<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:
/X/ Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
PANCHO'S MEXICAN BUFFET, 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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE> 2
[PANCHO'S MEXICAN BUFFET, INC. LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
December 22, 1999
The Annual Meeting of Stockholders of PANCHO'S MEXICAN BUFFET, INC., will
be held at the Company's restaurant (Pancho's Mexican Buffet) 68 Broadway
Square, Gus Thomasson Rd., Mesquite, TX 75150 on Wednesday, February 2, 2000 at
10:00 a.m. for the following purposes:
(1) To elect three (3) Directors;
(2) To consider and act upon a proposal to adopt the 1998 Restricted
Stock Plan for Non-Employee Directors; and approve stock previously issued
under such Plan.
and to transact such other business as may properly come before the meeting or
any adjournment thereof.
Only holders of Common Shares of record on the books of the Company at the
close of business on December 16, 1999 will be entitled to vote at the meeting
or any adjournment thereof.
A complete list of Stockholders entitled to vote will be available for
examination and inspection by any Stockholder from January 21-February 2, 2000,
during usual business hours, at the Company's restaurant, Pancho's Mexican
Buffet, 68 Broadway Square, Gus Thomasson Rd., Mesquite, TX 75150.
By Order of the Board of Directors
SAMUEL L. CARLSON
Secretary
Fort Worth, Texas
December 22, 1999
<PAGE> 3
PANCHO'S MEXICAN BUFFET, INC.
3500 Noble Avenue Fort Worth, Texas 76111
(Principal Executive Offices)
PROXY STATEMENT
The following information is submitted concerning the enclosed Proxy and
the matters to be acted upon under the authority thereof at the Annual Meeting
of Stockholders of the Company to be held on the 2nd day of February, 2000, or
any adjournment thereof pursuant to the enclosed notice of said meeting.
INFORMATION CONCERNING PROXY
The Proxy is solicited on behalf of the Board of Directors of the Company.
It may be revoked by the Stockholder at any time prior to the exercise thereof
by filing with the Secretary of the Company a written revocation or duly
executed Proxy bearing a later date. The Proxy shall be suspended if the
Stockholder shall be present at the meeting and elects to vote in person.
Unless contrary instructions are indicated on the Proxy, all shares
represented by valid proxies received pursuant to this solicitation (and which
have not been revoked or suspended before they are voted) will be voted for the
proposals to elect three directors and act upon a proposal to adopt the 1998
Restricted Stock Plan for Non-Employee Directors and approve the issuance of
stock previously issued under the Plan. The presence, in person, or by proxy, of
the holders of a majority of the issued and outstanding Common Shares on
December 16, 1999 is necessary to constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes are counted as shares present in the
determination of whether the shares of stock represented at the meeting
constitute a quorum. Because the three nominees receiving the highest vote
totals will be elected as Directors, abstentions and broker non-votes will not
affect the outcome of the election. The affirmative vote of a majority of the
Common Shares present, or represented by proxy, and entitled to vote at the
Annual Meeting is necessary for approval of the proposal to adopt the 1998
Restricted Stock Plan for Non-Employee Directors and approve the issuance of
stock previously issued under the Plan.
The cost of solicitation of Proxies by the Board will be borne by the
Company. In addition to solicitation by mail, proxies may be solicited by
directors, executive officers and employees of the Company personally or by
telephone or facsimile. Forms of proxy material also may be distributed through
brokers, custodians and other like parties to the beneficial owners of the
Company's common stock, and the Company may reimburse such parties for their
reasonable out-of-pocket and clerical expenses incurred in connection therewith.
The securities of the Company entitled to vote at the meeting consist, as
of December 16, 1999, of 1,464,006 Common Shares of a par value of $.10 per
share. Only Stockholders of record on the books of the Company at the close of
business on that date will be entitled to vote at the meeting. Each share is
entitled to one vote on each matter to be voted on at the meeting. There are no
cumulative voting rights.
The approximate date on which this Proxy Statement and the enclosed Form of
Proxy will be first sent or given to Stockholders is December 22, 1999.
All information regarding the shares of the Company's Common Stock
contained in this Proxy Statement has been adjusted to reflect the reverse stock
split in the Common Stock effective on January 27, 1999.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall be not
less than three (3) nor more than fifteen (15) members. The Board of Directors
has fixed at eight (8) the number of Directors which will constitute the Board
for the ensuing year.
The Certificate of Incorporation and Bylaws of the Company provide for a
classified Board of Directors, with the Board divided into three classes. At the
2000 meeting, three directors are to be elected for a term of
<PAGE> 4
three (3) years, and until their successors are duly elected and qualified. It
is proposed that Messrs. Hollis Taylor, Robert L. List and George N. Riordan,
current Directors of the Company, be elected for a term of three (3) years. The
Board of Directors has no reason to believe that the nominees will refuse to act
or be unable to accept election; however, in such event or if any other
unforeseen contingencies should arise, it is intended that the proxies will be
voted for such other persons as may be recommended by the Board of Directors.
