<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:
<TABLE>
<S> <C>
[ ] Preliminary proxy statement [ ] Confidential, for Use of the Commission Only
[X] Definitive proxy statement (as permitted by Rule 14a-6(e)(2) )
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
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
October 17, 2000
Dear Shareholder:
You are cordially invited to attend the 2000 Annual Meeting of
Shareholders, which will be held this year at 11:00 a.m. on Friday, November 17,
2000, in the Board of Directors Meeting Room on the mezzanine floor of AmSouth
Bank of Alabama, at the AmSouth-Sonat Building located at Fifth Avenue North and
Twentieth Street, Birmingham, Alabama.
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.
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
November 17, 2000
The Annual Meeting of Shareholders of WALL STREET DELI, INC., a
Delaware corporation (the "Company"), will be held in the Board of Directors
Meeting Room on the mezzanine floor of AmSouth Bank of Alabama, at the
AmSouth-Sonat Building located at Fifth Avenue North and Twentieth Street,
Birmingham, Alabama, on Friday, November 17, 2000 at 11:00 a.m. Central Standard
Time.
At the Annual Meeting shareholders will consider and act upon the
following matters:
1. The election of six directors, each director to hold office
until his successor is elected and qualified;
2. Approval of a new plan allowing non-employee directors to
purchase Company stock in lieu of cash directors' fees;
3. Approval of a new stock option plan for non-employee
directors;
4. The ratification of authorization for the Audit Committee to
select the Company's independent auditors; and
5. 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 9,
2000 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
November 17, 2000. A copy of the Annual Report of the Company for the fiscal
year ended July 1, 2000, 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 October 17,
2000.
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 9, 2000, are
entitled to notice of, and to vote at, the Annual Meeting. As of October 9,
2000, there were 2,908,477 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, Proposals number 2 and 3, the proposals
to adopt the Non-Employee Directors Stock Purchase Plan and the Stock Option
Plan for Non-Employee Directors, respectively, require the affirmative vote of a
majority of the shares present at the meeting in person or by proxy, and
ratification of auditors requires 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 1, 2000, 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.
<TABLE>
<CAPTION>
Amount and
Nature of Percentage
Name and Address of Beneficial of Common
Beneficial Owner Ownership(1) Stock
------------------- ------------ ----------
<S> <C> <C>
Alan V. Kaufman 307,212(2) 10.4%
Chairman and Nominee
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Robert G. Barrow 226,800(3) 7.1%
Vice Chairman and Nominee
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Jeffrey V. Kaufman 43,424(4) 1.5%
President, Chief Executive Officer,
Director and Nominee
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Howard J. Cannon -0- *
Chief Operating Officer
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Thomas J. Sandeman -0- *
Chief Financial Officer
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
</TABLE>
2
<PAGE> 6
<TABLE>
<CAPTION>
Amount and
Nature of Percentage
Name and Address of Beneficial of Common
Beneficial Owner Ownership(1) Stock
------------------- ------------ ----------
<S> <C> <C>
Paul M. Hazlinger -0- *
Vice President, Business Development
One Independence Plaza, Suite 100
Birmingham, Alabama 35209
Aaron Beam, Jr. 20,000(5) *
Director and Nominee
5182 Greystone Way
Birmingham, Alabama 35242
William M. Byrne 33,000(5) 1.1%
Director and Nominee
2701 South Minnesota
Sioux Falls, South Dakota 57105
Jake L. Netterville 47,750(5) 1.6%
Director and Nominee
8550 United Plaza Boulevard
Baton Rouge, Louisiana 70809
Estate of Joe Lee Griffin, Jr. 276,828(6) 9.4%
Post Office Box 55765
Birmingham, Alabama 35255
Dimensional Fund Advisors, Inc. 179,000(7) 6.1%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
All directors and executive officers as a group 669,186(8) 22.5%
</TABLE>
---------------
* 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 13,500 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
18,750 shares subject to options that are exercisable within 60 days.
(5) The reported amounts for Mr. Beam and Mr. Byrne include 8,000 shares
each and for Mr. Netterville, 10,000 shares, subject to options that
are exercisable within 60 days.
(6) 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.
(7) Dimensional Fund Advisors, Inc. a registered investment advisor, has
sole voting power and sole dispositive power with respect to all
179,000 shares, which are owned by advisory clients of Dimensional Fund
Advisors, Inc. This information is based upon Schedule 13G as filed by
Dimensional Fund Advisors, Inc., with the Securities and Exchange
Commission (the "Commission") on February 4, 2000.
(8) The amount reported includes an aggregate 59,750 shares subject to
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
All of the Company's non-employee directors and nominees will be
eligible to participate in the Non-Employee Directors Stock Purchase Plan, which
is to be considered by the shareholders as proposal number 2 at this Annual
Meeting. In addition, all non-employee directors and nominees will be eligible
to participate in the Stock Option Plan for Non-Employee Directors, which is to
be considered by the shareholders as proposal number 3 at this Annual Meeting.
Mr. Barrow, Mr. Beam, Mr. Byrne and Mr. Netterville have each received a
conditional grant of 6,000 options under the latter plan, subject to
shareholders' approval, so that in the event that this plan is not approved by
the shareholders, these grants will be void.
ELECTION OF DIRECTORS
At the Annual Meeting, six 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 shareholder 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
therefore will not affect the outcome of the election.
4
<PAGE> 8
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.
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. Mr. William S.
Atherton, who served as a director since 1991, resigned in January 2000; that
position has since remained vacant, and the Board of Directors has presently
fixed the number of directors at six.
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.
<TABLE>
<S> <C>
ALAN V. KAUFMAN Director Since 1966
Mr. Kaufman, age 63, 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 64, 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 62, 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.*
JEFFREY V. KAUFMAN Director since 1995
Mr. Kaufman, age 39, 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, from 1987 to 1993. Mr. Kaufman is the son of Alan V. Kaufman.
</TABLE>
5
<PAGE> 9
<TABLE>
<S> <C>
Aaron Beam, Jr. Director since 1998
Mr. Beam, age 56, 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 56, 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.
</TABLE>
---------------
(*) A company with a class of securities registered under the Securities
Exchange Act of 1934 (the "Exchange Act").
BOARD AND COMMITTEE MEETINGS AND ATTENDANCE
The Board of Directors held six meetings during the fiscal year ended
July 1, 2000. All of the directors attended at least 75% of the Board and
committee meetings, with the exception of Mr. Atherton, who resigned in January
2000.
The Audit Committee of the Board of Directors presently consists of Mr.
Netterville (chairman), Mr. Beam and Mr. Byrne. During the fiscal year, Mr.
Byrne replaced Mr. William S. Atherton, who was a member of the Committee until
his resignation in January. None of the members of the Committee is now or has
been 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 transactions
and potential conflict of interest situations. The Committee met three times
during the 2000 fiscal year.
The Compensation Committee of the Board of Directors presently consists
of Mr. Byrne (chairman), Mr. Netterville and Mr. Beam. Mr. Beam was appointed
during the fiscal year ended July 1, 2000, following Mr. Atherton's resignation.
None of the Compensation Committee members is or has ever been employed by the
Company. This committee held five meetings during fiscal 2000. 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.
6
<PAGE> 10
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 1, 2000 for services by each of the persons serving
as chief executive officer at any time during the 2000 fiscal year, and other
executive officers of the Company who were serving as such at the end of fiscal
2000 and whose total salary and bonus exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-
Term
Compensation
Annual Compensation Awards(3)
------------------------------------------ ------------
Other Annual All Other
Name and Principal Position Year(1) Salary Bonus Compensation(2) Options(4) Compensation(5)
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey V. Kaufman 2000 $155,000 $-0- $ 6,900 18,750 $16,639
President and Chief Executive 1999 $155,000 $-0- $12,070 -0- $ 9,091
Officer since June 1998 (6) 1998 $155,000 $-0- $13,411 10,000 $ 9,091
Alan V. Kaufman 2000 $106,250 $-0- $ 7,200 5,000 $53,979
Chairman of the Board 1999 $125,000 $-0- $11,626 -0- $53,979
1998 $125,000 $-0- $12,757 -0- $53,979
Howard L. Cannon 2000 $ 96,115 $18,000 $ 3,000 75,000 $ 5,256
Chief Operating Officer 1999 N/A
1998 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: automobile
allowances of $6,900 to Jeffrey Kaufman, $7,200 to Alan Kaufman, and
$3,000 to Howard Cannon.
