SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
[ X ] Filed by the registrant
[ ] Filed by a party other than the registrant
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
FLANIGAN'S ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
<PAGE>
FLANIGAN'S ENTERPRISES, INC.
2841 Cypress Creek Road
Fort Lauderdale, Florida 33309
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 26, 1999
Fort Lauderdale, Florida
February 3, 1999
To the Stockholders of Flanigan's Enterprises, Inc.,
Please take notice that the Annual Meeting of Stockholders of
Flanigan's Enterprises, Inc. (the "Company") will be held on Friday, February
26, 1999, at 10:00 A.M., at its corporate headquarters, 2841 Cypress Creek Road,
Fort Lauderdale, Florida, 33309 to consider and act upon the following matters:
(1) To elect three directors of the Company to hold office until
the year 2002 Annual Meeting;
(2) To vote upon the approval and ratification of a Company Key
Employee Incentive Stock Option Plan for Store Level
Management as adopted by the Board of Directors and set forth
in the following Proxy.
(3) To transact such other business as may properly come before
the meeting.
Details relating to these matters are set forth in the attached proxy
statement. Stockholders of record at the close of business on January 25, 1999,
will be entitled to vote at the meeting.
The Company invites each stockholder to attend the meeting in person.
However, whether or not you expect to be present, your cooperation in promptly
signing and returning the enclosed proxy in the envelope provided will be
appreciated. Regardless of the number of shares you own, your vote is important.
If you are present and vote in person at the meeting, the proxy will not be
used.
The Board recommends and requests a vote "FOR" the three nominees to
the Board of Directors, and "FOR" the approval and ratification of a Company Key
Employee Incentive Stock Option Plan for Store Level Management.
FLANIGAN'S ENTERPRISES, INC.
/s/Edward A. Doxey
------------------
Edward A. Doxey, Secretary
<PAGE>
FLANIGAN'S ENTERPRISES, INC.
2841 Cypress Creek Road
Fort Lauderdale, Florida 33309
PROXY STATEMENT
February 3, 1999
ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished in connection with the solicitation
by the management of Flanigan's Enterprises, Inc. (the "Company") of proxies for
use at the Annual Meeting of Stockholders of the Company to be held on Friday,
February 26, 1999, at 10:00 A.M. at its corporate headquarters, 2841 Cypress
Creek Road, Fort Lauderdale, Florida, 33309 or at any adjournment of such
meeting.
Stockholders of record as of the close of business on January 25, 1999
are entitled to vote at the meeting. On that date there were outstanding 930,000
shares of Common Stock ($.10 par value) of the Company, with each entitled to
one vote.
The Company's Annual Report (including the Form 10-KSB filed with the
Securities and Exchange Commission) for the fiscal year ended October 3, 1998 is
enclosed.
The accompanying proxy is revocable by the stockholder at any time
before it is exercised. Any stockholder attending the meeting may vote in person
whether or not a proxy was previously signed. Unless revoked, properly executed
proxies will be voted in accordance with specifications therein. Proxies with no
specifications will be voted in favor of all proposals. There are no rights of
appraisal or similar rights of dissenters with respect to any matter to be acted
upon at the meeting.
Solicitation of proxies is to be made by use of the mails, and in
addition, may be made by directors, officers and regular employees of the
Company, either personally or by telephone. The cost of the solicitation will be
borne by the Company, including reimbursement of brokerage firms and other
custodian or nominees for reasonable expenses incurred in distributing these
proxy materials to their beneficiaries.
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PROPOSAL ONE:
ELECTION OF DIRECTORS
The By-Laws of the Company provide for a Board of Directors which shall
consist of three classes of directors of three directors each. Three directors
are to be elected to replace those of the class whose terms expire this year.
The three directors to be elected at the annual meeting shall serve for a
three-year term expiring in 2002 and until their respective successors are
elected and qualified.
Shares of stock represented by valid proxies received in time for the
meeting will be voted for the election of the nominees listed below. It is not
anticipated that any of the nominees will be unavailable for election as a
director, but in case any of the nominees should become unavailable, the proxies
will be voted for such substitute as shall be designated by the Board of
Directors. William Patton has been a director since 1990, Germaine Bell has been
a director since 1984 and Patrick J. Flanigan has been a director since 1991.
<TABLE>
<CAPTION>
DIRECTORS ELECT
Shares of
Common Stock
Principal Occupation for the Beneficially
Last Five Years and Certain Director Owned as of Percent
Name Other Directorships Age Since January 25, 1999 of Class
---- ------------------- --- ----- ---------------- --------
<S> <C> <C> <C> <C> <C>
Term Ending 2002
William Patton Vice President of Community 76 1990 10,449 (7) 1.0
Relations since 1981, prior
thereto Vice President,
Lounge Operations
Germaine M. Bell Former Assistant Secretary 66 1984 - -
of the Company
Patrick J. Flanigan President of B.D. 43 Corp., 38 1991 36,500 (2) 3.4
(1) a Franchisee since 1985.
