500 and $58,500, respectively. These amounts
may be adjusted periodically pursuant to the terms of the
7
<PAGE> 10
plan. As a result of their resignations as Vice Presidents of the Company,
Messrs. May and Cleary have been or will be paid $98,414 and $24,210,
respectively, as settlement of the Company's liability under the Salary Plan.
TERMINATION BENEFITS; CHANGE IN CONTROL
Two of the Company's current executive officers may receive termination
benefits in the event of a change in control of the Company. In the event that
either of these executive officers is terminated or resigns after a change in
responsibilities in connection with a change in control of the Company, then
such employee will receive an amount equal to 18 months' compensation. Based on
current levels of compensation, such amount would be $375,000 for Mr. Stout and
$175,500 for Mr. Lewis. The Company is not currently aware of any potential
change in control that would give rise to such payments.
COMPENSATION OF DIRECTORS
The directors receive a monthly director's fee of $500 plus an additional
fee of $300 for each Board or Board Committee meeting attended.
Pursuant to the 1990 Stock Option Plan for Outside Directors ("1990 Plan"),
each director who is not also an officer or employee of the Company and who was
serving in such capacity on October 24, 1989 was granted an option to purchase
10,000 shares of Common Stock and an additional 1,000 shares for each previous
full year of service as a director. Each eligible director elected thereafter
has been and will be granted an option to purchase 10,000 shares upon election,
and all directors have been and will be granted an option to purchase 1,000
shares for each full year of service as a director after 1989 or their later
election, as applicable. The per share exercise price of the options granted
under the 1990 Plan is the fair market value of the Common Stock on the date the
option is granted.
SEPARATION AGREEMENT
Effective as of December 18, 1996, Mr. May resigned as Vice President of
the Company. Pursuant to the terms of a Separation Agreement and General Release
between the Company and Mr. May, the Company will continue to pay Mr. May his
regular salary for twelve months from the date of his resignation. The agreement
also provides for the acceleration of the vesting of all options held by Mr. May
on December 18, 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Stout, Chairman of the Board, President and Chief Executive Officer of
the Company, is a director and member of the Compensation Committee of
Comptronix. Mr. Duncan, a director and chairman of the Compensation Committee of
the Company, is the Chairman of the Board and Chief Executive Officer of
Comptronix.
COMPENSATION COMMITTEE REPORT
Decisions on compensation of the Company's executive officers are made by
the Compensation Committee of the Company's Board of Directors. Each member of
the Compensation Committee is a non-employee director. It is the responsibility
of the Compensation Committee to determine whether in its
8
<PAGE> 11
judgment the executive compensation policies are reasonable and appropriate,
meet their stated objectives and effectively serve the best interests of the
Company and its shareholders.
Compensation Philosophy and Policies for Executive Officers
The Compensation Committee believes that the primary objectives of the
Company's executive compensation policies should be:
- to attract and retain talented executives by providing compensation that
is, overall, competitive with the compensation provided to executives at
companies of comparable size and position in the restaurant industry,
while maintaining compensation within levels that are consistent with the
Company's overall financial objectives and operating performance;
- to provide the appropriate incentives for executive officers to work
towards the achievement of the Company's annual sales, operating and
development targets; and
- to align the interests of its executive officers more closely with those
of its shareholders and the long-term interests of the Company by
providing long-term incentive compensation in the form of stock options.
The Compensation Committee believes that the Company's executive
compensation policies should be reviewed each year following the time when the
financial results of the prior year become final. The policies are reviewed in
light of their consistency with the Company's financial performance, the success
achieved in meeting its sales and operating performance targets, achieving its
overall strategic business plan objectives and its position within the
restaurant industry, as well as the compensation policies of similar companies.
The compensation of individual executive officers is reviewed annually by the
Compensation Committee in light of the executive compensation policies
established for that year.
To review the comparability of the Company's executive compensation
policies, the Compensation Committee retained the Hay Group, an independent
consulting firm, in 1994 to assist the Compensation Committee in reviewing
compensation packages of executive officers of comparable companies. The
consulting firm analyzed the components of the Company's compensation for its
executive officers and concluded that the Company's total compensation for its
executive officers is approximately market, or the fiftieth percentile, of
comparable companies while compensation for the Company's Chief Executive
Officer is paid between the fiftieth and seventy-fifth percentiles.
The Compensation Committee sets the base compensation of its executive
officers at a level that it believes appropriate considering the overall
strategic direction of the Company, its position within the relative segments of
the food service industry in which it operates and the overall responsibilities
of each executive officer. The Compensation Committee believes that in addition
to corporate performance and specific business unit performance, it is
appropriate to consider in setting and reviewing executive compensation the
personal contributions the particular individual may make to the success of the
corporate enterprise. Such qualitative factors as leadership skills, planning
initiatives, development and morale building skills, and other such related
factors have been deemed to be important qualitative factors to take into
account when considering levels of compensation.
In making its decision regarding awarding no annual incentive compensation
awards for 1996, the Compensation Committee considered the transitional nature
of the year for the Company. The Compensation Committee believed that it was
appropriate to defer consideration of annual incentive compensation until
completion of the first full year of the Company operating only the J.
Alexander's concept.
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<PAGE> 12
Compensation of Executive Officers
The Compensation Committee believes that the compensation for each of the
Named Officers should consist of a base salary, the potential for an annual
bonus and long-term stock-based incentive compensation and has applied the
policies described herein to fiscal 1996 compensation for executive officers as
described below.
Base Compensation. Base salaries for the Named Officers are at fixed
levels generally between the 25th and 75th percentiles of salaries paid to
senior managers with comparable qualifications, experience and responsibility at
other corporations engaged in the same or similar businesses as the Company. The
Compensation Committee subjectively determined, on the basis of discussions with
the Chief Executive Officer and its experience in business generally and with
the Company specifically, what it viewed to be appropriate levels of base
compensation after taking into consideration each executive's contributions. As
a result of this review, increases averaging approximately 1.9% in the base
salaries for the Named Officers for fiscal 1996 were made, with specific
increases varying from zero to 8.7%, reflecting the Compensation Committee's
subjective judgment as to individual contributions to the success of meeting the
Company's overall financial objectives and financial performance. The
Compensation Committee did not assign any relative weight to the quantitative
and qualitative factors which it applied subjectively in reaching its base
compensation decisions.
Annual Incentive Compensation. The principal factors in awarding an annual
bonus to the Company's executive officers are their ability to increase same
store sales, improve corporate operating profits or maintain them at the
appropriate levels for the sales achieved, and meet the Company's overall
strategic business plan objectives. The Compensation Committee also may consider
other factors when awarding annual bonuses, such as the executive's contribution
to new concept development, improvement in financial performance and the impact
the executive officers have on programs that enhance shareholder value.
The Compensation Committee generally believes that an annual bonus award in
the range of 15% to 50% of the executive officer's annual base compensation is
appropriate in light of the relatively low to moderate base salary levels.
During fiscal 1996, no bonuses were awarded to the executive officers,
reflecting the Compensation Committee's subjective judgment as to the
transitional nature of the year for the Company and the other factors described
above.
Long-Term Incentive Compensation. During the Company's fiscal year the
Compensation Committee considers the desirability of granting its senior
executives long-term incentive compensation in the form of awards under the
Company's incentive stock option plan. The Compensation Committee believes that
its past grants of stock options have successfully focused the Company's
management team on building profitability and enhancing shareholder value.
The Company currently has no set policy as to when stock options should be
awarded, although historically the Company has awarded stock options, if any, at
the time of the Company's annual compensation review. The Compensation Committee
believes that the Company should make it a part of its regular executive
compensation policies to consider granting annual awards of stock options to
executive officers to provide long-term incentives as part of each executive's
annual compensation package. The Compensation Committee also believes that this
grant should be made on terms established at the time of the annual review, and
that the exercise price of stock options should be the fair market value of the
Company's Common Stock on the date of grant. Generally, the Compensation
Committee's policy is that stock options should vest gradually over a period of
three or more years, and that the material terms of stock options should not be
amended after grant.
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<PAGE> 13
The Compensation Committee believes that long-term stock-based incentive
compensation should be structured so as to closely align the interests of the
executives with those of the Company's shareholders and, in particular, to
provide only limited value (if any) in the event that the Company's stock price
fails to increase over time. The Compensation Committee determines the award of
stock option grants to the executive officers and takes into account the
recommendations of the Chief Executive Officer prior to approving annual awards
of long-term stock-based incentive compensation to the other executive officers.
During fiscal 1996, the Compensation Committee did not grant any options to
purchase shares of Common Stock to the executive officers.
Compensation of Chief Executive Officer
The Compensation Committee believes that the Chief Executive Officer's
compensation is consistent with its general policies concerning executive
compensation and is appropriate in light of the Company's financial objectives
and performance. Awards of long-term incentive compensation to the Chief
Executive Officer are considered concurrently with awards to other executive
officers and follow the same general policies as such other long-term incentive
awards.
In reviewing and approving Mr. Stout's fiscal 1996 compensation package,
the Compensation Committee also took into account the Company's operating
performance during 1995 and 1996. Mr. Stout's compensation package for fiscal
1996 was directly tied to the same performance criteria as the other executive
officers. The Compensation Committee did not increase Mr. Stout's base
compensation for 1996, and, consistent with the other executive officers of the
Company, did not award Mr. Stout a bonus for fiscal 1996.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"), enacted in 1993,
generally prohibits public companies from deducting the Chief Executive
Officer's and four other most highly compensated executive officers'
compensation, to the extent such compensation exceeds $1 million for any
individual officer. Performance-based compensation is not subject to the
deduction limit if certain requirements are met. Since the compensation of each
of the Company's executive officers is significantly less than $1 million, the
Company has not addressed the steps that it would take to structure the
performance-based portion of the compensation of its executive officers in a
manner that would comply with the statute.
Respectfully submitted,
Earl Beasley, Jr.
E. Townes Duncan
Garland G. Fritts
John L.M. Tobias
Toby S. Wilt
11
<PAGE> 14
PERFORMANCE GRAPH
The following graph compares the five-year cumulative returns of $100
invested on December 31, 1991 in (a) the Company, (b) the New York Stock
Exchange Market Index ("NYSE Index"), (c) the Media General Restaurant Group
Industry Index ("MG Restaurant Index"), and (d) the Standard & Poor's 500 Index
("S&P 500 Index"), assuming the reinvestment of all dividends.
