<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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
</TABLE>
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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
<PAGE> 2
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
Date Filed:
<PAGE> 3
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 Franklin Marriott Hotel Cool Springs, at 1700
Cool Springs Boulevard, Franklin, Tennessee, at 10:00 a.m., Nashville time, on
May 16, 2000 for the following purposes:
(1) To elect five directors to hold office for a term of one year
and until their successors have been elected and qualified;
(2) To consider and vote upon an amendment to 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 24, 2000
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 1, 2000
<PAGE> 4
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 16, 2000
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 16, 2000, at 10:00 a.m.,
Nashville time, at the Franklin Marriott Hotel Cool Springs, Franklin,
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 3, 2000.
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 the amendment to
the 1994 Employee Stock Incentive Plan. 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 24, 2000 (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 6,851,950 shares of Common Stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 23, 2000, 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
<PAGE> 5
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 directors of the Company as a group. Except as otherwise
specified, the shares indicated are presently outstanding.
<TABLE>
<CAPTION>
Amount of
Common Stock Percentage of
Beneficially Outstanding
NAME AND ADDRESS OF BENEFICIAL OWNER Owned Common Stock(1)
- ------------------------------------------------------------------------- ---------------- ---------------
<S> <C> <C>
E. Townes Duncan**....................................................... 1,730,246(2) 25.2%
3401 West End Avenue, Suite 520
Nashville, TN 37203
Solidus Company.......................................................... 1,684,546(3) 24.6
3401 West End Avenue, Suite 520
Nashville, TN 37203
Dimensional Fund Advisors, Inc........................................... 450,400(4) 6.6
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Lonnie J. Stout II****................................................... 382,754(5) 5.5
3401 West End Avenue, Suite 260
Nashville, Tennessee 37203
Sackett & Company........................................................ 373,703(6) 5.5
P. O. Box 276
Corte Madera, CA 94976-0276
R. Gregory Lewis***...................................................... 65,178(7) *
John L.M. Tobias**....................................................... 58,166(8) *
Ronald E. Farmer***...................................................... 46,831(9) *
J. Bradbury Reed*****.................................................... 40,570(10) *
J. Michael Moore***...................................................... 35,002(11) *
Garland G. Fritts**...................................................... 29,800(12) *
All directors, nominees and executive officers as a group (9 persons).... 2,376,324(13) 33.5
</TABLE>
- -----------
* Less than one percent.
** Director.
*** Named Officer.
**** Director and Named Officer.
***** Director Nominee
2
<PAGE> 6
(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 March 23, 2000, are
deemed outstanding for the purpose of computing such director's or
executive 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) Includes 10,000 shares issuable upon exercise of certain options held
by Mr. Duncan, 840 shares that Mr. Duncan holds as custodian for his
children, 840 shares owned by Mr. Duncan's wife, 5,760 shares that are
held in trusts of which Mr. Duncan's wife is trustee, and 1,684,546
shares that are beneficially owned by Solidus Company, a general
partnership in which Mr. Duncan is President and a Director.
(3) Includes 28,400 shares held by Solidus Partners, L.P., a limited
partnership of which Solidus Company ("Solidus") is general partner.
Solidus shares voting and dispositive power with respect to its shares
with Mr. Duncan, its President and a Director of Solidus, whose
beneficial ownership in such shares is shown above.
(4) Dimensional Fund Advisors, Inc. ("DFA") is a registered investment
advisor. Information is based solely on the Schedule 13G filed with the
Commission by DFA.
(5) Includes 158,330 shares issuable upon exercise of certain options held
by Mr. Stout and 7,555 Employee Stock Ownership Plan ("ESOP") shares
allocated to Mr. Stout and held by the J. Alexander's Corporation
Employee Stock Ownership Trust (the "Trust"), as to which Mr. Stout has
sole voting power and shared dispositive power.
(6) Includes 48,901 Conversion Shares. Sackett & Company ("Sackett") is a
registered investment advisor. Information is based solely on the
Schedule 13G filed with the Commission by Sackett.
(7) Includes 23,100 shares issuable upon exercise of certain options held
by Mr. Lewis and 5,947 ESOP shares allocated to Mr. Lewis and held by
the Trust, as to which Mr. Lewis has sole voting power and shared
dispositive power.
