<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 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
EL CHICO RESTAURANTS, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- - --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- - --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - --------------------------------------------------------------------------------
(5) Total fee paid:
$125.00
- - --------------------------------------------------------------------------------
/ / 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
EL CHICO RESTAURANTS, INC.
12200 STEMMONS
SUITE 100
DALLAS, TEXAS 75234
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 1995
To the Shareholders
of El Chico Restaurants, Inc.:
NOTICE IS HEREBY GIVEN that the annual meeting of shareholders of El
Chico Restaurants, Inc. (the "Company"), will be held at The Texas Commerce
Bank Tower, 2200 Ross Avenue, 7th Floor, Dallas, Texas, on Wednesday, May 24,
1995, at 10:00 a.m., Dallas time, for the following purposes.
1. To elect seven directors of the Company to hold
office until their respective successors shall have
been duly elected and qualified.
2. To consider, approve and ratify the grant of stock
options to each nonemployee director of the Company.
3. To transact such other business as may properly come
before the meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on Thursday,
April 13, 1995, as the record date for determination of shareholders entitled
to notice of and to vote at the annual meeting.
Whether or not you expect to attend the meeting in person, you are
urged to mark, sign, and date the enclosed form of proxy and return the same
promptly so that your shares of stock may be represented and voted at the
meeting. You may revoke your proxy at any time before it is voted.
BY ORDER OF THE BOARD OF DIRECTORS
JOHN A. CUELLAR
SECRETARY
DALLAS, TEXAS
APRIL 25, 1995
<PAGE> 3
EL CHICO RESTAURANTS, INC.
12200 STEMMONS
SUITE 100
DALLAS, TEXAS 75234
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 24, 1995
SOLICITATION AND REVOCABILITY OF PROXIES
The accompanying proxy is solicited by the Board of Directors of El
Chico Restaurants, Inc., a Texas corporation (the "Company"), to be voted at
the meeting of the shareholders of the Company (the "Meeting") to be held
Wednesday, May 24, 1995, at the time and place and for the purposes set forth
in the accompanying Notice of Annual Meeting of Shareholders (the "Notice").
WHEN PROXIES IN THE ACCOMPANYING FORM ARE PROPERLY EXECUTED AND RECEIVED, THE
SHARES THEREBY WILL BE VOTED AT THE MEETING IN ACCORDANCE WITH THE DIRECTIONS
NOTED THEREON; IF NO DIRECTION IS INDICATED, SUCH SHARES WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND IN FAVOR OF PROPOSAL 2.
Management does not intend to present any business at the Meeting for
a vote other than the matters set forth in the Notice and has no information
that others will do so. If other matters requiring a vote of the shareholders
properly come before the Meeting, it is the intention of the persons named in
the accompanying form of proxy to vote the shares represented by the proxies
held by them in accordance with their judgment on such matters.
Any shareholder giving a proxy may revoke that proxy at any time
before it is voted. A proxy may be revoked by filing with the Secretary of the
Company a written revocation or duly executed proxy bearing a date subsequent
to the proxy being revoked. Any shareholder may attend the Meeting and vote in
person whether or not such shareholder has previously returned a properly
executed proxy to the Company.
In addition to the solicitation of proxies by use of the mail,
officers and other employees of the Company may solicit the return of proxies.
Brokerage houses and other custodians, nominees and fiduciaries will be
requested to forward solicitation material to the beneficial owners of stock.
The cost of preparing, printing, assembling and mailing the Notice,
this Proxy Statement, the form of proxy enclosed herewith and any additional
solicitation material, as well as the cost of forwarding solicitation material
to the beneficial owners of stock, is to be borne by the Company. This Proxy
Statement and the accompanying Notice are first being sent to the shareholders
of the Company on or about April 25, 1995.
<PAGE> 4
QUORUM AND VOTING
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of common stock, $.10 par value, of the Company
("Common Stock") entitled to vote is necessary to constitute a quorum with
respect to each matter to be considered at the Meeting. If a quorum is not
present or represented at the Meeting, the shareholders entitled to vote
thereat, present in person or represented by proxy, may adjourn the Meeting
from time to time without notice or other announcement until a quorum is
present or represented. Assuming the presence of a quorum, the vote of the
holders of a plurality of the shares of Common Stock represented at the Meeting
is necessary for the election of directors. And assuming the presence of a
quorum, the affirmative vote of the holders of a majority of the shares of
Common Stock represented and voting at the Meeting is required for the
ratification of the grant of stock options to the nonemployee directors. An
automated system administered by the Company's transfer agent tabulates the
votes. Abstentions and broker non-votes are each included in the determination
of the number of shares present for determining a quorum. Each is tabulated
separately. Abstentions are counted in tabulations of the votes cast on
proposals presented to shareholders, whereas broker non-votes are not counted
as voting for purposes of determining whether a proposal has received the
necessary number of votes for approval of the proposal.
The record date for the determination of shareholders entitled to
notice of and to vote at the Meeting was the close of business on April 13,
1995. At that date, there were 3,925,385 shares of Common Stock issued and
outstanding. Each of such shares is entitled to one vote in each matter to be
acted upon at the Meeting. The Company's Articles of Incorporation deny
cumulative voting.
PRINCIPAL SHAREHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth as of April 13, 1995, unless otherwise
indicated, (i) the stock ownership of the persons or entities known by
management beneficially to own more than 5% of the Common Stock, (ii) the
number of shares of Common Stock beneficially owned by each director and
nominee, (iii) the number of shares owned by each of the persons named in the
Summary Compensation Table, and (iv) the number of shares of Common Stock
beneficially owned by all directors and executive officers of the Company as a
group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME BENEFICIAL OWNERSHIP(1) OF CLASS
- - ------------------------------ ------------------------- --------
<S> <C> <C>
Lawrence E. White 34,592 (2) *
John A. Cuellar (3) 61,791 (2) 1.6%
Carmen C. Summers (3) 16,200 (2) *
Charles A. Cooper 26,909 (2) *
Susan R. Holland 22,877 (2) *
Grahame N. Clark, Jr. 2,000 *
Jack D. Knox 15,000 (2) *
Joseph V. Mariner, Jr. 5,096 *
Joseph S. Thomson 26,500 (2) *
Fleming Capital Management, Inc. 473,500 (4) 12.1%
Dimensional Fund Advisors, Inc. 229,400 (5) 5.8%
Shawmut National Corporation 232,200 (6) 5.9%
Roger H. Jenswold & Company, Inc. 271,850 (7) 6.9%
All directors and executive officers as
a group (12 persons) 210,965 (2) 5.2%
</TABLE>
________________________
* Less than one percent.
-2-
<PAGE> 5
(1) Beneficial ownership as reported in the above table has been
determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Except as noted, the
listed individuals have sole investment power and sole voting power as
to all shares of stock of which they are identified as being the
beneficial owners.
