September 30, 1996
VIA EDGAR
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, DC 20549
RE: Cucos Inc. - Commission File No. 0-12701
Gentlemen:
On behalf of Cucos Inc. (the "Company") there follows herewith
for filing the Company's definitive Proxy Statement and Form of
Proxy relating to the 1996 Annual Meeting of Shareholders. This
material will be mailed to the Company's shareholders on or about
October 4, 1996.
The Company's 1996 Annual Report to Shareholders, which is being
sent to shareholders with the definitive proxy materials, was
transmitted to the Commission today as Exhibit 13 to the
Company's Report on 10-KSB for its fiscal year ended June 30,
1996. The Annual Report is not to be treated as "soliciting
material." The financial statements enclosed in the Annual
Report do not reflect a change from the preceding year in
accounting principles or practices.
The enclosed definitive proxy statement includes a proposal to
increase the number of shares on which options may be granted
under the Company's 1993 Stock Option Plan. The Company intends
to file a registration statement on Form S-8 relating to such
additional shares prior to the time any options granted with
respect to such shares first become exercisable.
The filing fee of $125 imposed by Rule 13a-1 under the Exchange
Act has been transmitted to the Commission in accordance with 17
C.F.R. Section 202.3a.
Very truly yours,
Thomas J. Sandeman
Vice President-Finance
(logo)
Cucos Inc.
110 Veterans Blvd.
Suite 222
Metairie, LA 70005
(504) 835-0306
September 30, 1996
Dear Shareholder:
The Annual Meeting of Shareholders will be held in the Cucos
Border Cafe, 3000 Veterans Boulevard, Metairie, Louisiana, at
3:00 p.m. on October 31, 1996. The purposes of the Annual
Meeting are set forth in the accompanying Notice and Proxy
Statement.
The 1996 Annual Report to Shareholders, which is enclosed,
contains financial and other information concerning the Company
and its business for the fiscal year ended June 30, 1996. The
Annual Report is not to be considered part of the proxy
solicitation materials.
We cordially invite you to attend the Annual Meeting. If
you cannot attend, please complete and return the enclosed Proxy
so that your vote can be recorded.
Cordially,
Vincent J. Liuzza, Jr.
Chairman of the Board and
Chief Executive Officer
(CUCOS LOGO)
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held October 31, 1996
To the Shareholders:
The Annual Meeting of the Shareholders of Cucos Inc. (the
"Company") will be held in Cucos Border Cafe, 3000 Veterans
Boulevard, Metairie, Louisiana, at 3:00 p.m. (local time) on
October 31, 1996, for the purposes:
(1) To elect a Board of Directors for the ensuing year;
(2) To consider and act upon a proposal to approve an
Amendments to the 1993 Stock Option Plan; and
(3) To consider and act upon a proposal to approve and
ratify the selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year
ending June 29, 1997; and
(4) To transact such other business as may properly come
before the meeting or any adjournments thereof.
The business to be transacted at the Annual Meeting is more
fully described in the accompanying Proxy Statement, to which
reference is hereby made.
The Board of Directors has fixed the close of business on
September 9, 1996, as the record date for determining
shareholders entitled to notice of and to vote at the Annual
Meeting.
BY ORDER OF THE
BOARD OF DIRECTORS:
Thomas J. Grace, Secretary
Dated: September 30, 1996
PROXY STATEMENT
General
The accompanying Proxy is solicited by and on behalf of the
Board of Directors of Cucos Inc. (the "Company"), 110 Veterans
Boulevard, Suite 222, Metairie, Louisiana 70005, in connection
with the Annual Meeting of Shareholders (the "Annual Meeting") to
be held October 31, 1996, and any adjournments of that meeting.
Execution of the Proxy will not in any way affect a shareholder's
right to attend the Annual Meeting and, upon revocation of the
Proxy, to vote in person. Proxies may be revoked at any time
before they are voted by filing with the Secretary a written
notice of revocation or a duly executed Proxy bearing a later
date. Unless they are revoked, Proxies in the form enclosed,
properly executed and received by the Secretary of the Company
prior to the Annual Meeting, will be voted at the Annual Meeting
as specified by the shareholder in the Proxy or, if no
specifications are made in the Proxy, then FOR the election as
directors of the nominees listed in the enclosed Proxy, FOR the
approval of the proposed amendments to the 1993 Stock Option Plan
described herein, and FOR the proposal to approve and ratify the
selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending June 29, 1997.
These materials are being mailed to shareholders on or about
September 30, 1996. The cost of soliciting Proxies is being paid
by the Company. The Company's 1996 Annual Report to Shareholders
for the fiscal year ended June 30, 1996 ("Fiscal 1996")
accompanies this Proxy Statement, but is not be considered a part
of the proxy solicitation materials.
Capital Stock
The authorized capital stock of the Company consists of
1,000,000 shares of preferred stock, no par value, of which no
shares have been issued, and 20,000,000 shares of Common Stock,
no par value, of which 2,113,747 shares were issued and
outstanding as of September 9, 1996, the record date for the
Annual Meeting. Only shareholders of record at the close of
business on such date are entitled to notice of and to vote at
the Annual Meeting. Each such shareholder is entitled to one
vote for each share of Common Stock held at that date. Proxies
marked as abstaining and proxies containing broker non-votes on
any matter to be acted upon by shareholders will be treated as
present at the meeting for purposes of determining a quorum but
will not be counted as votes cast on such matters.
Beneficial Ownership
The following table sets forth information, as of August 15,
1996, concerning (a) the only shareholders known by the Company
to own beneficially more than 5% of the Common Stock of the
Company, which is the only class of voting securities
outstanding, (b) each of the executive officers named in the
Summary Compensation table and (c) the beneficial ownership of
Common Stock by all directors and officers of the Company as a
group.
Amount
Beneficial Owner(s) Beneficially Percent of
and Address Owned (1) Class (1)
Vincent J. Liuzza, Jr. (2)(3) 470,200 shares 21.4%
Mr. & Mrs. Gerald E. Siefken (4) 224,000 shares 10.6%
Raymond D. Schoenbaum (5) 210,500 shares 10.0%
Robert J. Monroe (6) 160,730 shares 7.6%
Thomas J. Sandeman (2)(7) 26,400 shares 1.2%
Elie V. Khoury (2)(8) 25,700 shares 1.2%
All directors and officers as
a group (9 persons) (9) 735,824 shares 31.6%
(1) Unless otherwise noted, the shares are owned of record by
the beneficial owners shown with sole voting and investment
power, except for the community property interest, if any,
of the shareholder's spouse. The table includes shares
which are subject to stock options exercisable with 60 days
of August 15, 1996.
(2) Address: 110 Veterans Blvd., Suite 222, Metairie, Louisiana
70005.
(3) Includes 60,000 shares subject to options exercisable by Mr.
Vincent Liuzza, Jr. and 25,000 shares subject to options
exercisable by Mr. Liuzza's wife, Glenda T. Liuzza, as to
which she possesses sole voting and investment power. Mr.
Liuzza, Jr. disclaims any beneficial ownership of shares
issuable pursuant to Mrs. Liuzza's options.
(4) Address: 40 Killdeer Street, New Orleans, Louisiana 70124.
Includes 1,000 shares owned of record by Mr. Siefken as to
which he exercises sole voting and investment power, 67,600
shares owned of record by Mrs. Siefken, as to which she
exercises sole voting and investment power, 15,000 shares
owned of record by a trust for the benefit of Mr. Siefken's
daughter, as to which he exercises sole voting and
investment power in his capacity as trustee of the trust,
and 74,000 shares owned of record by Mr. & Mrs. Siefken
jointly with shared voting and investment power. Mr.
Siefken is also the beneficial owner of 66,400 shares which
he holds as custodian for four of his children as to which
he exercises sole voting and investment power. Mr. Siefken
disclaims any beneficial interest in the shares owned of
record by his wife. The above information is based upon
filings made by Mr. & Mrs. Siefken with the Securities and
Exchange Commission.
(5) Address: 1480 Terrell Mill Road, Suite 1100, Marietta,
Georgia 30067-6050. Mr. Schoenbaum's actual percentage
ownership is 9.96%. His ownership includes 180,500 shares
as to which he exercises sole voting and investment power,
10,000 shares beneficially owned as custodian for the
accounts of Brian D. Schoenbaum and Marc S. Schoenbaum (his
children) and 20,000 shares indirectly beneficially owned by
Mr. Schoenbaum as controlling shareholder, Director,
Chairman and Secretary of Innovative Restaurant Concepts.
Mr. Schoenbaum disclaims beneficial ownership of all 20,000
shares of Cucos Common Stock held of record by Innovative
Restaurant Concepts. The above information is based upon
filings made by Mr. Schoenbaum with the Securities and
Exchange Commission.
(6) Address: 228 St. Charles Avenue, Suite 1402, New Orleans,
Louisiana 70130. Includes 160,730 shares that are
beneficially owned by Mr. Robert J. Monroe as Executor of
the Estate of J. Edgar Monroe as to which he has sole voting
and investment power. The information about the Estate's
ownership is based on a written confirmation made by Mr.
