SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No.____)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.1a-11(c) or 240.1a-12
LUBY'S CAFETERIAS, INC.
(Name of Registrant as Specified in its Charter)
LUBY'S CAFETERIAS, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
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;*
4) Proposed maximum aggregate value of transaction:
*Set forth amount on which the filing is calculated and state how
it was determined.
[ ] Check box if any part of the filing fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of
its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
December 2, 1994
Dear Shareholders:
You are cordially invited to attend the 1995 Annual Meeting of Shareholders of
Luby's Cafeterias, Inc. to be held on Friday, January 13, 1995, at 10:00 a.m.,
at the San Antonio Airport Hilton, 611 Northwest Loop 410, San Antonio, Texas.
We hope that you will be able to attend the meeting. Matters on which action
will be taken at the meeting are explained in detail in the notice and proxy
statement following this letter.
We hope as many of you as possible will attend the meeting in person. Whether
or not you expect to be present and regardless of the number of shares you own,
please mark, sign and mail the enclosed proxy in the envelope provided.
Sincerely,
JOHN B. LAHOURCADE
_______________________
John B. Lahourcade
Chairman of the Board
RALPH ERBEN
_______________________
Ralph Erben
President and
Chief Executive Officer
<PAGE>
LUBY'S CAFETERIAS, INC.
2211 Northeast Loop 410
P. O. Box 33069
San Antonio, Texas 78265-3069
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 13, 1995
To the Shareholders of
LUBY'S CAFETERIAS, INC.
NOTICE IS HEREBY GIVEN that the 1995 Annual Meeting of Shareholders of
Luby's Cafeterias, Inc., a Delaware corporation, will be held at the San
Antonio Airport Hilton, 611 Northwest Loop 410, San Antonio, Texas, on Friday,
January 13, 1995, at 10:00 a.m., local time, for the following purposes:
(1) To elect three directors to serve until the 1998 Annual Meeting of
Shareholders;
(2) To approve the Nonemployee Director Stock Option Plan;
(3) To approve the appointment of auditors for the 1995 fiscal year; and
(4) To transact such other business as may properly come before the
meeting or any adjournment thereof.
In accordance with the Bylaws of the Company and a resolution of the
Board of Directors, the record date for the meeting has been fixed at November
15, 1994. Only shareholders of record at the close of business on that date
will be entitled to vote at the meeting or any adjournment thereof.
A complete list of shareholders entitled to vote at the meeting will be
on file at the Company's corporate office at 2211 Northeast Loop 410, San
Antonio, Texas, for a period of ten days prior to the meeting. During such
time, the list will be open to the examination of any shareholder during
ordinary business hours for any purpose germane to the meeting.
Shareholders who do not expect to attend the meeting in person are urged
to sign the enclosed proxy and return it promptly. A return envelope is
enclosed for that purpose.
LUBY'S CAFETERIAS, INC.
James R. Hale
Secretary
Dated: December 2, 1994<PAGE>
LUBY'S CAFETERIAS, INC.
2211 Northeast Loop 410
P. O. Box 33069
San Antonio, Texas 78265-3069
PROXY STATEMENT
The accompanying proxy is solicited by the Board of Directors of Luby's
Cafeterias, Inc., a Delaware corporation (the "Company"), to be voted at the
1995 Annual Meeting of Shareholders on January 13, 1995, or at any adjournment
thereof. This proxy statement and the accompanying proxy are being mailed to
shareholders on or about December 2, 1994.
THE COMPANY
The Company is a Delaware corporation and was formerly a wholly-owned
subsidiary of Luby's Cafeterias, Inc., a Texas corporation ("Luby's Texas").
On December 31, 1991, Luby's Texas was merged with and into the Company for the
purpose of reincorporating in Delaware. Unless the context indicates
otherwise, the word "Company" as used herein includes Luby's Texas as
predecessor.
VOTING AND PROXIES
Only holders of record of common stock of the Company as of the close of
business on November 15, 1994, will be entitled to vote at the meeting. There
were 24,554,348 shares of common stock outstanding on the record date,
exclusive of 2,848,719 treasury shares. Each share of common stock
outstanding is entitled to one vote. A majority of the shares outstanding will
constitute a quorum at the meeting.
All shares represented by proxies will be voted in accordance with the
shareholders' directions. If the proxy card is signed and returned without
any direction given, shares will be voted in accordance with the
recommendations of the Board of Directors as described in this proxy statement.
Any shareholder giving a proxy may revoke it at any time before the proxy is
voted by giving written notice of revocation to the Secretary of the Company,
by submitting a later-dated proxy, or by attending the meeting and voting in
person.
The election of nominees for director requires a plurality of the votes
cast. Approval of the Nonemployee Director Stock Option Plan requires the
affirmative vote of a majority of the shares present at the meeting in person
and by proxy. Approval of the appointment of auditors requires the affirmative
vote of a majority of the shares present at the meeting in person and by proxy.
Abstentions and broker nonvotes will be included in determining the presence
of a quorum at the meeting. Broker nonvotes and abstentions will not be
included in determining the number of votes cast on any matter, except that
abstentions will be counted as votes against the approval of the Nonemployee
Director Stock Option Plan.
ELECTION OF DIRECTORS
The Bylaws of the Company provide for a Board of Directors divided into
three classes, as nearly equal in number as possible, with the members of each
class to serve three-year terms. The directors whose terms expire at the 1995
Annual Meeting of Shareholders who have been nominated by the Board of
Directors for reelection to serve until the 1998 Annual Meeting of Shareholders
and until their successors are duly elected and qualified are Lauro F. Cavazos,
John B. Lahourcade and George H. Wenglein. The Board of Directors recommends a
vote FOR such nominees.
The proxies named in the accompanying proxy, who have been designated by
the Board of Directors, intend to vote for the above mentioned nominees for
election as directors, unless otherwise specified. Such nominees have
indicated a willingness to serve as directors, but should any of them decline
or be unable to serve, the persons named as proxies may vote for another person
in the place of such nominee according to their best judgment in the interest
of the Company.
