<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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
[X] Definitive proxy statement Commission Only (as permitted by
[ ] Definitive additional materials Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to
Rule 14a-11(c) or Rule 14a-12
WALL STREET DELI, INC.
(Name of registrant as Specified in Its Charter)
REGISTRANT
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(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:
<PAGE> 2
Wall Street Deli, Inc.
One Independence Plaza
Suite 100
Birmingham, Alabama 35209
(205)870-0020
Fax: (205)868-0860
November 4, 1999
Dear Shareholder:
You are cordially invited to attend the 1999 Annual Meeting of
Shareholders, which will be held this year at 9:30 a.m. on Wednesday, December
8, 1999, at the Wall Street Deli restaurant located at Muirfield Village, 1940
28th Avenue South, in Homewood, Alabama, which is a suburb of Birmingham.
Information about the meeting and the various matters on which the
shareholders will act is included in the Notice of Meeting and Proxy Statement
which follow. Also included is a Proxy Card and postage paid return envelope.
It is important that your shares be represented at the meeting. Whether
you plan to attend or not, we hope that you will complete and return your Proxy
in the enclosed envelope as promptly as possible.
We look forward to seeing you at the shareholders meeting.
Yours very truly,
/s/ Jeffrey V. Kaufman
-------------------------------------
JEFFREY V. KAUFMAN
President and Chief Executive Officer
<PAGE> 3
WALL STREET DELI, INC.
ONE INDEPENDENCE PLAZA, SUITE 100
BIRMINGHAM, ALABAMA 35209
(205) 870-0020
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
December 8, 1999
The Annual Meeting of Shareholders of WALL STREET DELI, INC., a
Delaware corporation (the "Company"), will be held at the Wall Street Deli
restaurant located at Muirfield Village, 1940 28th Avenue South, in Homewood,
Alabama, on Wednesday, December 8, 1999, at 9:30 a.m. Central Standard Time.
At the Annual Meeting shareholders will consider and act upon the
following matters:
1. The election of seven directors, each director to hold office
until his successor is elected and qualified.
2. A proposal to amend the Company's Incentive Award Plan.
3. The ratification of authorization for the Audit Committee to
select the Company's independent auditors; and
4. The transaction of such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on October 27,
1999, as the record date for the determination of shareholders entitled to vote
at the Annual Meeting.
All shareholders are cordially invited to attend the Annual Meeting.
By Order of the Board of Directors
/s/ Alan V. Kaufman
-------------------------------
ALAN V. KAUFMAN
Chairman of the Board
WHETHER YOU PLAN TO ATTEND THE MEETING OR NOT, WE URGE YOU TO MARK, SIGN AND
DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENVELOPE PROVIDED IN ORDER
THAT AS MANY SHARES AS POSSIBLE MAY BE REPRESENTED AT THE MEETING AND TO ASSURE
A QUORUM. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
SHOULD YOU LATER DETERMINE TO ATTEND THE MEETING.
<PAGE> 4
WALL STREET DELI, INC.
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
---------------
PROXY STATEMENT
The following information is furnished in connection with the
solicitation of proxies by the board of directors of Wall Street Deli, Inc. (the
"Company"), to be voted at the Annual Meeting of shareholders to be held on
December 8, 1999. A copy of the Annual Report of the Company for the fiscal year
ended July 3, 1999, and a form of proxy for use at the meeting are enclosed with
this Proxy Statement. It is anticipated that this Proxy Statement and the
enclosed proxy will be first mailed to shareholders on or about November 4,
1999.
GENERAL INFORMATION
PROXY
Shareholders are requested to execute and return the enclosed proxy in
the accompanying envelope. The proxy may be revoked at any time before it is
voted by written notice to the Secretary of the Company. Proxies which are
returned properly executed, and not revoked, will be voted in accordance with
the shareholders' directions as specified on the proxy. Where no direction is
specified, proxies will be voted FOR each of the nominees for directors, and
each of the proposals submitted. On any other matters that may properly come
before the meeting, proxies will be voted by the persons named in the proxy in
accordance with their best judgment.
RECORD DATE AND VOTING SECURITIES
Shareholders of record at the close of business on October 27, 1999,
are entitled to notice of, and to vote at, the Annual Meeting. As of October 27,
1999, there were 2,896,477 shares of the Company's common stock issued and
outstanding, and entitled to vote. The holders of common stock, the only class
of voting stock of the Company outstanding, are entitled to one vote per share,
exercisable in person or by proxy, for the election of directors and all other
matters.
A majority of the outstanding shares entitled to vote is necessary to
provide a quorum at this meeting. The election of each director requires a
plurality of votes cast at the meeting, the proposal to amend the Incentive
Award Plan requires the affirmative vote of a majority of the shares present at
the meeting in person or by proxy, and ratification of auditors require the
affirmative vote of a majority of the votes cast at the meeting.
Proxies marked as abstentions or as broker non-votes will be treated as
shares present for purposes of determining whether a quorum is present. Broker
non-votes (that is, shares held in "street" name for which proxies have been
designated as not voted) will not be counted as votes cast. An abstention or a
proxy instructing that a vote be withheld is considered a negative vote.
<PAGE> 5
EXPENSES OF SOLICITATION
The cost of soliciting proxies is paid by the Company. Solicitation is
being made principally by mail; in addition, certain officers and directors of
the Company and persons acting under their instructions may also solicit proxies
on behalf of management by telephone or in person. Banks, brokerage firms and
other custodians, nominees and fiduciaries will be reimbursed by the Company for
reasonable expenses incurred in sending proxy material to beneficial owners of
the Company's stock. The cost of additional solicitation, if any, and such
related expenses is not expected to be material.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS
The following table sets forth, as of October 20, 1999 information with
respect to the Company's common stock owned beneficially by each director, each
nominee for election as a director, each executive officer, by all executive
officers and directors as a group, and by each person known by the Company to be
a beneficial owner of more than five percent of the issued and outstanding
common stock of the Company.
AMOUNT AND
NATURE OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OF COMMON
BENEFICIAL OWNER OWNERSHIP(1) STOCK
- ---------------------------------- ------------ ----------
Alan V. Kaufman 307,212(2) 10.3%
CHAIRMAN AND NOMINEE
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Robert G. Barrow 216,800(3) 7.3%
VICE CHAIRMAN AND NOMINEE
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Jeffrey V. Kaufman 56,174(4) 1.9%
PRESIDENT, CHIEF EXECUTIVE OFFICER,
DIRECTOR AND NOMINEE
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
David A. Thomas 27,890(5) *
CHIEF OPERATING OFFICER
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
2
<PAGE> 6
AMOUNT AND
NATURE OF PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL OF COMMON
BENEFICIAL OWNER OWNERSHIP(1) STOCK
- ---------------------------------- ------------ ----------
Thomas J. Sandeman -- *
CHIEF FINANCIAL OFFICER
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Howard J. Cannon -- *
VICE PRESIDENT OPERATIONS
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
William S. Atherton 103,650(6) 3.5%
DIRECTOR AND NOMINEE
1924 South Utica
Tulsa, Oklahoma 74104
Aaron Beam, Jr. 8,000(6) *
DIRECTOR AND NOMINEE
5182 Greystone Way
Birmingham, Alabama 35242
William M. Byrne 15,000(6) *
DIRECTOR AND NOMINEE
2701 South Minnesota
Souix Falls, South Dakota 57105
Jake L. Netterville 42,750(6) 1.4%
DIRECTOR AND NOMINEE
8550 United Plaza Boulevard
Baton Rouge, Louisiana 70809
Estate of Joe Lee Griffin, Jr. 276,828(7) 9.3%
Post Office Box 55765
Birmingham, Alabama 35255
All directors and executive officers as a group 777,476(8) 26.1%
- ------------------
* Less than 1%
(1) Beneficial ownership reflects sole voting and investment power unless
otherwise noted.