<TABLE>
<CAPTION>
Measurement Period J. Alexander's MG Restaurant
(Fiscal Year Covered) Corporation NYSE Index Index S&P 500 Index
<S> <C> <C> <C> <C>
1991 100 100 100 100
1992 257.14 104.70 122.90 107.64
1993 419.05 118.88 134.29 118.50
1994 228.57 116.57 120.90 120.06
1995 361.90 151.15 165.23 165.18
1996 323.81 182.08 167.06 203.11
</TABLE>
12
<PAGE> 15
PROPOSAL 2: AMENDMENTS TO 1994 EMPLOYEE STOCK INCENTIVE PLAN
INTRODUCTION
The 1994 Plan was originally adopted by the Company's shareholders in May
1994 and currently authorizes 350,000 shares of Common Stock for issuance. The
Board of Directors has reviewed the Company's stock-based incentive compensation
arrangements and concluded that the 1994 Plan does not currently authorize a
sufficient number of shares to provide the flexibility with respect to
stock-based compensation or to establish appropriate long-term incentives to
achieve Company objectives. On the Record Date, options to purchase an aggregate
of 293,900 shares were outstanding under the 1994 Plan and options to purchase
an aggregate of 25,416 shares had been exercised. Accordingly, 30,684 shares of
Common Stock are available for issuance under the 1994 Plan. In order to provide
the Company with greater flexibility to adapt to changing economic and
competitive conditions, and to implement long-range goals and expansion plans
through stock-based compensation strategies that will attract and retain those
employees who are important to the long-term success of the Company, the Board
of Directors has proposed the adoption of an amendment to the 1994 Plan to
increase the number of shares of Common Stock authorized for issuance under the
1994 Plan by 250,000 shares, or approximately 4.6% of the shares of Common Stock
outstanding on the Record Date.
In addition, the Board of Directors is proposing to amend the 1994 Plan in
accordance with recent changes in the Code. Section 162(m) of the Code generally
limits the deduction that may be claimed by a publicly held company for
compensation paid to its chief executive officer and the other four most highly
paid executive officers in any fiscal year to $1 million per person, subject to
certain exceptions. The $1 million limitation applies to all types of
compensation, including amounts realized on the exercise of stock options,
unless the awards and plan under which they are made qualify as
"performance-based" under the terms of the Code and related regulations. In the
case of options, a plan and options awarded under such plan will be
performance-based and therefore not subject to the deduction limit if (i) the
plan is approved by shareholders; (ii) the options are awarded by a compensation
committee comprised solely of two or more "outside directors"; (iii) the
exercise prices of the options awarded are no less than the fair market value of
the underlying stock on the date of the award; and (iv) the plan includes a
per-employee limitation on the number of shares for which awards may be granted
during a specified period.
The amendment is proposed, in part, to bring the 1994 Plan into compliance
with the performance-based criteria of Section 162(m) by limiting the number of
shares for which options or SARs may be granted during a given year to an
individual employee. Currently, there is no specific per employee limitation on
awards under the 1994 Plan. The Board of Directors believes that it is in the
Company's and its shareholders' best interests to approve the Amendment to allow
the Company to continue to grant awards under the 1994 Plan to secure for the
Company the benefits of the additional incentive inherent in the ownership of
its Common Stock by key employees of the Company and to help the Company secure
and retain the services of key employees.
SUMMARY OF MATERIAL PROVISIONS OF THE 1994 PLAN, AS AMENDED
If approved by shareholders, the amendments will become effective as of May
20, 1997, the date of the Annual Meeting. The substantive provisions of the
amendments are set forth in Appendix A to this Proxy Statement. The following is
a summary of the material provisions of the 1994 Plan, as proposed to be
amended, and is qualified in its entirety by reference to Appendix A and the
text of the 1994 Plan, copies of which may be obtained by contacting R. Gregory
Lewis, Secretary, J. Alexander's Corporation, 3401 West End Avenue, Suite 260,
P.O. Box 24300, Nashville, Tennessee 37202 (615-269-1900). Capitalized terms not
otherwise defined herein have the meanings given them in the 1994 Plan.
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<PAGE> 16
The total number of shares of Common Stock available for issuance under the
1994 Plan is 600,000, of which an aggregate of 293,900 shares had been reserved
for issuance pursuant to outstanding options and options to purchase an
aggregate of 25,416 shares had been exercised as of the Record Date. Shares
awarded under the 1994 Plan may consist, in whole or in part, of authorized and
unissued shares or treasury shares. If shares subject to an option under the
1994 Plan cease to be subject to such option, or if shares awarded under the
1994 Plan are forfeited, or otherwise terminate without payment being made to
the participant in the form of Common Stock and without the payment of any
dividends thereon, such shares will again be available for future distribution
under the 1994 Plan. No person is eligible to receive during any one-year period
options pursuant to the 1994 Plan to purchase in excess of 200,000 shares of
Common Stock.
Awards under the 1994 Plan may be made to officers and key employees,
including the Named Officers, of and consultants to the Company and its
Subsidiaries and Affiliates, but may not be granted to any director who is a
member of the Compensation Committee or to any other director unless the
director is also a regular employee of the Company, its Subsidiaries or
Affiliates. The approximate number of officers and employees currently eligible
for awards pursuant to the 1994 Plan is 75.
The 1994 Plan is administered by the Compensation Committee of the Board.
The Committee has the authority to grant any or all of the following types of
awards under the 1994 Plan: (1) stock options; (2) SARs; (3) restricted stock;
(4) deferred stock; (5) stock purchase rights; and (6) other stock-based awards.
Incentive Stock Options ("ISO's") and Non-Qualified Stock Options may be granted
for such number of shares as the Committee will determine and may be granted
alone, in conjunction with, or in tandem with, other awards under the 1994 Plan,
and/or cash awards outside the 1994 Plan. ISOs may be granted only to
individuals who are employees of the Company or its Subsidiaries.
A Stock Option will be exercisable at such times and subject to such terms
and conditions as the Committee will determine and over a term determined by the
Committee, but no ISO shall be exercisable more than 10 years after the date of
grant (or, in the case of an employee who owns stock possessing more than 10% of
the combined voting power of all classes of stock of the Company or any of its
subsidiaries (a "10% Employee"), 5 years after the date of grant). The option
price for any ISO will not be less than 100% of the Fair Market Value of the
Company's Common Stock as of the date of grant (or, in the case of a 10%
Employee, not less than 110%). The option price for any Non-Qualified Stock
Option will not be less than 50% of such Fair Market Value. Payment of the
option price, in the case of an ISO, may be in cash, or, as determined by the
Committee, by unrestricted Common Stock having a Fair Market Value equal to the
option price. For Non-Qualified Stock Options, payment, as determined by the
Committee, may also be made in the form of Restricted Stock or Deferred Stock.
If an Optionee's employment is involuntarily terminated without Cause,
Stock Options will be exercisable for three months following termination or
until the end of the option period, whichever is shorter. On the termination of
an Optionee's employment by reason of the Disability of the employee, Stock
Options will be exercisable within the lesser of the remainder of the option
period or three years from the date of such termination of employment in the
case of a Non-Qualified Stock Option or one year from the date of such
termination in the case of an ISO. On the termination of an Optionee's
employment by reason of Normal or Early Retirement, Stock Options will be
exercisable within the lesser of the remainder of the option period or three
years from the date of such termination of employment in the case of a
Non-Qualified Stock Option or three months from the date of such termination in
the case of an ISO. On the termination of an Optionee's employment by reason of
death, Stock Options will be exercisable by the deceased employee's legal
representative within the lesser of the remainder of the option period or one
year from the date of the
14
<PAGE> 17
employee's death. Unless otherwise determined by the Committee, only options
which are exercisable on the date of termination, death, disability or
retirement may be subsequently exercised.
If there is a "Change in Control" or a "Potential Change in Control," any
SARs and limited SARs outstanding for at least six months and any Stock Options
which are not then exercisable will become fully exercisable and vested.
Similarly, the restrictions and deferral limitations applicable to Restricted
Stock, Deferred Stock, Stock Purchase Rights and Other Stock-Based Awards will
lapse and such shares and awards will be deemed fully vested. Stock options,
SARs, limited SARs, Restricted Stock, Deferred Stock, Stock Purchase Rights and
Other Stock-Based Awards, will, unless otherwise determined by the Committee in
its sole discretion, be cashed out on the basis of the change in control price,
as defined in the 1994 Plan.
Federal Income Tax Aspects. The following is a brief summary of the
Federal income tax aspects of awards made under the 1994 Plan based upon the
Federal income tax laws in effect on the date hereof. This summary is not
intended to be exhaustive and does not describe state or local tax consequences.
Incentive Stock Options. No taxable income is realized by the participant
upon the grant or exercise of an ISO. If Common Stock is issued to a participant
pursuant to the exercise of an ISO, and if no disqualifying disposition of the
shares is made by the participant within two years of the date of grant or
within one year after the transfer of the shares to the participant, then: (a)
upon the sale of the shares, any amount realized in excess of the option price
will be taxed to the participant as a long-term capital gain, and any loss
sustained will be a capital loss, and (b) no deduction will be allowed to the
Company for Federal income tax purposes. The exercise of an ISO will give rise
to an item of tax preference that may result in an alternative minimum tax
liability for the participant unless the participant makes a disqualifying
disposition of the shares received upon exercise.
If Common Stock acquired upon the exercise of an ISO is disposed of prior
to the expiration of the holding periods described above, then generally: (a)
the participant will realize ordinary income in the year of disposition in an
amount equal to the excess, if any, of the fair market value of the shares at
exercise (or, if less, the amount realized on the disposition of the shares)
over the option price paid for such shares, and (b) the Company will be entitled
to deduct any such recognized amount. Any further gain realized by the
participant will be taxed as short-term or long-term capital gain and will not
result in any deduction by the Company.
Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following the termination of the participant's
employment, the option will generally be taxed as a non-qualified stock option.