THE BOARD OF DIRECTORS
The following table indicates the name, age, principal occupation, position
and offices with the Company for past five years, term of office and period
during which he has served as such, of each Director and Director nominee.
<TABLE>
<CAPTION>
PROPOSED
TERM OR
DIRECTOR TERM TO ALL POSITIONS HELD
NAME AGE SINCE EXPIRE PAST FIVE YEARS
---- --- -------- -------- ------------------
<S> <C> <C> <C> <C>
Hollis Taylor 63 1974 2003 President and Chief Executive Officer.
Robert L. List 62 1993 2003 President, "Hammond's Candies Since 1920, LLC"
since May 1997, and President, West Indies Candy
Company since March 1993; Director, Mercury Air
Group, Inc. since 1990.
George N. Riordan 66 1994 2003 Managing partner, George Riordan & Co., investment
bankers; Chairman of the Board, MSC Software
Corporation, January 1997 to January 1999.
Director 1983 to date.
- -------------------------------------------------------------------------------------------------------
Jesse Arrambide, III 47 1977 2002 Chairman of the Board of Directors since August
1993, and Chief Operations Officer since
December, 1994; President, A & A Foods, Inc. and
President, A & A Foods No. 2, Inc., operators of
restaurants, since 1994.
Tomas Orendain 66 1993 2002 President, T.S. Orendain Associates, Inc., an
architectural firm. Chairman of the Board,
Orendain Telecommunication Services, Inc. since
1995.
- -------------------------------------------------------------------------------------------------------
Rudolph Rodriguez, Jr. 67 1993 2001 Chairman, and Chief Executive Officer, Rodriguez
Festive Foods, Inc., a manufacturer of Mexican
Food products; Advisory Board Member, Chase Bank
of Texas NA, Fort Worth, Texas.
Samuel L. Carlson 63 1993 2001 Senior Vice President, Administration and
Secretary.
David Oden 39 1998 2001 Senior Vice President and Chief Financial Officer,
TX. C. C., Inc., operator of the Texas Land &
Cattle Steak House restaurant chain, since
October 1998; Chief Financial Officer, TX. C. C.,
Inc. from July 1997 to October 1998; Senior Vice
President and Chief Financial Officer, Silver
Diner, Inc. from September 1995 to July 1997;
Vice President, Treasurer, Chief Financial
Officer and Assistant Secretary of Pancho's
Mexican Buffet, Inc. from January 1991 to July
1995.
- -------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 5
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors is convened annually following its election at the
Annual Meeting of Stockholders, and at that time it elects officers and appoints
committees to serve at the pleasure of the Board.
During the fiscal year ending September 30, 1999, the Board of Directors
held five meetings. No director attended fewer than 75% of the total meetings of
the Board of Directors and Committees of the Board on which he served during the
fiscal year.
The Compensation Committee is composed of Messrs. Tomas Orendain, George N.
Riordan and Robert L. List. This committee met one time during the past fiscal
year. Its function is to approve officers' salaries, administer executive
compensation plans, and approve officers' bonuses.
The Nominating Committee, composed of Messrs. George N. Riordan and Tomas
Orendain, will consider requests for nominations to the Board submitted in
writing to the Secretary of the corporation at the principal executive offices
of the corporation not less than 60 days, nor more than 90 days, prior to the
next annual meeting of Stockholders presently scheduled to be held on January
24, 2001. Such request for nomination should include sufficient biographical
material and other information required by Article II, Section 12 of the Bylaws
to permit an appropriate evaluation by the Nominating Committee. This committee
had one meeting during the past fiscal year.
The Audit Committee, which met three times during the fiscal year, is
composed of Messrs. Robert L. List, David Oden and Rudolph Rodriguez, Jr. The
function of the Audit Committee includes reviewing the engagement of the
independent auditors, the scope and timing of the audit, certain non-audit
services to be rendered by the independent auditors, reviewing the report of the
independent auditors upon completion of their audit, and reviewing with the
independent auditors and management the Company's policies and procedures with
respect to accounting and financial controls.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AS OF DECEMBER 16, 1999
The Company has only one outstanding class of equity securities, its Common
Stock par value $.10. Unless otherwise indicated, all shares are owned directly
and the owner has sole voting and investment powers with respect thereto.
The security ownership, as of December 16, 1999, of certain beneficial
owners known to the Company to own more than five percent of the Company's
Common Stock was:
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- --------
<S> <C> <C>
Dimensional Fund Advisors Inc.(1) 84,863 5.80%
1299 Ocean Ave., 11th Floor
Santa Monica, CA 90401
Carolina S. Arrambide 79,974 5.46%
3116 Westador Drive
Arlington, Texas 76015
</TABLE>
- ---------------
(1) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 84,863 shares of Pancho's
Mexican Buffet, Inc., 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 the DFA Participating Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional Fund
Advisors Inc. serves as investment manager. Dimensional disclaims beneficial
ownership of all such shares.