(2) Includes shares which may be acquired presently pursuant to the
exercise of stock options as follows: Mr. White - 33,333 shares;
Mr. Cuellar - 21,666 shares; Ms. Summers - 2,000 shares; Mr. Cooper
- 19,166 shares; Ms. Holland - 19,166 shares; Mr. Knox - 10,000
shares; Mr. Thomson - 10,000 shares; and all directors and executive
officers as a group - 115,331 shares. Also includes 5,000 shares
awarded to Mr. Cuellar and 2,500 shares awarded to Ms. Holland under
the earn-out provisions of the 1990 Long-Term Incentive Plan which are
restricted and subject to the vesting and forfeiture provisions of
such plan. Also includes 2,000 shares owned by Mr. Thomson's minor
son, and with respect thereto, Mr. Thomson disclaims beneficial
ownership.
(3) Carmen C. Summers and John A. Cuellar are first cousins. There is no
other family relationship among any of the directors and any executive
officers of the Company.
(4) The principal business address of Fleming Capital Management, Inc.
("Fleming"), is 1285 Avenue of the Americas, 16th Floor, New York, New
York 10019. The shares consist of shares held as of December 31, 1994
by one or more Fleming affiliates in their capacities as investment
managers or advisors with respect to one or more collective investment
funds and/or separate investment accounts.
(5) The principal business address of Dimensional Fund Advisors, Inc.
("Dimensional"), is 1299 Ocean Avenue, 11th Floor, Santa Monica, CA
90401. Dimensional, a registered investment advisor, is deemed to
have beneficial ownership of 229,400 shares of Common Stock as of
December 31, 1994, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment
company, or in series of the DFA Investment Trust Company, a Delaware
business trust, or the DFA Group Trust and DFA Participation Group
Trust, investment vehicles for qualified employee benefit plans, for
all of which Dimensional serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares.
(6) The principal business address of Shawmut National Corporation is 777
Main Street, Hartford, CT 06115. The shares consist of shares held
as of December 31, 1994 by the bank in a fiduciary capacity as
trustee, and/or co-trustee, for the benefit of other persons who have
the right to receive dividends and the proceeds from the sale of such
shares.
(7) The principal business address of Roger H. Jenswold & Company, Inc.
("Jenswold"), is 5847 San Felipe, Suite 1212, Houston, TX 77057.
Jenswold, a registered investment advisor, is deemed to have
beneficial ownership of 271,850 shares of Common Stock as of December
31, 1994.
-3-
<PAGE> 6
ELECTION OF DIRECTORS
(PROPOSAL 1)
The persons named in the enclosed form of proxy, unless such proxy
specifies otherwise, intend to vote the shares represented by such proxy for
the election of the nominees listed below to hold office until their respective
successors shall have been duly elected and qualified.
The Company's Bylaws fix the number of directors at seven, and seven
directors will be elected. Proxies cannot be voted for a greater number of
persons than the nominees named. Each of the nominees listed below is
currently a director of the Company.
Information regarding each nominee is set forth in the table and text
below.
<TABLE>
<CAPTION>
NOMINEE AGE POSITION WITH COMPANY
- - ------------------------------ --- ----------------------------------------
<S> <C> <C>
Joseph S. Thomson (1) 65 Chairman of the Board
Wallace A. Jones (2) 43 President, Chief Executive Officer and
Director
John A. Cuellar 49 Senior Vice President, General
Counsel, Secretary and Director
Carmen C. Summers 53 Purchasing Manager and Director
Grahame N. Clark, Jr. (1) 52 Director
Jack D. Knox (1) 57 Director
Joseph V. Mariner, Jr. (1) 74 Director
</TABLE>
___________________
(1) Member of the Executive Committee, Nominating Committee, Compensation
and Benefits Committee, and the Audit Committee.
(2) Member of the Executive Committee and Nominating Committee.
If any of the nominees for director should become unavailable to stand
for election as a director, the shares represented by the proxy will be voted
for such person or persons as may be nominated by the Board of Directors. The
Company has no reason to believe that any of the nominees will be unavailable
to serve as a director.
Directors are elected annually by the Company's shareholders and hold
office until their successors are elected and qualified. Officers are elected
annually by the Board of Directors and serve at the pleasure of the Board.
-4-
<PAGE> 7
Wallace A. Jones has been involved in the restaurant industry for over
20 years. From 1974 to October 1986 he held various positions at Casa Bonita,
Inc., owner of the Taco Bueno chain of restaurants. From October 1986 to
January 1989 he served as President and Chief Executive Officer of Prufrock
Restaurants, Inc., owner of the Black-eyed Pea chain of restaurants. From
March 1989 to October 1989, he served as Chief Operating Officer, and from
October 1989 to May 1990, he served as President and Chief Executive Officer of
Warburtons, Inc., a bakery cafe chain. From May 1990 to May 1991, he was self
employed developing a new restaurant project. From May 1991 to November 1994,
Mr. Jones was employed with Good Eats Restaurant Group, serving as President
and Chief Operating Officer from July 1993 to November 1994 and Vice President
from May 1991 to July 1993. Mr. Jones was elected President and Chief
Executive Officer of the Company in November 1994.
John A. Cuellar has served as a director and Vice President of the
Company since July 1974. In December 1982, Mr. Cuellar also assumed the
positions of General Counsel and Secretary of the Company. In February 1993,
Mr. Cuellar was elected Senior Vice President. In September 1994, Mr. Cuellar
was elected as interim Chairman of the Board, and served in that capacity until
November 1994. Mr. Cuellar serves on the Board of Link Financial Services
Corporation, which provides financial and planning services to profit and
nonprofit corporations and other entities.
Carmen C. Summers has served the Company in various capacities from
December 1971 through November 1982 and from July 1986 to the present, most
recently as Purchasing Manager. From November 1982 to July 1986, Ms. Summers
was with Campbell Taggart, Inc. as a senior buyer. From October 1987 to August
1993, Ms. Summers served as Trustee to the Gilbert Cuellar Daughters' Trust.
Ms. Summers has been a director of the Company since September 1988.
Grahame N. Clark, Jr., has been employed by BancTec, Inc. (a computer
systems manufacturer), since August 1980. Within that corporation he has been
a director since September 1985, and Chairman and Chief Executive Officer since
April 1987. Mr. Clark has been a director of the Company since February 1990.
Jack D. Knox is presently Chairman of the Board and an 80% shareholder
of Sixx Holdings, Inc., a NASDAQ-listed company which owns an Italian-themed
restaurant concept and two restaurants. He also serves as General Partner of
Six Flags Over Texas Fund, Ltd., which is the owner of a major amusement park
complex in Arlington, Texas. Mr. Knox formerly served as Chairman and Chief
Executive Officer of an AMEX-listed oil and gas company, Summit Energy, Inc.
He has been a director of the Company since February 1991.