(3) The Company has no restricted stock award plans and no long term
incentive plans as those terms are defined by applicable rules of the
Commission.
(4) The Company's Incentive Award Plan provides for grants of stock
appreciation rights (SAR's) in tandem with options; however, 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
$16,639 for Jeffrey Kaufman and $18,979 for Alan Kaufman. With respect
to Alan Kaufman, the amount also includes $35,000 in dollar value of
premiums paid by the Company for his benefit for split-dollar life
insurance with respect to life insurance and to premium amounts
unrelated to life
7
<PAGE> 11
insurance coverage. On termination of the insurance policy the beneficiary is
obligated by contract to refund to the Company all premiums paid. For Mr.
Cannon, the amount in this column consists of $5,256 in relocation expenses.
(6) Mr. Kaufman served as Executive Vice President and Chief Operating
Officer prior to June 1, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information with respect to option grants
during fiscal 2000 to the named executive officers.
<TABLE>
<CAPTION>
Percent of Potential Realizable Value
Total at Assumed Annual Rates
Options of Stock Price Appreciation
Granted to For Option Term(5)
Employees Exercise ----------------------------
Options in Fiscal or Base Expiration
Name Granted (1) Year (3) Price (4) Date 5% 10%
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey V. Kaufman 18,750 (2) -- $1.12 12/31/02 $ 5,813 $12,750
85,000 17.1% $1.15 02/01/05 $27,200 $59,500
Alan V. Kaufman 5,000 .8% $1.27 02/01/05 $ 1,750 $ 4,000
Howard L. Cannon 75,000 12.3% $1.15 02/01/05 $23,829 $40,029
</TABLE>
(1) Except as otherwise noted, options become exercisable in 25% increments
each year, beginning one year after grant, and expire 5 years after the
grant date.
(2) These options, which are immediately exercisable and expire five years
after the date of grant, were granted as replacements for twice as many
(37,500) previously-outstanding options that were canceled. See the
Report on Repricing of Options.
(3) Based on 608,250 options granted to all employees in the fiscal year
ended July 1, 2000. This amount does not include options for 4,000
shares granted to non-employee directors during the fiscal year.
(4) Options are exercisable at fair market value on the date of grant. In
the case of a person owning more than 10% of the Company's outstanding
stock, the exercise price is 110% of fair market value on the date of
grant.
(5) The dollar amounts set forth under these columns are the result of
calculations at the 5% and 10% rates specified by the rules of the
Commission; they are not intended to forecast future appreciation of
the Company's stock price.
8
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES
The following table provides information with respect to option
exercises in fiscal 2000 by the named executive officers and the value of each
such officer's unexercised options at July 1, 2000.
<TABLE>
<CAPTION>
Value of Unexercised
Number of Unexercised In-the-Money
Options/SARs Options/SARs
at Fiscal Year End 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- 18,750(2) 85,000 N/A N/A
Alan V. Kaufman -0- -0- -0- 5,000 N/A N/A
Howard L. Cannon -0- -0- -0- 75,000 N/A N/A
</TABLE>
(1) Based on $1.125 per share, the average of high and low sales prices
reported by NASDAQ on June 30, 2000. The exercise price of all
outstanding options is greater than the current price of the shares.
(2) These options, which are immediately exercisable and expire five years
after the date of grant, were granted as replacements for twice as many
(37,500) previously-outstanding options that were canceled. See the
Report on Repricing of Options.
COMPENSATION OF DIRECTORS
Four of the six present directors are not salaried employees of the
Company. For their services in fiscal 2000 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.
The four current non-employee directors also received grants of options
for 1,000 shares each in fiscal 2000, pursuant to the Company's existing Stock
Option Plan for Non-Employee Directors (the "Directors Option Plan"). The
Directors Option Plan provides for the granting of stock options under a non-
discretionary formula by which each 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 Option Plan
originally reserved 75,000 shares of the Company's common stock for issuance
upon exercise of the non-qualified stock options. Directors are eligible to
participate if they are not employed by the Company or its subsidiaries. Options
for an aggregate of 8,000 shares (as adjusted) remained outstanding as of the
2000 fiscal year end, and no options granted under the Directors Option Plan
have ever been exercised. The Directors Option Plan will automatically terminate
in 2001, and proposal number 3 to be considered at this Annual Meeting, if
approved by the shareholders, will replace the Directors Option Plan with a new
stock option plan for non-employee directors; please see the full discussion
later in this Proxy Statement.
9
<PAGE> 13
At this Annual Meeting, the shareholders will also consider a plan by
which the non-employee directors may elect either to receive all or a portion of
their fees for serving as directors in cash, or to have that amount applied to
the purchase of Wall Street Deli, Inc. shares. Please see the full discussion of
proposal number 2 in this Proxy Statement.
Until January 2000, Mr. Barrow was an employee of the Company. For his
service as Vice Chairman of the Board of Directors, and for continuing to
provide significant assistance to management, Mr. Barrow has received certain
medical reimbursement, and the Company has agreed to maintain certain life
insurance coverage. Payments made to Mr. Barrow for medical reimbursement from
January through July 1, 2000 aggregated $175.00. Mr. Alan's Kaufman's
compensation as Chairman is included in the discussion of compensation for named
executive officers. Also see the "Report on Executive Compensation" below.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL
ARRANGEMENTS
In connection with Mr. Cannon's employment, the Company entered into an
employment contract dated October 1, 1999, pursuant to which Mr. Cannon was
hired as the senior vice president of operations. He was later appointed chief
operating officer. The agreement is for a term of two years. Mr. Cannon's base
annual salary under the contract for fiscal 2000 was $146,000. The base salary
may be raised periodically at the discretion of the Compensation Committee, and
he may also be entitled to cash bonuses at the discretion of the Company. See
the "Compensation Committee Report on Executive Compensation" below. The
contract with Mr. Cannon includes his agreement not to compete with the Company
or solicit its employees for a period of one year following termination of
employment.
The purpose of the agreement is to assure that the Company will have
the continued dedication of the executive to his duties without distraction
arising from the possibility of a change in control of the Company, and
therefore to maintain his focus on business performance and strategy execution.
If his employment is terminated any time after October 1, 2000, as a result of a
Change of Control, either by the Company (except for Cause, death or
disability), or by Mr. Cannon (if there is no offer of comparable employment by
the Company), he will be entitled to receive a lump sum cash payment equal to
one and one-half times his annual base salary, plus the full amount of any
quarterly bonus for the quarter in which the termination occurs, and
continuation of health or insurance benefits for the remaining term of the
contract.
Additionally, in the event of a Change in Control, all outstanding
stock options under his Stock Option Agreement dated February 1, 2000 (presently
75,000 shares) will become fully vested and immediately exercisable.
A "Change in Control" under the agreement includes the occurrence of
any of the following: (a) any person, entity or "group" (within the meaning of
Rule 13d -3 of the Exchange Act (other than the Company or any employee benefit
plan of the Company) has acquired beneficial ownership of thirty percent or more
of the common stock or voting interest in the capital stock of the Company; (b)
the approval the shareholders of a reorganization, merger or consolidation
unless, following such reorganization, merger or consolidation (i) more than
sixty percent of the outstanding stock and combined voting power is then
beneficially owned by all or substantially all the same owners as immediately
prior
10
<PAGE> 14
to such transaction; (ii) no individual or entity (other than the Company or an
employee benefit plan or related trust of the Company) then beneficially owns
twenty percent or more of the stock or combined voting power of the stock,
unless such individual or entity beneficially owned twenty percent or more
immediately prior to such transaction; and (iii) at least a majority of the
members of the board of directors of the company resulting from such transaction
were directors of the Company immediately prior to such transaction; (c) the
approval by the shareholders of a sale or disposition of all or substantially
all the assets of the Company, other than to another corporation in which,
following such sale or disposition (i) more than sixty percent of the
outstanding stock and combined voting power is then beneficially owned by all or
substantially all the same owners as immediately prior to such transaction; (ii)
no individual or entity (other than the Company or an employee benefit plan or
related trust of the Company) then beneficially owns thirty percent or more of
the stock or combined voting power of the stock, unless such individual or
entity beneficially owned twenty percent or more immediately prior to such
transaction; and (iii) at least a majority of the members of the board of
directors of the company resulting from such transaction were directors of the
Company immediately prior to such transaction; or (d) the approval by the
shareholders of a complete liquidation or dissolution of the Company.