The following information is furnished with respect to each of the
nominees and for each of the other seven directors whose terms will continue
after the meeting. Such information includes all positions with the Company
and principal occupations during the last five years.
Nominees for Election to Terms Expiring in 1998
LAURO F. CAVAZOS is adjunct professor of Community Health, Tufts
University, School of Medicine (since 1992) and a management and education
consultant (since 1991). He was U.S. Secretary of Education from 1988 to 1990.
Prior thereto he was president and chief executive officer of Texas Tech
University and Texas Tech University Health Sciences Center. He is 67 and has
been a director of the Company since 1993 and is a member of the Audit
Committee. He is a director of Diamond Shamrock, Inc. and New England
Education Loan Marketing Corporation.
JOHN B. LAHOURCADE is chairman of the board of the Company and chairman
of the Executive Committee. He was chief executive officer of the Company
from 1984 to 1990. He is 70 and has been a director of the Company since
1970 and an officer of the Company since 1969.
GEORGE H. WENGLEIN is an investor and one of the founders of the Company.
He is a member of the Compensation Committee and a member of the Executive
Committee. He has been employed by the Company as a consultant since 1988.
He is 77 and has been a director of the Company since 1959.
Incumbent Directors Whose Terms Expire in 1996
DAVID B. DAVISS is an investor. Prior to 1991 he was executive vice
president-chief operating officer and a director of La Quinta Motor Inns, Inc.
He is an advisory director of Austin Trust Company. He is 58 and has been a
director of the Company since 1984 and is chairman of the Audit Committee.
ROGER R. HEMMINGHAUS is chairman of the board, president, chief executive
officer and a director of Diamond Shamrock, Inc. He is also deputy chairman of
the Federal Reserve Bank, Eleventh District, and a director of Southwestern
Public Service Company. He is 58 and has been a director of the Company since
1989 and is a member of the Compensation Committee.
WILLIAM E. ROBSON is senior vice president-operations of the Company. He
was senior vice president-operations development from 1988 to 1992. He is 53
and has been a director of the Company since 1993 and an officer since 1982.
Incumbent Directors Whose Terms Expire in 1997
JOHN E. CURTIS, JR. is senior vice president, chief financial officer and
treasurer of the Company. He has served as senior vice president and
chief financial officer since 1988 and as treasurer since 1990. He is 47 and
has been a director of the Company since 1991 and an officer of the Company
since 1982.
RALPH ERBEN is president and chief executive officer of the Company and
a member of the Executive Committee. He was chief operating officer of the
Company from 1988 to 1990, when he was elected chief executive officer. He
is 63 and has been a director of the Company since 1985 and an officer since
1978.
WALTER J. SALMON is Stanley Roth, Sr. professor of retailing, senior
associate dean and director of external relations, Harvard Graduate School
of Business Administration. He is 64 and has been a director of the Company
since 1979 and is chairman of the Compensation Committee. He is a director of
Circuit City Stores, Inc., The Neiman Marcus Group, Hannaford Bros. Co., Promus
Corporation, The Quaker Oats Company, Telxon Corporation and Tufts Associated
Health Plans, Inc.
JOANNE WINIK is president, general manager and a director of KLRN-TV, San
Antonio's Public Broadcasting Service affiliate. She is also a director of
Southern Educational Communications Association. She is 54 and has been a
director of the Company since 1993 and is a member of the Audit Committee.
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
Meetings and Compensation of Directors
During the fiscal year ended August 31, 1994, the Board of Directors held
four meetings. Each director who is not an officer of the Company is paid
$3,000 for each meeting of the Board of Directors which he or she attends plus
$12,000 per year for his or her services as a director. In addition, each
director who is not an officer of the Company is paid $1,000 for each meeting
of any committee of the Board which he or she attends, except that the
chairman of the Audit Committee is paid $1,200 for each meeting of the Audit
Committee which he attends.
Audit Committee
The Audit Committee of the Board of Directors, which currently consists
of David B. Daviss, Lauro F. Cavazos and Joanne Winik, met two times during the
1994 fiscal year. The functions of the Audit Committee are to recommend the
appointment of the independent auditors, to review the arrangements for and
scope of the annual audit and to review internal accounting controls.
Compensation Committee
The Compensation Committee of the Board of Directors currently consists
of Walter J. Salmon, Roger R. Hemminghaus and George H. Wenglein. The only
other person who served on the Compensation Committee at any time during the
1994 fiscal year was John B. Lahourcade. The Compensation Committee met seven
times during the 1994 fiscal year. The functions of the Compensation Committee
are to review the compensation of officers and other management personnel and
to make recommendations concerning such compensation. The Compensation
Committee also administers those employee benefit plans of the Company which
provide for administration by a Board committee.
Compensation Committee Interlocks and Insider Participation
John B. Lahourcade, who served as a member of the Compensation Committee
for a portion of the 1994 fiscal year, is chairman of the Board of Directors
and a full-time salaried employee of the Company.
George H. Wenglein, a member of the Compensation Committee, is a former
officer of the Company and is employed by the Company as a consultant at a
salary of $10,417 per month under a contract which expires in 1998. During
fiscal 1994, income tax services were provided at the Company's expense for
Mr. Wenglein in the amount of $3,000.
Nominating Committee
The Board of Directors does not have a standing nominating committee or a
committee performing similar functions.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
An architectural firm in which Paul A. Hesson is a principal regularly
renders architectural services for the Company. Mr. Hesson is the
father-in-law of John E. Curtis, Jr., senior vice president and chief financial
officer of the Company and a member of the Board of Directors. For the fiscal
year ended August 31, 1994, architectural fees paid to Mr. Hesson's firm by
the Company amounted to approximately $672,000. In the opinion of the Company,
such fees are comparable to those paid by the Company to other architectural
firms for similar services.
