<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
BFX HOSPITALITY GROUP, INC
(Name of Registrant as Specified In Its Charter)
BFX HOSPITALITY GROUP, INC
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No Fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
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<PAGE>
BFX HOSPITALITY GROUP, INC.
226 Bailey Avenue, Suite 101
Fort Worth, Texas 76107
(817) 332-4761
Dear Fellow Stockholder,
You are cordially invited to attend the 2000 Annual Meeting of Stockholders
of BFX Hospitality Group, Inc., a Delaware corporation (the "Company" or "BFX"),
to be held in the Camellia II Room of the Fort Worth Club, 12th Floor, 306 W.
7th Street, Fort Worth, Texas on February 22, 2000, at 10:00 o'clock a.m.
(C.S.T.) (including any adjournment or postponement thereof, the "Annual
Meeting").
At the Annual Meeting, you will be asked (i) to elect two members to the
Company's Board of Directors (the "Board") to serve for three-year terms
expiring in 2003; and (ii) to transact such other business as may properly come
before the Annual Meeting.
Details of the items of business scheduled for the Annual Meeting appear in
the accompanying Proxy Statement. Please give this material your careful
attention.
To be elected to the Board, each nominee must receive the favorable vote of
a plurality of the shares of Common Stock represented and entitled to vote at
the Annual Meeting. Each share of Common Stock is entitled to one vote on each
matter to be acted upon or which may properly come before the Annual Meeting.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to attend the Annual
Meeting, please complete, sign and date the enclosed proxy card and mail it
promptly using the enclosed, pre-addressed, postage-paid, return envelope. If
you attend the Annual Meeting, you may vote in person if you wish, even if you
have previously returned your proxy card. Your prompt attention will be greatly
appreciated.
Very truly yours,
/s/ Robert H. McLean
--------------------
Robert H. McLean
Chief Executive Officer
<PAGE>
BFX HOSPITALITY GROUP, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
February 22, 2000
TO THE STOCKHOLDERS:
The Annual Meeting of the Stockholders of BFX Hospitality Group, Inc. (the
"Company" or "BFX") will be held in the Camellia II Room of the Fort Worth Club,
12th Floor, 306 W. 7th Street, Fort Worth, Texas on Tuesday, February 22, 2000,
at 10:00 o'clock a.m. (C.S.T.) (including any adjournment or postponement
thereof, the "Annual Meeting"), for the following purposes:
1. To elect two members to the Board of Directors of the Company (the
"Board") to serve for three-year terms expiring in 2003;
2. To transact such other business as may properly come before the Annual
Meeting.
The Board has fixed the close of business on January 7, 2000 as the record
date (the "Record Date") for the determination of the stockholders entitled to
notice of and to vote at the Annual Meeting. Accordingly, only holders of
record of the Company's common stock, $.05 par value per share (the "Common
Stock"), at the close of business on the Record Date will be entitled to vote at
the Annual Meeting, either by proxy or in person. Each share of Common Stock is
entitled to one vote on each matter to be acted upon or which may properly come
before the Annual Meeting.
To be elected to the Board, each nominee must receive the favorable vote of
a plurality of the shares of Common Stock represented and entitled to vote at
the Annual Meeting.
It is important that your shares be represented at the Annual Meeting. Whether
or not you plan to attend the Annual Meeting, please complete, sign and date the
enclosed proxy card and mail it promptly using the enclosed pre-addressed,
postage-paid, return envelope. If you attend the Annual Meeting, you may vote
in person if you wish, even if you have previously returned your proxy card.
Your prompt attention is appreciated.
By Order of the Board of Directors,
/s/ Robert Korman
-----------------
Robert Korman
Secretary
Fort Worth, Texas
Dated January 28, 2000
<PAGE>
BFX HOSPITALITY GROUP, INC.
226 Bailey Avenue, Suite 101
Fort Worth, Texas 76107
(817) 332-4761
____________________
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
to be held on
February 22, 2000
___________________
GENERAL MATTERS
Time, Date and Place
This Proxy Statement is being furnished in connection with the solicitation
of proxies by the Board of Directors (the "Board") of BFX Hospitality Group,
Inc., a Delaware corporation (the "Company" or "BFX"), for use at the Annual
Meeting of Stockholders, including any adjournment or postponement thereof (the
"Annual Meeting"). The Annual Meeting will be held at 10:00 o'clock a.m.
(C.S.T.) on Tuesday, February 22, 2000 in the Camellia II Room of the Fort Worth
Club, 12th Floor, 306 W. 7th Street, Fort Worth, Texas.
Matters to be Considered at the Annual Meeting
At the Annual Meeting, stockholders of the Company will be asked (i) to
elect two members to the Board of Directors to serve for three-year terms
expiring in 2003, and (ii) to transact such other business as may properly come
before the Annual Meeting.
Record Date, Voting Securities and Quorum
The Board has fixed the close of business on January 7, 2000 as the record
date (the "Record Date") for the determination of the stockholders entitled to
notice of and to vote at the Annual Meeting. Accordingly, only holders of
record of the Company's common stock, $.05 par value per share (the "Common
Stock"), at the close of business on the Record Date will be entitled to vote at
the Annual Meeting, either by proxy or in person. This Proxy Statement and the
accompanying proxy card are being mailed to the Company's stockholders on or
about January 28, 2000.