If Mr. Cannon's employment is terminated as a result of his death or
disability, or voluntarily by him in the event of his assignment to duties
inconsistent with his position or of a material breach of the contract by the
Company, he is entitled to a lump sum payment of an amount equal to six months
of his base salary for the calendar year during which his employment is
terminated. Termination by the Company for Cause as defined in the contract will
entitle him in some instances to two months severance and in certain other
instances to no payments beyond compensation and benefits then accrued.
By action of the Board of Directors effective August 11, 2000, all
compensation plans maintained by the Company pursuant to which equity based
compensation is awarded or granted to participants subject to a vesting
schedule, including the Incentive Award Plan, the Non-Qualified Stock Option
Plan for Non- Employee Directors, and the Employee Stock Purchase Plan, now
provide for immediate vesting of any awards or grants thereunder in the event
the Company experiences a Change of Control. For this purpose, a "Change of
Control" will occur when a person or group of affiliated or associated persons
(other than the Company, any subsidiary of the Company, any employee benefit
plan maintained by the Company, any of its subsidiaries or any trustee or
fiduciary with respect to such plans acting in such capacity or any member of
the Existing Control Group, as defined in the Company's Shareholder Rights
Agreement) (an "Acquiring Person") has acquired, obtained the right to acquire,
or otherwise obtained beneficial ownership of 30% or more of the then
outstanding shares of Company Common Stock, and (ii) 10 business days (or such
later date as may be determined by action of the Board of Directors prior to
such time as any Person becomes an Acquiring Person) following the commencement
of a tender offer or exchange offer that would result in a person or group
beneficially owning 30% or more of the Company Common Stock from time to time
outstanding.
11
<PAGE> 15
10-YEAR OPTIONS REPRICING
Shown below is information with respect to repricing of options held by
any named executive officer.
<TABLE>
<CAPTION>
Length of
Number of Original
Securities Market Price Exercise Option Term
Underlying of Stock at Price at Remaining
Options Time of Time of New at Date of
Repriced or Repricing or Repricing or Exercise Repricing or
Name Date Amended (1) Amendment Amendment (2) Price (3) Amendment
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
13 months to
Jeffrey V. 2/1/00 18,750 $1.12 $4.84 $1.12 32 months
Kaufman
</TABLE>
----------
(1) As a condition of repricing of outstanding options, optionees were
required to take a 50% reduction in the number of outstanding options
as of the date of repricing. As a result, 37,500 previously outstanding
options held by Mr. Kaufman were canceled, and 18,750 were granted in
substitution.
(2) Weighted average exercise price per share of 35,000 options outstanding
as of December 15, 1999. The original exercise price of each option was
the market price of the common stock of the Company on the original
grant date.
(3) The new exercise price of the amended option is the market price on the
effective date of the repricing.
See the discussion below, "Report on Repricing of Options."
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Board of Directors
during fiscal 2000 were Messrs. William M. Byrne, Jake L. Netterville, and Aaron
Beam, Jr. none of whom is or has been an employee of the Company. Mr. William S.
Atherton also served as a member of the Compensation Committee until his
resignation from the Board in January 2000, and Mr. Beam filled that vacancy
during the remainder of the fiscal year. During the first quarter of fiscal
2000, the Company retained the services of The Byrne Companies, a company of
which Mr. Byrne is president and chief executive officer, to assist the Company
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, presently Chairman and Vice Chairman of the
Board, respectively, 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.
REPORT ON REPRICING OF OPTIONS
One of the results of the strategic planning process undertaken by the
Company during the first quarter of fiscal year 2000 was a number of
recommendations relating to assessment and improvement of the Company's human
resources. Based upon the recommendations received by the Compensation
Committee,
12
<PAGE> 16
as well as the Committee's own perception, regarding the pressing need for
motivating employees toward rebuilding shareholder value, the Committee
recommended an aggressive effort to maximize the use of incentive stock options.
One element of that effort was the adoption of the Company's new
Incentive Award Plan, as approved by the shareholders at the 1999 annual
meeting. The other main element was the Committee's recommendation, and the
Board of Directors' subsequent approval, that all the then 69,800 incentive
stock options, the exercise prices of which ranged from $4.00 to $11.88, should
be repriced at the then-current market value, provided that the option holders
agreed to a fifty percent reduction in the number of shares subject to their
options. All of the 13 employees holding outstanding options agreed to the
reduction by half in the number of their options as a condition to the
repricing.
In lengthy deliberations, the Committee and the Board of Directors
carefully considered the fairness of the repricing to other shareholders who
have suffered diminution in the value of their shares. It was the view of the
Committee that the need to retain and encourage employees and build morale, and
to do so with non-cash incentives as much as possible, would best serve the
long-term interests of all the shareholders of the Company.
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 always
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 has long been 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, 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.
The Committee and the Board are deeply concerned with the Company's
performance, and are acutely aware of the necessity, as well as the difficulty,
of achieving a balance between the vital need to attract, retain and motivate
qualified management and other personnel, on the one hand, and the requirement
of stringent cost containment efforts, on the other. All decisions regarding
executive compensation during fiscal 2000 have been made with careful regard to
both elements.
13
<PAGE> 17
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 has directly focused on
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 ceased his annual salary of $125,000, effective
January 31, 2000. This followed his reduction from $208,000 to $125,000 at the
beginning of the third fiscal quarter of 1998. Similarly, Mr. Alan Kaufman
agreed to reduce his annual base salary from $125,000 to $106,000. Mr. Cannon,
the other named executive officer, joined the Company in fiscal 2000. His
current base salary is approximately 4% higher than that of his predecessor.
Annual Performance Bonuses. In fiscal 2000, 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 year. The bonus program
provided that all corporate officers and management personnel, including the
chief executive officer and other executive officers (except Mr. Alan Kaufman,
who did not participate), 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 2000, no bonuses were paid under
this program. In addition to the performance bonus program, however, certain
discretionary bonuses were awarded; among the named executive officers, this
included Mr. Cannon, who received quarterly bonuses aggregating $18,000.
Stock Options. Stock options are granted by the Committee to employees,
including executive officers, based upon management's recommendations and 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.
14
<PAGE> 18
As discussed above in the Report on Repricing of Options, the Committee
is persuaded that present conditions favor an aggressive effort to use non-cash
incentives to the fullest extent practical and reasonable, in an effort to
rebuild and improve shareholder value while working to conserve the Company's
cash and human resources. To this end, the Committee made option grants during
fiscal 2000 in amounts significantly larger than the Company's employees have
ever before received. Of a total of 608,250 incentive stock options granted to
all employees this past year, Mr. Jeffrey Kaufman, the Chief Executive Officer,
and Mr. Cannon, the Chief Operating Officer, received options for 85,000 and
75,000 shares, respectively.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
At his request, Mr. Jeffrey Kaufman's base salary for the year remained
at $155,000. While the Committee concurs with Mr. Kaufman's request, in light of
the operational improvement and cost containment challenges presently facing the
Company, the Committee also believes it appropriate to observe 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 each of
the prior eleven fiscal years. Under the Company's bonus compensation program as
outlined in "Annual Performance Bonuses" above, no bonuses were awarded in
fiscal 2000.
All members of the Compensation Committee concur in this report to the
shareholders.
William M. Byrne
Jake L. Netterville
Aaron Beam, Jr.