James R. Hale, secretary of the Company, is a member of the law firm of
Cauthorn Hale Hornberger Fuller Sheehan & Becker Incorporated. The firm
performs legal services for the Company on a regular basis. For services
rendered during the fiscal year ended August 31, 1994, the Company paid such
firm approximately $267,000. In the opinion of the Company, such fees are
comparable to those charged by other law firms for similar services.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers, and any persons holding more than
ten percent of the Company's common stock to report their initial ownership of
the Company's common stock and any subsequent changes in that ownership to the
Securities and Exchange Commission and the New York Stock Exchange, and to
provide copies of such reports to the Company. Based upon the Company's review
of copies of such reports received by the Company and written representations
of its directors and executive officers, the Company believes that during
the year ended August 31, 1994, all Section 16(a) filing requirements
were satisfied.
PRINCIPAL SHAREHOLDERS
To the knowledge of the Company, no person owned beneficially as of
November 15, 1994, more than five percent of the outstanding common stock of
the Company.
MANAGEMENT SHAREHOLDERS
According to information furnished by the persons concerned, each
director, each nominee for director, and all directors and officers of the
Company as a group, owned beneficially the indicated number and percentage of
outstanding shares of common stock of the Company as of November 15, 1994:
Name of Individual or Shares Beneficially Owned Percent
Identity of Group as of November 15, 1994(1) of Class
_______________________ ___________________________ ________
Lauro F. Cavazos (2) 450 ---%
John E. Curtis, Jr. (3) 30,715 .12%
David B. Daviss (4) 3,037 .01%
Ralph Erben (5) 177,787 .72%
Roger R. Hemminghaus 3,000 .01%
John B. Lahourcade (6) 204,057 .83%
William E. Robson (7) 30,843 .13%
Walter J. Salmon (8) 2,255 .01%
George H. Wenglein 750,000 3.05%
Joanne Winik 450 ---%
All directors and officers of
the Company, as a group (9) 1,899,599 7.66%
(1) Except as indicated in the following notes, each person named in the
table owns directly the number of shares indicated and has the sole
power to vote and to dispose of such shares.
(2) The shares shown for Dr. Cavazos are held jointly with his wife.
(3) The shares shown for Mr. Curtis include 379 shares held for his benefit
in the Company's Dividend Reinvestment Plan and 23,688 shares which he
has the right to acquire within 60 days under the Company's employee
benefit plans.
(4) The shares shown for Mr. Daviss are held for his benefit in a custodial
account.
(5) The shares shown for Mr. Erben include 39,400 shares which he has the
right to acquire within 60 days under the Company's employee benefit
plans and 26,815 shares which he holds as Trustee for himself and his
children.
(6) The shares shown for Mr. Lahourcade include 1,125 shares held jointly
with his wife.
(7) The shares shown for Mr. Robson include 36 shares held jointly with his
wife, 64 shares held jointly with his son, 866 shares held for his
benefit in an Individual Retirement Account, 30 shares held by his
wife, 15 shares held by his wife as trustee for his grandchildren, 620
shares held for his benefit in the Company's Dividend Reinvestment
Plan, and 21,550 shares which he has the right to acquire within 60
days under the Company's employee benefit plans.
(8) The shares shown for Dr. Salmon are held for his benefit in an
Individual Retirement Account.
(9) The shares shown for all directors and officers as a group include
237,386 shares which they have the right to acquire within 60 days
under the Company's employee benefit plans.
EXECUTIVE COMPENSATION
The table below contains information concerning annual and long-term
compensation of the chief executive officer and the other four most highly
compensated executive officers (the "Named Officers") for services in all
capacities to the Company for the fiscal years ended August 31, 1994, 1993 and
1992:
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
____________________________________________________ _____________________________
Other All
Annual Securities Other
Compen- Restricted Underlying LTIP Compen-
Name and Principal Fiscal sation Stock Options/ Payouts sation
Position Year Salary Bonus(1) (2)(3) Awards SARs(4) (5) (3)(6)
__________________ _____ ______ ________ ______ _________ __________ _______ _______
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ralph Erben 1994 $330,000 $148,500 $0 $0 4,500 $ --- $18,681
President and 1993 315,000 148,500 0 0 5,700 --- 18,839
Chief Executive 1992 300,000 --- 0 5,400 ---
Officer
John B. Lahourcade 1994 225,000 --- 0 0 --- --- 2,380
Chairman of 1993 237,500 --- 0 0 --- --- 4,020
the Board 1992 262,500 --- 0 --- ---
John E. Curtis, Jr. 1994 230,000 69,000 0 0 2,100 --- 2,380
Senior Vice Presi- 1993 225,000 69,000 0 0 2,800 --- 4,020
dent and Chief 1992 215,000 --- 0 2,700 ---
Financial Officer
William E. Robson 1994 230,000 69,000 0 0 2,100 --- 7,118
Senior Vice Presi- 1993 221,500 69,000 0 0 2,800 --- 8,327
dent-Operations 1992 213,000 --- 0 2,700 ---
Davis W. Simpson 1994 183,000 34,313 0 0 1,250 --- 2,380
Vice President- 1993 179,500 34,313 0 0 1,800 --- 4,020
Management 1992 176,000 --- 0 1,600 ---
Personnel
<FN>
(1) Reflects incentive-based cash bonuses awarded under the Company's Incentive
Bonus Plan. Awards are stated as compensation in the year with respect
to which the award was earned, even if actually paid in the following year.
(2) Perquisites and other personal benefits received by the executive officers
are not included because the aggregate amount of such compensation does
not exceed the lesser of $50,000 or 10% of the total amount of annual
salary and bonus for any Named Officer.
(3) In accordance with the transition provisions of the SEC rules,
information with respect to fiscal year 1992 is omitted.
(4) The Company has not issued any stock appreciation rights to the Named
Officers.
(5) No amounts were paid out under the Company's Performance Unit Plan in
fiscal years 1992-1994.
(6) Includes contributions under the Profit Sharing Plan of $2,380 and $4,020
per Named Officer for 1994 and 1993, respectively. Remaining amounts
for Messrs. Erben and Robson are for amounts accrued under deferred
compensation agreements.