3
<PAGE> 6
Cede & Co. and other central clearinghouses were the record holders of
approximately 1,074,380 shares (73.4%), which include shares beneficially owned
by some of the entities listed above.
The security ownership as of December 16, 1999 including shares subject to
options that are exercisable in the next 60 days, (all Common Stock) of (i)
Directors and executive officers and (ii) Directors and executive officers as a
group, was:
<TABLE>
<CAPTION>
NAME OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1)(2) OF CLASS
---------------- -------------------------- --------
<S> <C> <C>
Hollis Taylor 65,203(3) 4.25
Samuel L. Carlson 20,886 1.36
Jesse Arrambide, III 36,970(3)(6) 2.41
Robert L. List 9,516(4) .62
Rudolph Rodriguez, Jr. 10,849(4) .71
W. Brad Fagan 4,385(8) .29
Tomas S. Orendain 9,516(4) .62
George N. Riordan 9,516(7) .62
David Oden 2,555(9) .17
All Directors and executive 169,397(5) 11.03
officers as a group
</TABLE>
- ---------------
(1) Includes shares purchased by the employee stock purchase plan through
September 30, 1999.
(2) Based on presently exercisable options which are indicated in the following
footnotes to this table, the percentage ownership is calculated on the
assumption that the shares presently purchasable, or purchasable within the
next sixty days, underlying such options are outstanding.
(3) This amount includes 24,666 shares subject to options that are exercisable
within the next sixty days.
(4) This amount includes 5,163 shares subject to options that are exercisable
within the next sixty days.
(5) This amount includes 72,066 shares that directors and executive officers
have the right to acquire within the next sixty days through the exercise
of stock options. The exercise price of all these options is higher than
the market price of the Company's stock on December 16, 1999.
(6) Estate of Jesse Arrambide has pledged 31,086 of the Company's common shares
for various loans. Jesse Arrambide, III acts as Independent Executor and
has sole voting power of these shares. Jesse Arrambide, III disclaims
beneficial ownership of these securities.
(7) This amount includes 4,497 shares subject to options that are exercisable
within the next sixty days.
(8) This amount includes 2,332 shares subject to options that are exercisable
within the next sixty days.
(9) This amount includes 416 shares subject to options that are exercisable
within the next sixty days.
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, to file with the Securities
and Exchange Commission ("SEC") and the Nasdaq initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Executive officers, directors and greater than ten-percent
shareholders are required by SEC regulations to furnish the Company with copies
of all Section 16(a) forms they file. To the Company's knowledge, based solely
on review of the copies of such reports furnished to the Company and written
representations that no other reports were required, for the year ended
September 30, 1999, all Section 16(a) filing requirements applicable to its
executive officers, Directors and greater than ten-percent beneficial owners
were filed on a timely basis.
4
<PAGE> 7
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following sets forth information concerning the compensation of the
Company's Chief Executive Officer and each of the other most highly compensated
executive officers of the Company (the "Named Executive Officers") for the
fiscal years shown, when compensation exceeded $100,000.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS ALL OTHER
FISCAL ------------------------------------- OTHER ANNUAL ------------ COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) BONUS($)(2) COMPENSATION(3) OPTIONS ($)(4)
--------------------------- ------ --------- ----------- ----------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Hollis Taylor................... 1999 $195,000 64,000 $ 30,441 $
President and Chief 1998 194,465 31,949 4,496
Executive Officer 1997 176,788 33,703 4,588
Jesse Arrambide III............. 1999 160,000 42,000 14,094
Chairman of the Board and 1998 155,557 15,975 722
Chief Operations Officer 1997 135,046 15,591 671
Samuel L. Carlson............... 1999 125,000 33,000 21,141
Senior Vice President 1998 123,524 22,172 1,688
Administration and 1997 110,492 23,387 1,720
Secretary
W. Brad Fagan................... 1999 100,000 26,000
Vice President, Treasurer 1998 95,382 390
and Assistant Secretary 1997 79,800 390
</TABLE>
- ---------------
(1) Annual incentive plan. (see Report of the Compensation Committee of the
Board of Directors)
(2) Stock bonus program. (see Report of the Compensation Committee of the Board
of Directors)
(3) "Other Annual Compensation" is intended to cover forms of annual
compensation not properly categorized as salary or bonus, including
perquisites. No named executive received such compensation or perquisites
which exceeded a threshold level for disclosure purposes.
(4) The totals in the column reflect the value of the Company contributions to
each named executive under the Employee Stock Purchase Program and
additional life insurance. These amounts for the 1999 fiscal year were as
follows: Hollis Taylor: $ and $ . Jesse Arrambide III: $ and
$ . Samuel L. Carlson: $0 and $ and W. Brad Fagan: $ and 0.