Joseph V. Mariner, Jr., an engineer, has managed his personal
investments since 1978, when he retired as Chief Executive Officer and a
director of Hydrometals, Inc. (a conglomerate engaged in electronics, plumbing
and non-powered hand tools). He presently serves as a director of Temtex
Industries (a manufacturer of fabricated metal products and structural clay
products), Peerless Manufacturing Company (a specialist in gas/liquid
separation and pulsation dampening), and Dyson Kissner Moran Corporation (a
major New York investment firm). Mr. Mariner is also a director of three
privately held corporations. Mr. Mariner has completed terms as a director for
First Republic Bank (now NationsBank of Texas, N.A.) and Varo, Inc. (a major
defense electronics manufacturer). Mr. Mariner has been a director of the
Company since December 1988.
-5-
<PAGE> 8
Joseph S. Thomson was elected as Chairman of the Board of the Company in
November 1994. Mr. Thomson has been a franchisee of the Company since 1969 and
currently owns and operates seven franchised El Chico restaurants located in
Conway, Arkansas; Fort Smith, Arkansas; Fayetteville, Arkansas; Marshall,
Texas; Meridian, Mississippi; and two locations in Jackson, Mississippi. Mr.
Thomson has been involved in the operation of three other franchised restaurant
concepts since June 1993 and in residential and commercial real estate
development since the late 1950s and has owned and operated the Century 21/Page
One Real Estate Company in Texarkana, Texas since 1976. He has been a director
of the Company since September 1987.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF
THE INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
MEETING ATTENDANCE AND COMMITTEES OF THE BOARD
The Company has standing Executive, Audit, Compensation and Benefits,
and Nominating Committees of the Board. All members of these Committees are
noted in the above table. Except as restricted by applicable law, the
Executive Committee has all the powers of the Board of Directors between
meetings of the Board.
The Audit Committee of the Board reviews the scope of the independent
auditors' examinations and receives and reviews their reports. In addition,
any transaction between the Company and officers or directors and their
affiliates, or any related party, must be approved in advance by the Audit
Committee as being in the best interest of the Company and on terms no less
favorable than the Company could receive from third parties. Lawrence E.
White, Chief Financial Officer of the Company, is an ex-officio member of the
Audit Committee.
The Compensation and Benefits Committee is responsible for reviewing the
compensation of the officers of the Company. In addition, the Compensation and
Benefits Committee administers the Company's 1983 Stock Option Plan, the Stock
Option Plan for Nonemployee Directors, the 1986 Employee Stock Bonus Plan, the
1990 Long-Term Incentive Plan, and the 1992 Stock Option Plan. See "Election
of Directors -- Director Compensation" below.
During Fiscal 1994 the Board of Directors met on 11 occasions; the Audit
Committee met on two occasions; the Compensation and Benefits Committee met on
two occasions; the Executive Committee met on two occasions; and the Nominating
Committee did not meet. All directors attended at least seventy-five percent
of all meetings of the Board and all committees of which they are members
either in person or by telephone as permitted under the Texas Business
Corporation Act.
During 1994, the Company established a Search Committee, which was
dissolved in November 1994. The Search Committee was comprised of the
nonemployee directors and Carmen C. Summers. The Search Committee was charged
with the obligation of interviewing and selecting for recommendation to the
Board of Directors the President and Chief Executive Officer of the Company and
negotiating the terms of his employment.
-6-
<PAGE> 9
DIRECTOR COMPENSATION
The Company compensated the nonemployee director members of the Search
Committee for performance of their duties during 1994 in selecting the
President and Chief Executive Officer as follows: Joseph V. Mariner, Jr., -
$13,188; Jack D. Knox - $9,000; Grahame N. Clark, Jr., - $5,284 and Joseph
S. Thomson - $794.
Effective April 1, 1995, those directors who are not employees (other
than the Chairman of the Board) of the Company receive an annual retainer of
$20,000 payable quarterly, and $500 for each Committee and Board meeting
attended, plus reimbursement of travel and other incidental expenses incurred
in connection with attendance at such meetings. The Chairman of the Board
receives an annual retainer of $30,000 and the same meeting fee as the other
directors. Upon depletion of the annual retainer, directors are entitled to
compensation based upon a $1,250 per diem for any consulting or other time
spent on behalf of the Company. In addition, the Nonemployee Director Stock
Bonus Plan provides for a grant of 500 shares to each nonemployee director on
February 1 of each year. As of April 17, 1995, Grahame N. Clark, Jr., Jack D.
Knox, Joseph V. Mariner, Jr., and Joseph S. Thomson have been granted 2,000
shares each pursuant to this plan.
Pursuant to the Company's Stock Option Plan for Nonemployee Directors,
which was approved by the shareholders on October 12, 1988 (but effective as of
December 8, 1987), those directors who are not employees or officers of the
Company are issued 10-year options, upon their election to the board, to
purchase 10,000 shares of Common Stock at the fair market value thereof on the
date of the grant. An aggregate of 100,000 shares was authorized for issuance
under the plan, and 50,000 shares remain available for grant. Grahame N.
Clark, Jr., Jack D. Knox, Joseph V. Mariner, Jr., and Joseph S. Thomson have
been granted options under the plan. Mr. Clark and Mr. Mariner exercised all
of their options in March 1993. The options are subject to certain service,
vesting and forfeiture provisions.
Each director who is not an employee of the Company was granted an
option to purchase 15,000 shares of Common Stock on September 15, 1994, at the
fair market value thereof on the date of the grant. Such grant is subject to
ratification by the shareholders at the Meeting. See "Ratification of
Nonemployee Director Options (Proposal 2)."
-7-
<PAGE> 10
COMPENSATION TO EXECUTIVE OFFICERS
The following table sets forth for the years presented, the compensation
of the Company's previous and current Chief Executive Officer and the Company's
five other most highly compensated Executive Officers serving during 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
---------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
- - -----------------------------------------------------------------------------------------------------------------
All
Other
Other Restricted Compen
Annual Stock Securities LTIP sation
Name and Principal Calendar Salary Bonus Compensation Awards Underlying Payouts (1)
Position Year ($) ($) ($) ($) Options ($) ($)
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Wallace A. Jones (2) 1994 20,192 -- 582 (3) -- 250,000 -- --
President, Chief Executive
Officer and Director
J. Michael Jenkins (4) 1994 170,192 -- 4,902 (3) -- -- -- 19,785 (5)
Former Chairman of the Board 1993 250,000 125,000 7,200 (3) -- -- -- --
and Chief Executive Officer 1992 209,615 37,403 6,037 (3) -- 500,000 -- 66,632 (6)
Lawrence E. White 1994 160,000 60,536 (7) -- -- -- -- 420
Executive Vice President and 1993 160,000 40,000 -- -- -- -- 57,473 (8)
Chief Financial Officer 1992 105,846 11,969 -- -- 50,000 -- 16,157 (8)
John A. Cuellar 1994 108,280 29,263 (7) -- -- -- -- 382
Senior Vice President, 1993 108,280 27,070 -- -- -- -- 325
General Counsel, Secretary 1992 108,872 8,100 -- 18,000 (9) 75,000 -- 653
and Director
Leslie J. Christon (10) 1994 147,433 -- -- -- -- -- --
Vice President of 1993 129,808 45,433 -- -- -- -- 400
Operations 1992 121,572 13,091 -- -- 25,000 29,891 (11) 608
Charles A. Cooper 1994 150,000 56,752 (7) -- -- -- -- 420
Vice President of 1993 150,000 52,500 -- -- -- -- --
Development 1992 139,448 15,709 -- -- 50,000 -- --
Susan R. Holland 1994 96,200 26,366 (7) -- -- -- -- 334
Treasurer and 1993 90,950 22,738 -- -- -- -- 272
Controller 1992 86,916 6,710 -- 9,000 (12) 50,000 -- 487
</TABLE>
___________________
(1) Represents employer matching contributions under the Profit Sharing Plan,
except as otherwise noted.