</TABLE>
The following table reports the grant of stock options and stock
appreciation rights ("SARs") to the Named Officers during fiscal 1994. Options
were granted under the Company's Management Incentive Stock Plan. The Company
has not granted SARs to any of the Named Officers.
<TABLE>
Option/SAR Grants in Last Fiscal Year
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term (3)
______________________________________________________________ ________________________
Number of % of Total
Securities Options/SARs Exercise
Underlying Granted to of Base Expira-
Options/SARs Employees in Price tion
Name Granted(1) Fiscal Year(2) ($/sh) Date 5%($) 10%($)
__________________ ____________ ______________ ________ ________ _________ __________
<S> <C> <C> <C> <C> <C> <C>
Ralph Erben 4,500 1.21% $21.75 10-10-99 $33,269 $75,471
John B. Lahourcade --- --- --- --- --- ---
John E. Curtis, Jr. 2,100 .57% 21.75 10-10-99 15,526 35,220
William E. Robson 2,100 .57% 21.75 10-10-99 15,526 35,220
Davis W. Simpson 1,250 .34% 21.75 10-10-99 9,241 20,964
<FN>
(1) Options were granted at fair market value of the common stock on the date
of grant. Options may not be exercised during the first 12 months
following the date of grant.
(2) Based upon a total of 370,725 options granted to employees in fiscal
1994.
(3) The dollar amounts in these columns are the result of calculations at the
5% and 10% rates set by the Securities and Exchange Commission and should
not be considered as a forecast of future stock prices.
</TABLE>
The table below reports exercises of stock options and SARs by the Named
Officers during fiscal 1994 and the value of their unexercised stock options
and SARs as of August 31, 1994. The stock options were granted under the
Company's Management Incentive Stock Plan and Employee Stock Option Plan.
The Company has not granted SARs to any of the Named Officers.
<TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year
and FY-End Option/SAR Values
<CAPTION>
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options/SARs at Options/SARs at
Shares FY-End FY-End (1)
Acquired on Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
__________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
Ralph Erben --- $ --- 35,025/13,850 $231,346/$65,200
John B. Lahourcade --- --- 6,000/0 43,980/0
John E. Curtis, Jr. 1,200 8,604 20,613/8,500 132,943/42,225
William E. Robson 2,513 18,106 16,600/8,500 104,063/42,225
Davis W. Simpson --- --- 15,355/6,150 98,347/31,488
<FN>
(1) The value of unexercised options is based on a price of $23.50 per common
share at August 31, 1994.
</TABLE>
The following table reports performance units granted to the Named
Officers during fiscal 1994 under the Company's Performance Unit Plan and
the Company's Management Incentive Stock Plan:
<TABLE>
Long-Term Incentive Plans - Awards in Last Fiscal Year
Estimated Future Payouts under Non-Stock Price Based Plans
<CAPTION>
Performance Estimated Future Payouts Under
Number of or Other Period Non-Stock Price Based Plans
Shares/Units Until Maturation ________________________________
Name or Other Rights or Payout Threshold Target Maximum
_________________ _______________ ________________ ________________________________
<S> <C> <C> <C> <C> <C>
Ralph Erben 4,500 1994-96 $58,298 $116,595 $174,893
John B. Lahourcade --- --- --- --- ---
John E. Curtis, Jr. 2,100 1994-96 27,206 54,411 81,617
William E. Robson 2,100 1994-96 27,206 54,411 81,617
Davis W. Simpson 1,000 1994-96 12,955 25,910 38,865
</TABLE>
The performance units described in the above table were granted in
October 1993 for the three-year performance cycle ending August 31, 1996.
At the end of the performance cycle, performance awards are made
in cash or in shares of common stock, or both, based upon the attainment
by the Company of certain performance goals during the three-year cycle.
Each performance unit is assigned a performance factor, which is a
percentage (not exceeding 150%) resulting from achievement of the
performance goals established at the date of grant. Each performance
unit is assigned a payment value, which is a dollar amount determined by
multiplying the performance factor by the average market price of the
common stock of the Company on 20 trading days immediately preceding the
end of the performance cycle. If the performance goals are not achieved,
a lesser performance factor is assigned (not below 50%), with no future
payouts if achievement is below 78% of goal - "Threshold." The values
included in the above table assume a 5% annual growth rate in the price
of the Company's common stock subsequent to August 31, 1994; however,
this assumption should not be considered as a forecast of future stock
prices.
DEFERRED COMPENSATION
The Company has deferred compensation agreements with several
officers and former officers of the Company. Under the agreements, the
Company is obligated to provide annual benefits for each such officer or
his beneficiaries during a period of ten years after his death,
disability or retirement. The agreements are unfunded, but the Company
has purchased life insurance as a means of partially offsetting the cost
of such benefits. The estimated annual benefits payable upon retirement
at normal retirement age for each of the Named Officers are as follows:
Ralph Erben, $32,100; John B. Lahourcade, $43,400; John E. Curtis, Jr.,
$0; William E. Robson, $24,200; and Davis W. Simpson, $0.
On October 27, 1994, the Board of Directors adopted a Nonemployee
Director Deferred Compensation Plan to become effective January 1, 1995.
Such plan, when effective, will permit nonemployee directors to defer all
or a portion of their directors' fees in accordance with applicable
regulations under the Internal Revenue Code. Deferred amounts will bear
interest at the average interest rate of U.S. Treasury ten-year
obligations. The Company's obligation to pay deferred amounts will be
unfunded and will be payable from general assets of the Company.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors (the
"Committee") presents the following report on executive compensation.
The report describes the Company's executive compensation programs and
the bases on which the Committee made compensation decisions for fiscal
1994 with respect to the Company's executive officers, including those
named in the compensation tables.
Compensation Objectives
The Committee conducts an annual review of the Company's executive
compensation program. The objectives of the executive compensation
program include the following:
To offer fair and competitive base salaries consistent with the
Company's position in the food service industry;
To reward executives for corporate and individual performance
through an annual incentive bonus program;
To encourage future performance through the use of long-term
incentives such as stock options and performance units; and
To encourage executives to acquire and retain ownership of the
Company's common stock.