AGGREGATED OPTION EXERCISES IN 1999 AND 1999 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES SEPTEMBER 30, 1999 SEPTEMBER 30, 1999(1)(2)
ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Hollis Taylor........................... 0 N.A. 24,666 $0 0
Jesse Arrambide III..................... 0 N.A. 24,666 0 0
W. Brad Fagan........................... 0 N.A. 2,332 0 0
</TABLE>
- ---------------
(1) Market value less exercise price, before payment of applicable income taxes.
(2) Exercise price is higher than market price of Company's stock.
5
<PAGE> 8
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
There currently exist Employment Agreements between the Company and Messrs.
Taylor, Arrambide, Carlson and Fagan, providing that Messrs. Taylor, Arrambide,
Carlson and Fagan are to be employed by the Company at a base salary of not less
than $195,000, $160,000, $125,000 and $100,000 per year, respectively. These
Agreements are considered for automatic renewal on December 31 of each
succeeding year for a period of five years, expressly subject to the approval of
the Compensation Committee. As these contracts have not been renewed, they are
scheduled to expire by their terms on December 31, 2001, which is five years
from the date of the last automatic renewal on December 31, 1996. During the
term of the aforesaid Employment Agreements, these individuals are to serve as
officers of the Company and perform such services similar to and not
inconsistent with the present positions held by each with the Company. In
addition, they shall be eligible to participate in all Company benefit, bonus
and other plans. Under the terms of each Employment Agreement, such employment
may be terminated for "cause" as defined in each Employment Agreement. See 1992
Stock Option Plan for change in control provisions.
COMPENSATION OF DIRECTORS
Each member of the Board of Directors who is not an employee of the Company
receives a Director's fee, in the amount of $10,000 cash annually, and
reimbursement of actual expenses incurred. Directors who are not employees of
the Company have in the past received options under both the Stock Option Plan
for Non-Employee Directors and the 1992 Stock Option Plan. Non-employee
Directors will receive future automatic option grants under the 1992 Stock
Option Plan, and if approved by shareholders at the meeting on January 26, 2000,
under the 1998 Restricted Stock Plan for Directors will receive shares of the
Company's stock in the amount of $2,500 quarterly, based on market price.
1992 STOCK OPTION PLAN
The 1992 Stock Option Plan (1992 Plan) was approved by the shareholders at
the Annual Meeting held January 27, 1993, and amended at the Annual Meeting held
January 28, 1998. Under the 1992 Plan, each Director of the Company who was not
an employee automatically received a non-qualified stock option immediately
following the Annual Meeting of Shareholders held on January 27, 1993, in the
amount of 1,666 shares of the Company's Common Stock. At each Annual Meeting of
the shareholders thereafter, each Director of the Company who is not an employee
of the Company will automatically receive a non-qualified stock option covering
1,333 shares of the Company's Common Stock. All options granted under the 1992
Plan will have an exercise price equal to the fair market value of the Common
Stock on the date of the Annual meeting of the shareholders to which it relates.
Each option granted will have a term not to exceed ten (10) years and generally
will become exercisable at the rate of twenty-five percent (25%) for each year
the optionee remains with the Company as a Director. Options granted to a
Director can, in no event, be exercisable until the lapse of six (6) months from
the date of grant.
Other than in the case of a reincorporation of the Company in another
state, in the event of (i) dissolution or liquidation of the Company, (ii) a
transaction in which more than 50 percent of the shares of the Company that are
entitled to vote are exchanged, or (iii) any merger or consolidation or other
reorganization in which the Company is not the surviving corporation (or in
which the Company becomes a subsidiary of another corporation), outstanding
options under this Plan shall become fully exercisable immediately prior to any
such event.
Unless terminated earlier by reason of expiration of the option term,
options under the 1992 Option Plan will terminate (a) three months after the
optionee's directorship terminates for reasons other than death or disability;
(b) 12 months after termination for disability; and (c) the normal termination
date, in the case of death. All options granted under the 1992 Plan will be
non-transferable by the optionee other than by Will or the laws of descent and
distribution. Such options may contain such other terms, provisions and
conditions not inconsistent with the 1992 Plan.
6
<PAGE> 9
Pursuant to the terms of the 1992 Plan, options covering 110,333 shares at
a market price of $34.125 were granted to officers and employees of the Company
on December 16, 1993 and 1,666 shares at a price of 9.2625 on September 29,
1995, and to non-employee Directors, 5,000 shares on January 26, 1994, 4,000
shares on January 25, 1995 and January 24, 1996, 3,333 shares on January 22,
1997 and 5,333 shares on January 28, 1998 and 7,000 shares on January 27, 1999.
On February 3, 2000, options covering 6,665 shares of the Company's Common Stock
will automatically be granted to the non-employee Directors of the Company.
Options to purchase 100,061 shares of the Company's Common Stock were
outstanding as of September 30, 1999. With the exception of the automatic grants
to non-employee directors, no other options were granted, and no options were
exercised during the fiscal year ended September 30, 1999. The exercise price of
all outstanding vested options is higher than the market price of the Company's
stock on December 9, 1999.