Non-Qualified Stock Options. Except as noted below, with respect to
non-qualified stock options: (a) no income is realized by the participant at the
time the option is granted; (b) generally upon exercise of the option, the
participant realizes ordinary income in an amount equal to the difference
between the option price paid for the shares and the fair market value of the
shares on the date of exercise, and the Company will be entitled to a tax
deduction in the same amount; and (c) at disposition, any appreciation (or
depreciation) after the date of exercise is treated either as short-term or
long-term capital gain or loss, depending upon the length of time that the
participant has held the shares. See "Restricted Stock" for tax rules applicable
where the spread value of an option is settled in an award of restricted stock.
Stock Appreciation Rights. No income will be realized by a participant in
connection with the grant of an SAR. When the SAR is exercised, the participant
will generally be required to include as taxable ordinary income in the year of
exercise, an amount equal to the amount of cash and the fair market value of any
shares
15
<PAGE> 18
received. The Company will be entitled to a deduction at the time and in the
amount included in the participant's income by reason of the exercise. If the
participant receives Common Stock upon exercise of an SAR, the post-exercise
appreciation or depreciation will be treated in the same manner discussed above
under "Non-Qualified Stock Options."
Restricted Stock. A participant receiving restricted stock generally will
recognize ordinary income in the amount of the fair market value of the
restricted stock at the time the stock is no longer subject to forfeiture, less
the consideration paid for the stock. However, a participant may elect, under
Section 83(b) of the Code within 30 days of the grant of the stock, to recognize
taxable ordinary income on the date of grant equal to the excess of the fair
market value of the shares of restricted stock (determined without regard to the
restrictions) over the purchase price of the restricted stock. Thereafter, if
the shares are forfeited, the participant will be entitled to a deduction,
refund, or loss, for tax purposes only, in an amount equal to the purchase price
of the forfeited shares regardless of whether he made a Section 83(b) election.
With respect to the sale of shares after the forfeiture period has expired, the
holding period to determine whether the participant has long-term or short-term
capital gain or loss generally begins when the restriction period expires and
the tax basis for such shares will generally be based on the fair market value
of such shares on such date. However, if the participant makes an election under
Section 83(b), the holding period will commence on the date of grant, the tax
basis will be equal to the fair market value of shares on such date (determined
without regard to restrictions), and the Company generally will be entitled to a
deduction equal to the amount that is taxable as ordinary income to the
participant in the year that such income is taxable.
Dividends and Dividend Equivalents. Dividends paid on restricted stock
generally will be treated as compensation that is taxable as ordinary income to
the participant, and will be deductible by the Company. If, however, the
participant makes a Section 83(b) election, the dividends will be taxable as
ordinary income to the participant but will not be deductible by the Company.
OPTIONS GRANTED UNDER THE 1994 PLAN
Because awards under the 1994 Plan are at the discretion of the
Compensation Committee, the benefits that will be awarded under the 1994 Plan in
the future are not currently determinable. The following table shows as to each
of the Named Officers, as to all executive officers as a group, as to all
current directors who are not executive officers as a group, and as to all other
employees as a group, the aggregate number of shares of Common Stock subject to
options granted under the 1994 Plan since its inception (excluding options that
have been canceled or forfeited unexercised), and the weighted average per share
option exercise price. As of April 8, 1997, the market value of a share of
Common Stock based on the closing price for such stock on the New York Stock
Exchange on that date was $8.50.
<TABLE>
<CAPTION>
AVERAGE EXERCISE
NAME OPTIONS(#) PRICE PER SHARE($)
- ---- ---------- ------------------
<S> <C> <C>
Lonnie J. Stout II....................................... 120,000 8.71
R. Gregory Lewis......................................... 25,500 8.62
Dennis J. Cleary......................................... 21,000 8.73
Richard D. May........................................... 9,000 7.38
All Executive Officers as a Group (6 persons)............ 197,000 8.64
Current Non-Employee Directors........................... -- --
All Other Employees as a Group........................... 122,316 8.61
</TABLE>
16
<PAGE> 19
THE AMENDMENTS TO THE 1994 PLAN WILL BE APPROVED IF THE VOTES CAST IN FAVOR
OF THE AMENDMENTS EXCEED THE VOTES CAST AGAINST IT. THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE FOR THE APPROVAL OF THE AMENDMENTS TO THE 1994 PLAN.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During fiscal 1996, the Company leased five Wendy's restaurant properties
from a corporation principally owned by Mr. Tobias and his wife pursuant to
15-year leases dated as of December 30, 1988. The leases provided for an
aggregate minimum annual rental of approximately $265,000, which was subject to
adjustment based on the lessor's financing costs (subject to certain
limitations), plus contingent rentals of 6% of the sales of each restaurant in
excess of the minimum rental. During fiscal 1996, the Company paid an aggregate
of approximately $308,000 in rent pursuant to these leases. The Company leased
one additional Wendy's restaurant property from affiliates of Mr. Tobias during
fiscal 1996. The lease provided for monthly rental of approximately $2,900
through June 1997. During fiscal 1996, the Company paid approximately $31,000 in
rent pursuant to the lease.
In September 1996, the Company loaned $90,000 to Mr. Cleary at an interest
rate of 6.53% per year. Mr. Cleary repaid the entire amount of the loan in April
1997.
The Company believes that the above-described transaction has been on terms
no less favorable to the Company than would have been obtainable from unrelated
parties.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who own more than 10% of a registered class of the
Company's equity securities, to file reports of ownership and changes in
ownership with the Commission and the New York Stock Exchange. Executive
officers, directors and greater than 10% shareholders are required by regulation
of the Commission to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on a review of the Forms 3, 4 and 5 and amendments thereto and
certain written representations furnished to the Company, the Company believes
that during the fiscal year ended December 29, 1996, its executive officers,
directors and greater than 10% beneficial owners complied with all applicable
filing requirements.
RELATIONSHIP WITH INDEPENDENT AUDITORS
Ernst & Young LLP, which has been the Company's independent auditors since
its organization, has been selected as independent auditors of the Company for
the 1997 fiscal year. The Company has been informed that representatives of
Ernst & Young LLP plan to attend the Annual Meeting. Such representatives will
have the opportunity to make a statement if they desire to do so and will be
available to respond to questions by the shareholders.
17
<PAGE> 20
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS TO BE
PRESENTED AT THE 1998 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 1998 Annual Meeting
of Shareholders by any shareholder of the Company must be received by the
Secretary of the Company not later than December 12, 1997, in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to its 1998 Annual Meeting of Shareholders. Nothing in this
paragraph shall be deemed to require the Company to include any shareholder
proposal that does not meet all the Commission's requirements for inclusion in
effect at the time.
METHOD OF COUNTING VOTES
Unless a contrary choice is indicated, all duly executed proxies will be
voted in accordance with the instructions set forth on the back side of the
proxy card. A broker non-vote occurs when a broker holding shares registered in
street name is permitted to vote, in the broker's discretion, on routine matters
without receiving instructions from the client, but is not permitted to vote
without instructions on non-routine matters, and the broker returns a proxy card
with no vote (the "non-vote") on the non-routine matter. Under the rules and
regulations of the primary trading markets applicable to most brokers, the
election of directors is a routine matter on which a broker has the discretion
to vote if instructions are not received from the client in a timely manner. The
amendment to the 1994 Plan, however, is a non-routine matter on which brokers
will not have discretion to vote if instructions are not received from the
client in a timely manner. Abstentions and broker non-votes will be counted as
present for purposes of determining the existence of a quorum.
Directors will be elected by a plurality of the votes cast in the election
by the holders of the Common Stock represented and entitled to vote at the
Annual Meeting. The amendment to the 1994 Plan will be approved if the number of
votes cast in favor of the amendment exceed the votes cast against it.
Abstentions and broker non-votes will not be considered in either vote.
MISCELLANEOUS
A copy of the Company's Annual Report is being mailed to shareholders
concurrently with the mailing of this Proxy Statement.
It is important that proxies be returned promptly to avoid unnecessary
expense. Therefore, shareholders who do not expect to attend in person are
urged, regardless of the number of shares of stock owned, to date, sign and
return the enclosed proxy promptly.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 29, 1996, MAY BE OBTAINED, WITHOUT CHARGE, BY ANY SHAREHOLDER TO WHOM
THIS PROXY STATEMENT IS SENT, UPON WRITTEN REQUEST TO R. GREGORY LEWIS,
SECRETARY, J. ALEXANDER'S CORPORATION, P.O. BOX 24300, NASHVILLE, TENNESSEE
37202.
Date: April 11, 1997.
18
<PAGE> 21
APPENDIX A
FIRST AMENDMENT TO J. ALEXANDER'S CORPORATION
1994 EMPLOYEE STOCK INCENTIVE PLAN
Section 3 of the J. Alexander's Corporation 1994 Employee Stock Incentive
Plan is hereby amended, to be effective upon approval by the J. Alexander's
Corporation shareholders at the 1997 Annual Meeting of Shareholders, as follows:
1. By deleting the first paragraph in its entirety and substituting
therefor the following:
"The aggregate number of shares of Stock reserved and available for
distribution under the Plan shall be 600,000 shares; provided, that
no person shall be eligible to receive during any one-year period
awards pursuant to the Plan to purchase in excess of 200,000 shares
of Common Stock. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares."
2. By deleting the third paragraph in its entirety and substituting
therefor the following:
"In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, Stock dividend,
Stock split or other change in corporate structure affecting the
Stock, an appropriate substitution or adjustment shall be made in
the maximum number of shares a participant may be eligible to
purchase pursuant to awards under the Plan during a one-year
period, in the aggregate number of shares reserved for issuance
under the Plan, in the number and option price of shares subject to
outstanding Options granted under the Plan, in the number and
purchase price of shares subject to outstanding Stock Purchase
Rights under the Plan, and in the number of shares subject to other
outstanding awards granted under the Plan as may be determined to
be appropriate by the Committee, in its sole discretion, provided
that the number of shares subject to any award shall always be a
whole number. Such adjusted option price shall also be used to
determine the amount payable by the Company upon the exercise of
any Stock Appreciation Right associated with any Stock Option."
19
<PAGE> 22
Appendix B
VOLUNTEER CAPITAL CORPORATION
1994 EMPLOYEE STOCK INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
The purpose of the Volunteer Capital Corporation 1994 Employee Stock
Incentive Plan (the "Plan") is to enable Volunteer Capital Corporation (the
"Corporation") to attract, retain and reward key employees of and consultants
to the Corporation and its Subsidiaries and Affiliates, and strengthen the
mutuality of interests between such key employees, consultants and the
Corporation's stockholders, by offering such key employees and consultants
performance-based stock incentives and/or other equity interests or
equity-based incentives in the Corporation, as well as performance-based
incentives payable in cash. The creation of the Plan shall not diminish or
prejudice other compensation programs approved from time to time by the Board.