(2) The amount reported includes 51,403 shares owned by Kaufman-Barrow
Properties, a general partnership. Mr. Kaufman is the father of Jeffrey
V. Kaufman.
(3) The amount reported includes 51,403 shares owned by Kaufman-Barrow
Properties, a general partnership, and 15,000 shares subject to options
held by Mr. Barrow that are exercisable within 60 days.
3
<PAGE> 7
(4) The amount reported includes 1,045 and 11,750 shares owned by Mr.
Kaufman's spouse and minor children, respectively, as to which he
disclaims beneficial ownership. The amount reported also includes
37,500 shares subject to options that are exercisable within 60 days.
(5) The amount reported includes 630 shares owned by Mr. Thomas's minor
children as to which he disclaims beneficial ownership. The amount
reported also includes 17,500 shares subject to options that are
exercisable within 60 days.
(6) The reported amounts for Mr. Atherton and Mr. Netterville include 5000
shares each that are subject to options, and for Mr. Beam and Mr. Byrne
include 2,000 shares each subject to options, that are exercisable
within 60 days.
(7) The amount reported includes 200,478 shares owned by the Joe Lee
Griffin Family Limited Partnership, of which the late Mr. Griffin's
daughters, Ms. Ginger G. Burkett, Ms. Gana G. Barrentine and Ms. Gari
Griffin, are the general partners, each with shared voting and
investment power, and of which the Estate is the limited partner. The
amount reported also includes 60,000 shares owned by JLG Investments,
Inc. of which the Estate is the controlling shareholder, and with
respect to which the Mesdames Griffin also have shared voting and
investment power, as well as an aggregate 15,000 shares owned by trusts
of which they are beneficiaries.
(8) The amount reported includes an aggregate 84,000 options that are
exercisable within 60 days held by executive officers and directors
included in the group.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
The Company's Incentive Award Plan for employees is proposed to be
amended at this annual meeting, to increase the number of shares available for
grant under the Plan. Mr. Jeffrey Kaufman, Mr. Alan Kaufman, Mr. Barrow, and Mr.
Thomas, Mr. Sandeman and Mr. Cannon who are directors, director nominees and/or
named executive officers, are presently participants in the Plan and/or will be
eligible for additional grants under the Plan.
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors will be elected to hold office
until their successors are elected and qualified. It is the intention of the
persons named as proxies, or their substitutes, to vote for the election of the
nominees listed below, unless and to the extent otherwise specified in any
particular proxy. Management of the Company does not contemplate that any of the
nominees will become unavailable for any reason, but if that should occur before
the meeting, proxies will be voted for another nominee, or other nominees, to be
selected by the Board of Directors. Any vacancies that may occur during the year
may be filled by an individual appointed by the Board of Directors to serve for
the remainder of the term of any such director position. In accordance with the
Company's bylaws and Delaware law, a stockholder entitled to vote for the
election of directors may withhold authority to vote for certain nominees for
director or may withhold authority to vote for all nominees for director. Each
director nominee receiving a plurality of the votes cast in person or by proxy
at the meeting will be elected director. Abstentions and broker non-votes will
not be treated as a vote for or against any particular director nominee, and
will not affect the outcome of the election.
None of the nominees for election as a director is proposed to be
elected pursuant to any arrangement or understanding between the nominee and any
other person or persons. All nominations for membership on the Board of
Directors originated with the Board of Directors.
4
<PAGE> 8
INFORMATION CONCERNING THE BOARD OF DIRECTORS AND NOMINEES
The Company's bylaws provide for a minimum of three, and a maximum of
seven directors. Since 1995 the Company has had seven directors, and the Board
of Directors has presently fixed the number at seven.
All of the nominees are currently serving as directors. The following
is a brief summary of each nominee's business experience during at least the
past five years, unless otherwise indicated, and other directorships held.
ALAN V. KAUFMAN Director since 1966
Mr. Kaufman, age 62, is one of the founders of Company. He
served as President of the Company from its founding in 1966
until August 1995, and has been Chairman of the Board since
the inception of the Company. Mr. Kaufman is the father of
Jeffrey V. Kaufman.
ROBERT G. BARROW Director since 1966
Mr. Barrow, age 63, co-founded the Company and was its Chief
Financial Officer from 1966 through 1999, and has been Vice
Chairman of the Board since February 1997. He was President
and Chief Executive Officer of the Company from August 1995 to
February 1997, and Executive Vice President from 1966 to 1996.
JAKE L. NETTERVILLE Director since 1982
Mr. Netterville, age 61, is Chairman of Postlethwaite and
Netterville, Certified Public Accountants, of Baton Rouge,
Louisiana. In 1993 Mr. Netterville served as Chairman of the
Board of Directors of the American Institute of Certified
Public Accountants. He is also a director of Amedisys, Inc.,
Source Capital Corporation* and Catalyst Vidalia Corporation.*
WILLIAM S. ATHERTON Director since 1991
Mr. Atherton, age 66, has been since 1965 a Partner in
Atherton & Murphy Investment Company, which manages personal
investments. He was Chairman and Chief Executive Officer of
A&M Food Services, Inc.,* from 1981 to 1986, and a Director of
Advantage Media, Inc., from 1991 to 1993.
5
<PAGE> 9
JEFFREY V. KAUFMAN Director since 1995
Mr. Kaufman, age 38, has been President and Chief Executive
Officer of the Company since June 1, 1998. He has been
employed by the Company since 1985, previously serving as
Executive Vice President and Chief Operating Officer from 1995
until his appointment as President and Chief Executive
Officer, as Senior Vice President and National Operations
Manager from 1993 to 1995, and as Regional Vice President,
Central Region 1987 to 1993. Mr. Kaufman is the son of Alan V.
Kaufman.
AARON BEAM, JR. Director since 1998
Mr. Beam, age 55, was one of the founders of HealthSouth
Corp.,* a provider of outpatient surgery and rehabilitative
healthcare services, and served as its Executive Vice
President and Chief Financial Officer and a Director from 1984
until his retirement in 1997. He is also a Director of Ramsay
Health Care Inc.* and Urocor, Inc.*
WILLIAM M. BYRNE Director since 1998
Mr. Byrne, age 55, has been President and Chief Executive
Officer since 1977 of The Byrne Companies, a consulting firm
specializing in human assessment and performance. He is the
author of the book HABITS OF WEALTH and Chief Executive
Officer of Vista Publications, a newsletter publisher. He is
the founder and Chief Executive Officer of Taco John's of
Iowa, the largest franchisee of that system, and in 1995 was
the recipient of the National Leadership Award from Taco
John's International. He is a member of the Franchisee
Advisory Council of the International Franchise Association.
- ----------------
(*) A company with a class of securities registered under the Securities
Exchange Act of 1934.
BOARD AND COMMITTEE MEETINGS AND ATTENDANCE
The Board of Directors held five formal meetings during the fiscal year
ended July 3, 1999. All of the directors attended at least 75% of the Board and
committee meetings.
The Audit Committee of the Board of Directors consists of Mr. Barrow,
Mr. Netterville, Mr. Atherton, and Mr. Beam. Mr. Barrow is a former executive
officer of the Company; none of the other members of the Committee is now or has
been previously employed by the Company. The Audit Committee is charged with
recommending to the Board of Directors the independent accountants to be
selected as the Company's auditors; reviewing the audit plan, financial
statements and audit results; reviewing with internal accounting officers and
independent auditors the accounting practices and policies, and overall
accounting and financial controls; and conducting an appropriate review of all
related party
6
<PAGE> 10
transactions and potential conflict of interest situations. The committee did
not formally convene as a separate body during the 1999 fiscal year, but met,
with Mr. Barrow recusing himself, in conjunction with the Special Committee of
the Board.
During the 1999 fiscal year, Mr. Netterville, Mr. Atherton, Mr. Byrne,
and Mr. Beam, none of whom is or has ever been employed by the Company, served
as a Special Committee of the Board of Directors. The Special Committee was
constituted to consider and evaluate proposals for a potential sale or other
business combination transaction involving the Company. The committee held two
meetings during the fiscal year.