INDEBTEDNESS OF MANAGEMENT
Jesse Arrambide, III, who is Chairman of the Board and Chief Operations
Officer of the Company, and Arrambide family-owned restaurant operations,
collectively, were indebted to the Company in the amount of $0 as of December
16, 1999. The largest aggregate amount of such indebtedness outstanding since
October 1, 1998 was $61,852. Interest is charged with respect to such balance at
a rate of 9.5% per annum.
This indebtedness, including certain advances, was incurred by Jesse
Arrambide, III, individually, in connection with a Company loan to purchase
Company stock, and by the Arrambide family-owned restaurant operations in
connection with the purchases from the Company of supplies and equipment on a
cost plus basis.
As of December 16, 1999 no other executive officer and/or director had an
outstanding balance in excess of $60,000.
7
<PAGE> 10
COMPANY STOCK PRICE PERFORMANCE
The graph below compares the cumulative total shareholder return on $100
invested at market close on September 30, 1994, assuming the reinvestment of all
dividends, on the Common Stock of the Company for the last five years with the
cumulative total return of the Nasdaq Stock Market Index (US Companies) and the
Nasdaq Eating and Drinking places (US Companies).
COMPARISON OF FIVE YEAR-CUMULATIVE TOTAL RETURNS
PERFORMANCE GRAPH FOR
PANCHO'S MEXICAN BUFFET, INC.
[CHART]
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30
---------------------------------------------
1994 1995 1996 1997 1998 1999
----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Pancho's Mexican Buffet, Inc. 100.0 36.9 24.1 27.5 10.5 14.0
Nasdaq Stock Market Index (US Companies) 100.0 138.1 163.8 225.0 228.8 371.5
Nasdaq Eating & Drinking Places (US Companies) 100.0 108.1 108.4 99.6 66.2 67.7
</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 09/30/94.
8
<PAGE> 11
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS
The Compensation Committee of the Board of Directors establishes the
general compensation policies of the Company, establishes the compensation plans
and specific compensation levels for executive officers and administers the
Company's annual incentive plan and stock option plan. The Compensation
Committee is composed of three independent, non-employee directors who have no
interlocking relationships as defined by the SEC.
The compensation committee relies primarily on data supplied by outside
consultants. Base salary, annual incentive and long-term incentive comparisons
are made relative to companies within the food and restaurant industry with
revenues closely comparable to the Company.
The compensation program for executives is viewed as a total compensation
package comprised of base salary, annual incentives and long-term capital
appreciation opportunities in the form of stock options and a stock purchase
program. The total cash compensation is comprised of base salaries that are
targeted to be slightly less than the average market salaries for comparable
companies with annual incentive opportunity targeted at a level higher than
average if targeted performance levels are attained.
ANNUAL INCENTIVE
The Officer's Bonus program is designed to reward executives for the annual
growth of the Company. Officers become eligible for a bonus only after a
predetermined level of consolidated earnings, before income taxes and payouts of
officer's bonuses has been met. Once the plan target has been met, bonuses as a
percentage of base salary are paid to executives based upon a graduated
schedule. The bonus percentage depends upon the degree to which the plan was
exceeded. Hollis Taylor is eligible for an additional 25% above the target
bonus. To be eligible, all officers must be employed at the end of the fiscal
year and any new officer would receive a bonus based on a pro-rata basis.
Payment of bonuses is made after the annual audit. Refer to Summary Compensation
Table for the bonuses paid.
LONG-TERM INCENTIVES
The stock bonus program utilized by the Company is designed to (1) align
executives with the long-term goals of the Company, (2) create an environment
whereby executives are aligned closely with shareholders and (3) encourage high
levels of stock ownership. Primary emphasis of the total compensation package
for executives is placed on the long-term component. The program of the Company
provides loans to executives to purchase shares of stock at a fixed market
price. The loan must be paid off ratably over ten years. If the financial
position of the Company and individual performance warrants, the Company pays to
the executive a stock bonus to cover the cost of the annual loan payment. While
this program has been successful, the long-term incentive compensation is below
market.
CEO COMPENSATION
The Compensation Committee believes that the Chief Executive Officer's
(CEO) compensation should be influenced by Company performance. Therefore,
although there is necessarily some subjectivity in setting the CEO's salary,
elements of the compensation package are directly tied to Company performance.
The Committee establishes the CEO's salary by reviewing annually the salaries of
CEO's of comparably-sized companies and their performance according to data
obtained by the Committee from independent outside consultants. In addition, the
CEO participates in the annual incentive plan described above.