For purposes of the Plan, the following terms shall be defined as set
forth below:
A. "Affiliate" means any entity other than the Corporation and
its Subsidiaries that is designated by the Board as a participating employer
under the Plan, provided that the Corporation directly or indirectly owns at
least 20% of the combined voting power of all classes of stock of such entity
or at least 20% of the ownership interests in such entity.
B. "Board" means the Board of Directors of the Corporation.
C. "Book Value" means, as of any given date, on a per share basis
(i) the Common Stockholders' Equity in the Corporation as of the end of the
immediately preceding fiscal year as reflected in the Corporation's
consolidated balance sheet, subject to such adjustment as the Committee shall
specify at or after grant, divided by (ii) the number of then outstanding
shares of Stock as of such year-end date (as adjusted by the Committee for
subsequent events or for shares of capital stock immediately convertible into
Common Stock).
D. "Common Stock" means the Corporation's Common Stock, $.05 par
value.
E. "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor thereto.
F. "Committee" means the Committee referred to in Section 2 of
the Plan.
G. "Corporation" means Volunteer Capital Corporation, a
corporation organized under the laws of the State of Tennessee or any successor
corporation.
H. "Deferred Stock" means an award made pursuant to Section 8
below of the right to receive Stock at the end of a specified deferral period.
<PAGE> 23
I. "Disability" means disability as determined under the
Corporation's long-term disability insurance policy.
J. "Disinterested Person" shall have the meaning set forth in
Rule 16b-3(c)(2)(i) as promulgated by the Securities and Exchange Commission
("Commission") under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), or any successor definition adopted by the Commission.
K. "Early Retirement" means retirement, for purposes of this Plan
with the express consent of the Corporation at or before the time of such
retirement, from active employment with the Corporation and any Subsidiary or
Affiliate prior to age 65, in accordance with any applicable early retirement
policy of the Corporation then in effect.
L. "Fair Market Value" means the reported closing price of the
Stock on The Nasdaq Stock Market on the relevant date or, if no shares are
traded on that date, the reported closing price on the next preceding date on
which shares were traded. In the event the Stock is no longer reported on The
New York Stock Exchange, Fair Market Value shall be determined by such other
method as the Committee in good faith deems appropriate without regard to any
restriction other than a restriction which, by its terms, will never lapse.
M. "Incentive Stock Option" means any Stock Option intended to be
and designated as an "Incentive Stock Option" within the meaning of Section 422
of the Code.
N. "Non-Qualified Stock Option" means any Stock Option that is
not an Incentive Stock Option.
O. "Normal Retirement" means retirement from active employment
with the Corporation and any Subsidiary or Affiliate on or after age 65.
P. "Other Stock-Based Award" means an award under Section 10
below that is valued in whole or in part by reference to, or is otherwise based
on, Stock.
Q. "Plan" means this Volunteer Capital Corporation 1994 Employee
Stock Incentive Plan, as hereinafter amended from time to time.
R. "Restricted Stock" means an award of shares of Stock that is
subject to restrictions under Section 7 below.
S. "Retirement" means Normal or Early Retirement.
T. "Stock" means the Common Stock.
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U. "Stock Appreciation Right" means the right pursuant to an
award granted under Section 6 below to surrender to the Corporation all (or a
portion) of a Stock Option in exchange for an amount equal to the difference
between (i) the Fair Market Value, as of the date such Stock Option (or such
portion thereof) is surrendered, of the shares of Stock covered by such Stock
Option (or such portion thereof), subject, where applicable, to the pricing
provisions in Section 6(b)(ii), and (ii) the aggregate exercise price of such
Stock Option (or such portion thereof).
V. "Stock Option" or "Option" means any option to purchase shares
of Stock (including Restricted Stock and Deferred Stock, if the Committee so
determines) granted pursuant to Section 5 below.
W. "Stock Purchase Right" means the right to purchase Stock
pursuant to Section 9.
X. "Subsidiary" means any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation if each of the corporations (other than the last corporation in the
unbroken chain) owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in the chain.
In addition, the terms "Change in Control," "Potential Change in
Control" and "Change in Control Price" shall have the meanings set forth,
respectively in Sections 11(b), (c) and (d) below and the term "Cause" shall
have the meaning set forth in Section 5(j) below.
SECTION 2. ADMINISTRATION.
The Plan shall be administered by a Committee of not less than two
Disinterested Persons, who shall be appointed by the Board and who shall serve
at the pleasure of the Board. The functions of the Committee specified in the
Plan may be exercised by an existing Committee of the Board composed
exclusively of Disinterested Persons. The initial Committee shall be the
Compensation Committee of the Board.
The Committee shall have authority to grant, pursuant to the terms of
the Plan, to officers, other key employees and consultants eligible under
Section 4: (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Restricted
Stock, (iv) Deferred Stock, (v) Stock Purchase Rights and/or (vi) Other
Stock-Based Awards.
In particular, the Committee shall have the authority, consistent with
the terms of the Plan:
(a) to select the officers and other key employees of
and consultants to the Corporation and its Subsidiaries and Affiliates
to whom Stock Options, Stock Appreciation Rights, Restricted Stock,
Deferred Stock, Stock Purchase Rights and/or Other Stock-Based Awards
may from time to time be granted hereunder;
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(b) to determine whether and to what extent Incentive
Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights,
Restricted Stock, Deferred Stock, Stock Purchase Rights and/or Other
Stock-Based Awards, or any combination thereof, are to be granted
hereunder to one or more eligible employees;
(c) to determine the number of shares to be covered
by each such award granted hereunder;
(d) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted
hereunder (including, but not limited to, the share price and any
restriction or limitation, or any vesting acceleration or waiver of
forfeiture restrictions regarding any Stock Option or other award
and/or the shares of Stock relating thereto, based in each case on
such factors as the Committee shall determine, in its sole
discretion);
(e) to determine whether and under what circumstances
a Stock Option may be settled in cash, Restricted Stock and/or
Deferred Stock under Section 5(l) or (m), as applicable, instead of
Stock;
(f) to determine whether, to what extent and under
what circumstances Option grants and/or other awards under the Plan
and/or other cash awards made by the Corporation are to be made, and
operate, on a tandem basis vis-a-vis other awards under the Plan
and/or cash awards made outside of the Plan, or on an additive basis;
(g) to determine whether, to what extent and under
what circumstances Stock and other amounts payable with respect to an
award under this Plan shall be deferred either automatically or at the
election of the participant (including providing for and determining
the amount (if any) of any deemed earnings on any deferred amount
during any deferral period); and
(h) to determine the terms and restrictions
applicable to Stock Purchase Rights and the Stock purchased by
exercising such Rights.
The Committee shall have the authority to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.
All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Corporation and Plan participants.
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SECTION 3. SHARES OF STOCK SUBJECT TO PLAN.
The aggregate number of shares of Stock reserved and available for
distribution under the Plan shall be 350,000 shares. Such shares may consist,
in whole or in part, of authorized and unissued shares or treasury shares.
Subject to Section 6(b)(iv) below, if any shares of Stock that have
been optioned cease to be subject to a Stock Option, or if any shares of Stock
that are subject to any Restricted Stock or Deferred Stock award, Stock
Purchase Right or Other Stock-Based Award granted hereunder are forfeited prior
to the payment of any dividends, if applicable, with respect to such shares of
Stock, or any such award otherwise terminates without a payment being made to
the participant in the form of Stock, such shares shall again be available for
distribution in connection with future awards under the Plan.
In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, Stock dividend, Stock split or
other change in corporate structure affecting the Stock, an appropriate
substitution or adjustment shall be made in the aggregate number of shares
reserved for issuance under the Plan, in the number and option price of shares
subject to outstanding Options granted under the Plan, in the number and
purchase price of shares subject to outstanding Stock Purchase Rights under the
Plan, and in the number of shares subject to other outstanding awards granted
under the Plan as may be determined to be appropriate by the Committee, in its
sole discretion, provided that the number of shares subject to any award shall
always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the Corporation upon the exercise of any Stock
Appreciation Right associated with any Stock Option.
SECTION 4. ELIGIBILITY.
Officers and other key employees of and consultants to the Corporation
and its Subsidiaries and Affiliates (but excluding members of the Committee and
any person who serves only as a director) who are responsible for or contribute
to the management, growth and/or profitability of the business of the
Corporation and/or its Subsidiaries and Affiliates are eligible to be granted
awards under the Plan.
SECTION 5. STOCK OPTIONS.
Stock Options may be granted alone, in addition to or in tandem with
other awards granted under the Plan and/or cash awards made outside of the
Plan. Any Stock Option granted under the Plan shall be in such form as the
Committee may from time to time approve.
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Stock Options granted under the Plan may be of two types: (i)
Incentive Stock Options and (ii) Non-Qualified Stock Options. Incentive Stock
Options may be granted only to individuals who are employees of the Corporation
or any Subsidiary of the Corporation.
The Committee shall have the authority to grant to any optionee
(subject to the limitation set forth in the paragraph above) Incentive Stock
Options, Non-Qualified Stock Options, or both types of Stock Options (in each
case with or without Stock Appreciation Rights).
Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable.
(a) Option Price. The option price per share of
Stock purchasable under a Stock Option shall be determined by the
Committee at the time of grant but shall be not less than 100% (or, in
the case of any employee who owns stock possessing more than 10% of
the total combined voting power of all classes of stock of the
Corporation or of any of its subsidiary or parent corporations, not
less than 110%) of the Fair Market Value of the Stock at grant, in the
case of Incentive Stock Options, and not less than 50% of the Fair
Market Value of the Stock at grant, in the case of Non-Qualified Stock
Options.
(b) Option Term. The term of each Stock Option shall
be fixed by the Committee, but no Incentive Stock Option shall be
exercisable more than ten years (or, in the case of an employee who
owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Corporation or any of its subsidiary or
parent corporations, more than five years) after the date the Option
is granted.