Monroe on behalf of the Estate of J. Edgar Monroe.
(7) Includes 25,000 shares subject to options exercisable by Mr.
Sandeman and 400 shares held as custodian for Mr. Sandeman's
children, as to which Mr. Sandeman exercises sole voting and
investment power.
(8) Includes 25,000 shares subject to options exercisable by Mr.
Khoury.
(9) Includes 211,200 shares subject to options.
(10) The table excludes shares issuable on the conversion of
certain convertible debentures. These debentures are not
convertible until the earlier of five years from the date of
purchase or certain other events. See "Certain
Relationships and Related Transactions".
Vincent J. Liuzza, Jr., the Succession of Vincent J. Liuzza,
Sr., and David M. Liuzza have pledged an aggregate of 467,317
additional shares of Common Stock of the Company owned by them
individually to secure loans extended to L.B.G., Inc. (formerly
known as Sizzler Family Steak Houses of Southern Louisiana, Inc.)
("L.B.G"), an affiliate of the Company, for general business
purposes. Under the terms of each of the notes evidencing the
loans, the lenders may foreclose on its pledge if L.B.G. fails to
make timely payments on the loans.
I.
ELECTION OF DIRECTORS
Nominees for Director
A total of seven directors are to be elected at the Annual
Meeting. Management proposes the election as directors of the
seven nominees listed below, each to serve as a director until
the next Annual Meeting or until his successor is elected and has
qualified. In the absence of direction from the shareholder,
proxies in the enclosed form will be voted FOR the election as
directors of the seven nominees listed below or substituted
nominees who may be named by the Board of Directors to replace
any of the seven nominees who become unavailable to serve for any
reason. (No such unavailability is presently known to
management.) In no event, however, will the proxies be voted for
more than seven persons. There are no arrangements or
understandings relating to any person's election or prospective
election as a director of the Company.
Under the Company's By-Laws, no nominee listed below will be
elected as a director unless each such nominee receives the
affirmative vote of a majority of the shares represented (in
person or by proxy) at the Annual Meeting. If more nominees than
the number of directors to be elected receive a majority vote,
then those nominees, up to seven persons, receiving the highest
number of votes shall be elected.
The following table lists the nominees for director and
shows, as of August 15, 1996, the beneficial ownership of Common
Stock of the Company be each of them. Information concerning the
principal occupations of the nominees for director, and other
directorships which they hold in certain public companies, is set
forth in the text following the notes to the table.
Shares
Director Beneficially Percent of
Nominees for Director Age Since Owned(1) Class (1)
Frank J. Ferrara, Jr. 43 Dec. 1995 0 (4) -
Thomas J. Grace 55 Oct. 1983 52,003 2.4%
Elie V. Khoury 36 Sept.1996 25,700(4) 1.2%
David M. Liuzza 49 Jan. 1995 52,071 2.5%
Vincent J. Liuzza, Jr. 55 Mar. 1981 470,200(2) 21.4%
Sidney C. Pulitzer 62 Oct. 1983 27,200 1.3%
Miguel Uria 58 Dec. 1983 80,850 (3) 3.8%
______________
(1) The shares are owned of record by the beneficial owners
shown with sole voting and investment authority, except as
set forth in the notes below and except for the community
property interest, if any, of the shareholder's spouse. The
table includes currently exercisable options to purchase
22,600 shares which are held by each of Messrs. Pulitzer and
Uria, exercisable options to purchase 31,000 shares which
are held by Mr. Grace and exercisable options to purchase
25,000 shares which are held by Mr. Khoury.
(2) Includes 60,000 shares subject to options exercisable by Mr.
Liuzza, Jr., and 25,000 shares subject to options which are
exercisable by Mr. Liuzza's wife, Glenda T. Liuzza, as to
which she exercises sole voting and investment power. Mr.
Liuzza, Jr., disclaims any beneficial ownership of shares
issuable pursuant to Mrs. Liuzza's options.
(3) Of these shares, 56,250 shares are owned of record by the
Miguel Uria Self Directed IRA. Mr. Uria exercises sole
voting and investment power over these shares.
(4) The table excludes shares issuable on the conversion of
certain convertible debentures. These debentures are not
convertible until the earlier of five years from the date of
purchase or certain other events. See "Certain
Relationships and Related Transactions".
Principal Occupations and Certain Directorships
The following paragraphs identify the principal occupations
of the nominees for director. Except as otherwise indicated,
each nominee has served for at least five years in the position
shown. Information is also given as to directorships held by
such persons in other companies which are publicly held and are
subject to certain requirements for filing reports with the
Securities and Exchange Commission.
Since 1982, Mr. Ferrara has served as managing partner of
Ferrara & Ferrara, a law firm located in Baton Rouge, Louisiana.
Mr. Grace has been Secretary of the Company since 1983 and
has been General Counsel of the Company since 1992. Mr. Grace
also served as City Attorney for the City of Harahan, from 1988
to January, 1992, and was an instructor of Law at Loyola
University Law School in New Orleans, Louisiana, from August,
1990, to May, 1991. Mr. Grace was a partner in the law firm of
Courtenay, Forstall, Grace & Hebert, New Orleans, Louisiana, from
1972 to May, 1989. Mr. Grace is a mediator with the firm of
United States Arbitration & Mediation, Gulf South, Inc. in
Metairie, Louisiana.
Mr. Khoury is President of the Company and has served in
that capacity since July 1996. Prior to that from December,
1995, to June, 1996, he served as Executive Vice President and
from June, 1990, through December, 1995, as Vice President of
Operations. Mr. Khoury is also President of Restaurant
Investments of Jackson, Inc. and Mexican Restaurant Management,
Inc., franchisees of the Company. See description of the
Hattiesburg and Jackson transactions under "Certain Relationships
and Related Transactions".
Mr. David M. Liuzza is a founder of the Company and has been
a Director since January, 1995. For the last five years, Mr.
Liuzza has served as President or in other positions for L.B.G.,
Inc., an affiliate of the Company formerly known as Sizzler
Family Steak Houses of Southern Louisiana, Inc. and as President
of LaMexiCo, L.L.C., a franchisee of the Company, since 1994.
Mr. Liuzza is the brother of Vincent J. Liuzza, Jr. See "Certain
Relationships and Related Transactions."
Mr. Vincent J. Liuzza, Jr., Chief Executive Officer of the
Company, has also been Chairman of the Board of Directors of the
Company since its inception in 1981 and was President from
inception until July, 1996. Mr. Liuzza is also a founder of
L.B.G., Inc., an affiliate of the Company, and has served as its
Chairman or in other positions since 1969. See "Certain
Relationships and Related Transactions."
Since 1984, Mr. Pulitzer has been Chairman of the Board of
Wemco Inc., New Orleans, Louisiana, a manufacturer of men's
neckwear and sportswear, after serving for more than five years
as its President. During the past two years, he has also served
as President and then as Chairman of the World Trade Center in
New Orleans, Louisiana, and as a Director of North Star
Insurance.
Mr. Uria has been President of ORO Financial, a registered
broker/dealer in New Orleans, Louisiana, since January, 1988.
Committees of the Board of Directors
The Company's Board of Directors has four standing
committees: the Executive Committee, the Stock Option committee,
the Compensation Committee and the Audit Committee. The Board of
Directors does not have a nominating committee.
The Executive Committee (presently consisting of Messrs.
Grace, David M. Liuzza and Vincent J. Liuzza, Jr.,) meets during
the intervals between meetings of the Board of Directors on call
of the Chairman of the Board and has all the authority of the
Board, subject to limitations imposed by law, the By-Laws or the
Board of Directors. Its minutes are reviewed by the Board of
Directors.
The Stock Option Committee (presently consisting of Messrs.
Pulitzer, Uria and Ferrara) administers the 1993 Stock Option
Plan of the company, except with respect to options issued to non-
employee directors (the terms of which are determined by a
formula), selects participants (except for Mr. Liuzza, Jr., who
will not be eligible for options) and determines the terms and
provisions of all stock option agreements, except as noted above.
The Audit Committee (presently consisting of Messrs.
Pulitzer, Ferrara and Vincent J. Liuzza, Jr.) recommends the
appointment of the independent public accountants for the
Company, reviews the scope of audits proposed by the auditors,
reviews the financial statements and periodically consults with
the independent public auditors on matters relating to internal
accounting controls and procedures.
The Compensation Committee (presently consisting of Messrs.
Pulitzer, Uria, Ferrara and Vincent J. Liuzza, Jr.) reviews and
approves the compensation of employees above a certain salary
level, reviews management proposals relating to incentive
compensation plans, and reviews and recommends directors'
compensation.
During Fiscal 1996, the Board of Directors met seven times;
the Executive Committee met two times; the Stock Option Committee
met two times; the Compensation Committee did not meet; and the
Audit Committee met once. All incumbent directors attended 75%
or more of the aggregate of (1) the total meetings of the Board
during the period he was a director and (2) the total meetings of
committees of the Board of which each was a member.
Executive Officers of the Company
The following table lists certain information about those
executive officers of the Company who are not directors of the
Company. In addition to the persons listed below, Mr. Vincent J.