The number of shares granted to the CEO is determined by the subjective
evaluation of the executive's ability to influence the Company's long-term
growth and profitability. The last grant of options the CEO received consisted
of 74,000 shares granted in 1993 at a market price of $11.375 per share. All
shares available to be purchased by the executive are granted at the current
market price. A loan was made to the CEO in 1992 to purchase 20,000 shares at a
market price of $7.875 per share. The loan is payable over ten years plus
interest. It has been Company policy to grant a bonus to the CEO in an amount to
cover the annual loan cost
9
<PAGE> 12
if the Company is in a financial position to make such a payment and if the
CEO's performance warranted such stock bonus. During the fiscal year, the
Company paid a stock bonus of $30,441 to the CEO.
Compensation Committee:
Tomas Orendain
George N. Riordan
Robert L. List
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933 or the Securities Exchange Act
of 1934 that might incorporate future filings, including this Proxy Statement,
in whole or in part, the preceding report and the Company Stock Performance
Chart on Page 8 shall not be incorporated by reference into any such filings.
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Rudolph Rodriguez, Jr., Director, is Chairman and Chief Executive Officer
of Rodriguez Festive Foods, Inc., which sold products to the Company's outside
distributor, which are then purchased by the Company, in the amount of
$1,439,148 during the fiscal year ended September 30, 1999. In the same fiscal
year, Rodriguez Festive Foods, Inc. purchased items in the amount of $1,784 from
the Company. Rodriguez Festive Foods, Inc. also leases the Company's cold
storage facilities formerly used by the Company's food distribution center. The
lease is for $5,000 per month expiring on October 31, 2000. All of the foregoing
transactions with Rodriguez Festive Foods, Inc. were entered into in the
ordinary course of business, and it is believed that the terms and conditions
are no less favorable to the Company than they would have been for similar
transactions with unrelated parties.
Occasional sales of supplies and equipment are made on a cost plus basis to
the family owned restaurant operations of Jesse Arrambide III, Chairman of the
Board and Chief Operations Officer of the Company. Sales were $1,021 for the
year ended September 30, 1999.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The independent auditors of the Company are Deloitte & Touche LLP, who have
acted in that capacity for many years. The Company has requested that Deloitte &
Touche LLP act as the independent auditors for the Company for fiscal 2000.
Representatives of Deloitte & Touche LLP will be present at the annual meeting
with the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions addressed to them.
10
<PAGE> 13
PROPOSAL TO APPROVE THE 1998 RESTRICTED STOCK PLAN
FOR NON-EMPLOYEE DIRECTORS AND THE ISSUANCE OF
COMMON STOCK PREVIOUSLY GRANTED UNDER THE PLAN
Effective January 1, 1998, the Board of Directors adopted the 1998
Restricted Stock Plan for Non-Employee Directors (the "Plan"). The Plan
authorizes the issuance of up to 33,333 shares of the Company's Common Stock to
non-employee Directors of the Company. The following five persons are currently
non-employee Directors of the Company: Robert L. List, George N. Riordan, Tomas
Orendain, Rudolph Rodriguez, Jr., and David Oden. Of these persons, Messrs. List
and Riordan are nominees for election to the Board of Directors.
The purpose of the Plan is to permit grants of shares of Common Stock,
subject to certain restrictions, to compensate non-employee Directors, to reward
such Directors for performance and to increase their ownership of Common Stock.
The stockholders are being requested to approve the adoption of the Plan
and the issuance of Common Stock that has previously occurred pursuant to the
terms of the Plan. The Board of Directors believes that it is in the best
interests of the Company and its stockholders to approve such adoption and
issuance. A vote of a majority of the votes cast at the meeting, in person or by
proxy, is required to approve the foregoing proposal. By approving the Plan,
stockholders will also be approving the previous issuance of Common Stock under
the Plan. Abstentions and broker non-votes are not counted as votes cast.
All share information contained in the following discussion of the Plan has
been adjusted to reflect the reverse stock split of Common Stock effective
January 27, 1998.
BACKGROUND
From January 1, 1998, through April 5, 1999, the Board of Directors awarded
and issued an aggregate of 19,552 shares of Common Stock to non-employee
Directors pursuant to the Plan, as indicated in the following table. All amounts
in the table, including the closing price of the Common Stock on the date of the
grant, reflect the reverse stock split.
<TABLE>
<CAPTION>
CLOSING PRICE OF NUMBER OF
COMMON STOCK SHARES AWARDED
DATE OF GRANT ON DATE OF GRANT RECIPIENTS TO EACH DIRECTOR
- ------------- ---------------- ---------- ----------------
<S> <C> <C> <C>
January 5, 1998......................... $6.09375 Robert L. List 410
Tomas Orendain
George N. Riordan
Rudolph Rodriguez, Jr.
April 2, 1998........................... $5.25 Robert L. List 476
Tomas Orendain
George N. Riordan
Rudolph Rodriguez, Jr.
June 30, 1998........................... $5.0625 Robert L. List 494
Tomas Orendain
George N. Riordan
Rudolph Rodriguez, Jr.