(c) Exercisability. Stock Options shall be
exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee at or after grant;
provided, however, that except as provided in Section 5(g), (h) and
(i) and Section 11, unless otherwise determined by the Committee at or
after grant, no Stock Option shall be exercisable prior to the first
anniversary date of the granting of the Option. The Committee may
provide that a Stock Option shall vest over a period of future service
at a rate specified at the time of grant, or that the Stock Option is
exercisable only in installments. If the Committee provides, in its
sole discretion, that any Stock Option is exercisable only in
installments, the Committee may waive such installment exercise
provisions at any time at or after grant in whole or in part, based on
such factors as the Committee shall determine, in its sole discretion.
(d) Method of Exercise. Subject to whatever
installment exercise restrictions apply under Section 5(c), Stock
Options may be exercised in whole or in part at any time during the
option period, by giving written notice of exercise to the
Corporation specifying the number of shares to be purchased.
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Such notice shall be accompanied by payment in full of the
purchase price, either by check, note or such other instrument as the
Committee may accept. As determined by the Committee, in its sole
discretion, at or (except in the case of an Incentive Stock Option)
after grant, payment in full or in part may also be made in the form
of unrestricted Stock already owned by the optionee or, in the case of
the exercise of a Non-Qualified Stock Option, Restricted Stock or
Deferred Stock subject to an award hereunder (based in each case, on
the Fair Market Value of the Stock on the date the option is
exercised. If payment of the exercise price is made in part or in
full with Stock, the Committee may award to the employee a new Stock
Option to replace the Stock which was surrendered.
If payment of the option exercise price of a Non-Qualified
Stock Option is made in whole or in part in the form of Restricted
Stock or Deferred Stock, such Restricted Stock or Deferred Stock (and
any replacement shares relating thereto) shall remain (or be)
restricted or deferred, as the case may be, in accordance with the
original terms of the Restricted Stock award or Deferred Stock award
in question, and any additional Stock received upon the exercise shall
be subject to the same forfeiture restrictions or deferral
limitations, unless otherwise determined by the Committee, in its sole
discretion, at or after grant.
No shares of Stock shall be issued until full payment therefor
has been made. An optionee shall generally have the rights to
dividends or other rights of a stockholder with respect to shares
subject to the Option when the optionee has given written notice of
exercise, has paid in full for such shares, and, if requested, has
given the representation described in Section 14(a).
(e) Non-Transferability of Options. No Stock Option
shall be transferable by the optionee otherwise than by will or by the
laws of descent and distribution, and all Stock Options shall be
exercisable, during the optionee's lifetime, only by the optionee.
(f) Bonus for Taxes. In the case of a Non-Qualified
Stock Option, the Committee in its discretion may award at the time of
grant or thereafter the right to receive upon exercise of such Stock
Option a cash bonus calculated to pay part or all of the Federal and
State, if any, income tax incurred by the optionee upon such exercise.
(g) Termination by Death. Subject to Section 5(k),
if an optionee's employment by the Corporation and any Subsidiary or
(except in the case of an Incentive Stock Option) Affiliate terminates
by reason of death, any Stock Option held by such optionee may
thereafter be exercised, to the extent such option was exercisable at
the time of death or (except in the case of an Incentive Stock Option)
on such accelerated basis as the Committee may determine at or after
grant (or except in the case of an Incentive Stock Option, as may be
determined in accordance with procedures established by the Committee)
by the legal representative of the estate or by the legatee of the
optionee under the will of the optionee, for a period of one year (or
such shorter period as the Committee
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may specify at grant) from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period
is the shorter.
(h) Termination by Reason of Disability. Subject to
Section 5(k), if an optionee's employment by the Corporation and any
Subsidiary or (except in the case of an Incentive Stock Option)
Affiliate terminates by reason of Disability, any Stock Option held by
such optionee may thereafter be exercised by the optionee, to the
extent it was exercisable at the time of termination or (except in the
case of an Incentive Stock Option) on such accelerated basis as the
Committee may determine at or after grant (or, except in the case of
an Incentive Stock Option, as may be determined in accordance with
procedures established by the Committee), for a period of (i) three
years (or such shorter period as the Committee may specify at grant)
from the date of such termination of employment or until the
expiration of the stated term of such Stock Option, whichever period
is the shorter, in the case of a Non-Qualified Stock Option and (ii)
one year from the date of termination of employment or until the
expiration of the stated term of such Stock Option, whichever period
is shorter, in the case of an Incentive Stock Option; provided,
however, that, if the optionee dies within the period specified in
clause (i) above (or such other period as the Committee shall specify
at grant), any unexercised Non-Qualified Stock Option held by such
optionee shall thereafter be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from the
date of such death or until the expiration of the stated term of such
Stock Option, whichever period is the shorter. In the event of
termination of employment by reason of Disability, if an Incentive
Stock Option is exercised after the expiration of the exercise period
applicable to Incentive Stock Options, but before the expiration of
any period that would apply if such Stock Option were a Non-Qualified
Stock Option, such Stock Option will thereafter be treated as a
Non-Qualified Stock Option.
(i) Termination by Reason of Retirement. Subject to
Section 5(k), if an optionee's employment by the Corporation and any
Subsidiary or (except in the case of an Incentive Stock Option)
Affiliate terminates by reason of Normal or Early Retirement, any
Stock Option held by such optionee may thereafter be exercised by the
optionee, to the extent it was exercisable at the time of such
Retirement or (except in the case of an Incentive Stock Option) on
such accelerated basis as the Committee may determine at or after
grant (or, except in the case of an Incentive Stock Option, as may be
determined in accordance with procedures established by the
Committee), for a period of (i) three years (or such shorter period as
the Committee may specify at grant) from the date of such termination
of employment or the expiration of the stated term of such Stock
Option, whichever period is the shorter, in the case of a
Non-Qualified Stock Option and (ii) three months from the date of such
termination of employment or the expiration of the stated term of such
Stock Option, whichever period is the shorter, in the event of an
Incentive Stock Option; provided, however, that, if the optionee dies
within the period specified in clause (i) above (or such shorter
period as the Committee may specify at grant), any unexercised
Non-Qualified Stock Option held by such optionee shall thereafter be
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exercisable, to the extent to which it was exercisable at the time of
death, for a period of 12 months from the date of such death or until
the expiration of the stated term of such Stock Option, whichever
period is the shorter. In the event of termination of employment by
reason of Retirement, if an Incentive Stock Option is exercised after
the expiration of the exercise period applicable to Incentive Stock
Options, but before the expiration of the period that would apply if
such Stock Option were a Non-Qualified Stock Option, the option will
thereafter be treated as a Non-Qualified Stock Option.
(j) Other Termination. Unless otherwise determined
by the Committee (or pursuant to procedures established by the
Committee) at or (except in the case of an Incentive Stock Option)
after grant, if an optionee's employment by the Corporation and any
Subsidiary or (except in the case of an Incentive Stock Option)
Affiliate is involuntarily terminated for any reason other than death,
Disability or Normal or Early Retirement, the Stock Option shall
thereupon terminate, except that such Stock Option may be exercised,
to the extent otherwise then exercisable, for the lesser of three
months or the balance of such Stock Option's term if the involuntary
termination is without Cause. For purposes of this Plan, "Cause"
means (i) a felony conviction of a participant or the failure of a
participant to contest prosecution for a felony, or (ii) a
participant's willful misconduct or dishonesty, which is directly and
materially harmful to the business or reputation of the Corporation or
any Subsidiary or Affiliate. If an optionee voluntarily terminates
employment with the Corporation and any Subsidiary or (except in the
case of an Incentive Stock Option) Affiliate (except for Disability,
Normal or Early Retirement), the Stock Option shall thereupon
terminate; provided, however, that the Committee at grant or (except
in the case of an Incentive Stock Option) thereafter may extend the
exercise period in this situation for the lesser of three months or
the balance of such Stock Option's term.
(k) Incentive Stock Options. Anything in the Plan to
the contrary notwithstanding, no term of this Plan relating to
Incentive Stock Options shall be interpreted, amended or altered, nor
shall any discretion or authority granted under the Plan be so
exercised, so as to disqualify the Plan under Section 422 of the Code,
or, without the consent of the optionee(s) affected, to disqualify any
Incentive Stock Option under such Section 422.
No Incentive Stock Option shall be granted to any participant
under the Plan if such grant would cause the aggregate Fair Market
Value (as of the date the Incentive Stock Option is granted) of the
Stock with respect to which all Incentive Stock Options issued after
December 31, 1986 are exercisable for the first time by such
participant during any calendar year (under all such plans of the
Corporation and any Subsidiary) to exceed $100,000.
To the extent permitted under Section 422 of the Code or the
applicable regulations thereunder or any applicable Internal Revenue
Service pronouncement:
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(i) if (x) a participant's employment is
terminated by reason of death, Disability or Retirement
and (y) the portion of any Incentive Stock Option that is
otherwise exercisable during the post-termination period
specified under Section 5(g), (h) or (i), applied without
regard to the $100,000 limitation contained in Section 422(d)
of the Code, is greater than the portion of such option that
is immediately exercisable as an "incentive stock option"
during such post-termination period under Section 422, such
excess shall be treated as a Non-Qualified Stock Option; and
(ii) if the exercise of an Incentive Stock
Option is accelerated by reason of a Change in Control, any
portion of such option that is not exercisable as an Incentive
Stock Option by reason of the $100,000 limitation contained in
Section 422(d) of the Code shall be treated as a Non-Qualified
Stock Option.
(l) Buyout Provisions. The Committee may at any time
offer to buy out for a payment in cash, Stock, Deferred Stock or
Restricted Stock an option previously granted, based on such terms and
conditions as the Committee shall establish and communicate to the
optionee at the time that such offer is made.
(m) Settlement Provisions. If the option agreement
so provides at grant or (except in the case of an Incentive Stock
Option) is amended after grant and prior to exercise to so provide
(with the optionee's consent), the Committee may require that all or
part of the shares to be issued with respect to the spread value of an
exercised Option take the form of Deferred or Restricted Stock, which
shall be valued on the date of exercise on the basis of the Fair
Market Value (as determined by the Committee) of such Deferred or
Restricted Stock determined without regards to the deferral
limitations and/or forfeiture restrictions involved.
SECTION 6. STOCK APPRECIATION RIGHTS.