President of B.D. 15 Corp.,
General Partner of CIC
Investors #15, a Franchisee
since 1997
</TABLE>
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<TABLE>
<CAPTION>
DIRECTORS CONTINUING IN OFFICE AFTER THE MEETING
Shares of
Common Stock
Principal Occupation for the Beneficially
Last Five Years and Certain Director Owned as of Percent
Name Other Directorships Age Since January 25, 1999 of Class
---- ------------------- --- ----- ---------------- --------
<S> <C> <C> <C> <C> <C>
Term Ending 2000
Charles E. McManus Certified Manufacturing 84 1982 11,462 1.1
Engineer and Independent
Sales Representative for Food
Service Equipment Co.,
Baltimore, MD, President of
Preferred Food Purveyors,
Inc. Baltimore, MD.
James G. Flanigan Vice President of Twenty- 34 1991 61,900 (3) 5.8
(1) Seven Birds Corporation, a
Franchisee since 1985
Edward A. Doxey Chief Financial Officer 57 1998 10,072 (8) 1.0
(9) and Secretary
of the Company
Term Ending 2001
Joseph G. Flanigan Chairman of the Board 69 1960 277,778 (4) 26.0
President and Chief Executive
Officer of the Company
Jeffrey D. Kastner Principal, law firm of Jeffrey 45 1985 200,500 (5) 18.8
D. Kastner, P.A. since 1985,
and General Counsel and
Assistant Secretary of
the Company
Charles F. Kuhn Former Vice President of 69 1985 - -
Package Operations, Package
Store Manager since 1992, of
Big Daddy's #14, Inc. a
Franchisee
Total shares beneficially owned by all directors
and executive officers as a group (nine in number). 499,761 (6) 47.0
* Less than 1%
</TABLE>
(1) James G. and Patrick J. Flanigan are the sons of the Chairman
of the Board.
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(2) Includes 36,100 shares owned by a trust which Patrick J.
Flanigan is one of three trustees and a beneficiary, and 400
shares owned as custodian for his children.
(3) Includes options to acquire 14,000 shares of common stock
granted pursuant to the Company Key Employee Incentive Stock
Option Plan, 36,100 shares owned by a trust of which James G.
Flanigan is one of three trustees and a beneficiary, and 200
shares owned as custodian for his child and 2,300 shares owned
by his spouse.
(4) Includes options to acquire 91,800 shares of common stock, see
Notes (3) & (4) to Cash Compensation Table. Includes 36,100
shares owned by a trust of which the spouse of the Chairman of
the Board is one of three trustees and 1,200 shares owned by
grandchildren of the Chairman of the Board.
(5) Includes options to acquire 20,000 shares of common stock
granted pursuant to the Company Key Employee Incentive Stock
Option Plan, 180,500 shares owned equally by five trusts of
which Jeffrey D. Kastner is one of three trustees. The five
trusts include the trusts of Patrick J. Flanigan (See Note (2)
above), James G. Flanigan (See Note (3) above), and the trust
of which the spouse of the Chairman of the Board is one of
three trustees and the 36,100 shares owned by each trust.
(6) Includes 108,300 shares owned equally by the three trusts of
which Jeffrey D. Kastner is one of the three trustees. The
36,100 shares owned by each of the trusts of Patrick J.
Flanigan (See Note (2) above) and James G. Flanigan (See Note
(3) above) are included in the calculation of beneficial stock
ownership of those individuals only. The 36,100 shares of
stock owned by a trust of which the spouse of the Chairman of
the Board is one of three trustees is not included, as that
stock is already included in the calculation of beneficial
ownership of Jeffrey D. Kastner. The 400 shares owned by
Patrick J. Flanigan, as custodian for his children, and the
200 shares owned by James G. Flanigan, as custodian for his
child, are not included, as that stock is already included in
the calculation of beneficial ownership of the Chairman of the
Board.
(7) Includes options to acquire 4,000 shares of common stock
granted pursuant to the Company's Key Employee Incentive Stock
Option Plan.
(8) Includes options to acquire 6,000 shares of common stock
granted pursuant to the Company's Key Employee Incentive Stock
Option Plan.
(9) Edward A. Doxey was appointed to the Board of Directors on
September 10, 1998 to serve the remainder of the term of Mary
C. Reymann who passed away on July 15, 1998.
The Board of Directors met four times during the past fiscal year and each
director attended at least three of those meetings of the Board and its
committees. Each director who is not a full time employee of the Company
receives an annual director's fee of $5,000 plus $250 for attendance at each
Directors Meeting and Audit Committee Meeting.