October 2, 1998......................... $3.00 Robert L. List 833
Tomas Orendain
George N. Riordan
Rudolph Rodriguez, Jr.
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
CLOSING PRICE OF NUMBER OF
COMMON STOCK SHARES AWARDED
DATE OF GRANT ON DATE OF GRANT RECIPIENTS TO EACH DIRECTOR
- ------------- ---------------- ---------- ----------------
<S> <C> <C> <C>
January 4, 1999......................... $1.9689 Robert L. List 1,270
David Oden
Tomas Orendain
George N. Riordan
Rudolph Rodriguez, Jr.
April 5, 1999........................... $2.8750 Robert L. List 870
David Oden
Tomas Orendain
George N. Riordan
Rudolph Rodriguez, Jr.
</TABLE>
In accordance with the Plan, these shares are "restricted stock." As a
result, the shares have certain restrictions on transfer until the death,
disability or retirement of the Director. See "-- Description of the Plan"
below.
The rules of the Nasdaq Stock Market generally require, with certain
exceptions, approval of stock option plans of a company that is listed on the
Nasdaq when a stock option or purchase plan is to be established. The Company,
however, inadvertently failed to obtain stockholder approval of the Plan in
accordance with these rules when the Board of Directors approved the Plan.
Nasdaq brought this omission to the Company's attention and requested that the
Company submit a proposal to remedy the rule violation as a condition to the
Company's stock being listed on the Nasdaq SmallCap Market.
The Board of Directors determined to remedy the inadvertent violation of
Nasdaq's rules by adopting a resolution that provides that future issuance of
restricted shares of the Company's Common Stock pursuant to the Plan be
suspended until the Company's stockholders considered approving the Plan. The
19,552 restricted shares of the Company's Common Stock that have been previously
issued under the Plan will remain outstanding, unless the Plan is not approved
by the Company's stockholders, in which case the shares will be canceled. Nasdaq
accepted this remedial plan of action, and the Common Stock was subsequently
approved for listing on the Nasdaq SmallCap Market.
DESCRIPTION OF THE PLAN
The maximum number of shares of Common Stock that may be awarded under the
Plan is 33,333 shares. If a grant of restricted shares under the Plan is
forfeited, the shares subject to such forfeiture will not be available for
future grants as restricted shares under the Plan.
The Plan will be administered by a committee (the "Committee") of the Board
of Directors of the Company, consisting of three or more members of the Board of
Directors. The Board of Directors may also assume, at its sole discretion,
administration of the Plan. The Committee will have the authority to interpret
the Plan and to establish, amend and rescind rules and regulations relating to
the Plan.
The Plan provides that each non-employee Director of the Company will
receive each year restricted shares having a fair market value of $10,000. The
restricted shares will be granted quarterly at the close of trading on the first
business day in January, April, July and October. Each quarterly grant will be
equal to that number of shares of Common Stock that has a value of $2,500, based
on the closing price of the Company's Common Stock on the day of the grant.
The shares of stock granted under the Plan will be subject to certain
restrictions described in the following paragraph for a period (the "Restriction
Period") commencing on the date of the grant and ending on the date the Director
ceases to be a Director of the Company by reason of death, disability or
retirement. A grant of restricted shares will be effective for the Restriction
Period and may not be revoked.
12
<PAGE> 15
The Company will hold the restricted shares for the account of the
Director. The Director receiving the restricted shares will have all of the
rights and privileges of a stockholder as to the restricted shares (including
the right to vote the shares and to receive dividends), subject to the following
restrictions: (i) the Director will not be entitled to delivery of the stock
certificate until the expiration of the Restriction Period; (ii) none of the
restricted shares may be sold, transferred, assigned, pledged or otherwise
encumbered or disposed of during the Restriction Period; and (iii) all of the
restricted shares will be forfeited if the Director ceases to be a Director for
any reason other than death, disability or retirement.
The Company is not required to issue any certificate for restricted shares
granted under the Plan prior to (i) obtaining any approval from any governmental
agency that the Company, in its sole discretion, determines to be necessary or
advisable, (ii) the admission of the shares to listing on any stock exchange on
which the Company may then be listed, (iii) the completion of any registration
or other qualification of the shares under any state or federal law or rulings
or regulations of any governmental body that the Company, in its sole
discretion, determines to be necessary or advisable, and (iv) six months and one
day after any grant of restricted shares.
The Plan provides that in the event of a recapitalization, stock split,
stock dividend, combination or exchange of shares, merger, consolidation, rights
offering, separation, reorganization or liquidation, or any other change in the
corporate structure or shares of the Company, the Board of Directors will make
an equitable adjustment to preserve benefits under the Plan as it may deem
appropriate in the number and kind of shares authorized by the Plan and in the
number and kind of shares or other securities or property covered by awards
under the Plan. Other than in the case of a reincorporation of the Company in
another state, the Plan provides that in the event of (i) dissolution or
liquidation of the Company, (ii) a transaction in which more than 50% of the
shares of the Company that are entitled to vote are exchanged, or (iii) any
merger or consolidation or other reorganization in which the Company is not the
surviving corporation (or in which the Company becomes the subsidiary of another
company), outstanding awards under the Plan will become free of all restrictions
immediately prior to any such event.