(a) Grant and Exercise. Stock Appreciation Rights may be granted
in conjunction with all or part of any Stock Option granted under the 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 Stock Option. In the case of an
Incentive Stock Option, such rights may be granted only at the time of the
grant of such Stock Option.
A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject to such
provisions as the Committee may specify at grant where a Stock Appreciation
Right is granted with respect to less than the full number of shares covered by
a related Stock Option.
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A Stock Appreciation Right may be exercised by an optionee, subject to
Section 6(b), in accordance with the procedures established by the Committee
for such purpose. Upon such exercise, the optionee shall be entitled to
receive an amount determined in the manner prescribed in Section 6(b). Stock
Options relating to exercised Stock Appreciation Rights shall no longer be
exercisable to the extent that the related Stock Appreciation Rights have been
exercised.
(b) Terms and Conditions. Stock Appreciation Rights shall be
subject to such terms and conditions, not inconsistent with the provisions of
the Plan, as shall be determined from time to time by the Committee, including
the following:
(i) Stock Appreciation Rights 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 5 and this Section 6 of the Plan; provided,
however, that any Stock Appreciation Right granted to an optionee
subject to Section 16(b) of the Exchange Act subsequent to the grant
of the related Stock Option shall not be exercisable during the first
six months of its term. The exercise of Stock Appreciation Rights
held by optionees who are subject to Section 16(b) of the Exchange Act
shall comply with Rule 16b-3 thereunder, to the extent applicable.
(ii) Upon the exercise of a Stock Appreciation Right, an
optionee shall be entitled to receive an amount in cash and/or shares
of Stock equal in value to the excess of the Fair Market Value of one
share of Stock over the option price per share specified in the
related Stock Option multiplied by the number of shares in respect of
which the Stock Appreciation Right shall have been exercised, with the
Committee having the right to determine the form of payment. When
payment is to be made in shares, the number of shares to be paid shall
be calculated on the basis of the Fair Market Value of the shares on
the date of exercise. When payment is to be made in cash, such amount
shall be calculated on the basis of the closing price, regular way, of
the Stock on The New York Stock Exchange or such other exchange or
market as is the principal trading market for the Stock, or, if no
such sale of Stock is reported on such date, the fair market value of
the Stock as determined by the Committee in good faith.
(iii) Stock Appreciation Rights shall be transferable only
when and to the extent that the underlying Stock Option would be
transferable under Section 5(e) of the Plan.
(iv) Upon the exercise of a Stock Appreciation Right, the
Stock Option or part thereof to which such Stock Appreciation Right is
related shall be deemed to have been exercised for the purpose of the
limitation set forth in Section 3 of the Plan on the number of shares
of Stock to be issued under the Plan, but only to the extent of the
number of shares of Stock actually issued under the Stock Appreciation
Right at the time of exercise based on the value of the Stock
Appreciation Right at such time. To the extent that a Stock
Appreciation Right is paid in cash upon exercise, the shares of Stock
which would have been issued pursuant to the underlying Stock Option
in lieu of such cash payment
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shall not count towards the limitation contained in Section 3
of the Plan and shall remain available for future distribution under
the Plan.
(v) In its sole discretion, the Committee may grant
"Limited" Stock Appreciation Rights under this Section 6, i.e, Stock
Appreciation Rights that become exercisable only in the event of a
Change in Control and/or a Potential Change in Control, subject to
such terms and conditions as the Committee may specify at grant. Such
Limited Stock Appreciation Rights shall be settled solely in cash.
(vi) The Committee, in its sole discretion, may also
provide that, in the event of a Change in Control and/or a Potential
Change in Control, the amount to be paid upon the exercise of a Stock
Appreciation Right or Limited Stock Appreciation Right shall be based
on the Change in Control Price, subject to such terms and conditions
as the Committee may specify at grant.
SECTION 7. RESTRICTED STOCK.
(a) Administration. Shares of Restricted Stock may be issued
either alone, in addition to or in tandem with other awards granted under the
Plan and/or cash awards made outside the Plan. The Committee shall determine
the eligible persons to whom, and the time or times at which, grants of
Restricted Stock will be made, the number of shares of Restricted Stock to be
awarded to any person, the price (if any) to be paid by the recipient of
Restricted Stock (subject to Section 7(b)), the time or times within which such
awards may be subject to forfeiture, and the other terms, restrictions and
conditions of the awards in addition to those set forth in Section 7(c).
The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals or such other factors 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 a
Restricted Stock award shall not have any rights with respect to such award,
unless and until such recipient has executed an agreement evidencing the award
and has delivered a fully executed copy thereof to the Corporation, and has
otherwise complied with the applicable terms and conditions of such award.
(i) The purchase price for shares of Restricted Stock
shall be established by the Committee and may be zero.
(ii) Awards of Restricted Stock must be accepted within a
period of 60 days (or such shorter period as the Committee may specify
at grant) after the award date, by
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executing a Restricted Stock Award Agreement and paying whatever price
(if any) is required under Section 7(b)(i).
(iii) Each participant receiving a Restricted Stock award
shall be issued a stock certificate in respect of such shares of
Restricted Stock. Such certificate shall be registered in the name of
such participant, and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such award.
(iv) The Committee shall require that the stock
certificates evidencing such shares 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, endorsed in blank, relating to the
Stock covered by such award.
(c) Restrictions and Conditions. The shares of Restricted Stock
awarded pursuant to this Section 7 shall be subject to the following
restrictions and conditions:
(i) Subject to the provisions of this Plan and the award
agreement, during a period set by the Committee commencing with the
date of such award (the "Restriction Period"), the participant shall
not be permitted to sell, transfer, pledge, assign or otherwise
encumber shares of Restricted Stock awarded under the Plan. Within
these limits, the Committee, in its sole discretion, may provide for
the lapse of such restrictions in installments and may accelerate or
waive such restrictions in whole or in part, based on service,
performance and/or such other factors or criteria as the Committee may
determine, in its sole discretion.
(ii) Except as provided in this paragraph (ii) and Section
7(c)(i), 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 vote the shares, and the right to
receive any cash dividends. The Committee, in its sole discretion, as
determined at the time of award, may permit or require the payment of
cash dividends to be deferred and, if the Committee so determines,
reinvested, subject to Section 14(e), in additional Restricted Stock
to the extent shares are available under Section 3, or otherwise
reinvested. Pursuant to Section 3 above, Stock dividends issued with
respect to Restricted Stock shall be treated as additional shares of
Restricted Stock that are subject to the same restrictions and other
terms and conditions that apply to the shares with respect to which
such dividends are issued.
(iii) Subject to the applicable provisions of the award
agreement and this Section 7, upon termination of a participant's
employment with the Corporation and any Subsidiary or Affiliate for
any reason during the Restriction Period, all shares still subject to
restriction will vest, or be forfeited, in accordance with the terms
and conditions established by the Committee at or after grant.
13
<PAGE> 35
(iv) If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to
such Restriction Period, certificates for an appropriate number of
unrestricted shares shall be delivered to the participant promptly.
(d) Minimum Value Provisions. In order to better ensure that
award payments actually reflect the performance of the Corporation and service
of the participant, the Committee may provide, in its sole discretion, for a
tandem performance-based or other award designed to guarantee a minimum value,
payable in cash or Stock to the recipient of a restricted stock award, subject
to such performance, future service, deferral and other terms and conditions as
may be specified by the Committee.
SECTION 8. DEFERRED STOCK.
(a) Administration. Deferred Stock may be awarded either alone,
in addition to or in tandem with other awards granted under the Plan and/or
cash awards made outside of the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at which grants of Deferred
Stock will be made, the number of shares of Deferred Stock to be awarded to any
person, the duration of the period (the "Deferral Period") during which, and
the conditions under which, receipt of the Stock will be deferred, and the
other terms and conditions of the awards in addition to those set forth in
Section 8(b).
The Committee may condition the grant of Deferred Stock upon the
attainment of specified performance goals or such other factors or 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 8 shall be subject to the following terms and
conditions:
(i) Subject to the provisions of this Plan and the award
agreement referred to in Section 8(b)(vi) below, 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 the Elective Deferral Period referred to in
Section 8(b)(v), 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) Unless otherwise determined by the Committee at
grant, 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 paid to the participant currently, or deferred
14
<PAGE> 36
or deemed to be reinvested in additional Deferred Stock, or otherwise
reinvested, all as determined at or after the time of the award by the
Committee, in its sole discretion.
(iii) Subject to the provisions of the award agreement and
this Section 8, upon termination of a participant's employment with
the Corporation and any Subsidiary or Affiliate for any reason during
the Deferral Period for a given award, the Deferred Stock in question
will vest, or be forfeited, in accordance with the terms and
conditions established by the Committee at or after grant.
(iv) Based on service, performance and/or such other
factors or criteria as the Committee may in its sole discretion
determine, the Committee may, in its sole discretion at or after
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) A participant may elect to further defer receipt of
an award (or an installment of an 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 generally
be made at least 12 months prior to completion of the Deferral Period
for such Deferred Stock award (or such installment).
(vi) Each award shall be confirmed by, and subject to the
terms of, a Deferred Stock Agreement executed by the Corporation and
the participant.
(c) Minimum Value Provisions. In order to better ensure that
award payments actually reflect the performance of the Corporation and the
service of the participant, the Committee may provide, in its sole discretion,
for a tandem performance-based or other award designed to guarantee a minimum
value, payable in cash or Stock to the recipient of a Deferred Stock award,
subject to such performance, future service, deferral and other terms and
conditions as may be specified by the Committee.
SECTION 9. STOCK PURCHASE RIGHTS.
(a) Awards and Administration. Subject to Section 3 above, the
Committee may grant eligible participants Stock Purchase Rights which shall
enable such participants to purchase Stock (including Deferred Stock and
Restricted Stock):
(i) at its Fair Market Value on the date of grant;
(ii) at 85% of such Fair Market Value on such date;
(iii) at an amount equal to Book Value on such date; or
15
<PAGE> 37
(iv) at a price between 85% and 100% of Fair Market
Value.
The Committee shall also impose such deferral, forfeiture and/or other
terms and conditions as it shall determine, in its sole discretion, on such
Stock Purchase Rights or the exercise thereof.
The terms of Stock Purchase Rights awards need not be the same with
respect to each participant.