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
-----------------------------------------------------
6/95 6/96 6/97 6/98 6/99 6/00
<S> <C> <C> <C> <C> <C> <C>
WALL STREET DELI, INC. 100.00 68.57 45.71 49.29 35.71 13.22
NASDAQ STOCK MARKET (U.S.) 100.00 128.39 156.15 205.58 296.02 437.30
S & P RESTAURANTS 100.00 117.67 123.06 166.71 209.00 160.78
</TABLE>
Assumes $100 invested in Wall Street Deli, Inc., NASDAQ Stock Market - U.S., and
S&P Restaurants indexes on June 30, 1995.
Total return calculations assume annual dividend reinvestment. The Company has
never paid a cash dividend.
15
<PAGE> 19
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 Commission Rule 16a-3(e) during the fiscal year ended July 1, 2000,
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 1,
2000, were directors, executive officers, or beneficial owners of more than 10
percent of the Company's outstanding stock, the following persons failed to
file, on a timely basis, as disclosed in the above forms, reports required by
Section 16(a) of the Exchange Act during the most recent fiscal year or prior
fiscal years: Mr. Jeffrey Kaufman, Mr. Alan Kaufman, Mr. Cannon and Mr. Sandeman
each filed one late report of one grant of options under the Company's Incentive
Award Plan.
PROPOSAL NUMBER 2:
APPROVAL OF THE NON-EMPLOYEE DIRECTORS STOCK PURCHASE PLAN
The shareholders are asked to approve the Wall Street Deli, Inc.,
Non-Employee Directors Stock Purchase Plan (the "Directors Stock Purchase
Plan"). Under the Directors Stock Purchase Plan, directors who are not employed
by the Company may elect to forgo all or a portion of their fees for serving as
directors, and instead receive shares of the Company's common stock. The Board
believes it is advisable to provide the Company's outside directors this
additional means for purchasing stock, through a formula and mechanism by which
participating directors have no discretion as to timing or price.
Shares will be purchased by the Company on the open market and no new
shares will be issued. The Plan will not occasion any cost to the Company, other
than nominal administrative costs.
Eligible Participants. Persons eligible to participate in the Directors
Stock Purchase Plan are those members of the Company's Board of Directors who
are not employed by the Company or any of its subsidiaries. Of the six incumbent
directors, who are also the nominees for election at this Annual Meeting, four
are not employees of Wall Street Deli, Inc. or its subsidiaries, and thus are
eligible to participate.
Advance Written Election; Purchase of Shares. Directors must make a
written irrevocable election in advance of the dates on which the cash fees
would become payable, and the Company will thereafter place an order to purchase
shares in the open market on the first business day following each calendar
quarter in which a participant has elected to forgo all or a portion of his fees
payable for services to be performed during such quarter. Elections made prior
to December 1, 2000, will become effective for fees payable beginning January 1,
2000. Thereafter, elections made prior to December 1 of each year will be
effective for the calendar year beginning on the following January 1. The right
to make this election is not transferable, except by will and laws of descent
and distribution.
Amendment and Termination. The Directors Stock Purchase Plan may be
amended by the Board of Directors without shareholder approval, unless the
proposed amendment, or the authority to make the
16
<PAGE> 20
amendment, would cause eligible directors to cease being "disinterested persons"
for purposes of Rule 16b-3 of the Commission, or unless the proposed amendment
otherwise requires shareholder approval under that Rule. In no circumstances may
the Directors Stock Purchase Plan be amended more than once every six months,
other than to comport with changes in the Internal Revenue Code and rules
thereunder. The Directors Stock Purchase Plan will automatically terminate on
December 31, 2010, but may be amended or terminated at any time by the
shareholders.
New Benefits Under the Plan. The only benefit to participants in the
Directors Stock Purchase Plan is the election to have some or all of their
directors' fees applied to the purchase of Company shares, instead of receiving
cash. Non-employee directors serving a full year will receive $650 for each
board meeting attended and $650 for each committee meeting unless held in
conjunction with a board meeting. The Board of Directors held six meetings
during the past fiscal year; it is presently contemplated that the Board of
Directors will hold at least as many in the current fiscal year, and that
committee meetings will generally be scheduled to coincide with board meetings.
Accordingly, it is estimated that each outside director could apply up to
approximately $3,900 per year to the purchase of shares. On October 4, 2000, the
closing price of the Company's shares was $0.625. If the Directors Stock
Purchase Plan had been in effect during the fiscal 2000 year, and if each of the
Company's outside directors who are presently eligible to participate had done
so to the fullest extent possible during that time, the number of shares in lieu
of cash directors fees that would have been available for purchase on behalf of
participating outside directors would have been approximately 3,200 shares each,
and approximately 12,800 shares in the aggregate.
Recommendation. Management believes the Company is well-served by
establishing an ongoing formal mechanism by which outside directors may acquire
Company stock at market prices, and in lieu of cash fees. The Board of Directors
therefore recommends a vote FOR proposal number 2.
PROPOSAL NUMBER 3:
APPROVAL OF THE NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
The Board of Directors has adopted a new Non-Employee Directors Stock
Option Plan (the "Directors Option Plan"), subject to the approval of
shareholders at this Annual Meeting. This Plan is proposed as a replacement for
the similar plan the Company has had in place since 1991 and which will expire
automatically in 2001. The Board concurs in management's belief that the
Directors Option Plan is an important tool for assisting the Company in its
efforts to attract and retain qualified outside directors, particularly in light
of the serious challenges facing the Company and its shareholders, and
recognizing that the Company is not in a position to offer cash compensation to
its outside directors commensurate with that offered by many companies.
The Directors Option Plan provides an automatic, non-discretionary
formula for grants of stock options to directors who are not employed by the
Company. It is intended that the Directors Option Plan constitute a "formula
award" plan within the meaning of Commission Rule 16b-3(c)(2)(ii) under the
Exchange Act.
Grant of Options. The proposed Directors Option Plan provides for an
initial grant of options to purchase 6,000 shares of the Company's common stock
to each non-employee director on the earlier of
17
<PAGE> 21
(i) thirty days after the adoption of the Directors Option Plan by the Board of
Directors or (ii) the date a person first becomes a director. Each of the
non-employee directors presently in office, all of whom are nominees for
election, has been conditionally granted options under the Directors Option
Plan, subject to approval of the Directors Option Plan by the shareholders of
the Company at this Annual Meeting. Future outside directors will automatically
be granted 6,000 options on the date each first becomes a director. In addition,
the Directors Option Plan provides for automatic annual grants of 5,000 options
to each of the non-employee directors.
Shares Available for Issuance. The Directors Option Plan reserves
200,000 shares of the Company's common stock for issuance upon exercise of the
stock options. The number of shares subject to options and the exercise prices
are subject to adjustment in the event of changes in the outstanding stock of
the Company by reason of stock dividends, recapitalizations, stock splits,
combinations, exchanges of shares and upon similar events. If any option granted
expires or terminates for any reason without having been exercised in full, the
unpurchased shares become available again for purposes of the Directors Option
Plan.
Eligible Persons. Directors of the Company are eligible to participate
in the Directors Option Plan if they are not employed by the Company or its
subsidiaries. Presently there are four non-employee members of the Board of
Directors.
Exercise Price and Payment on Exercise. The exercise price for each
option granted pursuant to the Directors Option Plan is 100% of the fair market
value of the Company's common stock on the date of the grant of the option,
based on the average of the highest and lowest selling prices quoted on NASDAQ
on that date. Full payment for the stock purchased upon the exercise of an
option must be made at the time of exercise, and may be made in cash or by
tendering shares already owned by the optionee, valued for this purpose at the
then current fair market value.
Term of Options and Exercisability. The term of each option granted
under the Directors Option Plan will be five years from the date of grant.
Options are exercisable immediately upon grant in whole or in part. However, in
order to facilitate compliance with the exemption afforded by Commission Rule
16b-3, option agreements may prohibit exercise of the options during the first
six months after the date of grant.
Non-Transferability. Options granted under the Directors Option Plan
are not transferable or assignable otherwise than by will or the laws of descent
and distribution upon the death of the optionee. During the lifetime of an
option holder, an option is exercisable only by the optionee or, in the event of
his or her legal disability, by his or her legal representative.