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BOARD OF DIRECTORS, COMMITTEES AND NOMINATIONS
The principal committee of the Board of Directors is the Audit
Committee. The functions of this committee include recommending the engaging and
discharging of the Company's independent auditors, reviewing with the
independent auditors the plan and results of the audit engagement, approving
professional services provided by the independent auditors prior to the
performance of such services, reviewing the range of audit and non-audit fees
and reviewing the adequacy of the Company's system of internal accounting
controls. The Audit Committee held one meeting during the past fiscal year. The
members of the Audit Committee for fiscal year 1998 were Charles McManus,
Jeffrey Kastner and Charles Kuhn.
While there is no nominating committee, the entire Board selects
nominees for election as directors and considers the performance of directors in
determining whether to nominate them for re-election. In performing these
functions, the Board considers any stockholder recommendations with respect to
the composition of the Board. Any recommendation by a stockholder of a proposed
candidate must be in writing, accompanied by a description of the proposed
nominee's qualification and other relevant biographical information together
with the consent of the proposed nominee to serve. The recommendation should be
directed to the Board of Directors, Attention: Secretary, Flanigan's
Enterprises, Inc., 2841 Cypress Creek Road, Fort Lauderdale, Florida, 33309.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES
SET FORTH HEREIN.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company
during the fiscal year ended October 3, 1998 to all of the Company's executive
officers whose aggregate direct re-numeration exceeded $60,000, and to all
executive officers as a group.
<TABLE>
<CAPTION>
COMPENSATION TABLE
Other
Name and Principal Position Annual Compensation Compensation (1)(2)
- --------------------------- ------------------- -------------------
<S> <C> <C>
Joseph G. Flanigan, (3)(4)(5) $266,000 $38,000
Chairman of the Board,
Chief Executive Officer
and President
Jeffrey D. Kastner, 116,000
Assistant Secretary
and General Counsel
Edward A. Doxey, 85,000
Chief Financial Officer
Others (two in number) 64,000 8,000
------- -------
All Executive Officers
as a group (five in number)(6) $531,000 $46,000
</TABLE>
Page 6
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(1) This table does not include incidental personal benefits of a
limited nature. Although the amount of such benefits and the
extent to which they are related to job performance cannot be
ascertained specifically, the Company has concluded that the
aggregate amount does not exceed the lesser of $25,000 or 10%
of the cash compensation disclosed above for any one person or
all executive officers as a group.
(2) Represents value of premium paid by the Company for life
insurance.
(3) On June 3, 1987, the Company entered into an Employment
Agreement with Joseph G. Flanigan effective January 1, through
December 31, 1988 and subject to one year extensions unless
either the Company or such executive shall have delivered a
notice that the term will not be extended. This Agreement was
approved by the Bankruptcy Court in the Company's
reorganization proceedings and was ratified by stockholders at
the Company's 1988 annual meeting (83% of the stockholders
voting ratified the Agreement). Mr. Flanigan receives a base
salary of $150,000. From 1988 until September 28, 1996 Mr.
Flanigan participated in a profit sharing program based on the
Company exceeding certain financial projections. For the
fiscal year ended September 28, 1996 no bonus was earned under
the Agreement. At the Company's 1997 annual meeting, the
stockholders approved a modification to the Agreement to
provide that during the period of Mr. Flanigan's employment,
the Company will pay Mr. Flanigan in addition to his base
salary an amount equal to fifteen percent of the annual income
of the Company before income taxes, in excess of $650,000,
excluding extraordinary items. For the fiscal year ended
September 27, 1997 a bonus of $78,000 was earned. For the
fiscal year ended October 3, 1998 a bonus of $116,000 was
earned, of which the sum of $30,000 was refused by Mr.
Flanigan to offset the compensation paid to other executive
officers. The Agreement further provides that in the event of
termination, the Chairman of the Board would be entitled to a
maximum payment of $450,000.
During fiscal year 1996, (prior to December 30, 1995), Mr.
Flanigan exercised the option to purchase 93,092 shares of the
Company's common stock, pursuant to the Employee Agreement, at
$0.875 per share. The option price in the Employment Agreement
had been reduced to $0.875 per share in December, 1989 and
approved at the Company's 1990 Annual Meeting.
The Employment Agreement further provides that in the event of
a "change in control" of the Company, the term of the
Agreement will continue for a period of three years
thereafter, provided that any damages due Mr. Flanigan as a
result of a change in control of the Company will be
subordinate to the claims of the secured creditors in the
Company's bankruptcy proceedings, whose damages would also be
due in full. In the event of termination, Mr. Flanigan would
be entitled to a maximum of $450,000.
(4) During the quarter ended March 28, 1992, the Board of
Directors approved issuance of additional options to Joseph G.
Flanigan to purchase up to 46,450 shares of the Company's
common stock. The exercise price of $2.25 equaled the fair
market value on the date of issuance. By written Resolution,
dated January 12, 1994, the Board
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of Directors approved an amendment to the stock option granted
Joseph G. Flanigan increasing the amount of the option price
to $6.50 per share, which reflected in excess of 110% of the
per share price of the Company's stock as of the close of
business on January 12, 1994. The expiration date of the stock
option was also extended through February 27, 2002. This
action was approved by the stockholders at the Company's 1994
Annual Meeting.