Each Stock Purchase Right award shall be confirmed by, and be subject
to the terms of, a Stock Purchase Rights Agreement.
(b) Exercisability. Stock Purchase Rights shall generally be
exercisable for such period after grant as is determined by the Committee not
to exceed 30 days. However, the Committee may provide, in its sole discretion,
that the Stock Purchase Rights of persons potentially subject to Section 16(b)
of the Exchange Act shall not become exercisable until six months and one day
after the grant date, and shall then be exercisable for 10 trading days at the
purchase price specified by the Committee in accordance with Section 9(a).
(c) Restrictions on Transfer. A Stock Purchase Right granted to a
person potentially subject to Section 16(b) of the Exchange Act shall not be
transferable by the grantee other than by will or laws of descent and
distribution.
SECTION 10. OTHER STOCK-BASED AWARDS.
(a) Administration. Other Stock-Based Awards, including, without
limitation, performance shares, convertible preferred stock, convertible
debentures, exchangeable securities and Stock awards or options valued by
reference to Book Value earnings per share or subsidiary performance, may be
granted either alone or in addition to or in tandem with Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock or Stock Purchase Rights
granted under the Plan and/or cash awards made outside of the Plan; provided
that no such Other Stock-Based Awards may be granted in tandem with Incentive
Stock Options if that would cause such Stock Options not to qualify as
Incentive Stock Options pursuant to Section 422 of the Code.
Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
awards shall be made, the number of shares of Stock to be awarded pursuant to
such awards, and all other conditions of the awards. The Committee may also
provide for the grant of Stock upon the completion of a specified performance
period.
The provisions of Other Stock-Based Awards need not be the same with
respect to each recipient.
16
<PAGE> 38
(b) Terms and Conditions. Other Stock-Based Awards made pursuant
to this Section 10 shall be subject to the following terms and conditions:
(i) Subject to the provisions of this Plan and the award
agreement referred to in Section 10(b)(v) below, shares subject to
awards under this Section 10 may not be sold, assigned, transferred,
pledged or otherwise encumbered prior to the date on which the shares
are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses.
(ii) Subject to the provisions of this Plan and the award
agreement and unless otherwise determined by the Committee at grant,
the recipient of an award under this Section 10 shall be entitled to
receive, currently or on a deferred basis, interest or dividends or
interest or dividend equivalents with respect to the number of shares
covered by the award, as determined at the time of the award by the
Committee, in its sole discretion, and the Committee may provide that
such amounts (if any) shall be deemed to have been reinvested in
additional Stock or otherwise reinvested.
(iii) Any award under Section 10 and any Stock covered by
any such award shall vest or be forfeited to the extent so provided in
the award agreement, as determined by the Committee, in its sole
discretion.
(iv) In the event of the participant's Retirement,
Disability or death, or in cases of special circumstances, the
Committee may, in its sole discretion, waive in whole or in part any
or all of the remaining limitations imposed hereunder (if any) with
respect to any or all of an award under this Section 10.
(v) Each award under this Section 10 shall be confirmed
by, and subject to the terms of, an agreement or other instrument by
the Corporation and the participant.
(vi) Stock (including securities convertible into Stock)
issued on a bonus basis under this Section 10 may be issued for no
cash consideration. Stock (including securities convertible into
Stock) purchased pursuant to a purchase right awarded under this
Section 10 shall be priced at at least 85% of the Fair Market Value of
the Stock on the date of grant.
SECTION 11. CHANGE IN CONTROL PROVISIONS.
(a) Impact of Event. In the event of:
(1) a "Change in Control" as defined in Section 11(b) or
17
<PAGE> 39
(2) a "Potential Change in Control" as defined in Section
11(c), but only if and to the extent so determined by the Committee at
or after grant (subject to any right of approval expressly reserved by
the Committee at the time of such determination), the following
acceleration and valuation provisions shall apply if so determined by
the Committee in its sole discretion:
(i) Any Stock Appreciation Rights (including, without
limitation, any Limited Stock Appreciation Rights) outstanding for at
least six months and any Stock Option awarded under the Plan not
previously exercisable and vested shall become fully exercisable and
vested.
(ii) The restrictions and deferral limitations applicable
to any Restricted Stock, Deferred Stock, Stock Purchase Rights and
Other Stock-Based Awards, in each case to the extent not already
vested under the Plan, shall lapse and such shares and awards shall be
deemed fully vested.
(iii) Except as otherwise provided in Section 11(a)(iv)
below, the value of all outstanding Stock Options, Stock Appreciation
Rights, Restricted Stock, Deferred Stock, Stock Purchase Rights and
Other Stock-Based Awards, in each case to the extent vested, shall,
unless otherwise determined by the Committee in its sole discretion at
or (except in the case of an Incentive Stock Option) after grant but
prior to any Change in Control, be cashed out on the basis of the
"Change in Control Price" as defined in Section 11(d) as of the date
such Change in Control or such Potential Change in Control is
determined to have occurred or such other date as the Committee may
determine prior to the Change in Control.
(iv) In the case of any Stock Options, Stock Appreciation
Rights, Restricted Stock, Deferred Stock, Stock Purchase Rights and
Other Stock-Based Awards held by any person subject to Section 16(b)
of the Exchange Act, the value of all such Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock or Other
Stock-Based Awards, in each case to the extent that they are vested
and have been held for at least six months, shall (unless otherwise
determined by the Committee in its sole discretion) be cashed out on
the basis of the "Change in Control Price" as defined in Section 11(d)
as of the date of such Change in Control or such Potential Change in
Control is determined to have occurred, but only if the Change in
Control or Potential Change in Control is outside the control of the
grantee for purposes of Rule 16b-3(e)(3) under the Exchange Act, or
any successor provision promulgated by the Securities and Exchange
Commission.
(b) Definition of Change in Control. For purposes of Section
11(a), a "Change in Control" means the happening of any of the following:
(i) any person or entity, including a "group" as defined
in Section 13(d)(3) of the Exchange Act, other than the Corporation or
a wholly-owned subsidiary thereof or any
18
<PAGE> 40
employee benefit plan of the Corporation or any of its Subsidiaries,
becomes the beneficial owner of the Corporation's securities having
35% or more of the combined voting power of the then outstanding
securities of the Corporation that may be cast for the election of
directors of the Corporation (other than as a result of an issuance of
securities initiated by the Corporation in the ordinary course of
business); or
(ii) as the result of, or in connection with, any cash
tender or exchange offer, merger or other business combination, sales
of assets or contested election, or any combination of the foregoing
transactions, less than a majority of the combined voting power of the
then outstanding securities of the Corporation or any successor
corporation or entity entitled to vote generally in the election of
the directors of the Corporation or such other corporation or entity
after such transaction are held in the aggregate by the holders of the
Corporation's securities entitled to vote generally in the election of
directors of the Corporation immediately prior to such transaction; or
(iii) during any period of two consecutive years,
individuals who at the beginning of any such period constitute the
Board cease for any reason to constitute at least a majority thereof,
unless the election, or the nomination for election by the
Corporation's stockholders, of each director of the Corporation first
elected during such period was approved by a vote of at least
two-thirds of the directors of the Corporation then still in office
who were directors of the Corporation at the beginning of any such
period.
(c) Definition of Potential Change in Control. For purposes of
Section 11(a), a "Potential Change in Control" means the happening of any one
of the following:
(i) The approval by stockholders of an agreement by the
Corporation, the consummation of which would result in a Change in
Control of the Corporation as defined in Section 11(b); or
(ii) The acquisition of beneficial ownership, directly or
indirectly, by any entity, person or group (other than the Corporation
or a Subsidiary or any Corporation employee benefit plan (including
any trustee of such plan acting as such trustee)) of securities of the
Corporation representing 5% or more of the combined voting power of
the Corporation's outstanding securities and the adoption by the
Committee of a resolution to the effect that a Potential Change in
Control of the Corporation has occurred for purposes of this Plan.
(d) Change in Control Price. For purposes of this Section 11,
"Change in Control Price" means the highest price per share paid in any
transaction reported on The New York Stock Exchange or such other exchange or
market as is the principal trading market for the Stock, or paid or offered in
any bona fide transaction related to a Potential or Actual Change in Control of
the Corporation at any time during the 60 day period immediately preceding the
occurrence of the Change in Control (or, where applicable, the occurrence of
the Potential Change in Control
19
<PAGE> 41
event), in each case as determined by the Committee except that, in the case of
Incentive Stock Options and Stock Appreciation Rights relating to Incentive
Stock Options, such price shall be based only on transactions reported for the
date on which the optionee exercises such Stock Appreciation Rights (or Limited
Stock Appreciation Rights) or, where applicable, the date on which a cash out
occurs under Section 11(a)(iii).
SECTION 12. AMENDMENTS AND TERMINATION.
The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of
an optionee or participant under a Stock Option, Stock Appreciation Right (or
Limited Stock Appreciation Right), Restricted or Deferred Stock award, Stock
Purchase Right or other Stock-Based Award theretofore granted, without the
optionee's or participant's consent or which, without the approval of the
Corporation's stockholders, would:
(a) except as expressly provided in this Plan, increase
the total number of shares reserved for the purpose of the Plan;
(b) change the pricing terms of Sections 5(a) or 9(a);
(c) change the employees or class of employees eligible
to participate in the Plan; or
(d) extend the term under Section 16 of the Plan.
The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but, subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent. The Committee may also substitute new Stock Options for
previously granted Stock Options (on a one for one or other basis), including
previously granted Stock Options having higher option exercise prices.
Subject to the above provisions, the Board shall have broad authority
to amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.
SECTION 13. UNFUNDED STATUS OF PLAN.
The Plan is intended to constitute an "unfunded" plan for incentive
and deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Corporation, nothing contained herein shall give
any such participant or optionee any rights that are greater than those of a
general creditor of the Corporation. In its sole discretion, the
20
<PAGE> 42
Committee may authorize the creation of trusts or other arrangements to meet
the obligations created under the Plan to deliver Stock or payments in lieu of
or with respect to awards hereunder; provided, however, that, unless the
Committee otherwise determines with the consent of the affected participant,
the existence of such trusts or other arrangements is consistent with the
"unfunded" status of the Plan.
SECTION 14. GENERAL PROVISIONS.