(8) Includes 1,126 Conversion Shares, 3,600 shares owned by Mr. Tobias'
wife, and 8,000 shares issuable upon exercise of certain options held
by Mr. Tobias.
(9) Includes 11,400 shares issuable upon exercise of certain options held
by Mr. Farmer and 2,507 ESOP shares allocated to Mr. Farmer and held by
the Trust, as to which Mr. Farmer has sole voting power and shared
dispositive power.
3
<PAGE> 7
(10) Includes 600 shares held in a trust, of which Mr. Reed is trustee and
with respect to which Mr. Reed has sole voting power, yet no
dispositive power.
(11) Includes 5,267 shares issuable upon the exercise of certain options
held by Mr. Moore and 3,799 ESOP shares allocated to Mr. Moore and held
by the Trust, as to which Mr. Moore has sole voting power and shared
dispositive power.
(12) Includes 7,000 shares issuable upon exercise of certain options held by
Mr. Fritts.
(13) Includes 1,126 Conversion Shares, 230,097 shares issuable upon exercise
of certain options held by the directors and executive officers, and
21,967 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.
Pursuant to a Stock Purchase and Standstill Agreement between Solidus
LLC (predecessor to Solidus Company) and the Company dated March 22, 1999,
Solidus purchased 1,086,266 shares of Common Stock for $3.75 per share, for an
aggregate purchase price of $4,073,497.50. In addition, Solidus agreed that (i)
for a period of seven years, Solidus and its affiliates would not acquire or
hold more than 33% of the Company's Common Stock; (ii) for a period of seven
years, Solidus and its affiliates would not solicit proxies for a vote of the
shareholders of the Company; (iii) for a period of seven years, Solidus and its
affiliates would not sell the Company's Common Stock, except to the Company, a
person, entity or group approved by the Company or to an affiliate of Solidus;
(iv) the above restrictions on Solidus' ownership and ability to solicit proxies
would terminate in the event of certain tender offers or exchange offers, a
notice filing with the Department of Justice relating to the acquisition by a
third party of more than 15% of the outstanding Common Stock or with the
Securities and Exchange Commission relating to the acquisition by a third party
of more than 10% of the outstanding Common Stock, the Company's proposing or
approving a merger or other business combination, or a change to a majority of
the Company's Board of Directors over a two-year period; and (v) Solidus would
not exercise rights attributable to the 1,086,266 shares of Common Stock
purchased on March 22, 1999, during the Company's rights offering in 1999.
In addition to the private sale to Solidus, on June 21, 1999, the
Company completed a rights offering wherein shareholders of the Company
purchased an additional 240,615 shares of common stock at a price of $3.75 per
share, which was the same price per share as stock sold in the private sale.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Five 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, except Mr. Reed, 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
4
<PAGE> 8
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>
E. Townes Duncan...................... Mr. Duncan, 46, has been a director of the Company since May 1989.
Mr. Duncan has been President and a director of Solidus Company (formerly
Solidus, LLC), a private investment firm, since January 1997. From 1993
to May 1997, Mr. Duncan was the Chairman of the Board and Chief
Executive Officer of Comptronix Corporation, a manufacturer of printed
circuit board assemblies ("Comptronix"). From 1985 to 1993, Mr. Duncan
was a Vice President and principal of Massey Burch Investment Group, Inc.
From 1994 to March 1999, Mr. Duncan was a director of Sirrom Capital
Corporation, a specialty finance company. Mr. Duncan is also a director of
Bright Horizons Family Solutions, Inc. (formerly CorporateFamily
Solutions), a childcare services company.
Garland G. Fritts..................... Mr. Fritts, 70, 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, 53, 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.
John L.M. Tobias...................... Mr. Tobias, 79, has been a director of the Company since February 1983. He
has served as President of J.M.T. Associates, Inc., an investment firm, since
1979 and as that corporation's Board Chairman since January 1987.