Liuzza, the Chairman of the Board of Directors of the Company,
serves as the Chief Executive Officer of the Company, Thomas J.
Grace, a director of the Company, serves as Secretary and General
Counsel, and Mr. Elie Khoury serves as President of the Company.
Information concerning Messrs. Liuzza, Jr., and Grace is set
forth under the captions "ELECTION OF DIRECTORS - Nominees for
Director," and 'ELECTION OF DIRECTORS - Principal Occupation and
Certain Directorships." Information concerning the business
experience of each executive officer named in the table below
follows the table.
Name Age Officer Officer Since
Thomas J. Sandeman 48 Vice President-Finance Treasurer October 1983
Glenda T. Liuzza 54 Vice President-Concept Development June 1985
Mr. Sandeman has been Vice President-Finance and Treasurer
of the Company since October 1983.
Mrs. Liuzza has been Vice President Concept Development of
the Company since June 1996, and was previously Vice President
Marketing/Concept Development since June 1985.
All executive officers serve at the pleasure of the Board of
Directors. Vincent J. Liuzza, Jr., and Glenda T. Liuzza are
husband and wife.
II.
PROPOSED AMENDMENTS TO THE COMPANY'S 1993 STOCK OPTION PLAN
Background
On September 1, 1993, the Board of Directors adopted
Company's 1993 Stock Option Plan (the "Plan"), subject to
approval by the shareholders. The shareholders of the Company
approved the Plan at the 1993 Annual Meeting of Shareholders held
on October 29, 1993. The Plan, as now in effect, authorizes the
grant of incentive stock options ("ISOs") and non-qualified stock
options ("Discretionary NQSO's") in respect of an aggregate of
250,000 common shares of the Company (subject to adjustment to
reflect any stock splits, share combinations or similar changes)
to officers and key employees of the Company and any parent or
subsidiary corporations ("Related Corporations"), independent
consultants and advisors to the Company, and directors of the
Company who are not officers or employees. Common Stock issuable
under the Plan may be authorized but unissued shares or
reacquired shares, and the Company may purchase shares for this
purpose. As of the date of this Proxy Statement, options to
purchase 146,800 shares have been granted under the Plan, 136,200
of which remain unexercised. Options to purchase 557,650 shares
were previously granted under the Company's 1983 Stock Option
Plan, of which 259,200 remain unexercised. No further options
may be issued under the 1983 Plan. The mean between the closing
bid and asked prices of the Company's common stock on September
9, 1996, was $1.38.
The Board has approved, subject to shareholder approval
at the Annual Meeting, three categories of amendments to the Plan
and the restatement of the Plan reflecting such amendments.
a. The First Proposed Set of Amendments. As
noted above, the Plan currently authorizes the grant of options
on up to 250,000 shares (subject to adjustments described above)
and that options on 146,800 shares have been granted under the
Plan through September 30, 1996. The Board of Directors has
approved, subject to approval by the shareholders at the Annual
Meeting, amending the Plan to increase the number of shares in
respect of which options may be granted under the Plan to
509,200. The Board did so to enable the Company to be in a
position to provide appropriate incentives to key employees, non-
employee directors and consultants and in recognition of the fact
that a majority of the options granted under the 1983 Plan will
expire if not exercised in the next two years.
The second and third categories of amendments are
related to the change, effective August 15, 1996, in a regulation
promulgated and administered by the Securities and Exchange
Commission ("SEC"). Section 16(b) under the Securities Exchange
Act of 1934 (the "Exchange Act") provides that any profit made in
purchases and sales, or sales and purchases, of equity securities
of a publicly-traded company by the officers, directors and
holders of 10% or more of a class of equity securities of the
company are subject to recapture by the company if the
transactions were effected within six months of each other. Rule
16b-3 under the Exchange Act provides, among other things, that
grants of options to officers and directors pursuant to a stock
option plan will not be considered "purchases" for purposes of
Section 16(b) of the Act if the stock option plan conforms to the
requirements of that rule.
When adopted by the shareholders in 1993, the Plan
conformed with Rule 16b-3 as then in effect. Insofar as relevant
here, the Plan provided for (i) administration by a Stock Option
Committee of the Board of Directors consisting of two non-
employee Directors and the President (who, by the terms of the
Plan, was ineligible to receive options under the Plan), and (ii)
limited options to be granted to all non-employee directors under
the Plan to a formula (for non-employee directors elected prior
to September 1, 1993, options on 800 shares immediately following
the 1993-1997 Annual Meetings (if reelected at such meetings),
and for non-employee directors first elected after September 1,
1993, options on 15,000 shares immediately following the Annual
Meeting at which he or she was elected and options on 5,000
shares immediately following the next two annual meetings at
which the non-employee director was reelected.
b. The Second Proposed Set of Amendments. Under
Rule 16b-3 as amended effective August 15, 1996, option plans may
comply with the amended rule if administered by either (i) a
committee of the Board consisting of two or more directors who
are not officers or employees of the issuer and who meet other
criteria, or (ii) the full Board of Directors. The Board of
Directors of the Company believed at the time of the adoption of
the Plan in 1993, and continues to believe, that participation by
officers of the Company in option grant decisions is highly
desirable. Accordingly, the Board approved, subject to
shareholder approval, an amendment to Section 2 of the Plan, and
conforming changes throughout the Plan, providing that the Plan
be administered, and options granted, by the full Board of
Directors. Under the proposed amendment, the Board will have all
of the authority previously exercised by the Stock Option
Committee to select optionees to receive options, to determine
the terms and conditions of such options, and generally to
administer the Plan. Approximately 35 persons are eligible for
selection as optionees under the Plan.
The proposed amendment to give administrative
authority over the Plan to the full Board of Directors includes
the elimination of the prior prohibition in the Plan of the grant
of options under the Plan to the President. That provision had
been included in the Plan solely to permit the President to serve
on the Board's Stock Option Committee. Since, under the proposed
amendment, the Plan will no longer be administered by that
Committee, the Board believes that the provision is no longer
necessary or desirable and that the President should be eligible
to receive options under the Plan.
c. The Third Proposed Set of Amendments. As
noted above, under Section 6 of the Plan, non-employee directors
were to receive aggregate automatic grants (called "formula"
awards) of options on up to 4,000 shares (if first elected prior
to September 1, 1993), or up to 25,000 shares, if first elected
after September 1, 1993. This "formula" award construct was
necessary to constitute an administrative committee for the Plan
under Rule 16b-3 as then in effect. Under the amended Rule 16b-
3, the eligibility of directors to receive options (under a
formula or otherwise) is no longer a criteria for option plan
compliance with the Rule. Accordingly, because the Board
believes that greater flexibility is desirable in connection with
the grant of options to non-employee directors, it has approved
an amendment, subject to shareholder approval, which would
eliminate the formula constraints in Section 6 of the Plan, as
well as a related provision, also no longer required by Rule 16b-
3, which, subject to limited exceptions, prohibited amendments to
formula provisions no more often than once every six months. If
these amendments are approved, options could be granted to non-
employee directors under Section 5 of the Plan. The Board
believes such action to be an appropriate recognition of the
efforts of the outside directors in managing the affairs of the
Company in the recent past and to provide appropriate incentives
to the outside directors going forward.
d. Ratification of Grant. In connection with
the appointment of Frank J. Ferrara, Jr. to the Board, the Stock
Option Committee of the Board approved, subject to shareholder
approval of amendments to the Plan consistent with the action
taken, a grant of non-qualified options to Mr. Ferrara in respect
of 15,000 shares. The fair market value of the Company's common
stock on the grant date, and accordingly the exercise price of
the options, was $1.33 per share. A vote for approval of the
amendments to the Plan described above will constitute approval
by the shareholders of the option granted to Mr. Ferrara pursuant
to the Plan.
The Board recommends approval of the
amendments to the Plan described above. Approval of the
amendments to the Plan requires the affirmative vote of the
holders of a majority of the shares represented at the meeting
and entitled to vote.
e. Summary of Material Provisions of the Plan.
Set forth below is a summary of the material provisions of the
Plan, to the extent not described above. The description
reflects the amendments to the Plan proposed for adoption by the
shareholders at the Annual Meeting.
Duration and Amendment of 1993 Plan. Except to
the extent limited by the 1993 Plan, the Internal Revenue Code of
1986, as amended (the "Code"), and rules promulgated under
Section 16 of the Exchange Act, the Board of Directors of the
Company will have the power, without the consent of the
shareholders, to discontinue, amend or revise the terms of the
1993 Plan. The 1993 Plan will terminate at midnight on August
31, 2003 unless earlier discontinued by the Board of Directors;
no options may be granted after such termination, but options
outstanding at the time of termination will remain exercisable in
accordance with their terms.
Terms and Conditions - Nonqualified Stock Options.
Discretionary NQSO's may be granted for terms of not more than
ten years at an exercise price per share determined by the Board
of Directors, which shall not be less than 100% of the fair
market value of such optioned Common Stock on the date the NQSO
is granted. Discretionary NQSO's are exercisable in such
installments as the Board may determine, but such options, by
their terms, are generally not exercisable earlier than six
months from the date of grant. The Board may accelerate the
exercise date of Discretionary NQSO's in the event of the
termination of an optionee's employment, disability or death, or
in the event of certain corporate transactions (see "Adjustments
upon Mergers and Other Events").