(5) Also at the Company's 1997 Annual Meeting the stockholders
approved a modification to the Employment Agreement which
granted Mr. Flanigan the option to acquire 4.99% of the amount
of common stock of the Company outstanding as of the date of
exercise, but not less than 45,250 shares at the option price
of $4.95 per share. The expiration date of the stock option is
December 31, 2001.
(6) See "Related Party Transactions."
RELATED PARTY TRANSACTIONS
In fiscal year 1998, Walter L. McManus, Sr., former Vice Chairman,
(together with his children; Castlewood and Co., a family owned Maryland
partnership; and Castlewood Realty Company, Inc., a family owned Maryland
Corporation) received an aggregate of $228,457 from the Company in lease rentals
for three locations where they leased to the Company the land or building. The
Company owed agreed to lease rejection damages of $58,366 to companies
controlled by the former Vice Chairman of the Board, which are included in and
payable pursuant to the Company's Plan of Reorganization.
Certain of the officers and directors of the Company hold securities of
a limited partnership which owned a club in King of Prussia, Pennsylvania which
was managed by the Company as General Partner for a management fee of 49% of the
profits. The partnership interests of all said officers and directors
represented 18.22% of the total invested capital of $960,000 in this limited
partnership. This unit was sold September 20, 1996. See page 9 of the Form 10-
KSB for the period ended October 3, 1998 for further discussion of the sale.
Members of Mr. Flanigan's family purchased four units sold to them on a
franchise basis in prior years. The terms of these sales were similar to one or
more of the Company's other franchise sales. The Company had no accounts
receivable from parties related to Mr. Flanigan at year-end.
During fiscal 1990, Mr. Flanigan acquired a 33.33% interest in one unit
sold to his family on a franchise basis in prior years. Mr. James G. Flanigan, a
member of the Board of Directors of the Company, is also a 33.33% owner of this
unit and is the manager of the day-to-day operation of the same. The Company
assigned the Lease Agreement for this unit to the franchisee, and vacated the
sublease agreement which had been a part of the franchise purchase. With this
transaction, the franchisee becomes responsible for all rent due under the Lease
Agreement. Under the new Franchise agreement the Company receives the royalty
fees only.
During fiscal 1990, Mr. Flanigan also became a 50% owner of a
corporation which assumed management of the day-to-day operation of another unit
sold to his family on a franchise basis in prior years. Mr. Flanigan became
involved in the day-to-day operation of this unit during fiscal year 1995 on a
limited basis.
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During fiscal year 1992, one unaffiliated franchisee expressed an
interest in selling his unit or returning it to the Company pursuant to the
terms of its franchise agreement and related documents. As a result of the
substantial investment necessary to upgrade and renovate this unit, an
affiliated group of investors formed a Subchapter S corporation and purchased
this unit from the franchisee. The shareholder interest of all officers and
directors represents 40% of the total invested capital. The shareholder interest
of the Chairman's family represents an additional 50% of the total invested
capital. The Company receives the increased royalties provided for in the new
franchise agreement executed during fiscal year 1996. Subsequent to the end of
fiscal year 1998, the Company purchased the right to manage the restaurant for
this franchisee from an unrelated third party pursuant to an existing Management
Agreement. The terms of the Management Agreement were not modified.
During fiscal year 1995, three of the four franchises purchased by
members of Mr. Flanigan's family in prior years, whose franchise agreements
expired during the past fiscal year, executed the Company's new franchise
agreement for the continued operation of their restaurants under the "Flanigan's
Seafood Bar and Grill" service mark or other service marks approved by the
Company.
During fiscal year 1996, the Company's franchise agreement with a
member of Mr. Flanigan's family expired and the Company declined to offer the
franchisee the option of executing its new franchise agreement. During the first
quarter of fiscal year 1997, the Company filed suit against the franchisee for
servicemark infringement, seeking injunctive relief and monetary damages. During
fiscal year 1998 a Stipulated Agreed Order of Dismissal Upon Mediation was
issued whereby the Company received $110,000 and the former franchisee agreed to
cease all use of the "Flanigan's" servicemark and other trade dress features
common to the Company owned and/or franchised restaurants.
During the third quarter of fiscal year 1997, a related party who is a
member of the Board of Directors of the Company and a member of Mr. Flanigan's
family formed a limited partnership to own a certain franchise in Fort
Lauderdale, Florida, through which it raised the necessary funds to renovate the
restaurant. The related party paid the Company $150,000 to approve his purchase
of this franchise and for the Company to relinquish its right to act as manager
of the franchise. As a result of this transaction the Company, received a
promissory note in the original principal amount of $100,000 which had a
principal balance of $68,960 as of October 3, 1998. Subsequent to the end of the
fiscal year, the promissory note was prepaid in full. The Company is a
twenty-five percent limited partner in the franchise. The limited partnership
interest of all officers and directors represents 48.75% of the total of the
invested capital. The limited partnership interest of the Chairman's family
represents an additional 2.50% of the invested capital.