The Compensation Committee of the Board of Directors consists of Mr.
Atherton, Mr. Netterville and Mr. Byrne, none of whom is or has ever been
employed by the Company. This committee held one meeting during fiscal 1999. The
Compensation Committee acts as the Stock Option Plan Committee as set forth in
the Company's Incentive Stock Option Plans, and in addition administers the
Company's employee compensation and benefit plans, makes annual recommendations
to the Board of Directors concerning compensation to executive officers,
considers and makes recommendations with respect to executive compensation
policies, and considers and acts upon such other related matters as the Board
may direct or request.
EXECUTIVE COMPENSATION
The following tables and charts set forth information with respect to
benefits made available, and compensation paid or accrued, by the Company during
the fiscal year ended July 3, 1999 for services by each of the persons serving
as chief executive officer at any time during the 1999 fiscal year, and the
other four highest paid executive officers of the Company who were serving as
such at the end of fiscal 1999 whose total salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-
Term
Compensation
Annual Compensation Awards(3)
----------------------------------------------------
Name and Principal Other Annual All Other
Position Year(1) Salary Bonus Compensation(2) Options(4) Compensation(5)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey V. Kaufman 1999 $155,000 $-0- $12,070 -0- $9,091
PRESIDENT AND CHIEF EXECUTIVE 1998 $155,000 $-0- $13,411 10,000 $9,091
OFFICER SINCE JUNE 1998 (6) 1997 $151,250 $-0- $12,764 17,500 $9,091
</TABLE>
7
<PAGE> 11
<TABLE>
<CAPTION>
Long-
Term
Compensation
Annual Compensation Awards(3)
----------------------------------------------------
Name and Principal Other Annual All Other
Positive Year(1) Salary Bonus Compensation(2) Options(4) Compensation(5)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert G. Barrow 1999 $125,000 $-0- $12,291 -0- $52,987
PRESIDENT AND CHIEF EXECUTIVE 1998 $166,500 $-0- $19,482 -0- $52,987
OFFICER UNTIL FEBRUARY 1997; 1997 $208,000 $-0- $27,504 7,500 $56,987
CHIEF FINANCIAL OFFICER UNTIL
OCTOBER 1998; CURRENTLY VICE
CHAIRMAN
Alan V. Kaufman 1999 $125,000 $-0- $11,626 -0- $53,979
CHAIRMAN OF THE BOARD 1998 $125,000 $-0- $12,757 -0- $53,979
1997 $125,000 $-0- $12,811 -0- $53,979
David A. Thomas 1999 $140,000 $-0- $ 8,184 -0- $ 3,356
CHIEF OPERATING OFFICER 1998 $140,000 $-0- $21,820 7,500 $ 3,356
1997 $138,750 $-0- $61,998 5,000 $ 3,356
Gary L. Fields(7) 1999 $144,792 $-0- $18,593 -0- $ 8,174
SENIOR VICE PRESIDENT- 1998 $138,750 $-0- $20,320 15,000 $ 8,174
NATIONAL OPERATIONS 1997 n/a
</TABLE>
- ----------------
(1) Information is provided for the full fiscal year during which a person
served in the named capacity for any portion of that year.
(2) The amounts shown in this column for the last fiscal year include the
following perquisites or personal benefits which exceeded 25% of the total
of such benefits reported for each such officer: medical expense
reimbursements of $3,886 to Jeffrey Kaufman; automobile allowances of $7,200
to Alan Kaufman, $7,800 to Robert Barrow, $6,000 to Jeffrey Kaufman, $6,000
to David Thomas and $6,000 to Gary Fields; and reimbursement or payment of
moving expenses of $10,500 to Gary Fields.
(3) The Company has no restricted stock award plans and no long term incentive
plans as those terms are defined by applicable SEC rules.
(4) The Company's Incentive Award Plan provides for grants of stock appreciation
rights (SAR's) in tandem with options, but no SAR's have been granted during
the past three fiscal years.
(5) The amounts shown in this column for the last fiscal year include Company
contributions to a defined contribution variable life insurance plan for
management and administrative employees, in the amounts of $18,979 for Alan
Kaufman, $17,987 for Robert Barrow, $9,091 for Jeffrey Kaufman, $3,356 for
David Thomas and $8,174 for Gary Fields. With respect to Alan Kaufman and
Robert Barrow, these amounts also include $35,000 each in dollar value of
premiums paid by the Company for their benefit for split-dollar life
insurance with respect to term life
8
<PAGE> 12
insurance and to premium amounts unrelated to term life insurance coverage.
On termination of the insurance policy the beneficiaries are obligated by
contract to refund to the Company all premiums paid.
(6) Mr. Kaufman served as Executive Vice President and Chief Operating Officer
prior to June 1, 1998.
(7) Mr. Fields resigned his position shortly after the end of the fiscal year.
OPTION GRANTS IN LAST FISCAL YEAR
There were no stock option grants in fiscal 1999 to the named executive
officers.
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
The following table provides information on option exercises in fiscal
1999 by the named executive officers and the value of each such officer's
unexercised options at July 3, 1999.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs Options/SARs
at Fiscal Year End(2) at Fiscal Year End(1)
----------------------------- ---------------------------
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------------------------------------------------------------------------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey V. Kaufman -0- -0- 40,500 -0- -0- -0-
Robert G. Barrow -0- -0- 20,000 -0- -0- -0-
Alan V. Kaufman -0- -0- 5,000 -0- -0- -0-
David A. Thomas -0- -0- 20,500 -0- -0- -0-
Gary L. Fields -0- -0- 28,000 -0- -0- -0-
</TABLE>
- -------------------
(1) Based on $2.9688 per share, the average of high and low sales prices
reported by NASDAQ on July 2, 1999.
(2) The numbers of options listed in this table differ from those in the
table on page 2 due to the expiration or lapse of certain options after
July 3, 1999.
COMPENSATION OF DIRECTORS
Four of the seven present directors are not salaried employees of the
Company. For their services in fiscal 1999 each non-employee director was paid a
fee of $650 for each meeting of the Board of Directors and each committee
meeting (if not held in conjunction with a Board meeting) attended, except
meetings of the Special Committee, for which no fees were paid.
The non-employee directors also received grants of options for 1,000
shares each in fiscal 1999, pursuant to the Company's Stock Option Plan for
Non-Employee Directors (the "Directors Plan"). The Directors Plan provides for
the granting of stock options under a non-discretionary formula by which each
9
<PAGE> 13
non-employee director serving as such on August 1 of each year receives an
option to purchase 1,000 shares of the Company's common stock. The options are
immediately exercisable, at an exercise price equal to the fair market value of
the common stock on the date of grant, and expire five years from the date of
grant. The Directors Plan reserves 75,000 shares of the Company's common stock
for issuance upon exercise of the non-qualified stock options to purchase. The
Plan will terminate in 2001. Directors are eligible to participate if they are
not employed by the Company or its subsidiaries. Options for an aggregate of
14,000 shares (as adjusted) had been granted and remained outstanding as of the
1999 fiscal year end, and 61,000 shares remained available for grant under this
Plan.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors
during fiscal 1999 were Messrs. William S. Atherton, Jake L. Netterville, and
William M. Byrne, none of whom is or has been an employee of the Company.
Following the close of the 1999 fiscal year (to which the following Compensation
Committee Report on Executive Compensation relates), the Company retained the
services of The Byrne Companies, a company of which Mr. Byrne is president and
chief executive officer, to assist Wall Street Deli in creating a business and
strategic plan for future growth. The Byrne Companies is a consulting firm
specializing in human assessment and performance. Mr. Alan Kaufman and Mr.
Robert Barrow have formerly served as chief executive officer of the Company,
and both Mr. Kaufman and Mr. Barrow, as well as Mr. Jeffrey Kaufman, the current
chief executive officer, have participated in deliberations concerning executive
officer compensation, and continue to make recommendations to and are consulted
by the Committee.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is composed of
directors who have never been employed by the Company, and is charged with
consideration of and action on matters concerning compensation to executive
officers. In addition, this Committee administers the Company's Incentive Stock
Option Plan.