The Company's executive compensation program is designed to enable
the Company to attract, retain and motivate the highest quality of
management talent. To achieve that objective, the Committee has
developed a compensation program which combines annual base salaries with
annual and long-term incentives tied to corporate performance and to
increases in shareholder value.
Annual Base Salaries
The Committee annually establishes the base salaries to be paid to
the Company's executive officers during the coming year, subject to
approval by the Board of Directors. In setting base salaries, the
Committee takes into account several factors, including the executive's
experience, responsibilities, management abilities and job performance,
as well as performance of the Company as a whole and competitive
compensation data.
Annual Incentive Bonuses
The Company's annual incentive bonus plan for executive officers and
other key personnel directly links annual cash incentive payments to the
attainment of predetermined earnings per share goals established by the
Committee and approved by the Board of Directors. Eligible executives
are assigned threshold, target and maximum bonus levels as a percentage
of base salary, based upon increase in earnings per share over the prior
year.
For fiscal 1994, the incentive compensation targets for executive
officers ranged from 10% to 30% of base salary if targeted earnings per
share were attained, with maximums ranging from 15% to 45% of base
salary. As a result of the 11% increase in earnings per share for fiscal
1994 over fiscal 1993, maximum cash incentive bonuses were paid to
executive officers for fiscal 1994, amounting to approximately 26% of
their base salaries as a group.
Stock Options
The Committee normally grants incentive stock options annually to
eligible executive officers and other key employees. The options, which
are granted at 100% of market price on the date of grant, are usually for
six-year terms exercisable 50% after one year and 100% after two years.
The number of option shares granted each year is normally determined by
a formula based upon the executive's base salary and the market price of
the common stock. The number of option shares granted will vary based
upon position level, with the more senior officers receiving larger
grants. The number of option shares held by an executive is not
considered in determining stock option awards.
Performance Units
The Committee (with the approval of the Board of Directors) normally
grants performance units annually to eligible executive officers and
other key employees based upon attainment by the Company of predetermined
earnings per share goals over a performance cycle of three consecutive
years. The goals are established by the Committee and approved by the
Board of Directors.
During fiscal 1994, performance awards were granted to eligible
executive officers for the three-year performance cycle ending August 31,
1996. The number of performance units granted is normally determined by
a formula based upon the executive's base salary and the market price of
the common stock. Performance units are payable at the end of each
performance cycle in cash or shares of common stock, or both, if the
performance goals for the cycle are attained. Performance unit payments
were made in November 1994 for the three-year performance cycle which ended
August 31, 1994, amounting to $189,620.
Compensation of Chief Executive Officer
During the six months ended March 31, 1993, the Company's net income
increased 15% over the same period in the prior fiscal year. On the
basis of that performance, and on the basis of competitive market data
provided by an independent consultant, the Committee recommended (and the
Board approved) a 10% increase in Mr. Erben's annual base salary to
$330,000, effective March 1, 1993. His annual base salary has not been
increased since that date.
For fiscal 1994, Mr. Erben received an incentive bonus of $148,500
under the Company's annual incentive bonus plan discussed above. The
bonus, which equals 45% of his current base salary, represents the
maximum bonus he could receive under the plan for fiscal 1994. The
Committee determined that, under the terms of the annual incentive bonus
plan, the increase in earnings per share for fiscal 1994 over fiscal 1993
entitled Mr. Erben (as well as the other participants) to be paid maximum
incentive bonuses under the plan for fiscal 1994.
Mr. Erben was granted an incentive stock option on October 11, 1993,
for 4,500 shares under the incentive stock plan. The number of shares
was determined in accordance with the formula discussed above. During
fiscal 1994, Mr. Erben exercised no stock options granted in prior years
under the plan.
On October 14, 1993, Mr. Erben was granted 4,500 performance units
under the Company's management incentive stock plan for the three-year
performance cycle ending August 31, 1996. The number of units was
determined in accordance with the formula discussed above. Mr. Erben
received a performance unit payment for the three-year performance cycle
which ended August 31, 1994, having a payment value of $65,629.
Members of the Committee:
Walter J. Salmon, Chairman
Roger R. Hemminghaus
George H. Wenglein
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
on the Company's common stock for the five fiscal years ended August 31,
1994, with the cumulative total return on the S&P 500 Index and the S&P
Restaurant Industry Index. The cumulative total shareholder return
computations set forth in the performance graph assume the investment of
$100 in the Company's common stock, the S&P 500 Index and the S&P
Restaurant Industry Index on September 1, 1989, and reinvestment of all
dividends.
The performance graph has been omitted in the EDGAR filing. A table
of the graph's data points is shown below.
<TABLE>
Five Year Cumulative Total Return
<CAPTION>
Years Ended August 31,
___________________________________________________
1989 1990 1991 1992 1993 1994
<S> <C> <C> <C> <C> <C> <C>
Luby's Cafeterias, Inc. $100 115 111 100 166 156
S&P 500 $100 95 121 130 150 158
S&P Restaurants $100 98 118 150 192 198
</TABLE>
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
On October 27, 1994, the Board of Directors adopted a Nonemployee Director
Stock Option Plan (the "Nonemployee Director Plan"), to be effective
only upon approval by the shareholders of the Company at the 1995 Annual
Meeting of Shareholders. If the Nonemployee Director Plan is not approved
by the shareholders at such meeting, it shall become automatically void.
The following summary description of the Nonemployee Director Plan is
qualified in its entirety by reference to the complete text of the
Nonemployee Director Plan attached as Exhibit A to this Proxy Statement.
Purpose
The purpose of the Nonemployee Director Plan is to strengthen the
Company's ability to attract and retain the services of experienced and
knowledgeable nonemployee directors. To accomplish these objectives, the
Nonemployee Director Plan authorizes the grant of options to purchase shares
of the Company's common stock to directors of the Company who are not
employees of the Company ("nonemployee directors"). There are currently five
nonemployee directors, being Lauro F. Cavazos, David B. Daviss, Roger R.