An NQSO held by an optionee whose employment with
the Company or a Related Corporation or directorship is
terminated (for any reason, including death or disability) prior
to the expiration date of such option, will remain exercisable by
the former employee or director, or his personal representative,
for such periods following the employee's or director's
termination as provided in the 1993 Plan and the applicable
option agreement. Upon exercise of NQSO's the exercise price must
be paid in cash.
Terms and Conditions - Incentive Stock Options.
ISOs are generally subject to the same terms and conditions under
the 1993 Plan as are described above for Discretionary NQSO's,
except that ISOs have additional terms, conditions and
limitations. Under the 1993 Plan: (i) the exercise price per
share of ISOs granted to a person who owns more than 10% of the
voting stock of the Company or a Related Corporation must be not
less than 110% of the fair market value of the optioned Common
Stock on the date of the grant and the term must not be more than
five years; (ii) the aggregate fair market value (determined at
the time the option is granted) of the Common Stock with respect
to which ISOs are exercisable for the first time by any eligible
person during any calendar year (under the 1993 Plan and any
other ISO plan of the Company or a Related Corporation) may not
exceed $100,000; and (iii) ISOs may not be granted to consultants
or non-employee directors. There are also certain other
requirements, such as specified holding periods for Common Stock
received upon exercise of ISOs and limitations on exercisability
following termination of employment, which must be satisfied in
order for an optionee to obtain ISO treatment under the Code.
Stock Option Agreements. The 1993 Plan also
requires that optionees enter into stock option agreements with
the Company which incorporate the terms of the options and such
other terms, conditions and restrictions, not inconsistent with
the 1993 Plan and applicable law, as the Board may determine.
Adjustments upon Mergers and Other Events. In the
event of a merger, consolidation or other specified corporate
transactions, options and stock grants will be assumed by the
surviving or successor corporation, if any. However, the 1993
Plan also authorizes the Board to terminate options (other than
NQSO's granted to non-employee directors) in the event of such a
corporate transaction, provided that any then exercisable option
may be exercised within seven days of notice of termination by
the optionee. Further, the exercise date of any options to be so
terminated may be accelerated by the Board.
Federal Income Tax Consequences
Based on the advice of counsel, the Company believes
that the normal operation of the 1993 Plan should generally have,
under the Code and the regulations and rulings thereunder, all as
in effect on September 30, 1996, the principal Federal income tax
consequences summarized below.
(a) Incentive Stock Options. To the extent options
qualify as ISOs under Section 422 of the Code, the principal
Federal income tax consequences to each employee receiving the
options (an "optionee") and to the Company should generally be as
follows:
(i) The optionee will not recognize taxable
income and the Company will not be entitled to a deduction upon
the grant of an ISO. Moreover, the optionee will not recognize
taxable income and the Company will not be entitled to a deduc
tion upon the exercise by the optionee of an ISO, provided the
optionee was an employee of the Company for certain periods
specified in the Plan prior to the exercise of the ISO. However,
the excess of the fair market value of the shares over the
exercise price will generally be included in the optionee's
alternative minimum taxable income in the year of exercise. If
the employment requirements are not met, the tax consequences
relating to NQSO's discussed below will apply.
(ii) If the optionee disposes of the shares
acquired under an ISO after at least two years following the date
of grant of the ISO and at least one year following the date of
transfer of the shares to the optionee, the optionee will
recognize a long-term capital gain or loss equal to the
difference between the amount realized upon the disposition and
the exercise price, assuming such shares were held by the
optionee as capital assets. Any net capital gain will be taxed
at a maximum rate of 28%. Up to this 28% maximum, all net
capital gain will be treated as ordinary income. Any such loss
will be treated as a capital loss, and thus can only be used to
offset up to $3,000 per year ($1,500 in the case of a married
individual filing separately) of ordinary income.
(iii) Except for certain transactions such as
gifts and related party transactions, if the optionee makes a
disqualifying disposition of the shares (that is, disposes of the
shares within two years after the date of grant of the ISO or
within one year after the transfer of the shares to the
optionee), but all other requirements of Section 422 of the Code
are met, the optionee will recognize ordinary income upon
disposition of the shares in an amount equal to the lesser of (a)
the fair market value of the shares on the date of exercise minus
the exercise price or (b) the amount realized on disposition
minus the exercise price. In the case of disqualifying
dispositions resulting from, for example, a gift or related party
transaction, the optionee's ordinary income will be equal to the
fair market value of the shares as the date of exercise minus the
exercise price. Disqualifying dispositions of the shares before
the holding period requirements specified above are satisfied
may, depending upon the sale price of the shares, also result in
short or long-term capital gain (or loss), assuming such shares
were held by the recipient as capital assets, under the Code
rules which govern other stock dispositions.
(iv) Where all requirements of Section 422 of the
Code, including the holding and employment requirements specified
in paragraphs (i) and (ii) above, are met, the Company is not
entitled to any Federal income tax deduction with respect to the
ISO. In those cases where any of such requirements are not met,
the deductibility rules relating to NQSO's discussed below will
apply.
(v) The Company will not recognize any gain or
loss upon the issuance of shares under the 1993 Plan.
(b) Nonqualified Stock Options. To the extent
options, when granted, are NQSO's, or, to the extent options,
when granted, are intended to be ISOs but fail to qualify as
such, the principal Federal income tax consequences to the
optionees and to the Company should generally be as follows:
(i) The optionee will not recognize taxable
income and the Company will not be entitled to a deduction upon
the grant of an NQSO.
(ii) The optionee generally will recognize
ordinary income at the time of the exercise of the NQSO, in an
amount equal to the excess of the fair market value of the shares
at the time of such exercise over the exercise price.
(iii) The Company will be entitled to a
deduction to the extent of the ordinary income recognized by the
optionee in accordance with the rules of Section 83 of the Code
and the regulations thereunder. However, the otherwise allowable
deduction for compensation paid or accrued with respect to
certain employees of the Company is generally limited, under
Section 162(m) of the Code and the regulations thereunder, to
$1,000,000 per year. NQSO income will be treated as compensation
for purposes of this $1,000,000 limit.
(iv) An optionee (except in the case of a
non-employee director or consultant) exercising an NQSO is
subject to Federal income tax withholding on the income
recognized as a result of the exercise of the NQSO.
(v) Gain or loss recognized by the optionee upon
a subsequent disposition of such shares will be long-term or
short-term capital gain or loss, if such shares are otherwise
capital assets in the hands of the optionee. Any net capital
gain will be taxed at a maximum rate of 28%. Up to this 28%
maximum, all net capital gain will be treated as ordinary income.
Any such loss will be treated as a capital loss and thus can only
be used to offset up to $3,000 per year ($1,500 in the case of a
married individual filing separately) of ordinary income.
(c) Other Considerations. The 1993 Plan is not
qualified under Section 402(a) of the Code and, based upon
current law and published interpretations, the Company believes
the 1993 Plan is not subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended.
The comments set forth in the above paragraphs are only
a summary of certain of the Federal income tax consequences
relating to the 1993 Plan as in effect on September 30, 1996. No
consideration has been given to the effects of state, local and
other laws (tax or other) on the 1993 Plan or the optionee.
The text of the Plan, reflecting all of the proposed
amendments, is attached to the Proxy Statement as Exhibit A. The
provisions added by the proposed amendments are in bold face, and
the provisions deleted by the proposed amendments are crossed out
with a solid line.
The Board of Directors recommends a vote FOR the
proposed amendments to the Plan described above.
III.
INDEPENDENT AUDITORS
Ernst & Young LLP, Certified Public Accountants, New
Orleans, Louisiana, were the independent auditors for the Company
during Fiscal 1996. A representative of Ernst & Young is
expected to be present at the Annual Meeting. The representative
will have the opportunity to make a statement at the Annual
Meeting and will be available to respond to any appropriate
questions.
The Board of Directors of the Company has selected the firm
of Ernst & Young LLP as the Company's independent auditors for
the fiscal year ending June 29, 1997. Shareholder approval and
ratification of this selection is not required by law or by the
By-Laws of the Company. Nevertheless, the Board of Directors has
chosen to submit it to the shareholders for their approval and
ratification. The affirmative vote of a majority of the shares
represented (in person or by Proxy) at the Annual Meeting is
required to approve and ratify this selection. If this selection
is not approved and ratified, the Board of Directors intends to
reconsider its selection of Ernst & Young. The proxy holders
named in the accompany Proxy will vote FOR this proposal unless
otherwise directed in the Proxy.
OTHER MATTERS
As of the date of this Proxy Statement, the Company's
management knows of no matters likely to be brought before the
Annual Meeting other than those set forth in the Notice of the
Meeting. If other matters properly come before the Annual
Meeting, each Proxy will be voted in accordance with the
discretion of the proxy holders named therein.
ADDITIONAL INFORMATION
Certain Relationships and Related Transactions
L.B.G., Inc. ("L.B.G.") is a management company owned by (i)
Vincent J. Liuzza, Jr., the Chairman, a principal shareholder and
a director of the Company and a nominee for re-election as such,
and (ii) David M. Liuzza, a former officer of the Company, a
director of the Company and a nominee for election as such.