COMPENSATION POLICIES
The Company's general approach to executive compensation has been
intended to attract, retain and motivate management employees and to enhance the
profitability of the Company and, in so doing, to enhance value for its
shareholders. To that end, the structure of the Company's executive compensation
is reflective of the principle that the compensation of executive officers
should be competitive with compensation of senior executives at comparable
companies, and that a meaningful portion of the compensation received should be
closely tied to the performance of the Company and, in certain instances,
10
<PAGE> 14
to the achievement of individual goals. By specifically linking pay and
performance, it is the intent of the Company to provide direct incentives for
the Company's financial success and the creation of incremental stockholder
value.
In keeping with these general objectives, the key components of
compensation for the named executive officers have for a number of years
consisted of annual compensation provided by base salary and annual performance
bonuses, and long-term compensation provided by stock options.
Members of the Committee, particularly those members with direct
experience in the restaurant and quick-service food industry, believe they have
a general awareness of pay practices among companies of roughly comparable size,
complexity, and/or industry focus, but the Committee has not to date undertaken
the expense of commissioning any studies or of formally reviewing specific
information concerning compensation practices of other companies. As this is
necessarily an imprecise basis for comparison, the Committee is unable to
measure with any specificity the compensation paid by the Company against that
paid by other companies. Solely on the basis of the Committee's general
knowledge and experience, it is believed that the Company's compensation levels
are generally commensurate with those of similar companies.
The determination of base salaries for the named executive officers is
a subjective process, which attempts to take into account individual
responsibilities and performance, as well as the experience of the individual
and the competitive marketplace for management talent, though no discrete
relative weights or values are assigned to those elements. While base salary
decisions have not been determined by reference to any specific criteria or
factors related to corporate performance, the Committee is certainly deeply
concerned by the fact that the Company is in a highly competitive business and
continues to operate in a difficult competitive environment, and thus notes that
reviews and decisions with respect to executive compensation must be made in
light of other Company policies that are designed to improve operating
performance and control costs. In light of other management changes and
corporate cost control efforts, Mr. Robert Barrow voluntarily reduced his annual
salary rate from $208,000 to $125,000 effective as of the beginning of the third
fiscal quarter of 1998, and continued at that same rate in fiscal 1999.
Similarly, Mr. Alan Kaufman continued at the same rate in fiscal 1999. Following
the close of the 1999 fiscal year, Mr. Barrow agreed to discontinue his annual
salary effective January 31, 2000, and Mr. Kaufman agreed to reduce his annual
salary by an additional twenty percent to $100,000. Base salaries of the other
named executive officers in fiscal 1999 remained at previous year levels, except
for one individual increase reflecting a promotion to a more senior position.
ANNUAL PERFORMANCE BONUSES. In fiscal 1999, the Company's formula for
annual performance bonuses was, as in the past several years, based upon the
achievement of net pre-tax earnings for the entire
11
<PAGE> 15
year. The bonus program provided that the chief executive officer and other
named executive officers (except Mr. Alan Kaufman and Mr. Robert Barrow, who at
their request did not participate), as well as all corporate officers and
management personnel, would participate in a bonus pool consisting of a
specified percentage of net annual pre-tax earnings. The bonus pool was
comprised of five per cent of profits up to a fixed dollar amount, after which
the percentage could increase as profits attained further specified dollar
levels. Based upon financial results for fiscal 1999, no bonuses were paid.
STOCK OPTIONS. Stock options are granted by the Committee to executive
officers, as well as other employees, based upon the Committee's subjective
evaluation of employees' general overall performance and contribution, and upon
their relative rank within the Company. No specific performance criteria are
considered, and there is no fixed formula for differentiating among different
levels of responsibility within the Company or for otherwise determining the
number of options granted to an individual or to all employees in the aggregate.
The Committee's approach to long-term incentives provided by stock options has
been a flexible one, in which the effort is to attract and retain able key
employees by giving them an opportunity for stock ownership. No stock options
were awarded in fiscal 1999.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Fiscal 1999 was Mr. Jeffrey Kaufman's first full fiscal year in the
capacity of Chief Executive Officer. His base salary for the year remained at
$155,000, at his request. In determining the chief executive officer's base
salary, the Committee has relied on the general principles and considerations
outlined in the "Compensation Policies" discussion above, noting at this time
particularly the operational improvement and cost containment challenges
presently facing the Company. The Committee also observes that the chief
executive officer's present salary is approximately 15 to 25 percent less than
salaries paid to the Company's previous chief executive officers during every
prior year since fiscal 1989. Under the Company's bonus compensation program as
outlined in "Annual Performance Bonuses" above, no bonuses were awarded in
fiscal 1999, and no stock options were granted.
All members of the Compensation Committee concur in this report to the
shareholders.
William S. Atherton
William M. Byrne
Jake L. Netterville
12
<PAGE> 16
PERFORMANCE GRAPH
The graph below sets forth Company's cumulative total stockholder
return over the last five years compared to the NASDAQ Stock Market - U.S. and
the Standard & Poor's Restaurants indexes. Stock price performance over the past
five years is not necessarily indicative of future results.
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
-----------------------------------------------------
6/94 6/95 6/96 6/97 6/98 6/99
<S> <C> <C> <C> <C> <C> <C>
WALL STREET DELI, INC. 100.00 71 49 33 35 26
NASDAQ STOCK MARKET (U.S.) 100.00 143 171 208 274 393
S & P RESTAURANTS 100.00 130 155 162 219 275
</TABLE>
Assumes $100 invested in Wall Street Deli, Inc., NASDAQ Stock Market - U.S., and
S&P Restaurants indexes on June 30, 1994.
Total return calculations assume annual dividend reinvestment. The Company has
never paid a cash dividend.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
The information set forth in the following paragraph is based solely
upon a review of Forms 3 and 4 and amendments thereto furnished to the Company
pursuant to Rule 16a-3(e) during the fiscal year ended July 3, 1999, and Form 5
and amendments thereto furnished to the Company with respect to that fiscal
year, if any, and written representations received by the Company.
Of those persons who, at any time during the fiscal year ended July 3,
1999, were directors, executive officers, or beneficial owners of more than 10
percent of the Company's outstanding stock, none of such persons failed to file,
on a timely basis, as disclosed in the above forms, reports required by Section
16(a) of the Securities Exchange Act of 1934 during the most recent fiscal year
or prior fiscal years.
13
<PAGE> 17
PROPOSAL NUMBER 2:
AMENDMENT OF THE INCENTIVE AWARD PLAN
The Company has since 1977 maintained one or more employee stock option
plans. The present plan, which is the 1997 Incentive Award Plan (the "Plan"),
when originally adopted authorized and reserved for issuance 350,000 shares of
the Company's common stock, with an annual maximum grant limitation of 75,000
shares to all employees, and a cumulative limit to any one person of 10% of the
total shares available under the Plan. As of fiscal year end, July 3, 1999,
options for an aggregate 180,700 shares had been granted to employees,
leaving an aggregate of 169,300 shares remaining available for grant under the
Plan. At a meeting of the Board of Directors in September, 1999, the Board
adopted a proposal to amend the Plan by increasing the number of shares
available and removing certain of the maximum limits. This proposal will, if
adopted by the shareholders at this annual meeting, authorize and reserve an
additional 400,000 shares, and remove the annual Plan maximum and cumulative
individual maximum award limits.
BACKGROUND AND REASONS FOR THE PROPOSAL
The Board of Directors feels that the serious challenges facing the
Company require creative and aggressive efforts. Recognizing that this proposal
involves a substantial increase in the number of stock options and other
stock-based awards available for award to employees, the Board asks the
Company's shareholders for their support of this amendment because it believes
that the ability to offer meaningful incentives is critical to the Company's
ability to rebuild shareholder value-it will provide a singularly important tool
for recruiting new management talent, and for retaining and motivating existing
employees.