Each share of Common Stock is entitled to one vote on each matter to be
acted upon or which may properly come before the Annual Meeting. As of the
Record Date, there were 3,968,866 shares of Common Stock outstanding and
entitled to vote. The Common Stock constitutes the only class of securities
entitled to vote at the Annual Meeting.
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the shares of Common Stock outstanding on the Record Date will
constitute a quorum at the Annual Meeting. Votes cast by proxy or in person at
the Annual Meeting will be counted by the persons appointed by the Company to
act as the inspectors for the meeting. The presiding officer of the meeting
will appoint two independent election judges to count votes at the Annual
Meeting. One of the two judges shall be a representative of the Company's
Registrar and Transfer Agent. Shares represented by proxies that reflect
abstentions or include "broker non-votes" will be treated as shares that are
present and entitled to vote for purposes of determining the presence of a
quorum. In the event that a quorum is not present at the Annual Meeting, it is
expected that the meeting will be adjourned or postponed to solicit additional
proxies. The persons named as proxies with respect to the Annual Meeting may
propose and vote for one or more adjournments of the Annual Meeting to permit
further solicitation of proxies in favor of the proposals; provided, however,
that no proxy which is voted against any of the proposals will be voted in favor
of any such adjournment or postponement.
1
<PAGE>
Vote Required
The Company's Bylaws provide that the majority of the shares entitled to
vote, present in person or represented by proxy, constitutes a quorum. The
Company's Bylaws further provide that in all matters other than the election of
Directors, the affirmative vote of the majority of shares, present in person or
represented by proxy at the meeting and entitled to vote on the subject matter,
shall be the act of the shareholders. With respect to the election of
Directors, the Company's Bylaws provide that a plurality of the votes cast by
the holders of shares entitled to vote and represented, in person or by proxy,
at an annual meeting shall be the act of the shareholders. If a shareholder
abstains from voting by not attending the Annual Meeting in person or by proxy,
the effect of that abstention would be to reduce the number of shares present at
the Annual Meeting for the purposes of determining whether a quorum exists.
After a quorum is found to exist, abstentions by those represented in person or
by proxy at the meeting and "broker non-votes" are treated as failures to vote.
Since Director nominees are elected by a plurality of the votes cast, an
abstention or "broker non-vote" has no effect upon the outcome of an election.
The Company's Bylaws are consistent with Delaware corporate law; therefore, the
effect of abstentions and broker non-votes is the same under either.
Proxies
Shares of Common Stock which are represented by properly executed proxy
cards received by the Company at or prior to the Annual Meeting, and not duly
and timely revoked, will be voted according to the instructions indicated on the
proxy card. Unless contrary instructions are given, the persons named on the
proxy card intend to vote the shares of Common Stock so represented FOR all
listed nominees for director.
The Board is not currently aware of any other matters which are to be
presented at the Annual Meeting. As to any other business which may properly
come before the Annual Meeting, the persons named on the proxy card for the
Common Stock will vote according to their best judgment.
Any holder of Common Stock has the power to revoke his or her proxy at any
time before it is voted at the Annual Meeting by delivering a written notice of
revocation to the Secretary of the Company, by a duly executed proxy bearing a
later date, or by voting by ballot at the Annual Meeting.
All expenses of this solicitation, including the cost of preparing,
assembling, and mailing this proxy soliciting material and Notice of Annual
Meeting of Stockholders, will be paid by the Company. Additional solicitation
of holders of Common Stock by mail, telephone, telegraph or by personal
solicitation may be done by directors, officers and regular employees of the
Company, for which they will receive no additional compensation. The Company
has retained Beacon Hill Partners, Inc. to assist it in connection with the
solicitation of proxies. In connection therewith, the Company will pay Beacon
Hill Partners, Inc. $2,500 plus expenses. Brokerage houses and other nominees,
fiduciaries and custodians nominally holding shares of Common Stock as of the
Record Date will be requested to forward proxy soliciting material to the
beneficial owners of such shares, and will be reimbursed by the Company for
their reasonable expenses.
2
<PAGE>
ELECTION OF DIRECTORS
Nominees for Election as Directors
The Company's Certificate of Incorporation provides that the Company's
Board shall be divided into three classes, as nearly equal in size as possible,
each of which is to serve for a term of three years.
The nominees for Director are Walter D. Rogers, Jr. and Hampton Hodges.
The nominees have been nominated for reelection by the Board to serve for a
three-year term expiring in 2003. The nominees are currently serving as
Directors and have consented to serve for the new term.
The following table reflects the name and age of each nominee, the position
and office with the Company currently held by the nominee, the period of service
as Director of the Company, and the term for which such nominee will serve, if
elected.
Position Held Term to
Nominee's Name Age With the Company Director Since Expire
- ----------------------- ------- ---------------- -------------- ------
Walter D. Rogers, Jr. 55 Director February 1995 2003
Hampton Hodges 62 Director November 1980 2003
To be elected as a Director, each nominee must receive the favorable vote of a
plurality of the shares represented and entitled to vote at the Annual Meeting.
The persons named in the enclosed form of Proxy, unless otherwise directed
therein, intend to vote such Proxy FOR the election of each nominee named herein
as a Director of the Company. If any nominee becomes unavailable for any
reason, the persons named in the form of Proxy are expected to consult with
management of the Company in voting the shares represented by them. The
management of the Company has no reason to doubt the availability of each
nominee to serve and no reason to believe that each nominee will be unavailable
or unwilling to serve if elected to office. To the knowledge of management,
each nominee intends to serve the term for which election is sought.