Hemminghaus, Walter J. Salmon, and Joanne Winik.
Grant of Options
Each nonemployee director, as of the effective date of the Nonemployee
Director Plan, shall be granted an option on such date, based upon the
remaining years of service in his or her current term as a director,
to purchase shares according to the following classifications: three
years remaining in term as of effective date - 5,000 shares; two years
remaining in term as of effective date - 3,333 shares; and one year remaining
in term as of effective date - 1,666 shares. A Nonemployee Director who is first
elected after the effective date of the Nonemployee Director Plan shall be
granted an option, when elected, to purchase 5,000 shares is elected to a
three-eyar term; 3,333 shares if elected to a term of two or more but less
than three years; or 1,666 shares if elected to a term of less than two years.
After the effective date of the Nonemployee Director Plan, each director
who has been previously granted an option under the Plan shall be granted an
additional option to purchase 5,000 shares upon each reelection to the
Board of Directors.
Option Price and Term
Only nonqualified options may be granted under the Nonemployee Director
Plan. The option price of each option granted shall be 100% of fair
market value on the date of grant. Each option shall terminate upon the
expiration of ten years from the date of grant or one year after the optionee
ceases to be a director, whichever first occurs.
An option granted under the Nonemployee Director Plan may not be exercised
prior to the expiration of five years from the date of grant, with certain
exceptions. Each option shall become immediately and fully exercisable in the
event of (i) death of the optionee, (ii) resignation or removal of the optionee
as a director because of long-term disability, (iii) resignation of the
optionee as a director after having served at least two full terms, and (iv)
expiration of the optionee's term without being reelected after having
served at least two full terms.
Administration and Amendment
The Nonemployee Director Plan will be administered by the Board of
Directors. It may be terminated, suspended, or amended as the Board of
Directors deems advisable unless shareholder approval is required by Rule
16b-3 under the Securities Exchange Act.
Nontransferability
No option granted under the Nonemployee Director Plan may be transferred,
assigned, pledged, or hypothecated in any way except by will or the laws of
descent and distribution. During the nonemployee director's lifetime, an
option may be exercised only by the nonemployee director or his or her legal
representative or guardian.
Number of Shares
The number of shares which may be issued upon exercise of options granted
under the Nonemployee Director Plan is 100,000 shares of common stock, subject
to appropriate adjustment in the number and kind of options in the event of a
reorganization, stock split, merger, or other change in capitalization.
Tax Consequences
For Federal income tax purposes, the grant of a nonqualified stock option
should not result in recognition of income by the optionee. If the optionee is
subject to Section 16 of the Securities Exchange Act, special rules will apply
if the option is exercised during the period of time (the "Section 16(b)
Period") within six months of the date it is issued. In such case, the
optionee will not recognize ordinary income and the Company will not be
entitled to a deduction until the expiration of the Section 16(b) Period.
Upon such expiration, the optionee will recognize ordinary income,
and the Company will be entitled to a deduction, equal to the excess of
the fair market value of the stock (determined as of the expiration of the
Section 16(b) Period) over the option exercise price. Such an optionee may
elect under Section 83(b) of the Internal Revenue Code to recognize ordinary
income on the date of exercise, in which case the Company would
be entitled to a deduction at that time equal to the amount of the ordinary
income recognized. Upon exercise of the option, the optionee will generally
recognize ordinary income in an amount equal to the excess of the fair market
value of the stock acquired upon exercise (determined as of the date of
exercise) over the exercise price of such option, and the Company will be
entitled to a deduction equal to such amount.
The amount of compensation income realized as a result of the exercise of
non-qualified options is subject to income tax withholding by the Company. An
optionee may be required to pay to the Company the amount of taxes required
to be withheld even though no cash compensation has been received at the time
of exercise.
If a nonqualified option is exercised by the transfer of previously
acquired shares, and if the fair market value of the shares received
by the optionee equals the fair market value of the shares surrendered,
a tax-free exchange results, with the basis of the stock received being equal
to the basis of the stock surrendered. If, however, the fair market value of
the stock received by the optionee exceeds the fair market value of the stock
delivered, the number of shares received in excess of the number delivered
is treated as compensation taxable as ordinary income.
General
Due to the five-year period which generally must expire before options
granted under the Nonemployee Director Plan may be exercised, it is not
possible to state the dollar value which may be realized by a nonemployee
director upon exercise of his or her options.
If the Nonemployee Director Plan had been in effect during the last fiscal
year, each of the following nonemployee directors would have received
an option at $23.25 per share to purchase the number of shares indicated:
Lauro F. Cavazos - 1,666 shares; David B. Daviss - 3,333 shares; Roger R.
Hemminghaus - 3,333 shares; Walter J. Salmon - 5,000 shares; and
Joanne Winik - 5,000 shares.
The affirmative vote of a majority of the shares present at the meeting in
person and by proxy is required for approval of the Nonemployee Director Plan.
The Board of Directors recommends that the shareholders vote FOR approval
of the Nonemployee Director Plan.
APPOINTMENT OF AUDITORS
The Board of Directors of the Company has appointed the firm of Ernst &
Young LLP to audit the accounts of the Company for the 1995 fiscal year.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting of Shareholders with the opportunity to make a statement if they
desire to do so and are expected to be available to respond to appropriate
questions.
Approval of the appointment of auditors is not a matter which is
required to be submitted to a vote of shareholders, but the Board of
Directors considers it appropriate for the shareholders to express or
withhold their approval of the appointment. If shareholder approval
should be withheld, the Board would consider an alternative appointment
for the succeeding fiscal year. The Board recommends that the
shareholders vote FOR approval of the appointment of Ernst & Young LLP.