(2) Mr. Jones was appointed Chief Executive Officer of the Company on
November 11, 1994, with his first day of employment being November 28,
1994. Mr. Jones' employment agreement provides for a 3-year term, an
annual base compensation of $250,000, an annual auto allowance of $7,200,
plus an annual bonus set as a percentage of the Company's earnings
improvement from the prior year, which bonus shall have a target payout
of 55% of base salary for achieving certain financial results, and a
maximum of 82.5% for surpassing those results. See "-Report of the
Compensation and Benefits Committee."
(3) Annual auto allowance. The amount shown for Mr. Jones represents the
prorata portion of such allowance.
(4) Mr. Jenkins resigned August 26, 1994.
(5) Represents consulting fees paid after termination of employment.
-8-
<PAGE> 11
(6) Amount paid on behalf of Mr. Jenkins for relocation expenses.
(7) Includes stock awards in the following amounts: White -- 259 shares with
a value of $2,266, Cuellar -- 125 shares with a value of $1,094, Cooper
-- 243 shares with a value of $2,126, Holland -- 111 shares with a value
of $971.
(8) Amount paid on behalf of Mr. White for relocation expenses. Amount for
1993 includes $426 of employer matching contribution under the Profit
Sharing Plan.
(9) As of December 31, 1994, Mr. Cuellar owned an aggregate of 5,000 stock
awards subject to vesting provisions. Stock awards for 1,000 shares and
4,000 shares were made in 1991 and 1992, respectively and will vest in
1996 and 1997, respectively. The Summary Compensation Table reflects the
value of the 1992 awards as of the award date. The market value of these
5,000 stock awards as of December 31, 1994 was $68,359 of which $43,750
related to the stock awards and $24,609 related to an estimate of federal
income taxes to be paid on behalf of Mr. Cuellar upon vesting.
(10) Ms. Christon resigned November 30, 1994.
(11) Includes 2,500 stock awards vested with a value of $29,891 of which
$20,625 related to the stock awards and $9,266 related to federal income
taxes paid on behalf of Ms. Christon.
(12) As of December 31, 1994, Ms. Holland owned an aggregate of 2,500 stock
awards subject to vesting provisions. Stock awards for 500 shares and
2,000 shares were made in 1991 and 1992, respectively and will vest in
1996 and 1997, respectively. The Summary Compensation Table reflects the
value of the 1992 awards as of the award date. The market value of these
2,500 stock awards as of December 31, 1994 was $34,180 of which $21,875
related to the stock awards and $12,305 related to an estimate of federal
income taxes to be paid on behalf of Ms. Holland upon vesting.
OPTION GRANTS IN 1994
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates
of Stock Price Appreciation
Individual Grants for Option Term (1)
----------------------------------------------------------------------------- ----------------------------
Number of % of Total
Securities Options Granted Exercise
Underlying to Employees Price Expiration
Name Options Granted in 1994 ($/Sh) Date 5% ($) 10% ($)
------------------ --------------- ----------- ---------- ---------- ------ -------
(#)
---
<S> <C> <C> <C> <C> <C> <C>
Wallace A. Jones 250,000 (2) 96% 12.12 9/15/04 1,906,000 4,831,000
</TABLE>
___________________
(1) The numbers shown reflect the values accumulated over a 10-year period.
(2) The exercise price for each option is the fair market value of the Common
Stock on the date of grant. The options are exercisable, cumulatively,
20% per anniversary date of grant. In addition, the options become
exercisable in full upon a change in control of the Company, whether by
reorganization, consolidation, merger or otherwise, or upon a sale,
lease, exchange or other disposition of all or substantially all of the
assets of the Company.
-9-
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value of Unexercised
Securities Underlying in-the-Money
Unexercised Options Options at
Shares December 31, 1994 (#) December 31, 1994 ($) (1)
Acquired Value
On Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
--------------- ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Wallace A. Jones -- -- 0/250,000 (2) 0/0
J. Michael Jenkins -- -- 166,666/0 (3) 0/0
Lawrence E. White -- -- 33,332/16,668 (4) 0/0
John A. Cuellar -- -- 5,000/45,000 (3) 0/0
16,666/8,334 (4) 0/0
Leslie J. Christon 16,666 $40,325 (5) 0/0 0/0
Charles A. Cooper -- -- 2,500/22,500 (3) 0/0
16,666/8,334 (4) 0/0
Susan R. Holland -- -- 2,500/22,500 (3) 0/0
16,666/8,334 (4) 0/0
- - -------------------
</TABLE>
(1) Stock price closed at $8.75 on December 31, 1994
(2) Exercise price is $12.12
(3) Exercise price is $9.63
(4) Exercise price is $9.56
(5) Option exercise of 16,666 shares at exercise price of $9.56 per share
at the time the Common Stock closed at $12.00 per share.
There were no Option/SAR repricings, nor long-term incentive plan
awards during 1994. Accordingly, disclosure tables are not presented.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the Compensation and Benefits Committee is or has been an
officer or employee of the Company or any of its subsidiaries or had any
relationship requiring disclosure pursuant to Item 404 of Regulation S-K. In
1994, no executive officer of the Company served on the Compensation and
Benefits Committee, or similar committee, or as a director of another entity,
one of whose executive officers served on the Compensation and Benefits
Committee or on the Company's Board of Directors.
SECTION 16(A) COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's officers and
directors, and persons who own more than 10 percent of a registered class of
the Company's equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "SEC"). Officers,
directors and greater than 10-percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on its review of the copies of such forms received by it,
or written representation from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, from January 1, 1994 to
December 31, 1994, all filing requirements applicable to its officers,
directors, and greater than 10-percent beneficial owners were timely met,
except that Joseph S. Thomson filed one Form 4 late with respect to one
transaction and Charles A. Cooper filed one Form 4 late with respect to one
transaction.