This proposal was developed and approved by the Compensation Committee
and then presented to and approved by the Board of Directors as a part of the
Company's new strategic initiative.
The Company's ability to recruit new talent, and to retain
recently-recruited new senior management personnel, is believed to be heavily
dependent on its ability to offer significant incentives, and the Board
considers it very important that those incentives be tied to performance. The
notable advantage of stock-based incentives is that employees' financial rewards
are directly parallel to improvements in shareholder value, and this is an
alignment of interests which is clearly not only highly appropriate but vital to
the Company.
14
<PAGE> 18
SUMMARY OF THE PLAN
PURPOSE, TYPES OF AWARDS AND INDIVIDUAL LIMITS. The purpose of the
Incentive Award Plan is to provide long-term incentives and rewards to those
employees largely responsible for the success and growth of the Company, to
assist the Company in attracting and retaining such employees and to associate
their interests with those of the Company's stockholders. The Plan is
administered by the Compensation Committee of the Board of Directors. Awards
under the Plan may include incentive stock options, non-qualified stock options,
stock appreciation rights, restricted stock or performance shares or any
combination of the foregoing. To date, however, the Company has only granted
stock options. The form, amount and timing of awards, and other terms and
conditions need not be uniform and may be made selectively among participants.
Any participant may be granted multiple awards. The proposed amendment will
delete the present limitation that no one participant may be granted, in the
aggregate, awards which would result in his or her receiving more than 10% of
the maximum number of shares available under the Plan.
SHARES ISSUABLE UNDER THE PLAN. Shares of the Company's common stock
issued under the Plan may be either authorized but unissued shares or treasury
shares. In the event of a lapse, expiration, termination or cancellation of any
award or the reacquisition of shares pursuant to the rights reserved upon
issuance, the shares subject to or reserved therefor may again be used for new
awards, so long as the number of shares issued under the Incentive Plan does not
exceed the total authorized number, which is presently 350,000 and if this
proposed amendment is adopted, will be 750,000. The amendment will delete the
present limitation that no more than 75,000 options in the aggregate may be
granted to all participants in any one year.
PERSONS ELIGIBLE. Active full time and part time key employees of the
Company and its subsidiaries are eligible to participate in the Plan.
Non-employee directors are not eligible. While the concept of a "key employee"
eligible to participate is necessarily flexible, as of October 15, 1999,
approximately 120 current employees (including a total of seven current employed
directors and executive officers) have been granted options under the Plan. The
Compensation Committee has sole authority and discretion to designate eligible
participants and determine the types of awards to be granted and their terms and
conditions, including exercise date, vesting schedule and exercise price.
INCENTIVE STOCK OPTIONS AND NON-QUALIFIED STOCK OPTIONS. The option
price for incentive stock options and non-qualified stock options granted under
the Plan may not be less than the fair market value of the Company's common
stock on the date of grant. For incentive stock options granted to persons
owning 10% or more of the Company's outstanding stock, the option price may not
be less than 110% of fair market value on the date of grant, and no person may
be granted incentive stock options if under all plans of the Company such person
holds options first exercisable during such calendar year for shares having an
aggregate fair market value, as of the date of grant, of more than $100,000,
plus any unused carryover from prior years. While the Committee has discretion
to determine the exercise period, no options have been granted to date that are
exercisable for more than five years. The Plan allows options to be exercised by
payment in cash or by
15
<PAGE> 19
the delivery of already-owned shares of Company stock, at the employee's
election. The effect of this feature is to allow a participant to deliver a
relatively small number of shares in satisfaction of the exercise price of a
larger option.
As of the end of the 1999 fiscal year, options for 180,700 shares were
outstanding under the Plan at an average exercise price of $5.71. On July 2,
1999, the last business day preceding fiscal year-end, the closing price of the
Company's common stock was $2.875 per share, and on October 27, 1999, the
closing price was $1.53 per share.
STOCK APPRECIATION RIGHTS AND RESTRICTED STOCK. Stock appreciation
rights ("SAR's") may be granted either singly or in tandem with options, on such
terms and conditions as the Compensation Committee may determine, except that
the exercise period for an SAR in tandem with an option may not exceed the
exercise period for the underlying option. Restricted stock grants may also be
granted on terms established by the Compensation Committee as long as such
grants are conditioned on continued employment with the Company. To date, no
restricted stock grants have been awarded, and no stock appreciation rights have
been granted under the Plan.
NON-TRANSFERABILITY. No awards under the Plan or any rights or interest
therein are assignable or otherwise transferable except by will or the laws of
descent and distribution. Participants under the Plan have no rights as
shareholders unless and until certificates for shares are issued to the
participant.
AMENDMENT AND TERMINATION. Unless approved by the shareholders, the
Plan may not be amended to increase the maximum number of shares under the Plan
or the maximum number of shares that may be awarded to any individual, to extend
the maximum period during which awards may be granted under the Plan, or to make
any other changes in the Incentive Plan that would require shareholder approval
under SEC Rule 16b-3. No awards may be made under the Incentive Plan after April
30, 2007, but the Plan will continue in effect for existing awards so long as
such awards are outstanding. The Committee may terminate the Plan at any time in
whole or in part, but such termination may not adversely affect any rights or
obligations with respect to any awards theretofore made.
FEDERAL INCOME TAX TREATMENT
STOCK OPTIONS. There are generally no federal tax consequences either
to the employee receiving stock options or to the Company upon the grant of a
stock option.
On exercise of an incentive stock option, the optionee will not
recognize any income and the Company will not be entitled to a deduction for tax
purposes, although the exercise may give rise to a liability for the employee
under the alterative minimum tax provisions of the Code. Generally, if the
employee disposes of shares acquired upon exercise of an incentive stock option
within two years of the
16
<PAGE> 20
date of grant or one year of the date of exercise, the employee will recognize
compensation income at ordinary income rates and the Company will be entitled to
a deduction for tax purposes in the taxable year in which the disposition
occurred in the amount of the excess of the fair market value of the shares of
common stock on the date of exercise over the option exercise price (or the gain
on sale, if less). Otherwise, the Company will not be entitled to any deduction
for tax purposes upon disposition of such shares, and the entire gain for the
employee will be treated as a capital gain. If shares are sold one year after
exercise and two years after grant, the gain will be taxed at short-term capital
gains rates, and if shares are sold eighteen months after exercise and two years
after grant, the gain will be taxed at long-term capital gain rates.
On exercise of a non-qualified stock option, the amount by which the
fair market value of the common stock on the date of exercise exceeds the option
exercise price will generally be taxable to the optionee as compensation income
and will generally be deductible for tax purposes by the Company. The
dispositions of shares of common stock acquired upon exercise of a non-qualified
stock option will generally result in a capital gain or loss for the optionee,
but will have no tax consequences for the Company.
RESTRICTED STOCK AWARDS. Unless an election is made as described below,
an employee who receives an award of restricted stock under the Plan will not
realize taxable income at the time of the award, nor will the Company be
entitled to a tax deduction at that time. When the awards become vested (I.E.,
when restrictions lapse through passage of time or otherwise) or the election
described below is made, participants will realize income and the Company may
claim a deduction at such time in an amount equal to the fair market value of
the shares less any amount paid by the participant. Dividends paid to the
employee with respect to restricted stock prior to their vesting constitute
compensation and, as such, are taxable to the participant and deductible by the
Company.
Pursuant to provisions of Section 83(b) of the Internal Revenue Code as
amended, the recipient of restricted stock under the Plan may elect to be taxed
at the time of the award. If the participant so elects, the full value of the
shares (without regard to restrictions) at the time of the grant, less any
amount paid by the participant, will be taxed to the participant as ordinary
income and will be deductible by the Company. Dividends paid with respect to the
shares during the period of restriction will be taxable as dividends to the
participant and not deductible by the Company. If, after making an election
pursuant to Section 83(b), any shares are subsequently forfeited, or if the
market value at vesting is lower than the amount on which the participant was
taxed, the participant cannot then claim a deduction.