The affirmative vote of a majority of the shares present at the meeting
in person and by proxy is required for approval.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals of shareholders intended to be presented at the 1996
Annual Meeting of Shareholders must be received in writing by the Company
at its corporate office no later than August 5, 1995. The Company's
corporate office is located at 2211 Northeast Loop 410, P. O. Box 33069,
San Antonio, Texas 78265-3069.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. To
assist in the proxy solicitation, the Company has engaged W. F. Doring
& Co. for a fee of $1,500 plus reimbursement for out-of-pocket expenses.
Proxies may be solicited through the mail and through telephonic or
telegraphic communications to, or by meetings with, shareholders or their
representatives by directors, officers and other employees of the Company
who will receive no additional compensation therefor.
The Company requests persons such as brokers, nominees and
fiduciaries holding stock in their names for others, or holding stock for
others who have the right to give voting instructions, to forward proxy
material to their principals and to request authority for the execution
of the proxy, and the Company reimburses such persons for their
reasonable expenses.
OTHER MATTERS
No business other than the matters set forth in this proxy statement
is expected to come before the meeting, but should any other matters
requiring a vote of shareholders arise, including a question of
adjourning the meeting, the persons named in the accompanying proxy will
vote thereon according to their best judgment in the interest of the
Company.
LUBY'S CAFETERIAS, INC.
JAMES R. HALE
________________________
James R. Hale, Secretary
Dated: December 2, 1994<PAGE>
LUBY'S CAFETERIAS, INC.
c/o Society Shareholder Services
1201 Elm Street, Suite 5050 - Dallas, Texas 75270
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Ralph Erben, John B. Lahourcade and George H.
Wenglein, and each of them, as Proxies, each with the power to appoint his
substitute, and hereby authorizes each of them to represent and to vote, as
designated below, all the shares of Common Stock of Luby's Cafeterias, Inc.
held on record by the undersigned on November 15, 1994, at the Annual Meeting
of Shareholders to be held on January 13, 1995, or any adjournment thereof.
Election of Directors, Nominees:
Lauro F. Cavazos, John B. Lahourcade, George H. Wenglein
This proxy when properly executed will be voted in the manner directed herein
by the undersigned shareholder. If no direction is made, this proxy will be
voted for proposals 1, 2 and 3. Please mark, sign, date and return the proxy
card promptly, using the enclosed envelope.
[X] Please mark your votes as in this example.
1. Election of Directors (see reverse)
[ ] FOR [ ] WITHHELD
For, except vote withheld from the following nominee(s):
________________________________
2. Proposale to adopt the nonemployee director stock option plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve the appointment of Ernst & Young LLP as the independent
public accountants of the corporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
SIGNATURE(S)_________________________________________DATE_________________
SIGNATURE(S)_________________________________________DATE_________________
NOTE: Please sign exactly as name appears. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
EXHIBIT "A"
LUBY'S CAFETERIAS, INC.
NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Introduction and Purpose
The purpose of the Luby's Cafeterias, Inc. Nonemployee Director Stock
Option Plan (the "Plan") is to promote the interests of Luby's Cafeterias,
Inc. (the "Company") and its shareholders by strengthening the Company's
ability to attract and retain the services of experienced and
knowledgeable Nonemployee Directors. To accomplish these objectives, the
Plan authorizes awards of options (the "Options") to purchase shares of
the Company's common stock par value $.32 per share ("Common Stock") to
Nonemployee Directors, thereby encouraging such directors to acquire an
increased proprietary interest in the Company.
The Plan shall be effective immediately upon approval of the Plan by the
shareholders of the Company at the 1995 annual meeting of shareholders.
If the Plan is not approved by the shareholders at such meeting it shall
become automatically void.
2. Administration
The Plan shall be administered by the Board of Directors of the Company
(the "Board"). The decision of the Board on any questions concerning the
interpretation or administration of the Plan shall, as between the Company
and the Option holders, be final and conclusive. The Board may consult
with counsel, who may be counsel to the Company, and shall not incur any
liability for any action taken in good faith in reliance upon the advice
of counsel. Grants of Options under Section 6 hereof shall be subject to
approval by the Board and shall become effective upon the dates specified
in Section 6.
3. Types of Options
Options granted under the Plan do not meet the requirements of Section 422
of the Internal Revenue Code and are commonly referred to as "non-
qualified stock options."
4. Participants
Participants shall be the directors of the Company who are not employees
of the Company ("Nonemployee Directors").
5. Shares
Subject to the adjustment provisions of Section 8, the number of shares of
Common Stock of the Company which may be issued upon exercise of Options
granted pursuant to the Plan shall not exceed 100,000 shares. If,
however, any Option granted under the Plan shall expire, terminate or be
cancelled without having been exercised in full, the unpurchased shares
shall continue to be available for purposes of the Plan. More than one
Option may be granted to the same participant.
6. Grant of Options
(a) Initial Grants. Each person who is a Nonemployee Director on the
effective date of the Plan who has three years remaining in his or
her term as an elected Director shall automatically be granted, as
of such date, an Option to purchase 5,000 shares of Common Stock.
Each person who is a Nonemployee Director on the effective date of
the Plan who has only two years remaining in his or her term as an
elected Director shall automatically be granted, as of such date, an
Option to purchase 3,333 shares of Common Stock. Each person who is
a Nonemployee Director on the effective date of the Plan who has
only one year remaining in his or her term as an elected Director
shall automatically be granted, as of such date, an Option to
purchase 1,666 shares of Common Stock.
(b) New Nonemployee Directors. Each person who has not previously
served as a Director of the Company and becomes a Nonemployee
Director after the effective date of the Plan, automatically shall
be granted, as of the date such person becomes a Nonemployee
Director, (i) an Option to purchase 5,000 shares of Common Stock if
elected to an initial term of three years, (ii) an Option to
purchase 3,333 shares of Common Stock if elected to an initial term
of two years or more but less than three years, or (iii) an Option
to purchase 1,666 shares of Common Stock if elected to an initial
term of less than two years.
(c) Subsequent Grants. Each Nonemployee Director who has been granted
an Option under subsection (a) or (b) above, who fulfills his or her
term, and who is reelected to the Board, automatically shall be
granted, as of the date of each such reelection, an Option to
purchase 5,000 shares of Common Stock.