J. Bradbury Reed...................... Mr. Reed, 60, is not presently a director of the Company. Mr. Reed is a
member in the law firm of Bass, Berry & Sims, PLC and has served in
various capacities for that firm since 1964. Mr. Reed and Bass, Berry &
Sims have served as the Company's outside general counsel since the
Company's inception in 1971. Mr. Reed has served as a director of
National Commerce Bancorporation since 1998.
</TABLE>
5
<PAGE> 9
The Board of Directors of the Company held nine meetings in 1999. 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. Duncan, Fritts and Tobias. The Audit Committee, which held three
meetings during 1999, 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 1999. 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 1999 by the Board
of Directors and (ii) the total number of meetings held during 1999 by all
committees of the Board of which he was a member.
CERTAIN PROCEEDINGS
Mr. Duncan served as Chairman of the Board and Chief Executive Officer,
and Mr. Stout served 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 distributed all of its
remaining assets, including the proceeds from the November 1996 sale, to its
creditors pursuant to a plan of liquidation consummated in May 1997.
EXECUTIVE COMPENSATION
The following table provides information as to annual, long-term or
other compensation during fiscal years 1999, 1998 and 1997 for the Company's
Chief Executive Officer and each of the other executive officers of the Company
who were serving as executive officers at December 31, 1999 whose salary and
bonus exceeded $100,000 (collectively, the "Named Officers").
6
<PAGE> 10
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------------------
------------------------------------------ SECURITIES ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING COMPENSATION
POSITION YEAR SALARY($) BONUS($) COMPENSATION ($) OPTIONS (#) ($)(3)
-------- ---- --------- -------- ---------------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Lonnie J. Stout II............ 1999 277,500 -- 11,432(1) 180,000(2) 4,384(4)
Chairman, President, 1998 272,500 34,688 9,706 50,000 5,388
Chief Executive 1997 258,750 -- 9,448 80,000 5,623
Officer, and Director
R. Gregory Lewis.............. 1999 137,500 -- 11,432(1) -- 4,864(5)
Vice-President, Chief 1998 130,000 16,750 9,706 46,800 5,636
Financial Officer, and 1997 121,500 -- 9,448 19,500 6,231
Secretary
Ronald E. Farmer.............. 1999 110,500 -- 11,432(1) -- 2,623(6)
Vice-President, 1998 103,500 13,375 9,706 34,200 3,078
Development 1997 96,500 -- 7,594 -- 3,348
J. Michael Moore.............. 1999 101,500 -- 11,432(1) -- 3,374(7)
Vice-President, 1998 95,650 12,250 9,706 15,800 3,531
Human Resources 1997 86,000 -- 7,061 -- 3,555
and Administration
</TABLE>
(1) Includes an auto allowance of $10,499 and the $933 premium cost of
medical insurance for each Named Officer.
(2) Options with respect to these shares are subject to shareholder
approval of Proposal No. 2.
(3) The ESOP shares included in this column for 1999 are valued at $3.125
per share, the closing price of the Company's common stock on December
31, 1999. The number of ESOP shares included in this column for 1999 is
an approximation of the number of shares to be allocated to the
participants.
(4) Includes the $1,440 premium cost of term life insurance maintained for
the benefit of Mr. Stout, $600 contributed by the Company to the
Company's 401(k) plan on behalf of Mr. Stout, and 750 ESOP shares
allocated to Mr. Stout.
(5) Includes the $1,320 premium cost of term life insurance maintained for
the benefit of Mr. Lewis, $1,200 contributed by the Company to the
company's 401(k) plan on behalf of Mr. Lewis and 750 ESOP shares
allocated to Mr. Lewis.
(6) Includes the $1,061 premium cost of term life insurance maintained for
the benefit of Mr. Farmer and 500 ESOP shares allocated to Mr. Farmer.
(7) Includes the $974 premium cost of term life insurance maintained for
the benefit of Mr. Moore, $946 contributed by the company to the
Company's 401(k) plan on behalf of Mr. Moore and 465 ESOP shares
allocated to Mr. Moore.