Plan Administration. The Directors Option Plan will be administered by
the Compensation Committee. The Committee has authority to establish rules and
regulations for, and make determinations and interpretations regarding, the Plan
and options granted thereunder, subject to the terms and provisions of the Plan.
Amendment and Termination. The Directors Option Plan may be amended by
the Board of Directors without shareholder approval, unless the proposed
amendment would materially increase the benefits accruing to the participants,
or would impair the rights of an optionee (in which case the optionee's consent
would be required). The Directors Option Plan will automatically terminate on
December 31, 2010. In
18
<PAGE> 22
addition, the Board of Directors may terminate the plan at any time with respect
to any shares for which options have not theretofore been granted.
Tax Treatment. Options granted to directors will not qualify as
"incentive stock options" under the Internal Revenue Code. A director who
receives options under the Directors Option Plan will not recognize taxable
income, for federal income tax purposes, upon the grant of an option. Upon
exercise of a non-qualified option, the optionee will generally recognize
taxable ordinary income to the extent that the fair market value of the shares
on the date of exercise exceeds the option price. The Company will generally be
allowed a tax deduction equal to the amount of ordinary income recognized by an
optionee upon exercise of an option.
New Plan Benefits. Each of the current directors and nominees who are
not employed by the Company will be eligible to participate in the Directors
Option Plan. None of the executive officers or any other employees of the
Company may participate. The following table sets forth the benefits or amounts
that will be received by or allocated to the current non-employee directors and
nominees, individually and as a group:
New Plan Benefits
Non-Qualified Stock Option Plan for Non-Employee Directors
<TABLE>
<CAPTION>
Number of Units (1)
-------------------------
Name and position Initial Annual
grant(2) grants
--------------------------------------------- ----------
<S> <C> <C>
Robert G. Barrow 6,000 5,000
Director and Nominee
Aaron Beam, Jr. 6,000 5,000
Director and Nominee
William M. Byrne 6,000 5,000
Director and Nominee
Jake L. Netterville 6,000 5,000
Director and Nominee
--------- --------
All Non-Employee
Directors as a Group 24,000 20,000
--------- --------
</TABLE>
(1) The dollar value of the options is not determinable.
(2) The initial grants shown in the foregoing table have been conditionally
granted, subject to shareholder approval at this Annual Meeting. In the
event shareholder approval is not received, these grants will lapse.
The exercise price of all such conditional grants is $1.06, which was
the fair market value of the Company's common stock on August 11, 2000,
the date of grant. The closing price of the Company's common stock
quoted by NASDAQ on October 4 was $0.625. If approved by the
shareholders, the options will become exercisable on November 17, 2000,
and will expire on November 17, 2005, if not sooner exercised.
19
<PAGE> 23
Recommendation. The Board of Directors expects that the Directors
Option Plan will be a valuable incentive for the attraction and retention of
quality non-employee directors and is therefore important to the Company's
success, and recommends a vote FOR Proposal Number 3.
PROPOSAL NO. 4:
RATIFICATION OF AUTHORIZATION FOR THE
AUDIT COMMITTEE TO SELECT FISCAL 2001 INDEPENDENT AUDITORS
The Board of Directors has authorized the Audit Committee to select the
Company's independent auditors for the fiscal year ending June 30, 2001, 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 1, 2000, 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 2001 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.
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 2001 must be received at the Company's principal
executive office shown on the first page of this Proxy Statement not later than
July 9, 2001, in order to be included in the proxy material for the 2001
meeting. All proposals must comply with Commission Rule 14a-8.
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
20
<PAGE> 24
APPENDIX 1
TO PROXY STATEMENT FOR
THE ANNUAL SHAREHOLDERS MEETING TO BE HELD NOVEMBER 17, 2000
WALL STREET DELI, INC.
NON-EMPLOYEE DIRECTORS STOCK PURCHASE PLAN
AS PROPOSED TO BE APPROVED AT THE MEETING
<PAGE> 25
WALL STREET DELI, INC.
NON-EMPLOYEE DIRECTORS
STOCK PURCHASE PLAN
1. PURPOSE
This Wall Street Deli, Inc. Non-Employee Directors Stock Purchase Plan
(the "Plan") is intended to enable Wall Street Deli, Inc. ("Wall Street Deli" or
the "Company"), to attract and retain capable non-employee Directors to the
service of the Company and to provide them with incentives to promote the best
interests of the Company by enabling them and encouraging them to acquire shares
of the Company's common stock, $0.05 par value (the "Shares").
2. ADMINISTRATION
The Plan shall be administered by a committee of the Board of Directors
(the "Committee"), which shall consist of at least two members of the Board of
Directors, and may consist of the Company's Compensation Committee. It is
intended that this Plan shall constitute a "formula award" plan within the
meaning of Rule 16b-3 (and Note 3 thereto) under the Securities Exchange Act of
1934, as amended (the "Act"); if for any reason it shall be determined that this
Plan does not constitute a formula award plan, or if for any other reason the
Board of Directors may consider it advisable, the Committee shall consist either
(i) solely of directors who are "non-employee directors" within the meaning of
Rule 16b-3(b)(3)(i) under the Act; or (ii) the entire Board of Directors.
The Committee shall have the authority to establish, from time to time,
such rules and regulations, not inconsistent with the provisions of the Plan,
for the proper administration of the Plan, and to make such determinations and
interpretations under or in connection with the Plan as it deems necessary or
advisable. All such rules, regulations, determinations and interpretations shall
be binding and conclusive upon the Company, its shareholders, and directors of
the Company and upon their respective legal representatives, beneficiaries,
successors and assigns and upon all other persons claiming under or through any
of them.
3. ELIGIBILITY
The Directors eligible to participate in the Plan shall be those
Directors of Wall Street Deli who are not employed by the Company or its
subsidiaries. The Directors eligible to participate in the Plan are hereinafter
referred to as "Eligible Directors." Eligible Directors electing to participate
in the Plan are hereafter referred to as "Participants."
4. ELECTION TO RECEIVE DIRECTORS FEES IN CASH OR SHARES
(a) Grant. Without further action by the Board, the Committee or
the stockholders of Wall Street Deli, each Eligible Director may elect to
receive Shares pursuant to the formula set forth in (d) below by agreeing to
forgo all or any portion of the Eligible Director's annual cash fees payable for
the calendar year following the date of such election, but subject, to the
provisions of (b) below.
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<PAGE> 26
(b) Method of Election. A Participant who wishes to elect to
receive one or more Shares in accordance with Section 4(a) shall deliver to the
Secretary of the Company a written irrevocable election, in a form acceptable to
the counsel to the Company, not later than December 1, 2000 with respect to
annual cash fees payable after January 1, 2001 and December 1 of each year
thereafter with respect to the annual cash fees payable for services in the
fiscal year beginning on the day following the Saturday closest to December 31
thereafter (the Company=s second fiscal quarter end), specifying the amount
(either in dollars or as a percentage) of such Participant's annual fees which
he or she wishes to forgo. (If the date an election is due is not a business
day, such election shall be due on the next business day immediately following
such otherwise applicable date.) In the event that a Participant elects to forgo
less than 100% of his or her annual retainer fees for a relevant year, such
Participant may provide in his or her election that such foregoing retainer fees
be applied to the acquisition of Shares pro rata in each calendar quarter or
from the full amount of fees otherwise payable for each quarter until the full
amount elected has been so applied.
(c) Acquisition of Shares. On the first business day following the
end of each calendar quarter with respect to which a Participant has elected to
forgo all or a portion of his or her annual retainer fees payable for services
to be performed during such calendar quarter ("Date of Acquisition"), the
Company shall cause to be purchased in the open market, in the name of the Plan
and on behalf of the respective Participants, the number of Shares determined in
accordance with (d) below.
(d) Number of Shares. The number of Shares to be received by a
Participant as of each Date of Acquisition shall be equal to the number of whole
Shares determined by the quotient of (i) and (ii) below, where (i) and (ii) are:
(i) the dollar amount of the annual cash fees being
forgone with respect to services to be performed during the
applicable quarter in accordance with an election under this
Section 4 to receive; and
(ii) one hundred percent (100%) of the average purchase
price per Share, based on the total cost of all Shares
acquired on behalf of all Participants with respect to such
Date of Acquisition.