7. Listing and Registration
The Company, in its discretion, may postpone the issuance and delivery of
shares, upon exercise of an Option, until completion of such stock
exchange listing, or registration, or other qualification of such shares
under any Federal or state law, rule, or regulation, as the Company may
consider appropriate. The Company may require any person exercising an
Option to make such representations and to furnish such information as the
Company may consider appropriate in connection with the issuance of the
shares in compliance with applicable law.
8. Adjustment Provisions
In the event the outstanding shares of Common Stock of the Company are
increased or decreased or changed into or exchanged for a different number
or kind of shares or other securities of the Company or another
corporation, through reorganization, merger, consolidation, liquidation,
recapitalization, reclassification, stock split-up, combination of shares,
or dividend payable in stock of the class which is subject to the Plan,
appropriate adjustment in the number and kind of shares as to which
Options may be granted and as to which Options or portions thereof then
unexercised shall be exercisable, and in the option price thereof, shall
be made to the end that the proportionate number of shares or other
securities as to which Options may be granted and the Option holder's
proportionate interest under outstanding Options shall be maintained as
before the occurrence of such event.
9. Option Price
The option price shall be 100% of the Fair Market Value of the shares at
the time of the granting of the Option. Such Fair Market Value shall be
determined by the Board and shall be the closing price of the Common Stock
on the New York Stock Exchange on the day on which the Option is granted
or, if no sale of the Common Stock shall have been made on the Exchange on
that day, then on the next preceding day on which a sale was made.
10. Payment for Shares
Payment for shares purchased upon exercise of an Option shall be made in
full at the time of exercise of the Option. No loan shall be made or
guaranteed by the Company for the purpose of financing the purchase of any
optioned shares. Payment of the option price shall be made in cash, or by
delivering Common Stock of the Company having a Fair Market Value
(determined as provided in Section 9) at least equal to the option price,
or a combination of Common Stock and cash. Payment in shares of Common
Stock shall be made by delivering to the Company certificates, duly
endorsed for transfer, representing shares of Common Stock having an
aggregate Fair Market Value on the date of exercise equal to that portion
of the option price which is to be paid in Common stock. Whenever payment
of the option price would require delivery of a fractional share, the
optionee shall deliver the next lower whole number of shares of Common
Stock and a cash payment shall be made by the optionee for the balance of
the option price.
11. Terms and Exercise of Options
(a) Term. An Option shall terminate upon the expiration of ten years
from the date the Option is granted or one year from the date the
optionee ceases to be a Director of the Company, whichever first
occurs (the "Expiration Date"). In no event shall an Option be
exercised after the Expiration Date.
(b) Exercise. To the extent that an Option is exercisable, it may be
exercised by the optionee or the legal representative of the
optionee or the legal representative of the optionee's estate.
Except as provided in subsection (c) below, an Option may not be
exercised prior to the expiration of five years from the date the
Option is granted. Once an Option becomes exercisable, it may
thereafter be exercised, wholly or in part, at any time prior to its
Expiration Date.
(c) Acceleration. Upon the occurrence of any of the following events
prior to the Expiration Date of an Option, the Option shall become
immediately and fully exercisable:
(i) death of the optionee;
(ii) resignation or removal of the optionee as a Director of
the Company by reason of a physical or mental impairment
which prevents the optionee from performing the duties
of his or her directorship for a period of six months or
more;
(iii) resignation of the optionee as a Director of the Company
after having served at least two full terms as a Director; or
(iv) expiration of the optionee's term of office as a
Director of the Company, without being reelected to the
Board, after having served at least two full terms as a
Director.
12. Transferability
No Option shall be assignable or transferable other than by will or the
laws of descent and distribution. During an optionee's lifetime, only the
optionee or his or her guardian or legal representative may exercise an
Option.
13. Provision for Taxes
It shall be a condition to the Company's obligation to issue or reissue
shares of Common Stock upon exercise of an Option that the optionee pay,
or make provision satisfactory to the Company for payment of, any federal
or state income or other taxes which the Company is obligated to withhold
or collect with respect to the issuance or reissuance of such shares.
14. Term of Plan
Subject to the provisions of Section 16, the Plan shall continue in
effect until the maximum number of shares of Common Stock issuable under
the Plan have been issued.
15. Restrictions on Exercise
Any provision of the Plan to the contrary notwithstanding, no Option
granted pursuant to the Plan shall be exercisable at any time, in whole or
in part, (i) prior to the shares of Common Stock subject to the Option
being authorized for listing on the New York Stock Exchange or (ii) if
issuance and delivery of the shares of Common Stock subject to the Option
would be in violation of any applicable laws or governmental regulations.
16. Amendment and Termination
Subject to the limitation that the provisions of the Plan shall not be
amended more than once every six months other than to comport with changes
in the Internal Revenue Code, the Employee Retirement Income Security Act,
or the rules thereunder, the Board may at any time amend, suspend or
discontinue the Plan or alter or amend any or all Options under the Plan
to the extent permitted by law. However, no such action by the Board may,
without approval of the shareholders of the Company, alter the provisions
of the Plan so as to:
(a) increase the maximum number of shares of Common Stock that may be
issued upon exercise of Options granted under the Plan except
pursuant to Section 8;
(b) change the class of individuals eligible to receive Options under
the Plan; or
(c) effect any other amendment to the Plan for which approval of the
Company's shareholders is required by Rule 16b-3 under the
Securities Exchange Act of 1934.
17. Unfunded Plan
The Plan shall be unfunded. Neither the Company nor the Board shall be
required to segregate any assets in connection with Options issued
pursuant to the Plan. Any liability of the Company to any Nonemployee
Director with respect to an Option shall be based solely upon contractual
obligations created by the Plan and any Option Agreement. No such
obligation shall be deemed to be secured by any pledge or any encumbrance
on any property of the Company.
18. Governing Law
This Plan shall be governed by, construed and enforced in accordance with
the internal laws of the State of Delaware, and, where applicable, the
laws of the United States.