7
<PAGE> 11
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information as to options granted to the
Named Officers during fiscal 1999. No stock appreciation rights ("SARs") have
ever been awarded by the Company.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL GRANT DATE
SECURITIES OPTIONS VALUE
UNDERLYING GRANTED TO -----------
OPTIONS/SARS EMPLOYEES IN EXERCISE OR GRANT DATE
GRANTED FISCAL BASE EXPIRATION PRESENT
NAME (#) YEAR (%) PRICE ($/SH) DATE VALUE ($)
- ------------------ ------------ -------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Lonnie J. Stout II 180,000 (1) 97.2 $2.25 (2) 11/08/2009 $266,400 (3)
</TABLE>
(1) The option is contingent upon shareholder approval of the amendment to
the 1994 Employee Stock Incentive Plan (the "1994 Plan") contained in
Proposal No. 2. The shares covered by the option granted to Mr. Stout
will vest in full on June 30, 2000.
(2) The exercise price shall increase by 15% on each anniversary of the
date of the grant, which was November 8, 1999.
(3) Based on the Black-Scholes Option Valuation Method. The assumptions
underlying this valuation are as follows: (i) a $2.25 exercise price
and market price on the date of grant; (ii) a ten year expected option
term; (iii) risk-free rate based on the current Treasury bill rate
(5.94% ten year rate); (iv) volatility of 0.4515, based on monthly
closing prices, adjusted to reflect an annualized volatility factor;
and (v) no annual dividend yield. The grant date value has not been
discounted for the vesting schedule of the options.
8
<PAGE> 12
OPTION EXERCISES AND YEAR-END VALUE TABLE
The following table provides information as to options exercised by the
Named Officers during fiscal 1999. None of the Named Officers has held or
exercised separate SARs. In addition, this table includes the number of shares
covered by both exercisable and unexercisable stock options as of January 2,
2000. Also reported are the values for the "in-the-money" options, which
represent the positive spread between the exercise price of any such existing
stock options and the year-end price of the Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT OPTIONS AT
ACQUIRED VALUE FISCAL YEAR END (#) FISCAL YEAR END ($)(1)
ON REALIZED ------------------------------ --------------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------- ------------ --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lonnie J. Stout II -- -- 233,330 266,670 119,531 150,000
R. Gregory Lewis -- -- 23,100 31,200 16,809 8,775
Ronald E. Farmer -- -- 11,400 22,800 3,206 6,413
J. Michael Moore -- -- 5,267 10,533 1,481 2,963
</TABLE>
(1) Amounts reflect the value of outstanding options based on the average
of the high and low price of the Company's Common Stock on December 31,
1999.
9
<PAGE> 13
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 2000.
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 generally 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, or in some cases in
which the Company currently self funds the retirement benefit, the cash value of
the policy which would have been required to fund the retirement benefit, 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 $138,750 and $58,500, respectively. Mr.
Farmer is expected to receive $46,500 and Mr. Moore is expected to receive
estimated annual benefits of approximately $46,650 payable upon retirement at
age 65. These amounts may be adjusted periodically pursuant to the terms of the
Salary Plan.
TERMINATION BENEFITS
Pursuant to severance benefits agreements with the Company, in the
event that Mr. Stout or Mr. Lewis is terminated or resigns after a change in
responsibilities, then he will receive an amount equal to 18 months'
compensation. Based on current levels of compensation, such amounts would be
$416,250 for Mr. Stout and $211,500 for Mr. Lewis.
COMPENSATION OF DIRECTORS
Effective November 1999, the directors receive a monthly fee of $833.33
plus a fee of $1,000 for each attended meeting of the Board or Committee. Prior
to November 1999, the directors received 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
10
<PAGE> 14
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.
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
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 or other stock-based awards.
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.
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 segment 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, 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
11
<PAGE> 15
building skills, and other such related factors have been deemed to be important
qualitative factors to take into account when considering levels of
compensation.
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 1999 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 3.41% in the base
salaries for the Named Officers for fiscal 1999 were made, with specific
increases varying from 0% to 7.14%, 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 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. However, in establishing the levels of incentive compensation for
1999, the Compensation Committee did not award any executive officers a bonus
because the Company was not profitable for the entire year.
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
12
<PAGE> 16
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.
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. 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. In 1999, the Compensation Committee determined
that outstanding grants of stock options to the executive officers other than
Mr. Stout provided sufficient incentive for such persons. Therefore, no
additional stock options were granted in 1999 to such persons.