Business Experience. The following is a brief summary of the business
experience of each of the nominees for election as a Director and of each of the
continuing Directors for the past five years.
Nominees
WALTER D. ROGERS, JR. has been engaged in personal investments since January
1999. Mr. Rogers served as President of Current Technology, Inc. from May 1992
until June 1997 when the company was sold to Danaher Corporation. From June
1997 to January 1999, Mr. Rogers served as President of Current Technology, Inc.
Mr. Rogers served as Executive Vice President of Current Technology, Inc. from
October 1990 to May 1992 and served as Vice President of the Company between
March 1988 and October 1990. Mr. Rogers received a B.S. degree in Business
Administration and Accounting from the University of Alaska in 1972.
HAMPTON HODGES co-founded the Company in 1980 and has been engaged in personal
investments since 1985. Mr. Hodges received a Bachelor of Science degree from
the United States Military Academy at West Point in 1961.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH NOMINEE.
3
<PAGE>
Information Regarding Continuing Directors
The following table reflects the name and age of each of the continuing
Directors whose terms are not expiring, the positions and offices with the
Company currently held by each continuing Director, the period of service as a
Director of the Company, and the year in which such continuing Directors' terms
will expire.
Position Held Term to
Director's Name Age With the Company Director Since Expire
- --------------- --- ---------------- -------------- ------
Bruno V. D'Agostino 57 Director December 1991 2001
John M. Edgar 56 Director September 1987 2001
H. T. Hunnewell 73 Director January 1981 2002
Robert H. McLean 58 Director, Chairman of the January 1981 2001
Board, President and Chief
Executive Officer
Russell J. Sarno 64 Director December 1980 2002
Business Experience. The following is a brief summary of the business experience
of each of the continuing Directors for the past five years.
Continuing Directors
BRUNO V. D'AGOSTINO served from 1978 to 1987 as Senior Vice President of
Benjamin Thompson & Associates, a firm specializing in marketplace architecture.
In August 1987, Bruno D'Agostino became a founding partner of D'Agostino Izzo
Quirk Architects, and he continues to serve in that capacity, directing urban
design projects throughout the United States. Mr. D'Agostino received a B.A.
degree in Architecture from the University of Cincinnati in 1964, and a Masters
degree in Architecture and Urban Design from Harvard University in 1969.
JOHN M. EDGAR has been engaged in the private practice of law in Kansas
City, Missouri since 1968. Mr. Edgar is currently the managing partner of the
Kansas City office of the law firm of Bryan Cave LLP, and a member of such
firm's Management Committee. Mr. Edgar received a B.S. degree in Business
Administration and Accounting from the University of Kansas in 1965, and a J.D.
degree, with honors, from the University of Missouri at Kansas City in 1968.
H. T. HUNNEWELL serves as President of Twin Montana, Inc., an oil and gas
exploration and development company located in Graham, Texas since October 1991.
Mr. Hunnewell received a B.S. degree in Petroleum Engineering and a B.S. degree
in Geology from Texas A&M University in 1950.
ROBERT H. McLEAN co-founded the Company in 1980 and has served as Chief
Executive Officer of the Company since 1989. Mr. McLean has also served as
Chairman of the Board and President of the Company since September 1998. Mr.
McLean received a B.B.A. in Business Administration from the University of Texas
at Austin in 1963 and a L.L.B. from the University of Texas School of Law in
1966.
RUSSELL J. SARNO, since January 1, 1995, has served as President of Flo
Control, Inc., a California corporation and manufacturer of specialty fluid
control devices located in Burbank, California. For ten years prior to January
1, 1995, Mr. Sarno served as President of Flo Control, Inc., a Delaware
corporation and at the time, a wholly owned subsidiary of the Company.
4
<PAGE>
Relationships. There is no family relationship between any of the Directors
of the Company.
Meetings and Committees. In fiscal year 1999, the Board of Directors of the
Company met two times with all of the meetings being regularly scheduled. All of
the Directors serving on the Board during such period attended at least 75% of
the meetings held while each served as a Director during fiscal year 1999,
except for Russell J. Sarno who attended 60% of the meetings held.
The Board of Directors does not have a standing Nominating Committee.
The Compensation Committee, composed of John M. Edgar, Walter D. Rogers,
Jr., and Russell J. Sarno met two times in fiscal 1999. The Compensation
Committee generally assists the Board of Directors in fulfilling its
responsibilities relating to compensation arrangements for the Company's
executives and key employees. The members of the Compensation Committee are
selected at the regularly scheduled meeting of the Board of Directors
immediately following each Annual Meeting of Stockholders.
The Audit Committee composed of the following Directors: Bruno V.
D'Agostino, Russell J. Sarno and John M. Edgar met on February 11, 1999 to
discuss the results from the fiscal 1998 audit. The Audit Committee generally
assists the Board of Directors in fulfilling its responsibilities relating to
the Company's accounting policies, financial reporting practices, and
communication with the independent accountants. The members of the Audit
Committee are selected at the regularly scheduled meeting of the Board of
Directors immediately following each Annual Meeting of Stockholders.
Compensation of Directors
For the 1999 fiscal year, the outside members of the Board of Directors
were paid $800 per month. In addition, directors residing outside of Texas were
paid $1,000 per regular or committee meeting. Directors residing in Texas were
paid $500 per regular or committee meeting. Thus, outside directors' total
annual cash compensation ranged from $11,600 to $15,600. The Company also allows
the outside members to participate in the Company's group health plan.