If the above quotient produces a fractional Share, the Participant
shall receive the cash value of such factional Share, instead of receiving such
fractional Share.
5. NONTRANSFERABILITY OF AWARDS
No right to make elections under this Plan (an "Award") shall be
transferable by the Participant otherwise than by will or under the applicable
laws of descent and distribution. In addition, no Award shall be assigned,
negotiated, pledged or hypothecated in any way (whether by operation of law or
otherwise), and no Award shall be subject to execution, attachment or similar
process. Upon any attempt to transfer, assign, negotiate, pledge or hypothecate
any Award, or in the event of any levy upon any Award by reason of any
attachment or hypothecate any Award, or in the event of any levy upon any Award
by reason of any attachment or similar process contrary to the provisions
hereof, such Award shall immediately become null and void.
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6. RIGHTS AS A STOCKHOLDER
A Participant shall have no rights as a stockholder with respect to any
Shares until he shall have become the holder of record of such Share(s), and no
adjustments shall be made for dividends in cash or other property or
distribution or other rights in respect to any such Shares, except as otherwise
specifically provided for in this Plan.
7. DETERMINATIONS
Each determination, interpretation or other action made or taken
pursuant to the provisions of this Plan by the Board or the Committee, as the
case may be, shall be final and binding for all purposes and upon all persons,
including, without limitation, Wall Street Deli, the directors, officers and
other employees of Wall Street Deli and its subsidiaries, the Participants and
their respective heirs, executors, administrators, personal representatives and
other successors in interest.
8. TERMINATION, AMENDMENT AND MODIFICATION
(a) This Plan shall terminate at the close of business on December
31, 2010, unless sooner terminated pursuant to paragraph (b) below or by action
of the stockholders of Wall Street Deli, provided, however, that Shares may be
awarded after December 31, 2010 the extent that a Participant elected to receive
such Shares prior to December 31, 2010. The Board at any time or from time to
time may amend this Plan to effect (i) amendments necessary or desirable in
order that this Plan shall conform to all applicable laws and regulations and
(ii) any other amendments deemed appropriate, provided that no such amendment
may be made if either the authority to make such amendment or the amendment
would cause the Eligible Directors to cease to be "non-employee directors" with
regard to this Plan or any other stock option or other equity plan of Wall
Street Deli for purposes of Rule 16b-3 (or any successor thereto).
Notwithstanding the foregoing, (i) the provisions of the Plan may not be amended
more than once every six months other than to comport with changes in the
Internal Revenue Code and the rules thereunder and (ii) the Board may not effect
any amendment that would require the approval of the stockholders of Wall Street
Deli under Rule 16b-3 or the listing requirements of any stock exchange (if
applicable to Wall Street Deli at the time such amendment is adopted or will be
effective) unless such approval is obtained. This Plan may be amended or
terminated at any time by the stockholders of Wall Street Deli.
(b) Notwithstanding anything else in this Plan to the contrary,
any action under this Plan subject to approval of the stockholders of Wall
Street Deli shall terminate and be rendered void and without effect if such
approval is not received by the next annual meeting of stockholders of Wall
Street Deli following the date of the action giving rise to the need for such
approval (of if such action occurs after the date the proxy materials for the
next annual meeting of stockholders have been mailed to stockholders, by the
second annual meeting of stockholders next following such action).
(c) Except as provided in paragraph (b) above or as otherwise
required by law, no termination, amendment or modification of this Plan may,
without the consent of a Participant or the permitted transferee of a
Participant, alter or impair the rights and obligations arising under any then
outstanding.
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<PAGE> 28
9. NON-EXCLUSIVITY
Neither the adoption of this Plan by the Board nor the submission of
this Plan to the stockholders of Wall Street Deli for approval shall be
construed as creating any limitation on the power of the Board to adopt such
other incentive arrangements as it may deem desirable, including, without
limitation, the granting or issuance of stock options, Shares and/or other
incentives otherwise than under this Plan, and such arrangements may be either
generally applicable or applicable only in specific instances.
10. GENERAL PROVISIONS
(a) This Plan shall not impose any obligations on Wall Street Deli
to retain any Participant as a director nor shall it impose any obligation on
the part of any Participant to remain as a director of Wall Street Deli.
(b) If the Board determines that the law so requires, the holder
of Shares received hereunder shall, upon receipt thereof, execute and deliver to
Wall Street Deli a written statement, in form satisfactory to Wall Street Deli,
representing and warranting that he is purchasing or accepting the Shares then
acquired for his own account and not with a view to the resale or distribution
thereof, that any subsequent offer for sale or sale of any such Shares shall be
made either pursuant to (i) a Registration Statement on an appropriate form
under the Securities Act of 1933, as amended (the "Securities Act"), which
Registration Statement shall have become effective and shall be current with
respect to the Shares being offered and sold, or (ii) a specific exemption from
the registration requirements of the Securities Act, and that in claiming such
exemption the holder will, prior to any offer for sale or sale of such Shares,
obtain a favorable written opinion from counsel approved by Wall Street Deli as
to the availability of such exemption.
(c) Nothing contained in this Plan and no action taken pursuant to
this Plan shall create or be construed to create a trust of any kind or any
fiduciary relationship between Wall Street Deli and any Participant, or any
other persons. Any reserves that may be established by Wall Street Deli in
connection with this Plan shall continue to be part of the general funds of Wall
Street Deli, and no individual or entity other than Wall Street Deli shall have
any interest in such funds until paid to a Participant. To the extent that any
Participant or his executor, administrator, or other personal representative, as
the case may be, acquires a right to receive any payment from Wall Street Deli
pursuant to this Plan, such right shall be no greater than the right of any
unsecured general creditor of Wall Street Deli.
11. LISTING AND REGISTRATION OF SHARES AND RELATED MATTERS
If at any time the Board shall determine in its discretion that the
listing, registration or qualification of the Shares covered by this Plan upon
any national securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the sale of Shares under
this Plan, no Shares will be delivered unless and until such listing,
registration, qualification, consent or approval shall have been effected or
obtained, or otherwise provided, for, free of any conditions not acceptable to
the Board.
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12. WITHHOLDING TAXES
The Company shall have the right to make such provisions as it deems
necessary or appropriate to satisfy any obligations it may have to withhold
federal, state or local income or other taxes incurred by reason of the issuance
of Shares under this Plan, including requiring a Participant to reimburse the
Company for any taxes required to be withheld or otherwise deducted and paid by
the Company. In lieu thereof, the Company shall have the right to withhold the
amount of such taxes from any other sums due or to become due from the Company
to the Participant upon such terms and conditions as the Board may prescribe.
13. INDEMNIFICATION AND EXCULPATION
(a) Each person who is or shall have been a member of the
Board of Directors or of the Committee shall be indemnified and held
harmless by the Company against and from any and all loss, cost,
liability or expense that may be imposed upon or reasonably incurred by
him in connection with or resulting from any claim, action, suit or
proceeding to which he may be a party or in which he may be involved by
reason of any action taken or failure to act under this Plan and
against and from any and all amounts paid by him in settlement thereof
(with the Company's written approval) or paid by him in satisfaction of
a judgment in any such action, suit or proceeding, except a judgment in
favor of the Company based upon a finding of his bad faith; subject,
however, to the condition that upon the institution of any such claim,
action, suit or proceeding against him, he shall in writing give the
Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his behalf. The
foregoing right of indemnification shall not be exclusive of any other
right to which such person may be entitled as a matter of law or
otherwise, or any power that the Company may have to indemnify him or
hold him harmless.
(b) Each member of the Board of Directors or of the
Committee, and each officer and employee of the Company shall be fully
justified in relying or acting upon any information furnished in
connection with the administration of this Plan by any person or
persons other than himself. In no event shall any person who is or
shall have been a member of the Board of Directors or of the Committee,
or an officer or employee of the Company be liable for any
determination made or other action taken or any omission to act in
reliance upon any such information or for any action (including the
furnishing of information) taken or any failure to act, if in good
faith.