Loan Program
In 1999, the Company's Board of Directors established a loan program
designed to enable eligible employees to purchase shares of the Company's common
stock. Under the program eligible participants may borrow an amount equal to the
full price of common stock purchased. The plan authorizes $1 million in loans to
employees. The employee loans are payable on December 31, 2006, unless repaid
sooner pursuant to terms of the loan program. Pursuant to the term of the loan
program, participants received one share of Common Stock and one share of
restricted stock under the Company's 1994 Plan for every 20 shares purchased
pursuant to the loan program. The restricted stock will vest in 20% increments
on the second through sixth anniversaries of the date of issuance.
The Compensation Committee believes that the loan program, which
facilitates employee purchases of Common Stock, more closely aligns employee
interests with shareholder interests. Thus, the Compensation Committee approved
the participation in the loan program by the Named Officers, as listed above,
including the awards of bonus stock and restricted stock pursuant to the terms
of the loan program.
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 1999, Mr. Stout requested that the Compensation Committee not
consider an increase in his base salary. The Compensation Committee determined
that Mr. Stout's base salary should remain at its 1998 level in accordance with
Mr. Stout's request, but that his long-term incentive compensation should be
reviewed. The Compensation Committee reviewed outstanding grants of stock
options to Mr. Stout, which were generally at exercise prices significantly in
excess of the market price of the Common Stock, and which, in accordance with a
request from Mr. Stout, were not adjusted in 1998, when other optionholders were
allowed to exchange their options for new options at a lower exercise price,
with new vesting periods.
13
<PAGE> 17
The Compensation Committee determined that Mr. Stout's option grants
did not provide sufficient incentives and an additional option grant was
appropriate so as to closely align his interests with those of the Company's
stockholders. Therefore, on November 8, 1999, the Compensation Committee granted
to Mr. Stout an option to purchase 180,000 shares of common stock, with the
option vesting in full on June 30, 2000. In addition, the Compensation Committee
determined to seek shareholder approval of the amendment to the 1994 Employee
Stock Incentive Plan to increase the number of shares available for grant, and
Mr. Stout's option was granted subject to shareholder approval of such an
amendment. The exercise price of the option is $2.25, which was the market price
on the date of grant, and increases by 15% on each anniversary of the date of
grant.
In addition, in 1999, the Compensation Committee determined that it was
appropriate to approve Mr. Stout's participation in the loan program in a
principal amount greater than his annual salary amount, pursuant to the terms of
the loan program, and also approved related issuances of bonus stock and
restricted stock, because of the effect of aligning his interest more closely
with those of the shareholders. The transactions under the loan program were
completed in 2000.
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,
E. Townes Duncan
Garland G. Fritts
John L.M. Tobias
14
<PAGE> 18
PERFORMANCE GRAPH
The following graph compares the five-year cumulative returns of $100
invested on December 31, 1994 in (a) the Company, (b) the Media General
Restaurant Group Industry Index ("MG Group Index"), (c) the Standard & Poor's
500 Index ("S&P 500 Index"), and (d) the New York Stock Exchange Market Index
("NYSE Market Index") assuming the reinvestment of all dividends.
[CHART]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
End of Fiscal Year 1994 1995 1996 1997 1998 1999
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
J. Alexander's Corporation 100 158.33 141.67 80.21 66.67 52.08
- --------------------------------------------------------------------------------------
MG Group Index 100 140.64 142.27 146.36 199.30 189.64
- --------------------------------------------------------------------------------------
S&P 500 Index 100 137.58 169.17 225.61 290.09 351.13
- --------------------------------------------------------------------------------------
NYSE Market Index 100 129.66 156.20 205.49 244.52 267.75
- --------------------------------------------------------------------------------------
</TABLE>
15
<PAGE> 19
PROPOSAL NO. 2: AMENDMENT TO 1994 EMPLOYEE STOCK INCENTIVE PLAN
The Company's 1994 Plan was originally adopted by the Company's
shareholders on May 10, 1994. The 1994 Plan initially authorized 350,000 shares
of Common Stock for issuance. The 1994 Plan was amended in 1997 to authorize an
additional 250,000 shares of Common Stock, for an aggregate amount of 600,000
shares of Common Stock authorized and reserved for issuance pursuant to the 1994
Plan. At the Record Date, there were 10,016 shares of Common Stock available for
issuance under the 1994 Plan (not including Mr. Stout's 1999 grant).