(a) The Committee may require each person purchasing shares
pursuant to a Stock Option or other award under the Plan to represent to and
agree with the Corporation in writing that the optionee or participant is
acquiring the shares without a view to distribution thereof. The certificates
for such shares may include any legend which the Committee deems appropriate to
reflect any restrictions on transfer.
All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Commission, any stock exchange upon which the
Stock is then listed, and any applicable Federal or state securities law, and
the Committee may cause a legend or legends to be put on any such certificates
to make appropriate reference to such restrictions.
(b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.
(c) The adoption of the Plan shall not confer upon any employee of
the Corporation or any Subsidiary or Affiliate any right to continued
employment with the Corporation or a Subsidiary or Affiliate, as the case may
be, nor shall it interfere in any way with the right of the Corporation or a
Subsidiary or Affiliate to terminate the employment of any of its employees at
any time.
(d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any award under the Plan, the participant shall pay to
the Corporation, or make arrangements satisfactory to the Committee regarding
the payment of, any Federal, state, or local taxes of any kind required by law
to be withheld with respect to such amount. Unless otherwise determined by the
Committee, withholding obligations may be settled with Stock, including Stock
that is part of the award that gives rise to the withholding requirement. The
election by a grantee who is subject to Section 16(b) of the Exchange Act to
satisfy withholding obligations with Stock shall be made either (i) during the
10 business day window period described in Rule 16b-3(e)(3) (or any successor
provision) thereunder, if the exercise is also made during such a period or
(ii) at least six months
21
<PAGE> 43
prior to the date as of which the income attributable to the exercise of the
related award is recognized under the Code, and shall be irrevocable to the
extent required under such Rule 16b-3(e)(3) (or any successor provision). The
obligations of the Corporation under the Plan shall be conditional on such
payment or arrangements and the Corporation and its Subsidiaries or Affiliates
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the participant.
(e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or in Deferred Stock or other types
of Plan awards) at the time of any dividend payment shall only be permissible
if sufficient shares of Stock are available under Section 3 for such
reinvestment (taking into account then outstanding Stock Options, Stock
Purchase Rights and other Plan awards).
(f) The Plan and all awards made and actions taken thereunder
shall be governed by and construed in accordance with the laws of the State of
Tennessee.
SECTION 15. EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of March 29, 1994, subject to the Plan
being approved by the stockholders of the Company at the meeting scheduled for
May 10, 1994.
SECTION 16. TERM OF PLAN.
No Stock Option, Stock Appreciation Right, Restricted Stock award,
Deferred Stock award, Stock Purchase Right or Other Stock-Based Award shall be
granted pursuant to the Plan on or after the tenth anniversary of the effective
date, but awards granted prior to such tenth anniversary may be extended beyond
that date.
22
<PAGE> 44
FIRST AMENDMENT TO J. ALEXANDER'S CORPORATION
1994 EMPLOYEE STOCK INCENTIVE PLAN
Section 3 of the J. Alexander's Corporation 1994 employee Stock
Incentive Plan is hereby amended, to be effective upon approval by the J.
Alexander's Corporation shareholders at the 1997 Annual Meeting of
Shareholders, as follows:
1. By deleting the first paragraph in its entirety and
substituting therefor the following:
"The aggregate number of shares of Stock reserved and
available for distribution under the Plan shall be 600,000
shares; provided, that no person shall be eligible to receive
during any one-year period awards pursuant to the Plan to
purchase in excess of 200,000 shares of common Stock. Such
shares may consist, in whole or in part, of authorized and
unissued shares or treasury shares."
2. By deleting the third paragraph in its entirety and
substituting therefor the following:
In the event of any merger, reorganization, consolidation,
recapitalization, extraordinary cash dividend, Stock dividend,
Stock split to other change in corporate structure affecting
the Stock, an appropriate substitution or adjustment shall be
made in the maximum number of shares a participant may be
eligible to purchase pursuant to awards under the Plan during
a one-year period, in the aggregate number of shares reserved
for issuance under the Plan, in the number and option price of
shares subject to outstanding Options granted under the Plan,
in the number and purchase price of shares subject to
outstanding Stock Purchase Rights under the Plan, and in the
number of shares subject to other outstanding awards granted
under the Plan as may be deter mined to be appropriate by the
Committee, in its sole discretion provided that the number of
shares subject to any award shall always by a whole number.
Such adjusted option price shall also be used to determine the
amount payable by the Company upon the exercise of any Stock
Appreciation Right associated with any Stock Option."
<PAGE> 45
Appendix C
J. ALEXANDER'S CORPORATION
EMPLOYEE STOCK OWNERSHIP PLAN PARTICIPANT VOTING INSTRUCTION FORM
This Voting Instruction Form is tendered to direct SunTrust Bank, Nashville,
N.A. (the "Trustee"), as Trustee of the J. Alexander's Corporation Employee
Stock Ownership Plan ("ESOP"), as to the manner in which all allocated shares in
the ESOP account of the undersigned (the "Voting Shares") shall be voted at the
Annual Meeting of Shareholders (the "Annual Meeting") to be held at the
Nashville City Club, SunTrust Bank Building, 201 Fourth Avenue North, Nashville,
Tennessee on Tuesday, May 20, 1997, at 10:00 a.m., local time, and any
adjournments thereof.
The undersigned hereby directs the Trustee to vote all Voting Shares of the
undersigned as shown below on this Voting Instruction Form at the Annual
Meeting.
(1) Election of Directors:
[ ] FOR all of the following nominees (except as indicated to the contrary
below):
E. Beasley, T. Duncan, G. Fritts, L. Stout, J. Tobias and T. Wilt.
[ ] AGAINST the following nominees (please print name or names)
- --------------------------------------------------------------------------------
WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees (please print
name or names)
- --------------------------------------------------------------------------------
[ ] AGAINST all nominees [ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all
nominees
(2) Proposed amendments to the 1994 Employee Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In the Trustee's discretion, the Trustee is entitled to act on any other
matter which may properly come before said meeting or any adjournment
thereof.
(Continued and to be signed on reverse side)
(Continued from other side)
IMPORTANT: PLEASE DATE AND SIGN THIS VOTING INSTRUCTION FORM and return it
to the Trustee of the J. Alexander's Corporation Employee Stock Ownership Plan,
SunTrust Bank, Nashville, N.A., P.O. Box 305110, Nashville, Tennessee
37230-5110.
A stamped and addressed envelope is enclosed for your convenience. YOUR
VOTING INSTRUCTION FORM MUST BE RECEIVED BY THE TRUSTEE BY MAY 6, 1997.
Your shares will be voted by the Trustee in accordance with your
instructions. If no choice is specified, your shares will be voted FOR the
nominees in the election of directors and FOR the amendments to the 1994
Employee Stock Incentive Plan.
PLEASE SIGN, DATE AND RETURN PROMPTLY
-------------------------------
-------------------------------
Date: , 1997
-------------------
Please sign exactly as your
name appears at left. If
registered in the names of two
or more persons, each should
sign. Executors,
administrators, trustees,
guardians, attorneys, and
corporate officers should show
their full titles.
- -------------------------------------------------------------------------------
If your address has changed, please PRINT your new address on this line.
<PAGE> 46
Appendix D
PROXY
J. ALEXANDER'S CORPORATION
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON TUESDAY, MAY 20, 1997.
The undersigned hereby appoints Lonnie J. Stout II and R. Gregory Lewis, and
each of them, as proxies, with full power of substitution, to vote all shares of
the undersigned as shown below on this proxy at the Annual Meeting of
Shareholders of J. Alexander's Corporation to be held at the Nashville City
Club, SunTrust Bank Building, 201 Fourth Avenue North, Nashville, Tennessee, on
Tuesday, May 20, 1997, at 10:00 a.m., local time, and any adjournments thereof.
(1) Election of Directors:
[ ] FOR all of the following nominees (except as indicated to the contrary
below):
E. Beasley, T. Duncan, G. Fritts, L. Stout, J. Tobias and T. Wilt.
[ ] AGAINST the following nominees (please print name or names)
- --------------------------------------------------------------------------------
WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees (please print
name or names)
- --------------------------------------------------------------------------------
[ ] AGAINST all nominees [ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all
nominees
(2) Proposed amendments to the 1994 Employee Stock Incentive Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(3) In their discretion on any other matter which may properly come before said
meeting or any adjournment thereof.
IMPORTANT: Please date and sign this proxy on the reverse side.
Your shares will be voted in accordance with your instructions. If no choice
is specified, shares will be voted FOR the nominees in the election of directors
and FOR the amendments to the 1994 Employee Stock Incentive Plan.
PLEASE SIGN HERE AND RETURN PROMPTLY
-------------------------------
-------------------------------
Date: , 1997
-------------------
Please sign exactly as your
name appears at left. If
registered in the names of two
or more persons, each should
sign. Executors,
administrators, trustees,
guardians, attorneys, and
corporate officers should show
their full titles.
- --------------------------------------------------------------------------------
If you have changed your address, please PRINT your new address on this line.
<PAGE> 47
[BASS, BERRY & SIMS PLC LETTERHEAD]
April 11, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Filing Desk
RE: J. ALEXANDER'S CORPORATION
(COMMISSION FILE NO. 1-8766)
Ladies and Gentlemen:
On behalf of J. Alexander's Corporation (the "Company"), I attach for
filing, in accordance with Rule 14a-6(b) promulgated under the Securities
Exchange Act of 1934, as amended, the Notice to Shareholders, Proxy Statement,
form of proxy and form of employee stock ownership plan voting instruction form
to be used in connection with the Company's 1997 Annual Meeting of
Shareholders. In accordance with Item 10, Instruction 3 of Schedule 14A, the
Company's 1994 Employee Stock Incentive Plan, as proposed to be amended, is
attached as Appendix B to the Proxy Statement.
On behalf of the Company, I hereby inform you, as supplemental
information in accordance with Item 10, Instruction 5 of Schedule 14A, that the
Company will file a Registration Statement on Form S-8 with respect to any
additional shares of Common Stock approved by the shareholders for issuance
under the 1994 Employee Stock Incentive Plan prior to their issuance.
The Company intends to mail definitive proxy materials to its
shareholders on or after the date hereof.
Please call me if you have any questions or comments regarding the
attached or any of the foregoing.
Very truly yours,
/s/ Jeffrey A. Oldham
---------------------
Jeffrey A. Oldham