During the fourth quarter of fiscal year 1997, the Company formed a
limited partnership and raised funds through a private offering to purchase the
assets of a restaurant in Surfside, Florida, and renovate the same for operation
under the "Flanigan's Seafood Bar and Grill" servicemark. The restaurant opened
for business on March 6, 1998 The Company acts as general partner of the limited
partnership and is also a 42% limited partner. The limited partnership interest
of all officers and directors represents 23.20% of the total of the invested
capital. The limited partnership interest of the Chairman's family and the
family of one director represents an additional 8.80% of the invested capital.
During the fourth quarter of fiscal year 1998, the Company, as agent for a
limited partnership to be formed, raised funds through a private offering to
purchase the assets of a restaurant in Kendall, Florida and renovate the same
for
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operation under the "Flanigan's Seafood Bar and Grill" servicemark. The Company
will act as general partner of the limited partnership and will also be a 40%
limited partner. The limited partnership interest of officers and directors will
represent 13.8% of the total of the invested capital. The limited partnership
interest of the Chairman's family represents an additional 16.9% of the invested
capital. The renovated restaurant is expected to open for business by June 1,
1999.
See footnotes (3) and (5) to the Compensation Table for a discussion of
an Employment Agreement between the Company and its Chairman of the Board.
Each of the above transactions was reviewed by the Board of Directors
at the time made and were, in the opinion of management and the Board, entered
into on terms which were no less favorable to the Company than could be obtained
in similar transactions with disinterested third parties.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of January 25, 1999, the names of
persons who own of record, or are known by the Company to own beneficially, more
than 5 percent of its Common Stock, and the beneficial ownership of all such
stock as of that date by all officers and directors as a group. See footnotes
(3), (4) and (5) to the Compensation Table for a discussion of stock options
granted to Mr. Flanigan.
Number of
Name of Beneficial Owner Shares Percentage
------------------------ ------ ----------
Fidelity Investments 90,000 8.5
Joseph G. Flanigan 277,778 26.0
Jeffrey D. Kastner 200,500 18.8
James G. Flanigan 61,900 5.8
All Officers and Directors
as a Group (nine in number) 499,761 47.0
PROPOSAL TWO:
APPROVAL AND RATIFICATION OF THE COMPANY'S KEY EMPLOYEE INCENTIVE
STOCK OPTION PLAN FOR STORE LEVEL MANAGEMENT
On December 10, 1998, the Board of Directors approved the Company's Key
Employee Incentive Stock Option Plan for Store Level Management. The purpose of
the Plan is to advance the growth and development of the Company by affording an
opportunity to its store level management to purchase shares of the Company's
stock. For purposes of the Plan, store level management includes store managers
and assistant managers, (both restaurants and package liquor stores) and kitchen
managers (restaurant) to purchase shares of the Company's stock. Pursuant to the
terms of the Plan, 100,000 shares of the Company's stock will be available for
options granted to eligible employees. A Key Employee Incentive Stock Option
Plan for Store Level Management Committee, ("Committee"), which Committee will
consist of 3 members of the Board of Directors, one of whom shall be the
Chairman of the Board, shall have full authority in its discretion to designate
the eligible employees to whom options shall be granted; the number of shares to
be made available under each such option; the period or periods in which such
eligible employee may exercise such option; the date such option expires; and
the price for the stock under such option. Stock ownership gives such employees,
who are an integral part of the Company's success, a proprietary interest in the
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Company, which induces them to promote the best interest of the Company and to
continue in its employ. The Plan also enables the Company to attract competent
personnel to enter its employ.
The above review of certain provisions of the Plan is not, nor is it
intended to be an exhaustive review of the Plan. A complete copy of the Plan is
attached hereto as Exhibit "A" and incorporated by reference. Shareholders are
urged to review the Plan in its entirety.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The rules and regulations of the Securities and Exchange Commission
afford stockholders the right to submit proposals to the Company which the
Company must then include in its proxy materials and which will be voted on by
stockholders at the Annual Meeting next ensuing. Under these regulations any
stockholder desiring to submit a proposal to be voted on at the 2000 Annual
Meeting of the Company must deliver the proposal to the Company no later than
September 23, 1999.
OTHER MATTERS
As of the date of this proxy statement, the management does not intend
to present, and has not been informed that any other person intends to present,
any matters for action at the meeting other than those specifically referred to
herein. If, however, any other matters are properly presented at the meeting it
is the intention of the persons named in the proxies to vote the shares of stock
represented thereby in accordance with their best judgment on such matters.