Currently, Mr. Hodges is the only outside director to participate at a cost to
the Company of approximately $4,100 in fiscal 1999. The Company reimburses the
Directors for expenses in connection with meetings.
5
<PAGE>
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company, their respective ages, positions
held, and tenure with the Company are as follows:
Position Held Officer of the
Officer's Name Age With the Company Company Since
- -------------- --- ---------------- --------------
Robert H. McLean 58 Director, Chairman of the 1985
Board, President and Chief Executive
Officer
Robert Korman 52 Vice President, Chief Financial 1982
Officer, Treasurer and Secretary
Frank J. Milan 44 Vice President 1994
Terry Kearney 38 Vice President 1997
Business Experience of Executive Officers. Information concerning the
business experience of Mr. McLean is provided under "Continuing Directors" on
page 4 herein.
ROBERT KORMAN, a Certified Public Accountant, has served as Vice President,
Treasurer, and Chief Financial Officer of the Company since February 1989. Mr.
Korman served as the Treasurer of the Company from December 1982 to February
1989. Mr. Korman was elected as the Secretary of the Company in February 1994.
FRANK J. MILAN has served as a Vice President of the Company since April
1994. From 1989 to April 1994, Mr. Milan served as an executive director of
Entertainment Centers of America, Inc. Previously, Mr. Milan was a director of
operations or general manager for several large entertainment complexes
including Dallas Alley and Billy Bob's Texas.
TERRY KEARNEY has served as Vice President of the Company since February
1997. From August 1994 to February 1997, Mr. Kearney was general manager of
Lucile's, A Stateside Bistro, a subsidiary of the Company. From 1993 to 1994,
Mr. Kearney was general manager of Buffalo Cantina in Minneapolis, Minnesota and
thereafter food and beverage director of Minneapolis Entertainment Company, Inc.
From 1988 to 1993, Mr. Kearney was a general manager in Minneapolis, Minnesota
with Strang Management Company, a franchisee of Applebee's International.
Terms of Office; Relationship. The officers of the Company are elected
annually by the Board of Directors of the Company at the Annual Meeting of
Directors held immediately following each Annual Meeting of Stockholders, or as
soon thereafter as necessary and convenient in order to fill vacancies or newly
created offices. Each officer holds office until his successor is duly elected
and qualified or until his death, resignation or removal, if earlier. Any
officer or agent elected or appointed by the Board of Directors of the Company
may be removed by the Board of Directors whenever, in its judgment, the best
interests of the Company will be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
There are no family relationships among the executive officers of the
Company. There are no arrangements or understandings between any officer and any
other person pursuant to which that officer was elected.
6
<PAGE>
EXECUTIVE COMPENSATION
Executive Compensation
The following table sets forth the compensation paid or accrued by the
Company and its subsidiaries for services rendered during the last three fiscal
years to (i) the Company's Chief Executive Officer and (ii) each of the most
highly compensated executive officers of the Company whose cash compensation
exceeded $100,000 during the last fiscal year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term Compensation
--------------------------------------
Annual Compensation Awards Payouts
----------------------------------- -------------------------- ---------
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Other Restricted
Annual Stock Options/ LTIP All Other
Name and Principal Position Year Salary(A) Bonus(A) Compensation Awards SAR'S Payouts Compensation
- ------------------------------------------------------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Robert H. McLean 1999 250,000 - - - - - 7,500 (F)
Chief Executive Officer 1998 250,000 - - - - - 1,184 (F)
1997 250,000 850,000 506,000 (B) - 300,000 (E) - 2,730 (F)
Robert Korman 1999 125,000 - - - 25,000 - 6,250 (F)
Chief Financial Officer, 1998 125,000 - - - 25,000 (E) - 1,184 (F)
Vice President, 1997 125,000 137,500 112,200 (B) - - 2,730 (F)
Treasurer and Secretary
Frank J. Milan 1999 100,000 50,000 - 11,250 (C) 25,000 - 1,850 (F)
Vice President 1998 100,000 25,000 - - - - 986 (F)
1997 100,000 20,000 - 20,000 (D) - - 986 (F)
Terry Kearney
Vice President 1999 80,000 24,368 - 11,250 (C) 25,000 - 2,371 (F)
1998 75,000 25,000 - - - - 1,713 (F)
1997 60,031 21,400 - 20,000 (D) - - -
</TABLE>
__________________________________
(A) The amounts shown include cash and non-cash compensation earned and
received by executive officers as well as amounts earned but deferred at
the election of those officers.
(B) Represents compensation received as a result of the exercise of options.
(C) Represents 10,000 shares of the Company's Common Stock issued in April 1999
to the named executive officer.
(D) Represents 10,000 shares of the Company's Common Stock issued in January
1996 to the named executive officer.
(E) Options were independently cancelled by named executive officer on March 1,
1999.
(F) Contributions by the Company to its 401(k) Profit Sharing Plan on behalf of
the named executive officer.
7
<PAGE>
Options Granted
The following table sets forth the options granted during the last
completed fiscal year to (i) the Company's Chief Executive Officer, and (ii)
each of the most highly compensated executive officers whose cash compensation
exceeds $100,000.