Upon an agreement with L.B.G. dated as of October 1, 1983,
the Company provides bookkeeping, accounting and similar
administrative services to L.B.G. which pays the Company for the
expenses of providing these services based on L.B.G.'s
proportionate share of the aggregate gross sales of L.B.G. and
the Company. During fiscal 1996 accounting and administrative
expenses shared by the Company and L.B.G. were approximately
$21,793 per four-week period. During Fiscal 1996 L.B.G.'s share
of these expenses were about .3% of these costs, and the Company
bore the remaining 99.7%. For Fiscal 1996, approximately $808 of
these costs were allocated to L.B.G.
The Company and L.B.G. share rental expenses of the
corporate headquarters based upon the square footage occupied by
each of them. Under that formula the Company paid about 95.5%
($104,306) of the building rental for these facilities and L.B.G.
bore the remaining 4.5% ($4,867) during fiscal 1996.
During Fiscal 1995, the Company repurchased the rights it
had previously granted to L.B.G. to develop and operate up to two
Cucos restaurants in Louisiana for a purchase price equal to
their original cost of $1,000.
Until February, 1995, L.B.G. purchased food and restaurant
supplies for its restaurants from the commissary of the Company.
During Fiscal 1995, the Company sold approximately $29,157 of
food and restaurant supplies to L.B.G. There were no such sales
in Fiscal 1996, nor is it anticipated that any sales will occur
in 1997.
At June 30, 1996, L.B.G. owed the Company $234,892 for food,
restaurant supplies, rent and services. The largest amount of
indebtedness outstanding from L.B.G. to the Company during Fiscal
1996 was $242,185 at June 2, 1996. The L.B.G. receivable is
secured by L.B.G.'s membership interest in LaMexiCo, and L.B.G.
pays interest on amounts outstanding at prime plus two percent.
During fiscal year 1994, the Company purchased a 26%
interest in LaMexiCo, L.L.C. ("LaMexiCo"), a Louisiana limited
liability company that operates a franchised Cucos restaurant at
3000 Veterans Boulevard in Metairie, Louisiana. The Company also
manages the restaurant for LaMexiCo and receives 5.0% of net
sales plus out-of-pocket expenses as compensation. The
restaurant opened under the development rights previously owned
by L.B.G. which owns 21% of LaMexiCo. Mr. Thomas J. Grace (a
director, the Secretary and the General Counsel of the Company),
Mrs. Vincent J. Liuzza, Sr. (a part owner of L.B.G.), Mr. Miguel
Uria (a director of the Company) and certain unaffiliated
investors own the balance of LaMexiCo. The Company received
$50,997 in royalties and $85,108 in management fee revenue from
LaMexiCo during Fiscal 1995. At June 30, 1996, LaMexiCo owed the
Company $16,551 for management fees, royalties and other
expenses.
On November 27, 1985, the Company entered into a lease with
Sidney C. Pulitzer, a director of the Company and a nominee for
re-election as such, for land, building and improvements on which
a Company-owned restaurant in New Orleans, Louisiana, is located.
The lease has a primary term of fifteen years which expires on
October 31, 2000, and contains an option to renew for an
additional fifteen-year period. The Company paid $122,446 in
rent to Mr. Pulitzer during Fiscal 1996.
The Company has entered into seven agreements with Brothers
Video, Inc. pursuant to which Brothers Video will supply video
poker machines in nine Cucos restaurants located in Louisiana.
The term of an agreement is 5 years. The Company has the option
to renew each contract for two additional years.
Under the agreements, the Company receives a commission of
65% of the net receipts during the first two years of the term
and 70% thereafter. Under the agreements, Brothers Video absorbs
all taxes, lease expenses and service costs associated with
operating the machines. Vincent J. Liuzza, Jr., the Chairman,
Chief Executive Officer and a director of the Company, is the
sole stockholder of Brothers Video. At June 30, 1996, the Company
had a current accounts receivable of $48,064 for video poker
commissions from Brothers Video. The Company earned
$186,134 in video poker commissions from Brothers Video in Fiscal
1996.
On July 28, 1995, the Company sold its Zero-Coupon
Convertible Secured Notes due June 30, 2015, in the aggregate
principal amount of $500,000 (the "Notes") to three individuals
including Mr. Elie Khoury, President of the Company, who
purchased $87,500 principal amount of the Notes for $87,500, and
Mr. Frank Ferrara, Director of the Company who purchased $206,250
principal amount for $206,250. The Notes are convertible into
shares of the Company's Common Stock at a conversion price of
$0.947 per share of Common Stock, subject to adjustments under
antidilution provisions; provided that the conversion privileges
cannot be exercised unless (1) shares to be received upon
conversion are to be immediately resold in the open marketplace,
(2) five years have passed from the date of issuance of the Notes
or (3) certain conditions relating to the sale or control of the
Company have occurred.
Also, on July 28, 1995, the Company granted Mr. Khoury and
Mr. Ferrara and the other individual who purchased the Notes,
development rights to obtain five licenses to use the Company's
unique restaurant system at specific locations within the State
of Louisiana to be designated in separate license agreements at a
development fee of $15,000 per restaurant. $500 ($100 per
license) of this development fee was paid on July 28, 1995, and
$14,900 will be payable upon the execution of each license
agreement.
Mr. Khoury serves as President of Mexican Restaurant
Management, Inc., a corporation which purchased all of the
outstanding stock of Restaurant Investments of Hattiesburg, Inc.,
a corporation operating a franchised Cucos restaurant in
Hattiesburg, Mississippi, on October 18, 1995. Mr. Khoury is
voting trustee under a Voting Trust dated October 18, 1995, for
all of the stock of Restaurant Investments of Hattiesburg, Inc.
Mexican Restaurant Management, Inc. is owned by Mr. Khoury, Mr.
Frank Ferrara, a Board Member of the Company and an independent
third party, who has also guaranteed the obligation of Restaurant
Investments of Hattiesburg, Inc., to the Company. As an
incentive, the Company and Restaurant Investments of Hattiesburg,
Inc. entered into a Royalty Incentive Program signed February 6,
1996. The Royalty Incentive Program is based on quantitative
measures, that, once achieved, is intended to result in an
operationally sound and stable restaurant as well as provide the
franchisee with a further incentive to spend advertising dollars.
The franchisee has paid or will pay royalties in an amount of
$1,200 per month from October, 1995, through December, 1996, and
$1,500 per month beginning January, 1996, and ending December,
1997, if these incentives are achieved. At June 30, 1996,
Restaurant Investments of Hattiesburg, Inc. owed the Company
$3,497 in current royalties and miscellaneous receivables.
Mr. Khoury also serves as President of Restaurant
Investments of Jackson, Inc. which operates a franchised
restaurant in Jackson, Mississippi. On February 19, 1996, the
Company awarded Development Rights to obtain up to (2) Licenses
to Restaurant Investment of Jackson, Inc. for Dothin, Hinds,
Rankin and Madison Counties, Mississippi. In consideration for
the development rights, Licensee shall pay no development fee for
the first restaurant and $15,000 for the second restaurant which
will be paid upon the opening of that restaurant. Also, on
February 19, 1996, the Company granted a license to Restaurants
Investments of Jackson, Inc. to operate a restaurant at 1270 E.
County Line Road in Ridgeland, Mississippi. The license fee was
for all out-of-pocket expenses. The royalty agreement under the
License call for no royalties for the first six months of
operation. Royalties for months 7 - 18 will be 1.0% of net
sales; for months 19 - 30 royalties will be 2.0%; for months 31 -
42 royalties will be 3.0%; and for months 43 and thereafter will
be 4.0%. Mr. Khoury, Mr. Ferrara and an independent third party
each own one-third of the outstanding stock of Restaurant
Investments of Jackson, Inc. At June 30, 1996, Restaurant
Investments of Jackson, Inc. owed the Company $4,735 for
miscellaneous receivables.
As described above, the Company believes that the terms of
the transactions described above are all on terms that are not
less favorable to the Company than those that could be negotiated
with an independent third party.
Executive Compensation
The following table shows cash compensation for services
rendered in all capacities to the Company during the fiscal years
ended July 3, 1994, and July 2, 1995, and June 30, 1996, for the
Chief Executive Officer and for the only other two executive
officers of the Company whose total annual salary and bonus
exceeded $100,000 for the fiscal year ended June 30, 1996.
<TABLE>
<CAPTION>
<S>
Long Term Compensation
Annual Compensation Awards Payouts
Other Other
Com- Restricted Com-
Name and Fiscal pensa- Stock Options/ LTIP pensa-
Principal Position Year Salary(1) Bonus tion(2) Awards SARS Payouts tion(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Vincent J. Liuzza 1996 $140,000 $645 - - - - $3,156
Jr.,Chief Executive 1995 $156,000 - - - - - $5,289
Officer 1994 $156,000 $12,413 - - - - $5,597
Elie V.Khoury, 1996 $85,000 $50,880 - - - - $1,194
President 1995 $85,000 $42,005 - - - - $1,344
1994 $85,000 $47,046 - - - - $1,774
Thomas J. 1996 $87,463 $13,373 - - - - $1,167
Sandeman,Vice 1995 $97,182 $15,038 - - - - $2,020
President-Finance 1994 $97,277 $17,858 - - - - $8,812
</TABLE>
_____________
(1) Includes amounts deferred under a retirement plan maintained
under the provisions of Section 401(k) of the Internal
Revenue Code in which employees of the Company are eligible
to participate. Does not include matching contributions
made by the Company, all of which are set forth in the
column "All Other Compensation".