-10-
<PAGE> 13
REPORT OF THE COMPENSATION AND BENEFITS COMMITTEE
The Compensation and Benefits Committee of the Board of Directors,
comprised of the four undersigned outside directors of the Company, has
responsibility for determining compensation plans for all officers of the
Company. During 1994, the Committee met twice to consider compensation of the
new Chief Executive Officer and base salary changes for certain executive
officers.
The Committee has determined, based on review of recommendations by an
outside consulting firm, that the Company's executive compensation plan should
have three principal components:
o Competitive base salaries. In order to attract and retain
high-quality management the Company should offer appropriate
salaries commensurate with their skills and experience. The
Committee considers recommendations by the Chief Executive
Officer in determining other executive base salaries, as well as
information on industry practice as provided by the outside
consulting firm.
o A short-term bonus plan. To encourage and reward near-term
improvements in the Company's performance, the Committee
determined to offer an annual bonus plan based on pre-tax
earnings improvements from the prior year. The plan considers
Company budget objectives and pays participating executives a
percentage of their base salary up to targets determined by a
review of industry practice. Bonuses for profit improvements up
to a target level are paid in cash, and profit improvements above
the target level are paid half in cash and half in stock.
o A long-term incentive plan. The Committee determined to
establish a long-term incentive plan to accomplish the following
objectives:
- reward sustained performance;
- balance short-term and long-term focus;
- attract and retain qualified management;
- build executive equity ownership;
- align executive and shareholder interests;
- minimize adverse financial statement impact of awards;
- consider awards forfeited by participants of the
terminated 1990 Long-Term Incentive Plan.
To these ends, the Committee determined that stock option awards
are most effective in accomplishing the desired objectives.
Awards were made in 1992, certain of which were subject to
shareholder approval of the 1992 Stock Option Plan, which was
approved at the Annual Meeting of Shareholders in April 1993. A
further award was made in 1994 as part of the initial
compensation package of the new Chief Executive Officer, Mr.
Wallace A. Jones.
The Company has not made significant use of supplemental executive
benefits and perquisites such as supplemental retirement benefits, executive
physical exams, or financial planning services, as is done in many companies in
its industry. Instead, compensation has emphasized the above described plans.
-11-
<PAGE> 14
In 1994, the former Chief Executive Officer resigned to pursue another
opportunity in the restaurant industry. Prior to his resignation, his annual
base salary of $250,000 was negotiated as part of his employment agreement
entered into upon his joining the Company in 1992, and no performance-related
or other changes had been made. The Compensation and Benefits Committee
reviewed and recommended the compensation package for the new Chief Executive
Officer, Mr. Jones. This review considered a compensation study done by an
outside consultant in 1992 for the purpose of evaluating the Company's
executive compensation packages, compensation paid to the prior Chief Executive
Officer, advice and data provided by the executive search firm retained by the
Company to find the new Chief Executive Officer, and actual negotiations with
Mr. Jones. Based on this review, the Committee recommended to the Board a
compensation package consisting of a $250,000 base salary, a $7,200 car
allowance, options to acquire 250,000 shares of the Company's Common Stock at
the market price on the day of the grant, and participation beginning in 1995
in the Company's executive short- term bonus plan with a target payout of 55%
of base salary and a maximum payout of 82.5% of base salary based on
achievement of pre-determined improvements in pre-tax profits. The Committee's
recommendation was approved by the Board.
The Committee also recommended, and the Board approved, 5% base salary
increases for two executive officers named in the compensation tables, Lawrence
E. White and John A. Cuellar, effective in 1995. These increases were for
performance by these officers in interim assignments during the transition
period following the resignation of the former Chief Executive Officer. Mr.
White served in the interim position of Chief Operating Officer, and Mr.
Cuellar served in the interim position of Chairman of the Board.
Executive short-term bonus awards for 1994 were made on the basis of a
pre-determined formula which paid bonuses ratably as pre-tax profits improved
over a base of $4.5 million (3.7% above 1993 actual pre-tax profit). The
ratable payout formula had a target of a pre-tax profit improvement based on
the Company's 1993 operating budget as approved by the Board of Directors. The
target payout was achieved at a pre-tax profit improvement of approximately 22%
over the base, which was surpassed by the Company's actual pre-tax profit
improvement over the target base of approximately 24%. Because the target
profit improvement was surpassed, bonuses of 27-38% of base salary were earned
by the named executive officers and paid in cash and stock. The Chief
Executive Officer, hired late in 1994 was not eligible for the 1994 bonus, and
his predecessor and another executive officer resigned during the year making
them also ineligible for the bonus.
An initial stock option grant of 250,000 shares was made to the new
Chief Executive Officer. No other stock option grants were made nor existing
options repriced in 1994 to named executive officers, and none of the present
named executive officers exercised any stock options in 1994. A former named
executive officer, who resigned during 1994, exercised 16,666 vested options at
the time of her resignation, and the former Chief Executive Officer, who also
resigned, forfeited a portion of his options, leaving 166,666 vested and
exercisable until February 2002.
Recently enacted federal income tax legislation has limited the
deductibility, effective January 1, 1994, of certain compensation paid to the
CEO and the four other most highly compensated executives. The U.S. Treasury
Department has issued proposed interpretive regulations, which are currently
under review within the Company with the intent of minimizing or eliminating
their effect.
-12-
<PAGE> 15
The accompanying graph of total return performance for the Company's
Common Stock compared with the NASDAQ broad market index of U.S. companies, and
the peer group index of NASDAQ restaurant companies is an integral part of this
report. The peer group index is determined and constructed independently by
the Center for Research in Security Prices of the University of Chicago.
Members of the Compensation and Benefits Committee
Grahame N. Clark, Jr., Chairman
Jack D. Knox
Joseph V. Mariner, Jr.
Joseph S. Thomson
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
EL CHICO RESTAURANTS, INC.
Prepared by the Center for Research in Security Prices
Produced on 02/28/95 including data to 12/30/94
[GRAPH]
<TABLE>
<CAPTION>
El Chico Eating and
Measurement Period Restaurants, drinking
(Fiscal Year Covered) Inc. NASDAQ places
<S> <C> <C> <C>
12/29/89 100 100 100
12/31/90 74.1 84.9 81.6
12/31/91 111.1 136.3 135.9
12/31/92 377.8 158.6 189.9
12/31/93 466.7 180.9 192.5
12/30/94 259.3 176.9 139.1
</TABLE>
NOTES:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous trading day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 12/29/89.