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
- ----------------------------------------------------------------------------------------------------------------------
Individual Grants
- ---------------------------------------------------------------------------------------------
Percent of
Total
Options/SAR's Potential Realizable
Number of Granted Value at Assumed Annual
Securities To Rates of Stock Price
underlying Employees Appreciation
options/SAR's In Exercise or For Option Term
Granted Fiscal Base Price Expiration
Name (#) Year ($/Sh) Date 5% ($) 10% ($)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert 25,000 33% 1.50 2/2003 10,361 22,894
Korman
Chief Financial Officer,
Vice President,
Treasurer and Secretary
Frank J. Milan 25,000 33% 1.50 2/2004 12,754 28,934
Vice President
Terry Kearney 25,000 33% 1.50 2/2004 12,754 28,934
Vice President
</TABLE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and September 30, 1999 Option Values
- -------------------------------------------------------------------------------------------------------------------------------
Number of Shares Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at at September 30, 1999
Shares September 30, 1999 ($)
Acquired on
Name Exercise Value Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert H. McLean - - - - - -
Chief Executive Officer
Robert Korman - - 25,000 - - -
Chief Financial Officer,
Vice President,
Treasurer and Secretary
Frank J. Milan - - 24,000 56,000 - -
Terry Kearney - - 16,000 44,000 - -
</TABLE>
8
<PAGE>
Compensation Committee's Report on Compensation
The following is a report of the Company's Compensation Committee (the
"Committee") regarding actions taken with respect to executive compensation
during the fiscal year ended September 30, 1999. Please note that the Company
does not intend for this information to be incorporated by reference in any
previous or subsequent SEC filing by the Company.
The Compensation Committee's Report on Compensation
for
Fiscal Year September 30, 1999
Compensation policies and annual compensation applicable to the Company's
executive officers were the responsibility of and established by the Committee
during the Company's last fiscal year. The Committee's overall policy regarding
compensation of the Company's executive officers is to provide salary levels and
compensation incentives that attract and retain qualified individuals in key
positions; that recognize individual performance and the Company's performance;
and that support the Company's objective of achieving sustained improvement in
its financial condition and operating results. To achieve these objectives, the
Company's executive compensation policies integrate annual base compensation
with bonuses based on a combination of overall corporate performance and
individual initiatives and performance. Annual cash compensation, together with
the payment of long term equity based incentive compensation through stock
options and other equity based awards, is designed to attract and retain
qualified executives and to insure that such executives have a continuing stake
in the long term success of the Company. The Company has access to compensation
packages made available to executive officers of competing companies, as well as
companies of a similar size and nature, but also uses its discretion to set
executive compensation at levels warranted in its judgment by external, internal
and individual circumstances.
Salary of Executive Officers, Other than CEO:
Base salary levels for the Company's executive officers are generally
established by employment agreements, and are competitively set relative to
competing companies, as well as companies of a similar size and nature.
Executive officer compensation is reviewed annually, and in certain instances in
fiscal year September 30, 1999, executive officers received salary increases in
excess of the base salary amounts established by their respective contracts. In
determining these increases in salaries, the Company takes into account
individual experience, individual performance salaries offered by competitive
companies, as well as companies of a similar size and nature, and specific
issues particular to the Company, as well as historical salary levels.
Annual Incentive Compensation of Executive Officers, Other than CEO:
In fiscal 1999, the Committee adopted performance based bonus plans for its
executive officers, which provided for the payment of bonuses upon the
achievement of pre-established financial performance objectives. Certain
executive officers received cash bonuses based on these performance formulas
during fiscal 1999. Two executive officers were also each granted 10,000 shares
of restricted stock at the discretion of the Committee.
Stock Option Plan:
Employee Incentive Stock Options, covering 25,000 shares each were granted
to the Chief Financial Officer and two other executive officers under the
Company's 1997 Employee Stock Option Plan, at an exercise price of $1.50.
9
<PAGE>
CEO Compensation:
In October of 1995, the Company entered into an employment agreement with
its Chief Executive Officer, Robert H. McLean. In connection with this
agreement, the Company analyzed compensation packages of comparable companies,
and established, pursuant to this employment agreement, a compensation package
for Mr. McLean considered competitive in the industry. In fiscal 1999, Mr.
McLean received an annual base salary of $250,000.00 pursuant to the terms of
his employment agreement.
In fiscal 1999, the Company adopted a performance based bonus plan for
executive officers, in which Mr. McLean was eligible to participate. No bonuses
were paid to Mr. McLean pursuant to this plan during fiscal 1999. The Company
believes Mr. McLean will continue to provide substantial contribution to the
Company's growth and success.
COMPENSATION COMMITTEE
John M. Edgar
Walter D. Rogers, Jr.
Russell J. Sarno
10
<PAGE>
Compensation Committee Interlocks and Insider Participation
Mr. Edgar, Mr. Sarno and Mr. Rogers, three of the Company's outside
directors, served on the Compensation Committee, which was formed at the
beginning of fiscal 1998. Mr. Sarno served as President of Flo Control, Inc., a
previously owned subsidiary of the Company, until January 1995 when Flo Control,
Inc. was sold to Mr. Sarno. Mr. Rogers served as President of Current
Technology, Inc., a previously owned subsidiary of the Company, until June 1997
when Current Technology, Inc. was sold to Danaher Corporation. Also, see
"Transactions with Management and Others" for further information regarding
transactions with Mr. Rogers.