STOCK APPRECIATION RIGHTS. The grant of stock appreciation rights
should not result in taxable income to the recipient or a tax deduction for the
Company. The exercise of stock appreciation rights should result in compensation
taxable as ordinary income to the employee subject to withholding, and in
17
<PAGE> 21
a tax deduction for the Company, in the amount of the cash paid and the fair
market value of any shares issued or transferred, unless any such shares are
subject to a substantial risk of forfeiture, in which event, (unless the
employee elected to be taxed on exercise) compensation should generally be
realized subject to federal income tax and withholding and a tax deduction
should be available to the Company only at a time the shares are no longer
subject to a substantial risk of forfeiture, with the amount based on the fair
market value of the shares at that time. Shares received by an officer or
director of the Company would be considered subject to a "substantial risk of
forfeiture" for this purpose so long as the sale of such shares could subject
the individual to suit under the short-swing profits recapture provision of
federal securities legislation.
NEW PLAN BENEFITS
While it is expected that all current executive officers, including
the named executive officers, will be eligible for grants and will likely be
granted significant numbers of options or restricted stock awards under the Plan
in the future, the number and value of such grants are not presently
determinable.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR Proposal number 2, to
amend the Incentive Award Plan.
PROPOSAL NUMBER 3:
RATIFICATION OF AUTHORIZATION FOR THE
AUDIT COMMITTEE TO SELECT 1999 INDEPENDENT AUDITORS
The Board of Directors has authorized the Audit Committee to select the
Company's independent auditors for the fiscal year ending July 1, 2000, subject
to approval by the shareholders at the Annual Meeting. BDO Seidman, LLP,
Certified Public Accountants, served as the Company's independent auditors for
the fiscal year ending July 3, 1999, and has performed this function for the
Company since 1971. Representatives of BDO Seidman, LLP will be present at the
Annual Meeting with the opportunity to make a statement if they so desire and
will be available to respond to questions of shareholders.
The Board of Directors of the Company recommends ratification of
authorization for the Audit Committee to select the Company's independent
auditors for the 2000 fiscal year. The affirmative vote of a majority of the
votes cast at the meeting is necessary to approve this proposal.
The Board of Directors recommends a vote FOR this proposal.
18
<PAGE> 22
OTHER MATTERS
The Board of Directors knows of no other business to be transacted, but
if any other matters do come before the meeting, the persons named as proxies in
the accompanying proxy, or their substitutes, will vote or act with respect to
them in accordance with their best judgment.
SHAREHOLDERS' PROPOSALS
Any proposal which a shareholder expects to present at the next annual
meeting to be held in the year 2000 must be received at the Company's principal
executive office shown on the first page of this Proxy Statement not later than
August 9, 2000, in order to be included in the proxy material for the 2000
meeting. All proposals must comply with the Rule 14a-8 of Regulation 14A of the
proxy rules of the Securities and Exchange Commission.
THE ANNUAL REPORT OF THE COMPANY WHICH ACCOMPANIES THIS PROXY STATEMENT
CONTAINS CERTAIN OF THE INFORMATION CONTAINED IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. A COPY OF THE
10-K WILL BE FURNISHED TO SHAREHOLDERS UPON REQUEST WITHOUT CHARGE. REQUESTS FOR
FORM 10-K REPORTS SHOULD BE SENT TO THOMAS J. SANDEMAN, CHIEF FINANCIAL OFFICER,
WALL STREET DELI, INC., ONE INDEPENDENCE PLAZA, SUITE 100, BIRMINGHAM, ALABAMA
35209.
By Order of the Board of Directors
19
<PAGE> 23
APPENDIX 1
TO PROXY STATEMENT FOR
THE ANNUAL SHAREHOLDERS MEETING TO BE HELD DECEMBER 8, 1999
WALL STREET DELI, INC.
INCENTIVE AWARD PLAN
AS PROPOSED TO BE AMENDED AT THE MEETING
<PAGE> 24
WALL STREET DELI, INC.
INCENTIVE AWARD PLAN
AS ADOPTED BY THE BOARD OF DIRECTORS ON APRIL 30, 1997
AND APPROVED BY THE SHAREHOLDERS ON NOVEMBER 6, 1997
AND AS PROPOSED TO BE AMENDED BY THE SHAREHOLDERS ON DECEMBER 8, 1999
1. PURPOSE.
The purposes of the Incentive Award Plan (the "Plan") are to provide
long-term incentives and rewards to those employees largely responsible for the
success and growth of Wall Street Deli, Inc. and its subsidiaries and divisions
(the "Company"), to assist the Company in attracting and retaining executives
with experience and ability on a basis competitive with industry practices, and
to associate the interests of such key employees with those of the Company's
shareholders.
2. ADMINISTRATION OF THE PLAN.
(a) COMMITTEE. The Plan shall be administered by the Compensation
Committee of the Board of Directors of the Company (the "Committee"). The Board
of Directors shall appoint at least two of its members to the Committee. Except
as may otherwise be provided in Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), no person shall be appointed as a member of
the Committee who is not "disinterested" as defined in Rule 16b-3 of the 1934
Act.
(b) COMMITTEE ACTIONS. Each member of the Committee shall serve at the
pleasure of the Board of Directors, which may fill any vacancy, however caused,
in the Committee. The Committee shall select one of its members as a chairman
and shall hold meetings at the times and in the places as it may deem advisable.
All actions the Committee takes shall be made by majority decision. Any action
evidenced by a written instrument signed by all of the members of the Committee
shall be as fully effective as if the Committee had taken the action by majority
vote at a meeting duly called and held.
(c) COMMITTEE POWERS. The Committee shall have all the powers vested in
it by the terms of the Plan, such powers to include exclusive authority (within
the limitations described herein) to (i) select the employees to be granted
awards under the Plan ("Participants"), (ii) determine the type, size and terms
of awards to be made to each Participant, including whether or not such awards
shall be issued for any consideration and, if issued for consideration, the
amount and type of consideration, (iii) determine the consideration to be paid
upon exercise of an ISO or NSO, as defined herein, (iv) determine the time when
awards will be granted and (v) establish objectives and conditions for awards,
including any holding period for awards or securities awarded, the effects of
termination of employment or disability on awards, vesting requirements and the
form of payment of awards. The Committee may, in its sole discretion, delegate
such of its powers as it deems appropriate, except that the Committee may not
delegate its authority with
<PAGE> 25
regard to any matter or action affecting an officer or other person subject to
Section 16 of the 1934 Act.
(d) The Committee shall have full power and authority to administer and
interpret the Plan and to adopt such rules, regulations, agreements, guidelines
and instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable. The Committee's
interpretations of the Plan, and all actions taken and determinations made by
the Committee pursuant to the powers vested in it hereunder, shall be conclusive
and binding on all parties concerned, including the Company, its shareholders
and any employee of the Company.
3. ELIGIBILITY.
(a) Active full-time and part-time key employees of the Company, its
subsidiaries and divisions, whether or not directors of the Company, shall be
eligible to participate in the Plan; directors of the Company who are not
employees are not eligible. The Committee, or its delegate, shall designate
Participants from among such eligible key employees.
(b) Subject to the limits set forth in this Plan, the Committee at any
time may grant additional awards to Participants to whom the Committee had
previously granted awards, so that a Participant may hold more than one award at
the same time.
4. AWARDS.
(a) TYPES. The Committee may authorize awards under the Plan of any one
or a combination of: nonqualified stock options ("NSO"), incentive stock options
("ISO"), stock appreciation rights ("SAR"), and restricted stock. The Committee
may make any other type of award which it shall determine is consistent with the
objectives and limitations of the Plan. All Incentive Stock Options ("ISOs")
awarded hereunder are intended to comply with Internal Revenue Code of 1986, as
amended ("Code"), Sections 422 and 424 and all provisions of the Plan and all
ISOs granted shall be construed to effectuate that intent. Each award shall be
subject to the terms and conditions set forth herein and as determined by the
Committee. Committee determinations as to eligibility, form, amount and timing
of awards, and other terms and conditions need not be uniform and may be made
selectively among Participants who receive or are eligible for awards hereunder,
whether or not such individuals are similarly situated.