-13-
<PAGE> 16
RATIFICATION OF THE NONEMPLOYEE DIRECTOR OPTIONS
(PROPOSAL 2)
On September 15, 1994, the Board of Directors approved a one-time grant
of nonqualified stock options to purchase an aggregate of 60,000 shares of
Common Stock to the four nonemployee directors of the Company (the "Nonemployee
Director Options"). As a result, Joseph S. Thomson, Grahame N. Clark, Jr.,
Jack D. Knox and Joseph V. Mariner, Jr. were each granted an option to
purchase 15,000 shares of Common Stock at an exercise price of $11.00 per
share. The Nonemployee Director Options were granted subject to the approval
of the Common Stock shareholders at the Meeting. The purpose of the
Nonemployee Director Options is to offer each of the nonemployee directors of
the Company an added incentive to continue in service as a director of the
Company. However, unless the Nonemployee Director Options are ratified by the
shareholders at the Meeting, they shall terminate and become null and void. No
executive officers of the Company were granted or are eligible to receive the
Nonemployee Director Options.
Each of the Nonemployee Director Options is evidenced by an individual
option agreement with the optionee, each agreement having substantially
identical provisions. The form of such option agreement is included herein as
EXHIBIT A, but the material features of the Nonemployee Director Options are
discussed below.
VALUE OF THE NONEMPLOYEE DIRECTOR OPTIONS
As of March 31, 1995, the aggregate value of the 60,000 shares of
Common Stock reserved for issuance upon the exercise of the Nonemployee
Director Options was $480,000, based on the closing sales price of the Common
Stock on the NASDAQ National Market System on such date of $8.00 per share, as
reported by The Wall Street Journal. Based on the difference between the
closing sales price per share of Common Stock on March 31, 1995 and the
exercise price per share for such options, the grant to each such nonemployee
director has no current value. The grants will not have value until the
market price of the Common Stock increases 37 1/2% from the March 31, 1995
closing price.
TERMS AND CONDITIONS OF THE OPTIONS
The Nonemployee Director Options become exercisable, in whole or in
part, cumulatively, with respect to 33 1/3% of the shares subject to such
options on September 15, 1995, 1996 and 1997, respectively. Consequently, the
Nonemployee Director Options are fully exercisable after September 15, 1997.
The exercise price of such options is $11.00 per share, which was the closing
price for the Common Stock on the NASDAQ National Market System on the date of
grant of the Nonemployee Director Options. The exercise price of the
Nonemployee Director Options may be paid in cash, by certified or cashier's
check, by money order, by delivery to the Company of certificates representing
shares of Stock owned for more than six (6) months by the nonemployee director,
the fair market value of which equals the purchase price of the Stock purchase
pursuant to the Option or, if approved by the Board of Directors, by personal
check.
The Nonemployee Director Options are not assignable or transferable
otherwise than by will or the laws of descent or distribution and during the
optionees' lifetime are exercisable only by the optionee. The Nonemployee
Director Options shall terminate on the earlier of (i) 30 days after the
optionee ceases to be a nonemployee director of the Company (other than by
reason of death), (ii) one year after the optionee's death, or (iii) on
September 15, 2004.
-14-
<PAGE> 17
To prevent dilution of the optionees' rights, the Nonemployee Director
Options provide for the adjustment of the number of shares subject to the
Nonemployee Director Options and the exercise price thereof upon the occurrence
of certain events, such as a subdivision or consolidation of shares or a stock
dividend. In addition, the Company may terminate the Nonemployee Director
Options upon the occurrence of several significant corporate events, including
but not limited to the dissolution or liquidation of the Company and the sale,
lease, or exchange of all or substantially all of the Company's assets or
business.
The shares of Common Stock issuable pursuant to the exercise of the
Nonemployee Director Options have not been registered with the SEC; however,
the Company anticipates registering such shares under the Securities Act of
1933, as amended, assuming the shareholders ratify the grant of such options at
the Meeting. After the effective date of such registration (and assuming no
reoffer prospectus is filed), shares purchased pursuant to the exercise of such
options may be sold in the open market, subject to compliance with the
provisions of Rule 144, other than the holding period requirement.
The discussion above is a summary only and is qualified in its entirety
by the full terms and provisions of each option agreement, the form of which is
attached hereto as EXHIBIT A.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The grant of the Nonemployee Director Options will not be taxable to
the optionees. Generally, upon the exercise of the Nonemployee Director
Options, the exercising optionee will recognize ordinary income at the time of
exercise equal to the excess of the then fair market value of the shares of
Common Stock received over the exercise price. The taxable income recognized
upon exercise of the Nonemployee Director Options will be treated as
compensation income subject to withholding and the Company shall be entitled to
a tax deduction equal to the ordinary income the exercising optionee recognizes
as compensation expense. When shares of Common Stock received upon the
exercise of the Nonemployee Director Options subsequently are disposed of in a
taxable transaction, the optionees generally will recognize capital gain (or
loss) in the amount by which the amount realized exceeds (or is less than) the
fair market value of the Common Stock on the date the Nonemployee Director
Options were exercised; such capital gain or loss will be long-term or
short-term depending upon the optionees' holding period following the exercise
of the Nonemployee Director Options.
APPROVAL
Ratification by the shareholders of the Company of the grant of the
Nonemployee Director Options is required pursuant to the terms of the grant of
such options. In addition, shareholder approval is required by Rule 16b-3
promulgated by the SEC under the Exchange Act. Assuming the presence of a
quorum, the proposal to ratify the Nonemployee Director Options requires the
approval of the holders of a majority of the shares of Common Stock represented
and voting at the Meeting in person or by proxy. Proxies will be voted for or
against such proposal in accordance with the specifications marked thereon,
and, if no specificiation is made, will be voted in favor of such proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THE RATIFICATION OF
THE NONEMPLOYEE DIRECTOR OPTIONS.
-15-
<PAGE> 18
CERTAIN TRANSACTIONS
During Fiscal Year 1985, the Company leased property from Frank Cuellar
and Sons, Inc. ("FC&S") for use as a Company restaurant, which opened in May
1987. The lease expires in May 1998, provides for one renewal of five years
and requires monthly rental payments of $4,500 (the base rent) plus 5% of
monthly gross sales exceeding $90,000. During Fiscal 1994, the Company made
payments to FC&S of approximately $72,692 under the lease. John A. Cuellar, an
officer and a director of the Company, owns 45.6% of FC&S. The foregoing
transactions were approved by the disinterested directors after the Audit
Committee found them to be in the best interests of the Company and on terms no
less favorable than could have been obtained from independent parties.
Carmen C. Summers, a director of the Company, has been employed by the
Company in various management capacities since July 1986. During Fiscal 1994,
the Company paid Ms. Summers approximately $72,620 as compensation. Management
of the Company advises the Compensation and Benefits Committee of the Board of
Directors as to Ms. Summers' compensation.