INCREASE IN AUTHORIZED SHARES
The Compensation Committee (the "Committee"), which consists entirely
of directors who are not officers of the Company, reviewed the Company's
stock-based incentive compensation plans and concluded that the number of shares
available under the 1994 Plan did not 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. The
Committee and the Board believe that a key element of officer and key employee
compensation is stock-based incentive compensation. Stock-based compensation
advances the interests of the Company by encouraging, and providing for, the
acquisition of equity interest in the Company by officers and key employees,
thereby providing substantial motivation for superior performance and aligning
their interest with shareholders of the Company. 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 which will attract and retain those
employees who are important to the long-term success of the Company, in February
2000 the Board approved the adoption, subject to shareholder approval, of an
amendment of the 1994 Plan to increase the number of shares of Common Stock
authorized for issuance thereunder by 400,000 shares. The Committee and Board of
Directors believe that the approval of this amendment is essential to further
the long-term stability and financial success of the Company by attracting,
motivating and retaining qualified employees through the use of stock
incentives.
A copy of the proposed amendment is attached as Appendix A to this
Proxy Statement. If approved by shareholders, the amendment will become
effective as of May 16, 2000.
SUMMARY OF THE AMENDMENT
The amendment increases the number of shares of Common Stock which may
be issued upon the exercise of options or for issuance of SARs, restricted stock
awards, or other stock-based awards by 400,000 shares, or 5.8% of the 6,851,950
shares of Common Stock outstanding on the Record Date. As amended, the 1994 Plan
will continue to provide for appropriate adjustment in the number of shares in
the event of a stock dividend, recapitalization, merger or similar transactions.
16
<PAGE> 20
SUMMARY OF MATERIAL PROVISIONS OF THE 1994 PLAN, AS AMENDED
The proposed amendment is 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.
The total number of shares of Common Stock available for issuance under
the 1994 Plan is 1,000,000, of which an aggregate of 738,568 shares had been
reserved for issuance pursuant to outstanding options and options to purchase an
aggregate of 31,416 shares had been exercised as of the Record Date. In
addition, 15,249 shares of bonus stock and 15,249 shares of restricted stock
were issued in connection with the loan program. 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 60.
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
17
<PAGE> 21
Committee, by unrestricted Common Stock having a Fair Market Value equal to the
option price. For NonQualified 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 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.
1. 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 the participant does not
dispose of the shares within two years of the date of grant or within one year
after the transfer of the shares to the participant (a "Disqualifying
Disposition"), 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.
18
<PAGE> 22
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 or loss realized by the
participant will be taxed as short-term or long-term capital gain or loss, as
the case may be, 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.
2. 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.
3. 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 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."
4. 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 or
loss for tax purposes in an amount equal only 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
19
<PAGE> 23
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.
5. 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 dividend 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 of the company as a group,
as to all current non-employee directors 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 plan, excluding options that have been canceled or
forfeited unexercised, and the weighted average per share exercise price. As of
March 23, 2000, the market value of a share of common stock based on the closing
price for such stock on the New York Stock Exchange was $3.88.
<TABLE>
<CAPTION>
AVERAGE
EXERCISE PRICE
NAME OPTIONS(#) PER SHARE($)
- ---- ---------- ------------
<S> <C> <C>
Lonnie J. Stout II .............. 400,000(1) 4.68
R. Gregory Lewis ................ 46,800 2.75
Ronald E. Farmer ................ 30,200 2.75
J. Michael Moore ................ 16,800 3.02
All Executive Officers as a Group
(5 persons) ..................... 516,800 4.27
Non-Employee Directors .......... -- --
All Other Employees as a Group .. 253,184 3.47
</TABLE>
(1) Options with respect to 180,000 of these shares are subject to
shareholder approval of this Proposal No. 2.