BY ORDER OF THE BOARD OF DIRECTORS
Edward A. Doxey
Secretary
February 3, 1999
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Exhibit A
FLANIGAN'S ENTERPRISES, INC.
KEY EMPLOYEE INCENTIVE STOCK OPTION PLAN
FOR STORE LEVEL MANAGEMENT
SECTION ONE
DESIGNATION AND PURPOSE OF THE PLAN
A. Designation. This Plan is designated the "Flanigan's Enterprises, Inc. Key
Employee Incentive Stock Option Plan for Store Level Management".
B. Purpose, The purpose of this Plan is to advance the growth and development of
the Company by affording an opportunity to its store level management, which
includes store managers and assistant managers, (restaurants and package liquor
stores), and kitchen managers, (restaurant), to purchase shares of the Company's
Stock. The acquisition of such Stock by employees who are an integral part of
the Company's success provides a continuing incentive for them to promote the
best interests of the Company. Such stock ownership gives such employees a
proprietary interest in the Company which induces them to continue in its
employ. The Plan also enables the Company to attract competent personnel to
enter its employ.
SECTION TWO
DEFINITIONS
As used in this Plan, the following terms shall have the meanings indicated:
A. "Committee" means the Key Employee Incentive Stock Option Plan for Store
Level Management Committee appointed to administer the Plan pursuant to Section
Four.
B. "Company" means Flanigan's Enterprises, Inc., including any present or future
"subsidiary corporation" as such term is defined in Section 424(f) of the 1986
Internal Revenue Code as amended.
C. "Eligible Employee" means any employee of the Company, who is employed as a
store manager or assistant manager of a package liquor store or restaurant, or a
kitchen manager of a restaurant. Options are to be granted under this Plan only
to Eligible Employees of the Company. Employees on leave of absence or in the
military service are not Eligible Employees while on leave of absence or in the
military service.
D. "Option" means an incentive stock option as defined in Section 422 of the
Internal Revenue Code, granted to a Participant by the Committee under this
Plan. It includes any part of an Option which remains after a Participant has
exercised part, but not all of his or her Option.
E. "Participant" means any Eligible Employee who is granted an Option as
provided in this
-1-
<PAGE>
Plan or any person who succeeds to the rights of such Eligible Employee under
this Plan by reason of the death of such Eligible Employee.
F. "Plan" means this Key Employee Incentive Stock Option Plan for Store Level
Management.
G. "Stock" and "Company's Stock" mean a share or shares of the common stock, par
value Ten Cents ($0.1 0) per share, of the Company.
H. Whenever appropriate words used in this Plan in the singular may mean the
plural, the plural may mean the singular and the masculine may mean the
feminine.
SECTION THREE
STOCK SUBJECT TO THE OPTION
A. Total Number of Shares. The total number of shares of Stock which may be
included in all Options granted to all Participants under this Plan is One
Hundred Thousand (100,000) shares, The total number of shares of Stock which may
be granted may be increased by a resolution adopted by the Company's Board of
Directors and approved by the Company's stockholders. Such Stock may be either
authorized and unissued common stock or reacquired common stock being held as
Treasury Stock.
B. Expired Options, If any Option granted under this Plan (i) is unexercisable,
or (ii) is terminated, or (iii) expires or is cancelled for any other reason, in
whole or in part, the Stock (or remaining Stock) subject to that particular
Option shall again be available for grant under this Plan.
SECTION FOUR
ADMINISTRATION OF PLAN
A. Appointment of Committee. The Company's Board of Directors shall appoint a
Key Employee Incentive Stock Option Plan for Store Level Management Committee
which shall consist of not less than three (3) members of such Board of
Directors, one (1) of whom shall be the Chairman, and which other members shall
be disinterested persons as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended. In addition, such Board of Directors shall designate a
member of the Committee to act as Chairman of the Committee, and such Board of
Directors may remove any members of the Committee at any time and appoint any
Director to fill any vacancy on the Committee.
B. Committee Meetings. The Committee shall hold its meetings at such times and
places specified by the Committee Chairman. A majority of the Committee shall
constitute a quorum. All actions of the Committee shall be taken by a majority
of the members at the meeting duly
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called by its Chairman; provided, however, any action taken by a written
document signed by a majority of the members of the Committee shall be as
effective as action taken by the Committee at a meeting duly called and held.
C. Committee Powers. Subject to the provisions of this Plan, the Committee shall
have full authority in its discretion to (i) designate the Participants to whom
Options shall be granted, (ii) determine the number of shares to be made
available under each such Option, (iii) determine the period or periods in which
Participants may exercise such Option, (iv) determine the date when such Option
expires, and (v) determine the price for the Stock under such Option. The
Committee shall have all powers necessary to administer the Plan in accordance
with its terms, including the power to interpret this Plan and resolve all
questions arising thereunder. The Committee may prescribe such rules and
regulations for administering this Plan as the Committee deems appropriate.