(2) The Company provides certain employees, including executive
officers, with automobiles and provides complimentary meals
to executive officers and directors. The value of these
benefits is not included in the amounts reported in the
table. The Company has determined that perquisites and
other personal benefits with respect to any individual named
in the preceding table would in no event have exceeded 10%
of the compensation reported in such table for such person.
(3) Amounts set forth (A) matching contributions made under the
retirement plan referenced in footnote (1) to this table as
follows: Mr. Liuzza - $319 - 1996, $1,108 - 1995, $2,061 -
1994; Mr. Khoury - $561 - 1996, $977 - 1995, $1,423 - 1994;
Mr. Sandeman - $238 - 1996, $1,100 - 1995, $978 - 1994; and
(B) the dollar value of term life and disability insurance
premiums paid by the Company as follows: Mr. Liuzza -
$2,838 - 1996, $4,181 - 1995, $3,679 - 1994; Mr. Khoury -
$634 - 1996, $367 - 1995, $351 - 1994; Mr. Sandeman - $929 -
1996, $920 - 1995, $834 - 1994.
Stock Option Grants During Fiscal 1996
The Company did not grant any stock options or stock
appreciation rights to any of Messrs. Vincent J. Liuzza, Jr.,
Khoury or Sandeman during Fiscal 1996.
Aggregated Stock Option Exercises and Fiscal Year-Ended Option
Values
The following table sets forth information concerning stock
options which were exercisable during Fiscal 1996 by Messrs.
Vincent J. Liuzza, Jr., Khoury and Sandeman and the total number
and value of unexercised options held by each such person at June
30, 1996, separately identifying unexercisable and exercisable
options at June 30, 1996. No stock appreciation rights have ever
been granted to any of the named executive officers.
<TABLE>
<CAPTION>
Number of Shares
<S> <C>
Underlying Value of
Unexercised Options Unexercised
at In-The-Money
Shares June 30,1996 Options at June 30,
Acquired on Value Exercisable/ 1996 Exercisable/
Name Exercise Realized Unexercisable Unexercisable
</TABLE>
<TABLE>
<CAPTION>
Vincent J.Liuzza,Jr. 0 $0 60,000/0 $0/$0
<S> <C> <C> <C> <C>
Elie V. Khoury 0 $0 25,000/0 $4,742/$0
Thomas J. Sandeman 0 $0 25,000/0 $0/$0
</TABLE>
__________________
Compensation of Directors
Directors of the Company are not paid fees for attendance at
meetings of the Board of Directors or any other cash compensation
for serving as directors. Under the 1993 Stock Option Plan, the
non-employee directors of the Company shall receive stock options
to purchase 800 shares of Common Stock at its fair market value
on the day immediately following the Annual Meeting (provided
such directors are re-elected). Furthermore, under the 1993
Stock Option Plan, a new non-employee director would receive an
option to purchase 15,000 (rather than 800) shares of Common
Stock on the day after his or her initial appointment as a
director of the Company, subject to the approval of the Amendment
to the Plan by the Shareholders, described herein.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's directors and executive officers, and
persons who own more than ten percent of a registered class of
the Company's equity securities, i.e., the Company's Common Stock
("10% Shareholders"), to file reports of ownership and reports of
changes in ownership of such securities with the Securities and
Exchange Commission (the "SEC"). Executive officers, directors
and 10% Shareholders are required by SEC regulation 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 and written representations from certain reporting persons
that no other reports were required for those persons, the
Company believes that during the period from July 4, 1995, to
June 30, 1996, all of its officers, directors and 10%
Shareholders complied with all applicable Section 16(a) filing
requirements, except for the Form 3 of Frank J. Ferrara was filed
late.
SHAREHOLDER PROPOSALS
1997 ANNUAL MEETING
A shareholder who intends to present a proposal, which
relates to a proper subject for shareholder action, at the 1997
Annual Meeting of Shareholders and who wishes such proposal to be
considered for inclusion in the Company's proxy materials for
such meeting must cause such proposal to be received, in proper
form, at the Company's principal executive offices no later than
June 20, 1997. Any such proposals, as well as any questions
relating thereto, should be directed to the Company to the
attention of its President.
METHODS AND COST OF SOLICITING PROXIES
The Proxy enclosed with this Proxy Statement is solicited by
and on behalf of the Board of Directors of the Company. In
addition to use of the mail, Proxies may be solicited by personal
interview and telephone. Directors, executive officers or
employees of the Company who may solicit Proxies by such methods
are not paid additional remuneration therefor. The cost of
solicitation, including the cost of preparation, printing and
mailing, is being paid by the Company.
BY ORDER OF THE BOARD OF DIRECTORS:
Thomas J. Grace, Secretary
Dated: September 30, 1996
1993 STOCK OPTION PLAN
OF
CUCOS INC.
(As Amended and Restated Effective September 26, 1996)
1. Purpose
This 1993 Stock Option Plan ("the Plan") is intended to
provide a means whereby Cucos Inc. (the "Company") may, through
the grant of incentive stock options and nonqualified stock
options (collectively, "Options") to purchase common shares of
the Company to (i) officers and other employees of the Company
and/or of a Related Corporation (as defined below) ("Key
Employees"), (ii) independent consultants or advisors hired by
the Company to render bona fide services to the Company or a
Related Corporation, other than services in connection with the
offer or sale of securities in a capital raising transaction
("Consultants"), and (iii) directors who are not officers or
employees ("Outside Directors"), attract and retain capable Key
Employees, Consultants and Outside Directors and motivate such
persons to exercise their best efforts on behalf of the Company
and of any Related Corporation.
For purposes of the Plan, a Related Corporation of the
Company shall mean either a corporate subsidiary of the Company,
as defined in section 424(f) of the Internal Revenue Code of
1986, as amended (the "Code"), or the corporate parent of the
Company, as defined in section 424(e) of the Code. Further, as
used in the Plan, (i) the term "incentive stock option" ("ISO")
shall mean an option which, at the time such option is granted
under the Plan, qualifies as an ISO within the meaning of section
422 of the Code and is designated as an ISO in the "Option
Agreement" (as defined in Section 9); and (ii) the term
"nonqualified stock option" ("NQSO") shall mean an option which,
at the time such option is granted, does not qualify as an ISO,
and is designated as an NQSO in the Option Agreement.
2. Administration
The Plan shall be administered by the Company's Board
of Directors (the "Board").
The Board shall have full authority,
subject to the terms of the Plan, to select the Discretionary
Grantees (as defined in Section 4 of the Plan) to be granted ISOs
and/or NQSOs under the Plan, to grant Options on behalf of the
Company and to set the date of grant and the other terms of such
Options.
The Board also shall have the authority to
establish such rules and regulations, not inconsistent with the
provisions of the Plan, for the proper administration of the
Plan, and to amend, modify, or rescind any such rules and
regulations, 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 stockholders and all employees, and upon their respective
legal representatives, beneficiaries, successors, and assigns and
upon all other persons claiming under or through any of them.
No member of the Board shall be liable
for any action or determination made in good faith with respect
to the Plan or any Option granted under it.
3. Stock
Options may be granted under the Plan covering up to a
maximum of Five Hundred
Nine Thousand Two Hundred (509,200) shares of the Company's
common shares, no par value (the "Common Stock"), subject to
adjustment as hereinafter provided. Shares issuable under the
Plan may be authorized but unissued shares or reacquired shares,
and the Company may purchase shares required for this purpose,
from time to time, if it deems such purchase to be advisable.
If any Option granted under the Plan expires or
otherwise terminates for any reason whatsoever (including, with
out limitation, the surrender thereof by the Optionee (as defined
in Section 4)) without having been exercised, the shares subject
to the unexercised portion of the Option shall continue to be
available for the granting of Options under the Plan as fully as
if the shares had never been subject to an Option.
4. Eligibility For Grants Of Options
(a) In General.
Options granted to Key Employees may be NQSOs or ISOs.
Options granted to Consultants and Outside Directors shall be
NQSOs, not ISOs. Key Employees, Consultants and Outside
Directors who have been granted an Option under the Plan shall be
referred to as "Optionees." More than one Option may be granted
to an Optionee under the Plan.
(b) Outside Directors.
Outside Directors shall be eligible to receive NQSOs
(but not ISOs) pursuant to Section 5 of the Plan.
(c) Discretionary Grantees.
Consultants and Key Employees and Outside Directors
shall hereinafter be
collectively referred to as "Discretionary Grantees."
Discretionary Grantees shall be eligible to receive Options
pursuant to Section 5 of the Plan; provided, however, that
Consultants and Outside Directors shall not be eligible to
receive ISOs.