(b) GUIDELINES. The Committee may adopt from time to time policies for
its implementation of the Plan. Such policies may include, but need not be
limited to, the type, size and term of awards to be made to Participants who are
eligible key employees and the conditions for payment of such awards. All awards
shall be evidenced by a written agreement between the Participant and the
Company in the form and containing the terms and conditions authorized by the
Committee.
3
<PAGE> 26
(c) MULTIPLE AWARDS. A Participant may be granted multiple awards under
the Plan.
5. TERMS OF STOCK OPTIONS.
The Committee may grant options qualifying as ISOs under the Code and
NSOs (collectively "Stock Options"), and such Stock Options shall be subject to
the following terms and conditions and such other terms and conditions as the
Committee may prescribe:
(a) OPTION PRICE. The option price per share with respect to each Stock
Option shall be determined by the Committee, but shall not be less than 100% of
the fair market value of the Common Stock on the date the Stock Option is
granted, as determined by the Committee. Unless otherwise determined by the
Committee, fair market value shall be deemed to be the mean between the highest
and lowest sales prices of the Common Stock on the Consolidated Transaction
Reporting System on the date the Stock Option is granted.
(b) PERIOD OF OPTION. The period of each Stock Option shall be fixed by
the Committee.
(c) PAYMENT. The option price shall be payable at the time the Stock
Option is exercised in cash or, at the discretion of the Committee, in whole or
in part in the form of shares of Common Stock already owned by the grantee
(based on the fair market value of the Common Stock on the date the option is
exercised as determined by the Committee). No shares shall be issued until full
payment therefor has been made. A grantee of a Stock Option shall have none of
the rights of a stockholder until the shares are issued.
(d) EXERCISE OF OPTION. The shares covered by a Stock Option may be
purchased in such installments and on such exercise dates as the Committee may
determine. Any shares not purchased on the applicable exercise date may be
purchased thereafter at any time prior to the final expiration of the Stock
Option. In no event (including those specified in paragraphs (e), (f) and (g) of
this section below) shall any Stock Option be exercisable after its specified
expiration period.
(e) TERMINATION OF EMPLOYMENT. Upon the termination of a Participant's
employment (for any reason other than retirement, death or termination for
deliberate, willful, or gross misconduct), Stock Option privileges for such
Participant shall be limited to the shares that were immediately exercisable at
the date of such termination. The Committee, however, in its discretion may
provide that any Stock Options outstanding but not yet exercisable upon the
termination of a Participant's employment may become exercisable in accordance
with a schedule to be determined by the Committee. Such Stock Option privileges
shall expire unless exercised within such period of time after the date of such
termination of employment as may be established by the Committee. If a
Participant's employment is terminated for deliberate, willful or gross
misconduct, as
4
<PAGE> 27
determined by the Company, all rights under the Stock Option shall expire upon
receipt of the notice of such termination.
(f) RETIREMENT. Upon retirement of the Participant, Stock Option
privileges for such Participant shall apply to those shares immediately
exercisable at the date of retirement. The Committee, however, in its
discretion, may provide that any Stock Options outstanding but not yet
exercisable upon the retirement of the Participant may become exercisable in
accordance with a schedule to be determined by the Committee. Stock Option
privileges shall expire unless exercised within such period of time as may be
established by the Committee.
(g) DEATH. Upon the death of a Participant, Stock Option privileges for
such Participant shall apply to those shares that were immediately exercisable
at the time of death. The Committee, however, in its discretion, may provide
that any Stock Options outstanding but not yet exercisable upon the death of a
Participant may become exercisable in accordance with a schedule to be
determined by the Committee. Such privileges shall expire unless exercised by
legal representatives within a period of time as determined by the Committee but
in no event later than the date of the expiration of the Stock Option.
(h) LIMITS ON INCENTIVE STOCK OPTIONS. Except as may otherwise be
permitted by the Code, the Committee shall not grant, in the aggregate under all
plans of the Company, a Participant ISOs that are first exercisable during any
one calendar year to the extent that the aggregate fair market value of the
Common Stock with respect to which such ISOs are granted, at the time the ISOs
are granted, exceeds $100,000.
6. TERMS OF STOCK APPRECIATION RIGHTS
The Committee may, in its discretion, grant a stock appreciation right
to receive the appreciation in the fair market value of shares of Common Stock
("SAR") either singly or in combination with an underlying Stock Option granted
hereunder. Such SARs shall be subject to the following terms and conditions and
such other terms and conditions as the Committee may prescribe:
(a) TIME AND PERIOD OF GRANT. If an SAR is granted with respect to an
underlying Stock Option, it may be granted at the time of the Stock Option grant
or at any time thereafter but prior to the expiration of the Stock Option grant.
If an SAR is granted with respect to an underlying Stock Option, at the time the
SAR is granted the Committee may limit the exercise period for such SAR, before
and after which period no SAR shall attach to the underlying Stock Option. In no
event shall the exercise period for an SAR granted with respect to an underlying
Stock Option exceed the exercise period for such Stock Option. If an SAR is
granted without an underlying Stock Option, the period of exercise of the SAR
shall be set by the Committee.
(b) VALUE OF SAR. If an SAR is granted with respect to an underlying
Stock Option, the Participant will be entitled to surrender the Stock Option
which is then exercisable and receive
5
<PAGE> 28
in exchange therefor an amount equal to the excess of the fair market value of
the Common Stock on the date the election to surrender is received by the
Company over the Stock Option price multiplied by the number of shares covered
by the Stock Option which are surrendered. If an SAR is granted without an
underlying Stock Option, the Participant will receive upon exercise of the SAR
an amount equal to the excess of the fair market value of the Common Stock on
the date the election to surrender such SAR is received by the Company over the
fair market value of the Common Stock on the date of grant multiplied by the
number of shares covered by the grant of the SAR.
(c) PAYMENT OF SAR. Payment of an SAR shall be in the form of shares of
Common Stock, cash, or a combination thereof. The form of payment upon exercise
of an SAR shall be determined by the Committee either at the time of grant of
the SAR or at the time of exercise of the SAR.
7. TERMS OF RESTRICTED STOCK.
The Committee may issue shares of Common Stock to a Participant which
shares shall be subject to the following terms and conditions and such other
terms and conditions as the Committee may prescribe for the award of restricted
stock ("RS"):
(a) REQUIREMENT OF EMPLOYMENT. A Participant awarded an RS must remain
in the employment of the Company during a period designated by the Committee
("Restriction Period"). If the Participant leaves the employment of the Company
prior to the end of the Restriction Period, the RS shall terminate and the
shares of Common Stock shall be returned immediately to the Company; provided
that the Committee may, at the time of the grant, provide for the employment
restriction to lapse with respect to a portion of the RS at different times
during the Restriction Period. The Committee may, in its discretion, also
provide for such complete or partial exceptions to the employment restriction as
it deems equitable.
(b) RESTRICTIONS ON TRANSFER AND LEGEND OF STOCK CERTIFICATES. During
the Restriction Period, the Participant may not sell, assign, transfer, pledge,
or otherwise dispose of the shares of Common Stock. Each certificate for shares
of Common Stock issued hereunder shall contained a legend giving appropriate
notice of the restrictions in the grant.
(c) CUSTODY OF CERTIFICATES. The Committee may require, under such
terms and conditions as it deems appropriate or desirable, that the certificates
for shares of Common Stock delivered under the Plan may be held in custody by a
bank or other institution, or that the Company may itself hold such shares in
custody until the Restriction Period expires or until restrictions thereon
otherwise lapse, and may require, as a condition of any award of RS that the
Participant shall have delivered a stock power endorsed in blank relating to the
RS.