VOTE REQUIRED
The plan amendment will be approved if the number of shares of Common
Stock voted in favor of the amendment exceeds the aggregate of the number of
abstentions and shares of Common Stock voted against it. The Board of Directors
of the Company recommends that shareholders vote FOR this proposal.
20
<PAGE> 24
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to a Stock Purchase and Standstill Agreement between Solidus
and the Company dated March 22, 1999, Solidus purchased 1,086,266 shares of
Common Stock for $3.75 per share, for an aggregate purchase price of
$4,073,497.50. In addition, Solidus agreed that (i) for a period of seven years,
Solidus and its affiliates would not acquire or hold more than 33% of the
Company's Common Stock; (ii) for a period of seven years, Solidus and its
affiliates would not solicit proxies for a vote of the shareholders of the
Company; (iii) for a period of seven years, Solidus and its affiliates would not
sell the Company's Common Stock, except to the Company, a person, entity or
group approved by the Company or to an affiliate of Solidus; (iv) the above
restrictions on Solidus' ownership and ability to solicit proxies would
terminate in the event of certain tender offers or exchange offers, a notice
filing with the Department of Justice relating to the acquisition by a third
party of more than 15% of the outstanding Common Stock or with the Securities
and Exchange Commission relating to the acquisition by a third party of more
than 10% of the outstanding Common Stock, the Company's proposing or approving a
merger or other business combination, or a change to a majority of the Company's
Board of Directors over a two-year period; and (v) Solidus would not exercise
rights attributable to the 1,086,266 shares of Common Stock purchased on March
22, 1999, during the Company's rights offering in 1999.
In 1999, the Company's Board of Directors established a loan program
designed to enable eligible employees to purchase shares of the Company's common
stock. Under the terms of the loan program, all full-time employees as well as
part-time employees who had at least five years of employment with the Company
were eligible to borrow amounts ranging from a minimum of $10,000 to a maximum
of 100% of their annual salary. Borrowings in excess of the maximum were allowed
upon approval by the Compensation Committee or the officers of the Company, as
applicable. The aggregate amount of loans authorized were $1 million. Purchases
of stock under the plan totaled $486,000 during 1999, with the remainder of the
authorized amount purchased by February 2000.
Pursuant to the terms of the loan program, participants received one
share of bonus Common Stock and one share of restricted stock for every 20
shares purchased pursuant to the loan program, issued pursuant to the 1994 Plan.
The shares of restricted stock vest at a rate of 20% on each of the second
through the sixth anniversaries of February 18, 2000.
The following transactions were completed on February 18, 2000,
pursuant to the loan program. Mr. Stout borrowed $424,005 to purchase 128,971
shares of Common Stock. He received 6,449 shares of bonus stock and 6,449 shares
of restricted stock. Mr. Lewis also participated in the loan program, borrowing
$19,098 to purchase 5,809 shares. He received 290 shares each of bonus stock and
restricted stock. Messrs. Farmer and Moore each borrowed a total of $76,397 to
purchase 23,238 shares. They each received 1,162 shares of bonus stock and 1,162
shares of restricted stock. The market price of the Common Stock was $3.625 per
share at the time of the award of the shares of the bonus stock and the shares
of restricted stock.
21
<PAGE> 25
All loans made under the loan program bear interest at a rate of 3% and
are due and payable on December 31, 2006, at which time a balloon payment of the
unpaid interest and entire principal amount will become due and payable. In the
event a participant receives from the Company bonus compensation, 30% of any
such bonus is to be applied to the outstanding principal balance of the loan.
Further, a participant's loan may become due and payable upon termination of a
participant's employment or failure to make any payment when due, as well as
under other circumstances set forth in the loan program documents. The interest
rate and payment terms are adjusted to terms comparable to market rates and
terms in the event a participant sells or pledges the shares purchased pursuant
to the loan program (including shares of bonus stock awarded in connection with
the program) without the Company's prior consent.
Mr. Reed is a member of the law firm of Bass, Berry & Sims, PLC. This
law firm and Mr. Reed have served as the Company's outside legal counsel since
the Company's inception in 1971.