SECTION FIVE
SELECTION OF PARTICIPANTS
Discretion of Committee. In determining which Eligible Employees should be
offered Options, as well as the terms thereof, the Committee shall evaluate the
duties and responsibilities of Eligible Employees, their past and prospective
contributions to the success of the Company, the extent to which they are
performing and will continue to perform outstanding services for the benefit of
the Company, and such other factors as the Committee deems relevant. A member of
the Committee shall not participate in any determination of the Committee with
respect to any option granted to him or her.
SECTION SIX
OPTION AGREEMENTS
A. Form of Options. Subject to provisions of this Plan, the Options granted to
Participants shall be set forth in written agreements upon such terms and
conditions as the Committee determines. Such agreements shall incorporate the
provisions of this Plan by reference.
B. Date of Granting Options, The date of granting an Option is the date
specified in the written option agreement which is signed by the Participant and
the Company.
SECTION SEVEN
OPTION PRICES
A. Determination of Option Price. The option price for the Stock shall not be
less than I00% of the fair market value of the Stock on the date of the grant.
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B. Determination of Fair Market Value. The fair market value of the Stock on the
date of granting an Option shall be the mean of the high and low prices at which
the Stock was sold on the market on such date. In the event no such sales of
stock occurred on such date, the fair market value of the Stock shall be
determined by the Committee in accordance with the applicable Regulations of the
Internal Revenue Service.
SECTION EIGHT
TERM OF OPTION
The term of an Option may vary within the Committee's discretion, provided,
however, that the term of an Option shall not exceed ten (10) years from the
date of granting the Option to the Participant and, to this end, all Options
granted pursuant to this Plan must provide that each such Option expires and
cannot be exercised ten (10) years from the date each such Option is granted.
SECTION NINE
EXERCISE OF OPTION
A. Limitation of Exercise of Option. The Committee may limit an Option by
restricting its exercise in whole or in part for specified periods.
B. Method of Exercising Option. Subject to the terms of a particular Option, a
Participant may exercise such Option, in whole or in part, by written notice to
the Company's President or Chief Financial Officer stating in such written
notice the number of shares of Stock such Participant elects to purchase under
his or her Option,
C. No Obligation to Exercise Option. A Participant is under no obligation to
exercise an Option or any part thereof.
D. Payment for Option Stock. The Committee shall determine the terms for payment
of Stock and such terms shall be set forth in the option agreement at the time
the Option is granted to the Participant.
E. Delivery of Stock to Participant. The Company shall undertake and follow all
necessary procedures to make prompt delivery of the number of shares of Stock
which the Participant elects to purchase upon exercise of an Option granted
under this Plan. Such delivery, however, may be postponed at the sole discretion
of the Company, to enable the Company to comply with any applicable procedures,
regulations or listing requirements of any government agency, stock exchange or
regulatory authority.
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F. Failure to Accept Delivery of Stock, If a Participant refuses to pay for
Stock which he or she has elected to purchase under his or her Option, in
accordance with the terms of payment which had previously been agreed upon, his
or her Option shall thereupon, at the sole discretion of the Committee,
terminate and such funds previously paid for unissued Stock shall be refunded.
Stock which has been previously issued to the Participant and been fully paid
for shall remain the property of the Participant and shall be unaffected by such
termination.
SECTION TEN
NON-TRANSFERABILITY OF OPTIONS
During a Participant's lifetime, any Option granted to him or her may be
exercised only by him or her. It may not be sold, assigned, pledged or otherwise
transferred except by testamentary devise or by the laws of descent and
distribution. No Option or any right thereunder shall be subject to execution,
attachment or similar process. Upon any attempt by a Participant to sell,
assign, pledge or otherwise transfer any Option, or any right thereunder,
contrary to the provisions hereof, the Option and all rights thereunder shall
immediately become null and void.
SECTION ELEVEN
PURCHASE FOR INVESTMENT
A. Written Agreement by Participants. Unless a registration statement under the
Securities Act of 1933 is then in effect with respect to the Stock a Participant
receives upon exercise of his or her Option, a Participant shall acquire the
Stock he or she receives upon the exercise of his or her Option for investment
and not for resale or distribution and he or she shall furnish the Company with
a written statement to that effect when he or she exercises his or her Option
and a reference to such investment warranty shall be inscribed on the Stock
Certificate(s).
B. Registration Requirement. Each Option shall be subject to the requirement
that, if at any time the Company's Board of Directors determines that the
listing, registration or qualification of the Stock subject to the Option upon
any securities exchange or under any state or Federal law is necessary or
desirable as a condition of, or in connection with, the issuance of Stock
thereunder, the Option may not be exercised in whole or in part unless such
listing, registration or qualification shall have been effected or obtained (and
the same shall have been free of any conditions not acceptable to the Company's
Board of Directors).