5. Granting of Options to Discretionary Grantees
From time to time until the expiration or earlier
suspension or discontinuance of the Plan, the Board
may, on behalf of the Company, grant to Discretionary Grantees
under the Plan such Options as it determines are warranted;
provided, however, that grants of ISOs and NQSOs shall be
separate and not in tandem; and further provided, that
Consultants and Outside Directors shall not be eligible to
receive ISOs. In making any determination as to whether a
Discretionary Grantee shall be granted an Option and as to the
number of shares to be covered by such Option, the
Board shall take into account the duties of the Discretionary
Grantee, his present and potential contributions to the success
of the Company or a Related Corporation, and such other factors
as the Board shall deem relevant in accomplishing the
purposes of the Plan. Moreover, the Board may provide
in the Option that said Option may be exercised only if certain
conditions, as determined by the Board, are fulfilled.
6. [RESERVED]
7. Annual Limit
(a) ISOs.
The aggregate fair market value (determined as of the
time the ISO is granted) of the Common Stock with respect to
which ISOs are exercisable for the first time by a Discretionary
Grantee during any calendar year (under this Plan and any other
ISO plan of the Company or a Related Corporation) shall not
exceed $100,000.
(b) NQSOs.
The annual limits set forth above for ISOs shall not
apply to NQSOs.
8. Terms and Conditions of Options
The Options granted to Discretionary Grantees other
than Consultants and Outside Directors pursuant to the Plan shall
expressly specify whether they are ISOs or NQSOs. The Options
granted to Consultants and Outside Directors pursuant to the Plan
shall expressly specify that they are NQSOs. The Options granted
to Optionees pursuant to the Plan shall include expressly or by
reference the following terms and conditions, as well as such
other provisions not inconsistent with the provisions of this
Plan and, for ISOs granted under this Plan, the provisions of
section 422(b) of the Code, as the Board shall deem
desirable:
(a) Number of Shares.
A statement of the number of shares to which the Option
pertains.
(b) Price.
A statement of the Option price. With respect to
Options granted to Discretionary Grantees other than Outside
Directors, the Option price (subject to paragraph (j) below)
shall be determined and fixed by the Board in its
discretion but shall not be less than 100 percent of the fair
market value of the optioned shares of Common Stock on the date
the Option is granted. With respect to Options granted to
Outside Directors, the Option price shall be 100 percent of the
fair market value of the optioned shares of Common Stock on the
date the Option is granted.
The fair market value of the optioned shares of Common
Stock shall be --
(1) if there are sales of Common Stock on a
registered securities exchange or on an over-the-counter market
on the date of grant, then the mean between the highest and
lowest quoted selling price on the date of grant; or
(2) if there are no sales of Common Stock on the
date of grant but there are sales on dates within a reasonable
period both before and after the date of grant, then the weighted
average of the means between the highest and lowest selling price
on the nearest date before and the nearest date after the date of
grant.
(c) Term.
(1) ISOs.
Subject to paragraph (j) below and to earlier
termination as provided in paragraphs (e), (f), and (g) below and
in Section 10, the term of each ISO shall be not more than ten
years from the date of grant.
(2) NQSOs.
Subject to earlier termination as provided in
paragraphs (e), (f) and (g) below and in Section 10, the term of
each NQSO awarded to a Discretionary Grantee shall be not more
than ten years from the date of grant.
(d) Exercise.
(1) Options Granted to Discretionary Grantees.
Except as set forth in Section 8(d)(2), granted
to Discretionary Grantees shall be exercisable in such
installments and on such dates, not less than six months from the
date of grant as the Board may specify, provided that
the Board may accelerate the exercise date of any
outstanding Options, in its discretion, if it deems such
acceleration to be desirable.
(2) Options Granted to Outside Directors.
Options granted to Outside Directors shall be
exercisable commencing one (1) year after the date of grant.
(3) In General.
Any Option shares, the right to the purchase of which
has accrued, may be purchased at any time up to the expiration or
termination of the Option. Exercisable Options may be exercised,
in whole or in part, from time to time by giving written notice
of exercise to the Company at its principal office, specifying
the number of shares to be purchased and accompanied by payment
in full of the aggregate Option price for such shares. Only full
shares shall be issued under the Plan.
The Option price shall be payable in cash or its
equivalent.
(e) Termination of Employment, Consulting Services or Board
Membership.
If a Key Employee's employment by the Company (and
Related Corporations), a Consultant's engagement by the Company
(and Related Corporations), or an Outside Director's membership
on the Board terminates prior to the expiration date fixed for
his Option for any reason other than death or disability, such
Option may be exercised, to the extent of the number of shares
with respect to which the Optionee could have exercised it on the
date of such termination, or, with respect to Discretionary
Grantees other than Outside Directors, to any greater extent
permitted by the Board, by the Optionee at any time
prior to the earlier of (i) the expiration date specified in such
Option, (ii) with respect to Options granted to Outside Directors
on and after March 23, 1994, one year after such termination of
membership on the Board, or (iii) with respect to other
Discretionary Grantees, an accelerated termination date
determined by the Board in its discretion, except that,
subject to Section 10, such accelerated termination date shall
not be earlier than the date of a Key
Employee's termination of employment
or a Consultant's cessation of consulting services and
in the case of ISOs, such
accelerated termination date shall not be later than three months
after such termination of employment.
(f) Exercise upon Disability of Optionee.
If an Optionee shall become disabled (within the
meaning of section 22(e)(3) of the Code) during his employment,
his provision of consulting services to the Company (and Related
Corporations), or his membership on the Board and, prior to the
expiration date fixed for his Option, his employment, consulting
arrangement, or membership on the Board is terminated as a
consequence of such disability, such Option may be exercised, to
the extent of the number of shares with respect to which the
Optionee could have exercised it on the date of such termination,
or, with respect to Discretionary Grantees other than Outside
Directors, to any greater extent permitted by the
Board, by the Optionee at any time prior to the earlier of (i)
the expiration date specified in such Option, (ii) with respect
to Options granted to Outside Directors on and after March 23,
1994, one year after such termination of membership on the Board,
or (iii) with respect to Discretionary Grantees other than
Outside Directors, an accelerated termination date determined by
the Committee Board, in its discretion, except that, subject to
Section 10, such accelerated termination date shall not be
earlier than the date of a Key
Employee's termination
or Consultant's cessation of consulting services
by reason of disability, and in the
case of ISOs, such date shall not be later than one year after
such termination of employment. In the event of the Optionee's
legal disability, such Option may be so exercised by the
Optionee's legal representative.
(g) Exercise upon Death of Optionee.
If an Optionee shall die during his employment, his
provision of consulting services to the Company (or a Related
Corporation) or his membership on the Board, and prior to the
expiration date fixed for his Option, or if an Optionee whose
employment, consulting arrangement or membership on the Board is
terminated for any reason, shall die following his termination of
employment, cessation of consulting services or membership on the
Board but prior to the earliest of (i) the expiration date fixed
for his Option or (ii) the expiration of the period determined
under paragraphs (e) and (f) above, or (iii) in the case of an
ISO, three months following termination of employment; such
Option may be exercised, to the extent of the number of shares
with respect to which the Optionee could have exercised it on the
date of his death, or, with respect to Discretionary Grantees
other than Outside Directors, to any greater extent permitted by
the Board, 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, at any time prior to the earlier of (i) the
expiration date specified in such Option, (ii) one year after the
date of the Optionee's death, or (iii) with respect to
Discretionary Grantees other than Outside Directors, an
accelerated termination date determined by the Board,
in its discretion except that, subject to Section 10, such
accelerated termination date shall not be later than one year
after the date of death.
(h) Non-Transferability.
No Option shall be assignable or transferable by the
Optionee otherwise than by will or by the laws of descent and
distribution.
(i) Rights as a Stockholder.
An Optionee shall have no rights as a stockholder with
respect to any shares covered by his Option until the issuance of
a stock certificate to him for such shares.
(j) Ten Percent Stockholder.
If a Key Employee owns more than
ten percent of the total combined voting power of all shares of
stock of the Company or of a Related Corporation at the time an
ISO is granted to him, the Option price for the ISO shall not be
less than 110 percent of the fair market value of the optioned
shares of Common Stock on the date the ISO is granted, and such
ISO, by its terms, shall not be exercisable after the expiration
of five years from the date the ISO is granted. The conditions
set forth in this paragraph (j) shall not apply to NQSOs.
(k) Listing and Registration of Shares.
Each Option shall be subject to the requirement that,
if at any time the Board shall determine, in its
discretion, that the listing, registration, or qualification of
the shares covered thereby upon any 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 granting of such Option
or the purchase of shares thereunder, or that action by the
Company or by the Optionee should be taken in order to obtain an
exemption from any such requirement, no such Option may be
granted or exercised, in whole or in part, unless and until such
listing, registration, qualification, consent, approval, or
action shall have been effected, obtained, or taken under
conditions acceptable to the Board. Without limiting
the generality of the foregoing, each Optionee or his legal
representative or beneficiary may also be required to give
satisfactory assurance that shares purchased upon exercise of an
Option are being purchased for investment and not with a view to
distribution, and certificates representing such shares may be
legended accordingly.