Employment Agreements
Mr. McLean has an Employment Agreement with the Company providing for an
annual salary of $250,000 and a term of 36 months beginning October 1, 1995 and
containing a non-competition provision. This Employment Agreement has an
automatic renewal feature which operates to insure that the term of the
Employment Agreement is never less than 24 months, nor more than 36 months. If
the Agreement is terminated by BFX without cause or by Mr. McLean for "Good
Reason" (as therein defined and hereafter summarized), Mr. McLean is entitled to
receive a lump sum payment equal to the salary to be paid to him for the
remaining balance of the Employment Agreement term plus accrued bonus and earned
but untaken vacation. As used in the Employment Agreement, "Good Reason" means
(i) the election of a member of the Board of Directors without the approval of
the election or the nomination for election of the new member by all Board
members who were members on October 1, 1995, or their successors, if recommended
to succeed such members by all Board members who were members on October 1,
1995, (ii) an adverse change in Mr. McLean's status or position as an executive
of the Company, (iii) the taking of any action by the Company that would
substantially diminish the aggregate projected value of Mr. McLean's awards
under the Company's bonus, stock bonus or management incentive plans or (iv) the
taking of any action by the Company that would substantially diminish the
aggregate value of the benefits provided to Mr. McLean by the Company under
health, dental, accident, disability, life insurance or retirement plans. Mr.
McLean also has a Change in Control Agreement, with the same term as his
Employment Agreement, which provides that if Mr. McLean's employment with the
Company is terminated within two years following a Change in Control of the
Company, unless such termination is because of his death or disability or by the
Company for cause, Mr. McLean shall be entitled to receive a lump sum payment
equal to three times his base amount as that term is defined in Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"), subject to reduction
in order to avoid the payment of an "excess parachute payment" as that term is
defined in Section 280G of the Code.
Mr. Korman has an Employment Agreement with the Company providing for an
annual salary of $125,000, with a term of 12 months beginning August 1, 1995.
This Employment Agreement has an automatic renewal feature which operates to
insure that the term of the Employment Agreement is always 12 months. Mr.
Korman's Employment Agreement also has a change in control provision which
provides that if Mr. Korman's employment with the Company is terminated within
24 months following a Change in Control of the Company, unless such termination
is because of his death or disability, or by the Company for cause, Mr. Korman
shall be entitled to receive a lump sum payment equal to his salary for the
remaining balance of his employment term.
Mr. Milan has an Employment Agreement with the Company providing for an
annual salary of $100,000 with a term of 12 months beginning October 1, 1998.
The Employment Agreement has an automatic renewal feature, which operates to
extend the Employment Agreement one additional year on the Renewal Date. Either
Mr. Milan or the Company can give written notice on or before 30 days prior to
the Renewal Date of its election to terminate the Employment Agreement. Mr.
Milan's Employment Agreement has a change in control provision which provides
that, if Mr. Milan's employment with the Company is terminated within 24 months
following a Change in Control of the Company, Mr. Milan shall be entitled to
receive an amount equal to his base amount as that term is defined in Section
280G of the Code, subject to reduction in order to avoid the payment of an
"excess parachute payment" as that term is defined in Section 280G of the Code.
Mr. Kearney has an Employment Agreement with the Company providing for an annual
salary of $100,000, with a term of 12 months beginning October 1, 1998. The
Employment Agreement has an automatic renewal feature, which operates to extend
the Employment Agreement one additional year on the Renewal Date. Either Mr.
Kearney or the Company can give written notice on or before 30 days prior to the
Renewal Date of its election to terminate the Employment Agreement. Mr.
Kearney's Employment Agreement has a change in control provision which provides
that,
11
<PAGE>
if Mr. Kearney's employment with the Company is terminated within 24 months
following a Change in Control of the Company, Mr. Kearney shall be entitled to
receive an amount equal to his base amount as that term is defined in Section
280G of the Code, subject to reduction in order to avoid the payment of an
"excess parachute payment" as that term is defined in Section 280G of the Code.
For purposes of the Employment Agreements and the Change in Control
Agreement referred to immediately above, a "Change in Control" is defined as
having occurred upon any of the following events (unless the Continuing Board of
Directors of Company (as hereinafter defined) determines that the happening of
any of the following events in a particular case should not be deemed a Change
in Control):
(i) the acquisition directly or indirectly, by any person (as such
terms are used in Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934, as amended), other than the Company, any of its subsidiaries
or any employee benefit plan maintained by Company or any such subsidiary,
of beneficial ownership of securities of Company representing fifteen
percent (15%) or more of the combined voting power of Company's then
outstanding securities (with the terms used herein and in Sections 13(d)
and/or 14(d) of the Securities Exchange Act of 1934, as amended, having the
meanings of such terms in such Sections);
(ii) if the stockholders of Company approve a merger or
consolidation, a sale or disposition of all or substantially all of
Company's assets or a plan of liquidation or dissolution of Company;
(iii) the election during any period of twenty-four (24) months or
less of a member or members of Company's Board without the approval of the
election or nomination for election of such new member or members by a
majority of the members of the Board who were members at the beginning of
the period, or members of the Board thereafter recommended to succeed such
original members (or their successors hereunder) by a majority of the
members of the Board who were members at the beginning of the period (or
their successors hereunder); or
(iv) any person (as such term is used in Section 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended) other than Company, any of
its subsidiaries or any employee benefit plan maintained by Company or any
such subsidiary, makes a tender or exchange offer for any shares of
Company's outstanding voting securities at any point in time, pursuant to
which any such shares are purchased.