SECTION TWELVE
CHANGES IN CAPITAL STRUCTURE
In the event of a change in the capital structure of the Company, the number of
shares specified in Section Three of this Plan, the number of shares covered by
each outstanding Option and the price per share shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Stock
resulting from the splitting or consolidation of shares, or the payment of
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a stock dividend, or effected in any other manner without receipt of additional
or further consideration by the Company,
SECTION THIRTEEN
CORPORATE REORGANIZATION OR DISSOLUTION
In the event the Company consolidates with or merges into another corporation,
or in the event of the Company's dissolution, all outstanding Options shall
thereupon terminate, provided, however that such Options may be assumed by the
corporation surviving such merger or consolidation within the sole discretion of
the surviving corporation. The Company shall give fifteen (15) days prior
written notice to the holders of the unexercised Options prior to the effective
date of such consolidation, merger or dissolution. All Options previously issued
shall accelerate upon such notice, and the holders hereof may exercise such
Options prior to such effective date, notwithstanding time limitations
previously placed on the exercise of such Options.
SECTION FOURTEEN
TERMINATION OF EMPLOYMENT
A. Severance. Subject to the provisions of Paragraph B. of this Section
Fourteen, in the event a Participant's employment with the Company terminates,
his or her Option terminates one (1) month from the earlier of (i) the giving of
notice of such termination, or (ii) the date of such termination of employment
in the absence of such notice.
B. Death, If a Participant dies prior to the full exercise of his or her Option,
his or her Option to purchase Stock under such Option may be exercised to the
extent, if any, that the Participant would be entitled to exercise it at the
date of the Participant's death by the person to whom the Option shall pass by
testamentary devise or by the laws of descent and distribution within twelve
(12) months of Participant's death or the expiration of the term of the Option,
whichever date is sooner.
C. Limitation. In no event may an Option be exercised by anyone after the
expiration date provided for in Section Eight of the Plan.
SECTION FIFTEEN
APPLICATION OF FUNDS
All proceeds received by the Company from the exercise of Options shall be paid
into its treasury and such proceeds shall be used for general corporate
purposes.
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SECTION SIXTEEN
PARTICIPANT'S RIGHT AS A STOCKHOLDER
A Participant has no right as a stockholder with respect to any Stock covered by
his or her Option until the date a stock certificate is issued to him or her for
such shares. Except as otherwise provided for in Section Twelve of this Plan, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
SECTION SEVENTEEN
AMENDMENT AND TERMINATION OF THE PLAN
Discretion of the Board of Directors. The Company's Board of Directors may amend
or terminate this Plan at any time provided that such amendment or termination
does not adversely affect the rights of the Participants who were granted
Options prior thereto. The Board of Directors may not amend this Plan to provide
for an increase in the total number of shares covered by this Plan or for a
change in the definition of "Eligible Employee" without the prior approval of
the Company's stockholders.
Dated: December 10, 1998 FLANIGAN'S ENTERPRISES, INC.
By:________________________________
-----------------------------------
Print Name
-----------------------------------
Title
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REVOCABLE PROXY
FLANIGAN'S ENTERPRISES, INC.
[ X ] PLEASE MARK VOTES AS IN THIS EXAMPLE
Proxy Solicited on Behalf of the Board of Directors of
the Company for Annual Meeting February 26, 1999
The undersigned hereby constitutes and appoints Jeffrey D. Kastner and Edward
A. Doxey, jointly and severely as his true and lawful agents and proxies with
full power of substitution in each, to represent the undersigned at the Annual
Meeting of Stockholders of Flanigan's Enterprises, Inc. to be held at the
Company's executive offices, 2841 West Cypress Creek Road, Ft. Lauderdale, FL
33309 on Friday, February 26, 1999 at 10:00 A.M. and at any adjournments thereof
on all matters coming before said meeting.
Please sign exactly as name appears below.
1. ELECTION OF DIRECTORS.
Nominees:
William Patton, Germaine M. Bell, Patrick J. Flanigan
FOR ALL
[ ] FOR [ ] WITHHOLD [ ] EXCEPT
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
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2. Proposal to Approve and Ratify the Company's Key Employee Incentive Stock
Option Plan for Store Level Management.
MANAGEMENT RECOMMENDS A VOTE "FOR"
PROPOSALS ONE AND TWO
3. In their discretion, upon other matters as may properly come before the
meeting.
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted for Proposals one and two.
When shares are held by joint tenants, both should sign. Executors,
administrators, trustees, etc. should give full title as such. If the signer is
a corporation, please sign full corporate name by duly authorized officer.
<PAGE>
Please be sure to sign and date this Proxy in the box below.
_________________________________________
Date
_________________________________________
Stockholder sign above
_________________________________________
Co-holder (if any) sign above
Detach above card, sign, date and mail in postage paid envelope provided.
FLANIGAN'S ENTERPRISES, INC.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