(l) Withholding.
The obligation of the Company to deliver shares of
Common Stock upon the exercise of any Option shall be subject to
applicable federal, state and local tax withholding requirements.
9. Option Instruments -- Other Provisions
Options granted under the Plan shall be evidenced by
written documents ("Option Agreements") in such form as the
Board shall, from time to time, approve, which Option
Agreements shall contain such provisions, not inconsistent with
the provisions of the Plan for NQSOs granted pursuant to the
Plan, and such conditions, not inconsistent with section 422(b)
of the Code for ISOs granted pursuant to the Plan, as the
Board shall deem advisable, and which Option Agreements
shall specify whether the Option is an ISO or NQSO. Each
Optionee shall enter into, and be bound by, such Option
Agreements, as soon as practicable after the grant of an Option.
10. Capital Adjustments
The number of shares which may be issued under the
Plan, as stated in Section 3, and the number of shares issuable
upon exercise of outstanding Options under the Plan (as well as
the Option price per share under such outstanding Options),
shall, in accordance with the provisions of section 424(a) of the
Code, be adjusted to reflect any stock dividend, stock split,
share combination, or similar change in the capitalization of the
Company. In the event any such change in capitalization cannot
be reflected in a straight mathematical adjustment of the number
of shares issuable upon the exercise of outstanding Options (and
a straight mathematical adjustment of the exercise price
thereof), the Board shall make such adjustments as are
appropriate to reflect most nearly such straight mathematical
adjustment. Such adjustments shall be made only as necessary to
maintain the proportionate interests of Optionees and preserve,
without exceeding, the value of Options.
In the event of a corporate transaction (as that term
is described in section 424(a) of the Code and the Treasury
Regulations issued thereunder as, for example, a merger,
consolidation, acquisition of property or stock, separation,
reorganization, or liquidation), each outstanding Option shall be
assumed by the surviving or successor corporation; provided,
however, that, in the event of a proposed corporate transaction,
the Board may terminate all or a portion of the
outstanding Options (except for those awarded
to Outside Directors, which shall not be terminable) if it
determines that such termination is in the best interests of the
Company. If the Board decides to terminate such
outstanding Options the Board shall give each Optionee
holding such an Option to be terminated not less than seven days'
notice prior to any such termination by reason of such a
corporate transaction, and any such Option which is to be so
terminated may be exercised (if and only to the extent that it is
then exercisable) up to, and including the date immediately
preceding such termination. Further, as provided in Section
8(d)(1) with respect to Discretionary Grantees, the
Board, in its discretion, may accelerate, in whole or in part,
the date on which any or all Options become exercisable.
The Board also may, in its discretion, change
the terms of any outstanding Option
to reflect any such corporate transaction,
provided that, in the case of ISOs, such change is excluded from
the definition of a "modification" under section 424(h) of the
Code.
11. Amendment or Discontinuance of the Plan
(a) In General.
The Board from time to time may suspend or discontinue
the Plan or amend it in any respect whatsoever, except that,
without the approval of the stockholders (given in the manner set
forth in paragraph (b) below): (i) the class of employees
eligible to receive Options shall not be changed, (ii) the
maximum number of shares of Common Stock with respect to which
Options may be granted under the Plan shall not be increased
except as permitted under Section 10, and (iii) the duration of
the Plan under Section 17 shall not be extended; and further
provided, that no such suspension, discontinuance, or amendment
shall materially impair the rights of any holder of an
outstanding Option without the consent of such holder.
(b) Manner of Stockholder Approval.
(1) The approval of stockholders must be by a majority
of the outstanding shares of Common Stock present, or
represented, and entitled to vote at a meeting duly held in
accordance with the applicable laws of the State of Louisiana;
and
(2) The approval of stockholders must comply with all
applicable provisions of the corporate charter, bylaws, and
applicable state law prescribing the method and degree of
stockholder approval required for the issuance of corporate stock
or options. If the applicable state law does not prescribe a
method and degree of stockholder approval in such case, the
approval of stockholders must occur:
(A) By a method and in a degree that would be
treated as adequate under applicable state law in the case of an
action requiring stockholder approval (i.e., an action on which
stockholders would be entitled to vote if the action were taken
at a duly held stockholders' meeting); or
(B) By a majority of the votes cast at a duly
held stockholders' meeting at which a quorum representing a
majority of all outstanding voting stock is, either in person or
by proxy, present and voting on the plan.
12. Rights
Neither the adoption of the Plan nor any action of the
Board shall be deemed to give any individual any
right to be granted an Option, or any other right hereunder,
unless and until the Board shall have granted such
individual an Option, and then his rights shall be only such as
are provided by the Option Agreement.
Any Option under the Plan shall not entitle the holder
thereof to any rights as a stockholder of the Company prior to
the exercise of such Option and the issuance of the shares
pursuant thereto. Further, notwithstanding any provisions of the
Plan or the Option Agreement with an Optionee, but subject to any
employment agreement or consulting agreement, the Company shall
have the right, in its discretion, to retire an Optionee at any
time pursuant to its retirement rules or otherwise to terminate
his employment or consulting services at any time for any reason
whatsoever.
13. Indemnification of Board
Without limiting any other rights of indemnification
which they may have from the Company and any Related Corporation,
the members of the Board shall
be indemnified by the Company against all costs and expenses
reasonably incurred by them in connection with any claim, action,
suit, or proceeding to which they or any of them may be a party
by reason of any action taken or failure to act under, or in
connection with, the Plan, or any Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided
such settlement is approved by legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any
such action, suit, or proceeding, except a judgment based upon a
finding of willful misconduct or recklessness on their part. Upon
the making or institution of any such claim, action, suit, or
proceeding, the Board member shall notify the
Company in writing, giving the Company an opportunity, at its own
expense, to handle and defend the same before such Board
member undertakes to handle it on his own behalf.
14. Application of Funds
The proceeds received by the Company from the sale of
Common Stock pursuant to Options granted under the Plan shall be
used for general corporate purposes. Any cash received in
payment for shares upon exercise of an Option to purchase Common
Stock shall be added to the general funds of the Company and
shall be used for its corporate purposes.
15. Stockholder Approval
This Plan, as amended and restated, shall become
effective on September 26, 1996 (the date the
amended and restated Plan was adopted by the Board); provided,
however, that if the amended and restated Plan is not approved by
the stockholders, in the manner described in Section 11(b),
within 12 months before or after the date the amended and
restated Plan was approved by the Board, the Plan shall
continue in effect as in effect prior to September 26, 1996.
16. No Obligation to Exercise Option
The granting of an Option shall impose no obligation
upon an Optionee to exercise such Option.
17. Termination of Plan
Unless earlier terminated as provided in the Plan, the
Plan and all authority granted hereunder shall terminate
absolutely at 12:00 midnight on August 31, 2003, which date is
within ten years after the date the Plan was adopted by the
Board, and no Options hereunder shall be granted thereafter.
Nothing contained in this Section, however, shall terminate or
affect the continued existence of rights created under Options
issued hereunder and outstanding on August 31, 2003, which by
their terms extend beyond such date.
18. Governing Law
The Plan shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws
of the State of Louisiana shall govern the operation of, and the
rights of Optionees under, the Plan, and Options granted
thereunder.
CUCOS INC. THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Thomas J. Grace and Vincent
J. Liuzza, Jr., and each of them, as proxies for the undersigned,
with full power of substitution to vote all of the undersigned's
shares of common stock, no par value, of Cucos Inc. at the Annual
Meeting of Shareholders on October 31, 1996 (and any adjournments
thereof), as instructed herein with respect to the matters herein
set forth. The undersigned acknowledges receipt of the Company's
Notice of Meeting and Proxy Statement dated September 30, 1996.
MANAGEMENT RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSALS
1. Election of Directors:
For all nominees listed below (except as indicated to the
contrary below) ____
Withhold authority (to vote for all nominees listed below)
______
Frank J. Ferrara, Thomas J. Grace, Elie V. Khoury, David M.
Liuzza, Vincent J. Liuzza, Jr., Sidney C. Pulitzer and
Miguel Uria
INSTRUCTIONS: To withhold authority to vote for any individual
nominee, write the nominee's name here:
_________________________________________________________________
2. Adoption of the Amendments to the Company's 1993 Stock
Option Plan.
For ___ Against ___ Abstain ___
3. Approving and ratifying the selection of Ernst & Young LLP
as the Company's independent public accountants for the
fiscal year ending June 29, 1997.
For ___ Against ___ Abstain ___
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
This Proxy when properly executed will be voted as directed
upon the matters set forth on the reverse. If no direction is
indicated, this Proxy will be voted "FOR" the nominees for
election to the Board of Directors named on the reverse and "FOR"
proposals 2 and 3. This Proxy confers discretionary voting
authority as to all other matters which may properly come before
the Annual Meeting.
DATE: , 1996
SIGNATURE(S)
Executors, Administrators,
Trustees, etc.
should give full title.
PLEASE MARK, SIGN, DATE AND RETURN OUR PROXY IN THE ACCOMPANYING
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES.