Joseph S. Thomson, Chairman of the Board of the Company, owns 100% of
the stock of two corporations that own and operate seven franchised El Chico
restaurants located in Conway, Arkansas; Fort Smith, Arkansas; Fayetteville,
Arkansas; Marshall, Texas; Meridian, Mississippi; and two locations in Jackson,
Mississippi. Each of these franchises was initially granted before Mr. Thomson
was elected a director, and all seven franchises were granted on the same terms
as franchises granted to other independent parties. Effective January 1, 1993,
each franchise agreement was renewed and extended using the Company's new form
of franchise agreement, as amended. The foregoing transactions were approved
by the disinterested directors after the Audit Committee found them to be in
the best interests of the Company and on terms no less favorable then could
have been obtained from independent parties. During Fiscal 1994, total royalty
and marketing fees paid to the Company under the franchise agreements entered
into with Mr. Thomson were approximately $525,026.
PROPOSALS OF SHAREHOLDERS
Shareholders of the Company who intend to present a proposal for action
at the 1996 annual meeting of shareholders of the Company must notify the
Company's management of such intention by notice received at the Company's
principal executive offices not less than 120 days in advance of April 25, 1996
for such proposal to be considered for inclusion in the Company's proxy
statement and form of proxy relating to such meeting.
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
The Company's Independent Public Accountants for the year ended
December 31, 1994, were the firm of KPMG Peat Marwick LLP. It is expected that
one or more representatives of such firm will attend the Meeting, will be given
the opportunity, if they so desire, to make statements and will be available to
respond to appropriate questions. The Board of Directors, on recommendation of
the Audit Committee, has selected the firm of KPMG Peat Marwick LLP as the
Company's Independent Accountants for the year ending December 31, 1995.
-16-
<PAGE> 19
ANNUAL REPORT
The 1994 Annual Report is being mailed to shareholders with this Proxy
Statement. The Annual Report is not to be regarded as proxy soliciting
material.
BY ORDER OF THE BOARD OF DIRECTORS
JOSEPH S. THOMSON
Chairman of the Board
April 25, 1995
Dallas, Texas
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS, WHO
DO NOT EXPECT TO ATTEND THE MEETING AND WISH THEIR STOCK TO BE VOTED, ARE URGED
TO DATE, SIGN, AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
-17-
<PAGE> 20
EXHIBIT A
NONQUALIFIED STOCK OPTION AGREEMENT
A Nonqualified Stock Option (the "Option") for a total of 15,000 shares
(the "Shares") of Common Stock, par value $0.10 per share, of El Chico
Restaurants, Inc. (the "Company"), is hereby granted to
(the "Optionee") pursuant to the terms of this Option Agreement (the "Option
Agreement").
SECTION 1. EXERCISE PRICE. The exercise price is $11.00
for each share, being the closing price for the Common Stock on the NASDAQ
National Market System on September 15, 1994 (the "Date of Grant").
SECTION 2. EXERCISE OF THE OPTION. This Option shall not
be exercisable prior to the six-month anniversary of the Date of Grant of this
Option. After such anniversary, this Option may be exercised at any time and
from time to time during the term of this Option, in whole or in part,
cumulatively, as follows:
September 15, 1995 5,000 shares
September 15, 1996 5,000 shares
September 15, 1997 5,000 shares
(a) PARTIES WHO MAY EXERCISE. Options may be exercised:
(i) during the Optionee's lifetime, solely by the
Optionee; or
(ii) after the Optionee's death, by the personal
representative of the Optionee's estate or
the person or persons entitled thereto under
his/her will or under the laws of descent and
distribution.
(b) METHOD OF EXERCISE. Options shall be deemed exercised when:
(i) the Company has received written notice of
such exercise delivered to the Company in accordance with the notice
provisions herein;
(ii) full payment of the aggregate exercise price
of the Shares as to which the Option is exercised has been tendered to
the Company; and
(iii) arrangements that are satisfactory to the
Board of Directors (the "Board") in its sole discretion have been made
for the Optionee's payment to the Company of the amount, if any, that
the Company determines to be necessary for the Company to withhold in
accordance with applicable federal or state income tax withholding
requirements.
(c) PAYMENT. The exercise price of any Shares purchased shall
be paid solely in cash, by certified or cashier's check, by money order, by
delivery to the Company of certificates representing the number of shares of
Stock owned for more than six (6) months by the Nonemployee Director, the fair
market value of which equals the purchase price of the Stock purchase pursuant
to the Option or, if approved by the Board, by personal check.
A-1
<PAGE> 21
(d) RESTRICTIONS ON EXERCISE.
(i) This Option may not be exercised if the
issuance of the shares upon such exercise would constitute a violation
of any applicable federal or state securities or other law or valid
regulation. As a condition to the exercise of this Option, the
Company may require the person exercising this Option to make any
agreements and undertakings that may be required by any applicable law
or regulation.
(ii) Shares issued upon the exercise of this
Option without registration of such shares under the Securities Act of
1933, as amended (the "Act"), shall be restricted securities subject
to the terms of Rule 144 under the Act. The certificates representing
any such shares shall bear an appropriate legend restricting transfer
and the transfer agent of the Company shall be given stop transfer
instructions with respect to such shares.
(e) SURRENDER OF OPTION. Upon exercise of this Option in part,
if requested by the Company, the Optionee shall deliver this Option Agreement
and any other written agreements executed by the Company and the Optionee with
respect to this Option to the Company which shall endorse or cause to be
endorsed thereon a notation of such exercise and return all agreements to the
Optionee.
SECTION 3. TERM OF OPTION. Subject to SECTION 4 hereof,
this Option may not be exercised after the expiration of ten (10) years from
the Date of Grant of this Option and is subject to earlier termination upon the
earlier to occur of thirty (30) days after the termination of the Optionee's
position as a director of the company or one year after the death of the
Optionee.
SECTION 4. REORGANIZATION OR LIQUIDATION.
(a) EFFECT OF MERGER, CONSOLIDATION, ETC. Upon the occurrence
of any of the following events, but provided the notice required by SECTION
4(B) shall have first been given, this Option shall automatically terminate and
be of no further force and effect whatever, without the necessity for any
additional notice or other action by the Board or the Company: (i) the merger
or consolidation of the Company with or into another corporation (other than a
merger or consolidation with or into another corporation in which the Company
is the surviving corporation and which does not result in any reclassification
or change in outstanding stock issuable upon execution of this Option) or the
acquisition of its assets or stock pursuant to a reorganization, unless the
surviving or acquiring corporation, as the case may be, shall assume or
continue this Option or substitute new options covering shares of the successor
corporation, with appropriate adjustment as to number and kind of shares and
prices therefor; (ii) the dissolution or liquidation of the Company; or (iii)
the sale, lease or exchange of all or substantially all of the Company's assets
and business.
(b) NOTICE OF SUCH OCCURRENCES. At least 30 days' prior written
notice of any event described in SECTION 4(A) shall be given by the Company to
Optionee. Optionee may then exercise this Option at any time before the
occurrence of the event requiring the giving of notice, regardless of whether
all conditions of exercise relating to vesting periods or length of service as
a director have been satisfied. Such notice shall be deemed to have been given
when delivered personally to Optionee or when mailed to Optionee by registered
or certified mail, postage prepaid, at such Optionee's last address known to
the Company.