The "Continuing Board of Directors of Company" shall mean (i) the members
of Company's Board of Directors in office immediately prior to the Change in
Control, excluding any who initiate a Change in Control or are affiliated with
one who initiates a Change in Control, and (ii) any subsequent directors who may
be selected, nominated or approved by a majority of the other Continuing Board
of Directors of Company.
12
<PAGE>
Stock Price Performance
The following table compares the total stockholder returns over the last
five years to the American Stock Exchange Market Value Index and the S&P
Restaurant Industry Group Index. The Company is listed on the American Stock
Exchange and during Fiscal 1999 has been solely in the food, beverage and
hospitality industry. The stockholder return shown below is not necessarily
indicative of future performance.
COMPARISON OF CUMULATIVE TOTAL RETURN OF ONE OR MORE
COMPANIES, PEER GROUPS, INDUSTRY INDEXES AND/OR BROAD MARKETS
<TABLE>
<CAPTION>
------------------------------------FISCAL YEAR ENDING----------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPANY/INDEX/MARKET 9/30/1994 9/29/1995 9/30/1996 9/30/1997 9/30/1998 9/30/1999
BFX Hospitality Gp 100.00 126.92 138.46 242.31 92.31 53.85
Restaurants 100.00 143.41 171.03 174.12 217.58 299.94
AMEX Market Index 100.00 120.49 125.40 152.50 133.20 155.13
</TABLE>
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the American Stock Exchange.
Officers, directors and greater than ten-percent stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during fiscal 1999 all
filing requirements were complied with by its officers, directors and greater
than ten-percent beneficial owners.
13
<PAGE>
TRANSACTIONS WITH MANAGEMENT AND OTHERS
In March 1997, Mr. Rogers exercised outstanding stock options to purchase
150,000 shares of the Company's common stock for an aggregate purchase price of
$247,000. Pursuant to the terms of his Stock Option Agreement, Mr. Rogers
executed a Promissory Note in the principal amount of $247,000, secured by all
of the stock, payable one year from the date of exercise, and bearing interest
at 8% per annum, both principal and interest payable at maturity. Under the
terms of this Note, Mr. Rogers had the right to tender shares of the Company's
common stock in payment of such Note. Pursuant to the terms of an Agreement
between Mr. Rogers and the Company dated as of October 8, 1997, and amended as
October 21, 1997, Mr. Rogers tendered to the Company on June 25, 1999, 33,021
shares of its common stock in payment of the remainder of his principal balance
of his note in the amount of $123,500.
In October 1999, the Company's Board of Directors approved an incentive
stock option agreement with Mr. Korman pursuant to the terms of the 1997
Employee Stock Option Plan. Under the agreement, 25,000 options were issued to
purchase shares of the Company's stock at an exercise price of $1.00, which was
the fair market value at date of grant. In addition, in October 1999, the
Company's Board of Directors approved non-qualified stock option agreement with
Mr. Korman. Under the agreement, 25,000 options, were issued to purchase shares
of the Company's stock at an exercise price of $1.00, which was the fair market
value at the date of grant. All of these options are fully vested and must be
exercised within five years of the date of issuance. The options do not
terminate upon termination of Mr. Korman's employment and may be transferred by
will or by the laws of descent and distribution.
In October 1999, the Company's Board of Directors approved an incentive
stock option agreement with Mr. Milan pursuant to the terms of the 1997 Employee
Stock Option Plan. Under the agreement, 25,000 options were issued to purchase
shares of the Company's stock at an exercise price of $1.00 per share, which was
the fair market value at the date of the grant. The term of the options is for
six years and become exercisable at a rate of 20% per year beginning one year
after the date of grant. The options terminate and become unexercisable upon
termination of the Mr. Milan, unless such termination is without cause or is due
to death or total and permanent disability.
In October 1999, the Company's Board of Directors approved an incentive
stock option agreement with Mr. Kearney pursuant to the terms of the 1997
Employee Stock Option Plan. Under the agreement, 15,000 options were issued to
purchase shares of the Company's stock at an exercise price of $1.00 per share,
which was the fair market value at the date of the grant. The term of the
options is for six years and become exercisable at a rate of 20% per year
beginning one year after the date of grant. The options terminate and become
unexercisable upon termination of the Mr. Kearney, unless such termination is
without cause or is due to death or total and permanent disability.
In October 1999, the Company's Board of Directors approved non-qualified
stock option agreements with Mr. McLean. Under the agreement, 300,000 options
were issued to purchase shares of the Company's stock at an exercise price of
$1.00, which was the fair market value at the date of grant. The options are
fully vested and must be exercised within five years of the date of issuance.
The options do not terminate upon termination of Mr. McLean's employment and may
be transferred by will or by the laws of descent and distribution.
14
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information as of December 31, 1999,
regarding the beneficial ownership (as defined by the SEC) of Common Stock by
(i) each person known by the Company to own beneficially more than 5% of the
outstanding Common Stock; (ii) each director of the Company; (iii) each
executive officer of the Company named in the Executive Compensation Table (see
"Executive Compensation"); and (iv) all current directors and executive officers
of the Company as a group. Except as otherwise noted, each named beneficial
owner has sole voting and investment power with respect to the shares owned.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner (1) Beneficial Ownership (2) of Class
----------------------- ------------------------ --------
<S> <C> <C>
Robert H. McLean 688,601(3) 16.13%(4)
H.T. Hunnewell 143,151 3.61%
Robert Korman 134,530(5) 3.33%(6)
Walter D. Rogers, Jr. 123,783 3.12%
Bruno V. D'Agostino 65,000 1.64%
Frank J. Milan 64,000(7) 1.60%(8)
Hampton Hodges 58,000 1.46%
Terry Kearney 56,000(9) 1.41%(10)
Russell J. Sarno 32,614 0.82%
John M. Edgar 25,040 0.63%
All current Directors and 1,390,719(11) 31.72 (12)
Officers as a group (10
in Number)
</TABLE>
_________________
(1) Unless otherwise indicated, the address of the security holders named
above is: 226 Bailey Avenue, Suite 101, Fort Worth, Texas 76107-1220.