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 January 2, 2000, its executive
officers, directors and greater than 10% beneficial owners complied with all
applicable filing requirements, except that Mr. Duncan failed to timely report a
purchase of 2,250 shares occurring in April. The delinquent transaction has
since been reported to the Commission.
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 2000 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 shareholders' questions.
DEADLINE FOR SUBMISSION OF SHAREHOLDER PROPOSALS TO BE
PRESENTED AT THE 2001 ANNUAL MEETING OF SHAREHOLDERS
Any proposal intended to be presented for action at the 2001 Annual
Meeting of Shareholders by any shareholder of the Company must be received by
the Secretary of the Company not later than December 3, 2000, in order for such
proposal to be considered for inclusion in the Company's Proxy Statement and
proxy relating to
22
<PAGE> 26
its 2001 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.
For other shareholder proposals to be timely (but not considered for
inclusion in the Company's Proxy Statement), a shareholder's notice must be
received by the Secretary of the Company not less than 75 days nor more than 90
days prior to April 3, 2001. For proposals that are not timely filed, the
Company retains discretion to vote proxies it receives. For proposals that are
timely filed, the Company retains discretion to vote proxies it receives
provided (1) it includes in the Proxy Statement advice on the nature of the
proposal and how the Company intends to exercise its voting discretion and (2)
the proponent does not issue a proxy statement.
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 for the election
of directors only. 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 plan amendment will be approved if the number of
shares of Common Stock voted in favor of the amendment exceeds the aggregate of
the number of abstentions and shares of Common Stock voted against it.
Abstentions and broker non-votes will not be counted as votes for or against any
director nominee. Abstentions will have the effect of a vote against the plan
amendment. Broker non-votes will not be counted as votes for or against the plan
amendment.
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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 JANUARY 2,
2000, 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 1, 2000
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APPENDIX A
SECOND 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 2000 Annual Meeting of Shareholders,
to be held May 16, 2000, as follows:
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 1,000,000 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."
<PAGE> 29
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.
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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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<PAGE> 34
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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<PAGE> 35
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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<PAGE> 36
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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<PAGE> 40
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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<PAGE> 41
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.
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<PAGE> 42
(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
15
<PAGE> 43
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
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<PAGE> 44
(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.
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<PAGE> 45
(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
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<PAGE> 46
(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
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<PAGE> 47
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
20
<PAGE> 48
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
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<PAGE> 49
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
22
<PAGE> 50
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.
23
<PAGE> 51
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> 52
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 Franklin Marriott Hotel Cool Springs, at 1700 Cool Springs Boulevard,
Franklin, Tennessee on Tuesday, May 16, 2000, 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): T. Duncan, G. Fritts, L. Stout,
J. Tobias and B. Reed.
[ ] 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) Amendment to the 1994 Stock Incentive Plan:
[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY (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)
<PAGE> 53
(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
by May 12, 2000.
A stamped and addressed envelope is enclosed for your convenience.
YOUR VOTING INSTRUCTION FORM MUST BE RECEIVED BY THE TRUSTEE BY MAY 12, 2000.
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 amendment to the 1994 Stock
Incentive Plan.
PLEASE SIGN, DATE AND RETURN PROMPTLY
--------------------------------------------
--------------------------------------------
Date: , 2000
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.
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If your address has changed, please PRINT your new address on this line.
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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 16, 2000.
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 Franklin
Marriott Hotel Cool Springs, at 1700 Cool Springs Boulevard, Franklin, Tennessee
on Tuesday, May 16, 2000, 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): T. Duncan, G. Fritts, L. Stout, J. Tobias,
T. Duncan and B. Reed.
[ ] AGAINST the following nominees (please print name or names):
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WITHHOLD AUTHORITY (ABSTAIN) to vote for the following nominees (please print
name or names):
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[ ] AGAINST all nominees
[ ] WITHHOLD AUTHORITY (ABSTAIN) to vote for all nominees
(2) Amendment to the 1994 Stock Incentive Plan:
[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY (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.
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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 proposed amendment to the 1994 Stock Incentive Plan.
PLEASE SIGN, DATE AND RETURN PROMPTLY
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Date: , 2000
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.
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If your address has changed, please PRINT your new address on this line.