A-2
<PAGE> 22
SECTION 5. ADJUSTMENTS.
(a) ADJUSTMENT BY STOCK SPLIT, STOCK DIVIDEND, ETC. If the
Company shall at any time increase or decrease the number of its outstanding
shares of Common Stock, or change in any way the rights and privileges of such
shares, by means of the payment of a stock dividend or the making of any other
distribution upon such shares payable in Common Stock, or through a stock split
or subdivision of shares, or a consolidation or combination of shares, or
through a reclassification or recapitalization involving the Common Stock, then
the number of shares of Common Stock then included in this Option shall be
increased, decreased or changed in like manner as if the shares of Common Stock
referred to had been issued and outstanding, fully paid and nonassessable at
the time of such occurrence.
(b) DIVIDEND PAYABLE IN STOCK OF ANOTHER CORPORATION, ETC. If
the Company shall at any time pay or make any dividend or other distribution
upon the Common Stock payable in securities or other property (except money or
Common Stock), a proportionate part of such securities or other property shall
be set aside and delivered to Optionees.
(c) OTHER CHANGE IN STOCK. If there shall be any change not
otherwise or fully covered under this Option, in the number or kind of
outstanding shares of Common Stock or of any stock or other securities into
which the Common Stock shall be changed or for which it shall have been
changed, then and if the Board shall in its discretion determine that such
change equitably requires adjustments in the number or kind of shares subject
to this Option, such adjustments shall be made by the Board and shall be
effective for all purposes of this Option.
(d) APPORTIONMENT OF PRICE. Upon any occurrence described in
SECTION 5(A), (B) or (C), the total Option price shall remain unchanged but
shall be apportioned ratably over the increased or decreased number or changed
kinds of securities or other property subject to this Option.
(e) FRACTIONAL SHARES; GENERAL. No adjustment or substitution
provided for in this SECTION 5 shall require the Company to sell a fractional
share under this Option and the total substitution or adjustment with respect
to this Option shall be limited by deleting any fractional share. In the case
of any such substitution or adjustment, the exercise price per share in this
Option shall be equitably adjusted by the Board to reflect the greater or
lesser number of shares of Common Stock or other securities in to which the
Common Stock subject to this Option may have been changed.
SECTION 6. ASSIGNABILITY OF OPTION. This Option may not be
transferred or assigned by the Optionee otherwise than by will or the laws of
descent and distribution.
SECTION 7. PURCHASE FOR INVESTMENT. As a condition of any
issuance of a stock certificate for shares, the Board may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of this Option Agreement or any law or
regulation, including, but not limited to, the following:
(a) a representation and warranty by the Optionee to
the Company, at the time his/her Option is exercised, that he/she is
acquiring the shares to be issued to him/her for investment and not
with a view to, or for sale in connection with the distribution of any
such Shares; and
(b) a representation, warranty or agreement to be
bound by any legends that are, in the opinion of the Board, necessary
or appropriate to comply with the provisions of any securities law
deemed
A-3
<PAGE> 23
by the Board to be applicable to the issuance of the Shares and are
endorsed upon the certificates representing the Shares.
SECTION 8. SHAREHOLDER APPROVAL. This Option is subject to
approval by a majority of the shareholders of the Company represented and
voting at the next meeting of shareholders. Absent such approval, this Option
shall become null and void.
SECTION 9. GOVERNMENT REGULATIONS. The granting and
exercise of this Option and the obligation of the Company to sell and deliver
shares under such Option, shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
SECTION 10. LAW GOVERNING. THIS OPTION IS INTENDED TO BE
PERFORMED IN THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SUCH STATE.
SECTION 11. NOTICES. Except as otherwise set forth in
SECTION 4(B), all notices and other communications that are required to be or
may be given under this Option Agreement shall be in writing and shall be
deemed to have been duly given when delivered in person, transmitted by
confirmed telecopy, upon receipt after dispatch by courier or by certified or
registered mail, postage prepaid, to the party to whom the notice is given.
Notices shall be given at the address under the signature of the appropriate
party to this Option Agreement or to such other address as such party may
designate by giving notice to the other party to this Option Agreement.
EXECUTED as of the 15th day of September, 1994.
EL CHICO RESTAURANTS, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
12200 Stemmons Freeway
Suite 100
Dallas, Texas 75234
Attn: General Counsel
OPTIONEE:
_________________________________________
Name:____________________________________
Address: ______________________________
______________________________
______________________________
A-4
<PAGE> 24
P R O X Y
EL CHICO RESTAURANTS, INC.
12200 STEMMONS
SUITE 100
DALLAS, TEXAS 75234
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS
The undersigned hereby appoints Clayton Killam and Susan Holland and each of
them, as proxies, with power to appoint substitutes, and hereby authorizes
each of them to represent and vote, as designated below, all of the shares of
the common stock, par value $.01 per share, of El Chico Restaurants, Inc. (the
"Company") held of record by the undersigned at the close of business on April
13, 1995, at the Annual Meeting of Shareholders to be held on May 24, 1995, and
any adjournment(s) thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE NOMINEES UNDER PROPOSAL 1, FOR PROPOSAL
2 AND AT THE DISCRETION OF THE PROXIES WITH RESPECT TO ANY OTHER MATTER THAT
IS PROPERLY BROUGHT BEFORE THE MEETING.
-----------
SEE REVERSE
SIDE
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<PAGE> 25
/X/ Please mark your SHARES IN YOUR NAME
votes as in this example.
<TABLE>
<S> <C>
FOR WITHHOLD FOR AGAINST ABSTAIN
1. Proposal to elect as directors of the Company / / / / 2. Proposal to consider, approve / / / / / /
the following persons, to hold office until and ratify the grant of stock
the next Annual Meeting of Shareholders of the options to each non-employee
Company or until their respective successors director.
have been duly elected and shall have qualified: FOR WITHHOLD
Wallace A. Jones, John A. Cuellar, Carmen C. 3. In their discretion, the proxies / / / /
Summers, Grahame N. Clark, Jr., Jack D. Knox, are authorized to vote upon such
Joseph V. Mariner, Jr., Joseph S. Thomson. other business as may properly
come before the meeting.
(Instruction: To withhold authority to vote for any
individual nominee, write that nominee's name on the
space provided below.)
___________________________________________________
Please sign exactly as name appears on your
stock certificate(s). When shares are held
by joint tenants or tenants in common, both
should sign below. When signing as attorney,
executor, administrator, receiver, trustee
or guardian, please so specify below. When
signing as a corporation, please sign in
full corporate name and have signed by the
SIGNATURE(S)_____________________________________________ DATE_________________ president or other duly authorized officer(s).
If a partnership, please have signed in the
SIGNATURE(S)_____________________________________________ DATE_________________ partnership name by the authorized person(s).
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED EVELOPE.
</TABLE>