14. PRONOUNS; HEADINGS
Wherever any words are used in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply. Headings used herein are for general information only
and do not constitute part of the Plan.
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15. SEVERABILITY OF PROVISIONS
If any provision of this Plan shall be held invalid or unenforceable,
such invalidity or unenforceability shall not affect any other provisions
hereof, and this Plan shall be construed and enforced as if such provision had
not been included.
16. SHAREHOLDER APPROVAL; EFFECTIVE DATE
This Plan is subject to the approval of the holders of a majority of
the securities of the Company present or represented and entitled to vote at a
meeting duly held in accordance with applicable laws of the State of Delaware.
This Plan shall become effective November 17, 2000 subject to such shareholder
approval obtained within 12 twelve months thereafter.
17. SAVINGS CLAUSE
Any provision of this Plan which, if given effect, would disqualify any
Share awarded hereunder from exemption from the operation of '16(b) of the
Securities Exchange Act of 1934 shall be null and void and of no effect, and any
such provision shall be deemed not to be a part of this Plan for purposes of
construction hereof.
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APPENDIX 2
TO PROXY STATEMENT FOR
THE ANNUAL SHAREHOLDERS MEETING TO BE HELD NOVEMBER 17, 2000
WALL STREET DELI, INC.
NON-EMPLOYEE DIRECTORS STOCK OPTION PLAN
AS PROPOSED TO BE APPROVED AT THE MEETING
<PAGE> 32
WALL STREET DELI, INC.
2000 STOCK OPTION PLAN
NON-EMPLOYEE DIRECTORS
1. PURPOSE
This Stock Option Plan for Non-Employee Directors (the "Plan") is
intended to enable Wall Street Deli, Inc., a Delaware corporation (the
"Company"), to attract and retain capable non-employee Directors to the service
of the Company and to provide them with incentives to promote the best interests
of the Company by enabling them and encouraging them, through the grant of
non-qualified stock options, to acquire Company stock. Options to acquire Common
Stock under this Plan are sometimes hereinafter referred to individually as an
"Option" and, collectively as the "Options."
2. ADMINISTRATION
The Plan shall be administered by a committee of the Board of Directors
(the "Committee"), which shall consist of at least two members of the Board of
Directors, and may consist of the Company's Compensation Committee. It is
intended that this Plan shall constitute a "formula award" plan within the
meaning of Rule 16b-3 (and Note 3 thereto) under the Securities Exchange Act of
1934, as amended (the "Act"); if for any reason it shall be determined that this
Plan does not constitute a formula award plan, or if for any other reason the
Board of Directors may consider it advisable, the Committee shall consist either
(i) solely of directors who are "non-employee directors" within the meaning of
Rule 16b-3(b)(3)(i) under the Act; or (ii) the entire Board of Directors.
The Committee shall have the authority to establish, from time to time,
such rules and regulations, not inconsistent with the provisions of the Plan,
for the proper administration of the Plan, and to make such determinations and
interpretations under or in connection with the Plan and the Options granted
hereunder as it deems necessary or advisable. All such rules, regulations,
determinations and interpretations shall be binding and conclusive upon the
Company, its shareholders, and directors of the Company and upon their
respective legal representatives, beneficiaries, successors and assigns and upon
all other persons claiming under or through any of them.
3. ELIGIBILITY
The Directors eligible to participate in the Plan shall be those
Directors of the Company who are not employees of the Company or its
subsidiaries. For purposes of determining eligibility for participation in this
Plan, Directors shall not be considered as employees solely by virtue of the
performance of services pursuant to contract or other agreement on an interim,
occasional or otherwise non-full time basis which does not result in such
Director's direct or indirect receipt of annual compensation from the Company or
its subsidiaries of $60,000 or more. The Directors eligible to receive options
under the Plan are hereinafter referred to as "Eligible Directors."
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<PAGE> 33
4. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 7 hereof, 200,000 shares of the
Company's Common Stock, par value $.05 per share (the "Shares"), shall be
available for the grant of Options under the Plan. Shares issuable under the
Plan may be authorized but unissued Shares or reacquired Shares, as the Board
shall determine.
If any Option granted under the Plan expires or otherwise terminates,
in whole or in part, without having been exercised, the Shares subject to the
unexercised portion of such Option shall be available for the granting of
Options under the Plan as fully as if such Shares had never been subject to an
Option.
5. GRANTS, TERMS AND CONDITIONS OF OPTIONS
Each Eligible Director shall automatically be granted an Option to
purchase 6,000 Shares on the first Initial Grant Date occurring on or after such
Eligible Director first became a Director of the Company. An "Initial Grant
Date" is either (a) thirty (30) days (or the first business day following the
30th day) after the date this Plan is adopted by the Board of Directors; or (b)
the date on which an Eligible Director first became a Director of the Company.
In addition, on August 1 of each year, commencing with August 1, 2001,
or such other date as the Committee shall determine not less than six months in
advance, each Eligible Director of the Company shall automatically be granted an
Option to purchase 5,000 Shares.
Options granted pursuant to this Plan shall be subject to the following
terms and conditions, and such further terms and conditions as are not
inconsistent with the provisions of this Plan, as determined by the Committee.
(a) PRICE. The option price per Share under each Option
granted under the Plan shall be the Fair Market Value of the Shares on
the date of grant of such Option. "Fair Market Value" means the average
between the last reported highest and the lowest selling prices quoted
on the NASDAQ System, or other principal exchange on which the Common
Stock is traded, on the pertinent date.
(b) TERM. The duration of each Option shall be five (5)
years from the date of grant (the "Expiration Date").
(c) EXERCISE AND PAYMENT. Each Option granted to each
Optionee shall become immediately exercisable in whole or in part,
subject to Section 5(h) hereafter. An Option shall be exercised in the
manner set forth in the Option Agreement (as defined in Section 5(h)
hereafter) relating thereto and payment in full for all shares being
purchased at the time shall be made coincidentally therewith. Such
payment shall be in United States dollars effected by means of cash,
certified check or bank draft. Alternatively, such payment may be made,
in whole or in part, in shares of Common Stock of the Company,
including the withholding of a portion of the shares issuable upon
exercise (a "cashless exercise") and any such shares so tendered in
payment shall be valued for such purpose at the then Fair Market Value.
The Company shall withhold a portion of the shares issuable on
exercise, or accept delivery of shares, in payment of the Optionee's
tax obligation with respect to such exercise, provided that this tax
withholding right
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<PAGE> 34
shall be exercisable only at the discretion of the Optionee, and is not
discretionary on the part of the Company.
(d) DEATH OF OPTIONEE. If an Optionee dies prior to the
Expiration Date of his Option, such Option may be exercised, by the
Optionee's estate, personal representative or beneficiary who acquired
the right to exercise such Option by bequest or inheritance or by
reason of the death of the Optionee, to the extent of the number of
Shares with respect to which the Optionee could have exercised it on
the date of his death, at any time prior to the earlier of (i) one (1)
year following the date of the Optionee's death, or (ii) the Expiration
Date of such Option.
(e) TRANSFERABILITY. No Option shall be assignable or
transferable by an Optionee otherwise than by will or by the laws of
descent and distribution, or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, and
during the lifetime of the Optionee, the Option shall be exercisable
only by him, or in the event of his legal disability, by his legal
representative.
(f) RIGHTS AS A SHAREHOLDER. An Optionee shall have no
rights as a shareholder with respect to any Shares covered by his
Option until the issuance of a stock certificate to him representing
such Shares.
(g) SEQUENTIAL EXERCISE OF OPTIONS. Options granted under
the Plan shall be exercisable at the discretion of the Optionee without
regard to the price or the date of grant of any other outstanding
Option which was granted under this Plan or any other plan of the
Company or a related corporation, or a predecessor of the Company or a
related corporation before or after the granting of such Option to the
same Optionee to purchase Shares, or to purchase stock in a corporation
which (at the time of granting of such option) was a related
corporation or to purchase stock in a predecessor corporation of the
Company or a related corporation.