(2) Shares are deemed to be "beneficially owned" by a person if such
person, directly or indirectly, has or shares (i) the voting power thereof,
including the power to vote or to direct the voting of such shares, or (ii) the
investment power with respect thereto, including the power to dispose or direct
the disposition of such shares. In addition, a person is deemed to beneficially
own any shares as to which such person has the right to acquire beneficial
ownership within 60 days. The number of shares shown represents sole voting and
investment power except as otherwise indicated in the footnotes below.
(3) This figure includes 4,831 shares owned by the Company's Employee
Stock Ownership Plan which are voted by Mr. McLean pursuant to such plan and
300,000 shares of Common Stock issuable to Mr.McLean pursuant to non-qualified
stock options which are currently exercisable. This figure includes 22,100
shares owned by a limited partnership that Mr. McLean controls. This figure also
includes 20,000 shares owned by a limited partnership of which Mr. McLean is a
limited partner and an officer of the general partner but does not have an
ownership interest in the general partner, and 1,100 shares owned by Mr.
McLean's spouse. Mr. McLean disclaims beneficial ownership of these 21,100
shares.
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<PAGE>
(4) This percentage is calculated including the 300,000 shares covered by
stock options owned by Mr. McLean.
(5) This figure includes 2,354 shares which are owned by the Employee
Stock Ownership Plan and are voted by Mr. Korman pursuant to the plan and
includes 75,000 shares issuable to Mr. Korman pursuant to employee incentive
stock options which are currently exercisable.
(6) This percentage is calculated including the 75,000 shares covered by
the stock options owned by Mr. Korman.
(7) This figure includes 24,000 shares of Common Stock issuable to Mr.
Milan pursuant to employee incentive stock options which are currently
exercisable.
(8) This percentage is calculated including the 24,000 shares covered by
the stock options owned by Mr. Milan.
(9) This figure includes 16,000 shares of Common Stock issuable to Mr.
Kearney pursuant to employee incentive stock options which are currently
exercisable.
(10) This percentage is calculated including the 16,000 shares covered by
the stock options owned by Mr. Kearney.
(11) This figure includes the 355,000 shares of the Common Stock issuable
pursuant to the stock options described in notes (3), (5), (7), and (9)
hereinabove.
(12) This percentage is calculated including the 415,000 shares of the
Common Stock issuable pursuant to the stock options described in notes (3), (5),
(7), and (9) hereinabove, and all percentages are rounded to the nearest one-
hundredth of a percent.
No written or oral agreement or other arrangement exists between any of the
above-named individuals or companies and the Company regarding the manner in
which the shares of Common Stock owned by each will be voted on any issue or
policy affecting the Company.
16
<PAGE>
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Board has selected PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") as independent accountants to audit the books,
records and accounts of the Company for fiscal year 2000. PricewaterhouseCoopers
has served as the Company's independent accountants since the inception of the
Company, and is therefore familiar with the affairs and financial procedures of
the Company. To the knowledge of management of the Company, neither such firm
nor any of its members has any direct or material indirect financial interest in
the Company, nor any connection with the Company in any capacity other than as
independent accountants.
Audit and audit related services were performed by PricewaterhouseCoopers
during the fiscal year ended September 30, 1999 and included the audit of the
annual financial statements included in the Company's 1999 Annual Report on Form
10-K.
A representative of PricewaterhouseCoopers is expected to be present at the
Annual Meeting to answer questions and will be afforded an opportunity to make
any statement he wishes to make regarding the financial statements of the
Company.
INFORMATION CONCERNING 2001 ANNUAL MEETING
Under the Company's Bylaws and applicable regulations, if a stockholder
intends to submit a nomination for Director or propose any other item of
business at the 2001 Annual Meeting of Stockholders, notice of such stockholder
notice must be received by the Company at its executive offices by September 15,
2000, or if the 2001 Annual Meeting date is changed by more than 30 days from
February 22, 2001, then a reasonable time before proxy materials are prepared
and distributed to stockholders. Such notice must provide certain information
with respect to the nominee or the proposed item of business to be considered,
and information as to the name and address of the stockholder making such
proposal and the number of shares held by such stockholder. Additional
information about stockholder proposals may be obtained from the Company.
OTHER BUSINESS
The Board knows of no other business to be acted upon at the Annual
Meeting. However, if any other business comes before the Annual Meeting, it is
the intention of the persons named in the enclosed proxy to vote on such matters
in accordance with their best judgment.
Please date, sign and return the enclosed Proxy at your earliest
convenience in the enclosed envelope. No postage is required for mailing in the
United States. A prompt return of your Proxy will be appreciated as it will save
the expense of further mailing.
By Order of the Board of Directors,
/s/ Robert Korman
-----------------
Robert Korman
Secretary
Fort Worth, Texas
Dated January 28, 2000
17