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<PAGE> 29
(d) LAPSE OF RESTRICTIONS. All restrictions imposed under the RS shall
lapse upon the expiration of the Restriction Period if the conditions as to
employment set forth above have been met. The Participant shall then be entitled
to have the legend removed from the certificates.
(e) DIVIDENDS. The Committee shall, in its discretion, at the time of
the award of RS, provide that any dividends declared on the Common Stock during
the Restriction Period shall either be (i) paid to the Participant, or (ii)
accumulated for the benefit of the Participant and paid to the Participant only
after the expiration of the Restriction Period.
8. SHARES OF STOCK SUBJECT TO THE PLAN.
AGGREGATE SHARES. The shares that may be delivered or purchased under
the Plan shall not exceed an aggregate of 750,000 shares of Common Stock. Shares
to be delivered or purchased under the Plan may be either shares of authorized
but unissued Common Stock or treasury shares.
REACQUIRED SHARES. In the event of a lapse, expiration, termination
or cancellation of any award granted under the Plan without the issuance of
shares or payment of cash, or if shares are issued as RS hereunder and are
reacquired by the Company pursuant to rights reserved upon the issuance thereof,
the shares subject to or reserved for such award may again be used for new
awards hereunder; provided that in no event may the number of shares issued
hereunder exceed the total number of shares reserved for issuance.
9. DILUTION AND OTHER ADJUSTMENTS.
In the event of any change in the outstanding shares of Common Stock by
reason of any split, stock dividend, recapitalization, merger, consolidation,
combination or exchange of shares or other similar corporate change, such
equitable adjustments shall be made in the Plan and the awards thereunder as the
Committee determines are necessary and appropriate, including, if necessary, an
adjustment in the maximum number or kind of shares subject to the Plan or which
may be or have been awarded to any Participant. Such adjustment shall be
conclusive and binding for all purposes of the Plan.
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<PAGE> 30
10. MISCELLANEOUS PROVISIONS.
(a) RIGHTS AS SHAREHOLDER. A Participant under the Plan shall have no
rights as a holder of Common Stock with respect to awards of Stock Options or
SARs hereunder, unless and until certificates for shares of Common Stock are
issued to the Participant.
(b) ASSIGNMENT OR TRANSFER. No awards under the Plan or any rights or
interests therein shall be assignable or transferable by a Participant except by
will or the laws of descent and distribution. During the lifetime of a
Participant, awards hereunder are exercisable only by, and payable only to, the
Participant or if the Participant is disabled, by the participant's duly
appointed guardian or legal representative.
(c) REQUIREMENTS FOR TRANSFER. No shares of Common Stock shall be
issued or transferred under the Plan until all legal requirements applicable to
the issuance or transfer of such shares have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any issuance of shares of Common Stock made to any Participant upon such
Participant's written undertaking to comply with such restrictions on his
subsequent disposition of such shares as the Committee or the Company shall deem
necessary or advisable as a result of any applicable law, regulation or official
interpretation thereof, and certificates representing such shares may be
legended to reflect any such restrictions.
(d) WITHHOLDING TAXES. The Company shall have the right to deduct from
all awards hereunder paid in cash any federal, state, local or foreign taxes
required by law to be withheld with respect to such awards and, with respect to
awards paid in stock or upon exercise of stock options, to require the payment
(through withholding from the participant's salary or otherwise) of any such
taxes. Alternatively, the Company may issue or transfer the number of shares of
Common Stock under an award net of the number of shares sufficient to satisfy
the withholding tax requirements. For withholding tax purposes, the shares of
Common Stock shall be valued on the date the withholding obligation is incurred.
The obligation of the Company to make delivery of awards in cash or Common Stock
shall be subject to currency or other restrictions imposed by any government.
(e) NO RIGHTS TO AWARDS. No employee or other person shall have any
claim or right to be granted an award under the Plan.
(f) COMPLIANCE WITH SECTION 16(b). Transactions under this Plan and
each award to a person subject to Section 16 of the 1934 Act are intended to
comply with Rule 16b-3 (or its successors) under the 1934 Act, and the Committee
shall impose such minimum holding periods, requirements on the timing of
elections and other restrictions on any award as it may deem needed for such
compliance. To the extent any provision of this Plan, agreements entered into
pursuant thereto or any action by the Committee fails to comply with Rule 16b-3
(or its successors) under the 1934 Act, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
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<PAGE> 31
(g) COSTS AND EXPENSES. The cost and expenses of administering the Plan
shall be borne by the Company and not charged to any award nor to any
Participant receiving an award.
(h) THE RIGHT OF THE COMPANY TO TERMINATE EMPLOYMENT. No provision in
the Plan or any award shall confer upon any employee any right to continue in
the employment of the Company or any subsidiary or division of the Company or to
continue performing services for or to interfere in any way with the right of
the Company or any subsidiary or division of the Company to terminate his
employment or of the right of shareholders of the Company to remove such
employee or person as a director at any time for any reason.
(i) APPROVAL OF SHAREHOLDERS, ETC. The Company shall submit the Plan to
its shareholders for approval within 12 months of the adoption of the Plan by
the Board of Directors; provided further that unless shareholder approval is
obtained within said twelve-month period, both the Plan and all outstanding
awards shall be rendered immediately void and of no effect.
11. AMENDMENTS AND TERMINATION.
The Committee may at any time terminate or from time to time amend the
Plan in whole or in part, but no such action shall adversely affect any rights
or obligations with respect to any awards theretofore made under the Plan.
Unless the holders of at least a majority of the outstanding shares of
Common Stock of the Company shall have first approved thereof, no amendment of
the Plan shall be effective that would increase the maximum number of shares
which may be delivered under the Plan or to any one individual or extend the
maximum period during which awards may be granted under the Plan or make such
other changes in the Plan which would require shareholder approval pursuant to
Rule 16b-3 under the 1934 Act.
With the consent of the Participant affected, the Committee may amend
outstanding agreements evidencing awards under the Plan in a manner not
inconsistent with the terms of the Plan.
12. EFFECTIVE DATE AND TERM OF PLAN.
The Plan shall become effective on the date it is approved by the
Board of Directors of the Company. No awards shall be made under the Plan after
April 30, 2007. The Plan will continue in effect for existing awards so long as
any such award is outstanding.
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PROXY
WALL STREET DELI, INC.
Proxy for Annual Meeting of Shareholders, December 8, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Alan V. Kaufman and Robert G. Barrow,
and either of them, proxies for the undersigned, with full power of
substitution, to represent the undersigned and to vote, as designated below, all
of the shares of the common stock of Wall Street Deli, Inc. (the Company) that
the undersigned is entitled to vote at the annual meeting of shareholders of the
Company to be held on December 8, 1999, and at any adjournment thereof.
1. The election as directors of all nominees listed below (except as
marked to the contrary below):
Alan V. Kaufman, Robert G. Barrow, Jeffrey V. Kaufman, William S.
Atherton, Aaron Beam, Jr., William M. Byrne, and Jake L. Netterville
[ ] FOR all nominees listed above [ ] VOTE WITHHELD
(except as marked to the to vote for all
contrary) nominees listed above
(INSTRUCTION: TO WITHHOLD YOUR AUTHORITY TO VOTE FOR ANY INDIVIDUAL
NOMINEE, WRITE THAT NOMINEE'S NAME ON THE LINE BELOW:)
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2. The proposal to amend the Company's Incentive Award Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Ratification of authorization for the Audit Committee to select the
Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS and will be voted as
directed herein. If no direction is given, this proxy will be voted FOR items 1,
2 and 3.
<PAGE> 33
Dated , 1999
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Phone No.
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Signature of Stockholder
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Signature of Stockholder
Where stock is registered jointly in the names of two or more persons, ALL
should sign. Signature(s) should correspond exactly with the name(s) as shown
above. Please mark, sign, date, and return the proxy card promptly in the
enclosed envelope. No postage need be affixed if mailed in the United States.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