(h) OPTION AGREEMENT AND FURTHER CONDITIONS. As soon as
practicable after the grant of an option, each Optionee shall enter
into, and be bound by the terms of, a stock option agreement (the
"Option Agreement") which shall state the exercise price of the Options
granted, and such other terms and conditions as the Committee shall
determine and as are not inconsistent with this Plan. It is
specifically contemplated that, in order to facilitate compliance with
Rule 16b-3 under the Act and notwithstanding the immediate
exercisability set forth in Section 5(c) above, Option Agreements may
delay exercisability until the expiration of six months after the date
of grant, or may require such other holding period as may be necessary
or desirable under federal securities or tax laws.
(i) WITHHOLDING. The obligation of the Company to deliver
Shares upon the exercise of any Option shall be subject to any
applicable federal, state and local tax withholding requirements.
(j) NO OBLIGATION TO EXERCISE OPTION. The granting of an
Option shall impose no obligation upon an Optionee to exercise such
Option.
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<PAGE> 35
6. INVESTMENT PURPOSES
Each Optionee, or his legal representative or beneficiaries, may be
required to give satisfactory assurance that Shares acquired upon exercise of an
Option are being acquired for investment and not with a view to distribution,
and certificates representing such Shares may be legended accordingly. Such
Shares shall be transferable thereafter only if the proposed transfer is
permissible under the Plan and the Option and if, in the opinion of counsel (who
shall be satisfactory to the Company), such transfer shall at such time be in
compliance with applicable securities laws.
7. ADJUSTMENTS
The number of shares and the option price for the shares covered by
each outstanding Option shall all be proportionately adjusted for any increase
or decrease in the number of shares of Common Stock resulting from a subdivision
or consolidation of the issued shares of Common Stock or the payment of a stock
dividend on Common Stock or any other increase or decrease in the number of such
shares effected without receipt of consideration by the Company. In the event of
a change in the Company's presently authorized Common Stock which is limited to
a change of all of its presently authorized shares with par value, or any change
of the then authorized shares with par value into the same number of shares
without par value, or any change of the then authorized shares with par value,
the shares resulting from any such change shall be deemed to be Common Stock as
defined in Section 4. In the event that the outstanding shares of Common Stock
of the Company shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up, combination of
shares, sale of assets, merger or consolidation, whether or not the Company
shall be the surviving corporation then, there shall be substituted for each
share of Common Stock subject to any such Option and for each share of Common
Stock reserved for issuance pursuant to this Plan but not yet covered by an
Option the number and kind of shares of stock or other securities into which
each outstanding share of Common Stock shall be so changed or for which each
such share shall be exchanged. In the event there shall be any change, other
than as specified above in this Section 7, in the number or kind of shares then
subject to an Option or Options and of the shares theretofore reserved for
issuance pursuant to this Plan but not yet covered by an Option, such adjustment
shall be made by the Committee and shall be effective and binding for all
purposes of this Plan and of each Option hereunder and each Stock Option
Agreement hereunder entered into in accordance with this Plan. No adjustment or
substitution provided for in this Section 7 shall require the Company to buy or
sell a fractional share under any Stock Option Agreement, and the total
substitution or adjustment with respect to each Stock Option Agreement hereunder
shall be limited accordingly.
8. TERMINATION, AMENDMENT OR DISCONTINUANCE OF THE PLAN
(a) TERMINATION. This Plan will terminate not later than
December 31, 2010, and after that date no options may be granted
hereunder. All Options outstanding at the time of termination of the
Plan shall remain in effect until such Options have expired in
accordance with their terms, have been terminated in accordance with
the Plan, or have been terminated by mutual consent of the parties. The
Board of Directors in its discretion may terminate the Plan at any time
with respect to any shares for which Options have not theretofore been
granted.
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<PAGE> 36
(b) AMENDMENT. The Board of Directors shall have the
right to alter or amend the Plan or any part thereof from time to time,
including, but not limited to, such modifications and amendments as
shall be in the judgment of the Board or the Committee required to
satisfy the conditions of Rule 16b-3 under the Securities Exchange Act
of 1934 as it now exists or may from time to time be amended and/or
superseded, or to conform to any change in any law or regulation
applicable thereto; provided, however that:
(i) no change in any Option theretofore granted
may be made which would impair the rights of the Optionee
without the consent of such Optionee;
(ii) the Board of Directors may not make any
alteration or amendment which would materially increase the
benefits accruing to participants under the Plan, increase the
aggregate number of shares which may be issued under the Plan
(other than increase reflecting a stock dividend, stock split,
share combination or similar change in capitalization of the
Company), materially modify the requirements as to eligibility
for receipt of Options under the Plan, or extend the term of
the Plan without the approval of the shareholders of the
Company; and
(iii) the Board of Directors may not amend this
Plan more than once every six months, other than to comport
with changes in the Internal Revenue Code, the Employee
Retirement Income Security Act, or regulations thereunder.
9. ABSENCE OF RIGHTS
The granting of an Option to an Eligible Director shall confer no
rights of any sort except such rights as are contained in this Plan and the
Option Agreement.
10. INDEMNIFICATION AND EXCULPATION
(a) Each person who is or shall have been a member of the
Board of Directors or of the Committee shall be indemnified and held
harmless by the Company against and from any and all loss, cost,
liability or expense that may be imposed upon or reasonably incurred by
him in connection with or resulting from any claim, action, suit or
proceeding to which he may be a party or in which he may be involved by
reason of any action taken or failure to act under this Plan and
against and from any and all amounts paid by him in settlement thereof
(with the Company's written approval) or paid by him in satisfaction of
a judgment in any such action, suit or proceeding, except a judgment in
favor of the Company based upon a finding of his bad faith; subject,
however, to the condition that upon the institution of any such claim,
action, suit or proceeding against him, he shall in writing give the
Company an opportunity, at its own expense, to handle and defend the
same before he undertakes to handle and defend it on his behalf. The
foregoing right of indemnification shall not be exclusive of any other
right to which such person may be entitled as a matter of law or
otherwise, or any power that the Company may have to indemnify him or
hold him harmless.
(b) Each member of the Board of Directors or of the
Committee, and each officer and
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<PAGE> 37
employee of the Company shall be fully justified in relying or acting
upon any information furnished in connection with the administration of
this Plan by any person or persons other than himself. In no event
shall any person who is or shall have been a member of the Board of
Directors or of the Committee, or an officer or employee of the Company
be liable for any determination made or other action taken or any
omission to act in reliance upon any such information or for any action
(including the furnishing of information) taken or any failure to act,
if in good faith.
11. APPLICATION OF PROCEEDS
The proceeds received by the Company from the sale of Common Stock
pursuant to Options will be used for general corporate purposes.
12. PRONOUNS; HEADINGS.
Wherever any words are used in the masculine gender, they shall be
construed as though they were also used in the feminine gender in all cases
where they would so apply. Headings used herein are for general information only
and do not constitute part of the Plan.
13. SHAREHOLDER APPROVAL
This Plan is subject to the approval of the holders of a majority of
the securities of the Company present or represented and entitled to vote at a
meeting duly held in accordance with applicable laws of the State of Delaware.
14. SAVINGS CLAUSE
Any provision of this Plan which, if given effect, would disqualify any
Option granted hereunder, or Shares issuable upon exercise thereof, from
exemption from the operation of ss.16(b) of the Securities Exchange Act of 1934
shall be null and void and of no effect, and any such provision shall be deemed
not to be a part of this Plan for purposes of construction hereof.
--------------------
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<PAGE> 38
PROXY
WALL STREET DELI, INC.
Proxy for Annual Meeting of Shareholders, November 17, 2000
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 November 17, 2000, 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, 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 approve the Non-Employee Directors Stock Purchase Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The proposal to approve the Stock Option Plan for Non-Employee
Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Ratification of authorization for the Audit Committee to select the
Company's independent auditors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In their discretion, the Proxies are authorized to vote upon such other
matters as may properly come before the meeting.
<PAGE> 39
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, 3 and 4.
Dated , 2000
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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.