No restricted shares may be granted under the Plan after December 31, 2002,
but grants of restricted shares previously granted may extend beyond that date,
and the terms and conditions of the Plan will continue to apply to these grants.
The Board of Directors may terminate the Plan at any time with respect to any
shares of Common Stock not at the time subject to outstanding awards. The Board
of Directors may from time to time alter or amend the Plan or any part of the
Plan.
INFORMATION CONCERNING STOCKHOLDER PROPOSALS
A Stockholder intending to present a proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's next Annual
Meeting of Stockholders must deliver such proposal in writing to the Company's
principal executive offices no later than August 23, 2000.
If a Stockholder desires to bring business before the meeting which is not
the subject of a proposal timely submitted for inclusion in the Proxy statement,
the Stockholder must follow the procedures outlined in the Company's Bylaws. A
copy of these procedures is available upon request from the Secretary of the
Company. 3500 Noble Avenue, Fort Worth, Texas 76111. One of the procedural
requirements in the Bylaws is timely notice in writing of the business the
Stockholder proposes to bring before the meeting. Notice must be received not
less than 60 days nor more than 90 days prior to the meeting.
13
<PAGE> 16
OTHER MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING
The Company knows of no matters other than those above stated which are to
be brought before the meeting. It is intended that the persons named in the
enclosed Proxy will vote your stock according to their best judgment if any
other matters do properly come before the meeting.
A copy of the Annual Report for fiscal 1999 is being mailed to Stockholders
with the Proxy Statement. The Annual Report is not to be regarded as
proxy-soliciting material or a communication by means of which any solicitation
is to be made.
Whether or not you intend to be present at this meeting, you are urged to
return the Proxy promptly. If you are present at the meeting, and wish to vote
your stock in person, this Proxy shall, at your request, be returned to you at
the meeting.
By Order of the Board of Directors
SAMUEL L. CARLSON
Secretary
Dated: December 20, 1999
14
<PAGE> 17
SITE OF PANCHO'S MEXICAN BUFFET, INC.
ANNUAL MEETING OF SHAREHOLDERS
WEDNESDAY, FEBRUARY 2, 2000 AT 10:00 A.M.
PANCHO'S MEXICAN BUFFET
68 BROADWAY SQUARE
GUS THOMASSON RD.
MESQUITE, TEXAS 75150
TELEPHONE 972-681-1435
SITE OF PANCHO'S MEXICAN BUFFET, INC.
<PAGE> 18
1998 RESTRICTED STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
OF PANCHO'S MEXICAN BUFFET, INC.
1. PURPOSE
The purpose of the 1998 Restricted Stock Plan for Non-Employee
Directors of Pancho's Mexican Buffet, Inc. is to permit grants of shares of
Common Stock subject to restrictions in order to compensate Non-Employee
Directors of the Company, to reward such Directors for performance and to
increase their ownership of Common Stock.
2. DEFINITIONS
The following terms shall have the following meanings:
"Act" means the Securities Exchange Act of 1934, as amended.
"Award" means an award of Restricted Shares pursuant to the Plan.
"Beneficiary" means any person or persons designated in writing by a
Participant to the Committee on a form prescribed by it for that
purpose, which designatio shall be revocable at any time by the
participant prior to his or her death, provided that, in the absence
of such a designation or the failure of the person or persons so
designated to survive the Participant, "Beneficiary" shall mean such
participant's estate.
"Board" means the Board of Directors of the Company.
"Committee" means the Committee designated by the Board to administer
the Plan pursuant to Section 3.
"Common Stock" means the Common Stock, par value $0.10 per share, of
the Company.
"Company" means Pancho's Mexican Buffet, Inc., a Delaware
corporation, or any successor corporation.
"Disability" of a Participant means that the Participant is disabled
due to a physical or mental condition so as to be prevented from
engaging in further services as a director of the Company.
"Non-Employee Director" means a director of the Company who is not a
full-time officer of employee of the Company or any of its
subsidiaries or affiliates.
"Participant" means any Non-Employee Director of the Company who is
granted an Award under the Plan.
"Plan" means this 1998 Restricted Stock Plan for Non-Employee
Directors, as amended from time to time.
<PAGE> 19
"Restricted Shares" means shares of Common Stock subject to an Award
granted under the Plan.
"Restriction Period" means the period of time during which the
restrictions described in Section 7(b) shall be applicable.
"Retirement" of a Participant means termination of service, while in
good standing and not in violation of law, as a director of the
Company; provided that Participant had served as a director of the
Company for at least three (3) years from the date the restricted
shares were granted to such Participant.
3. ADMINISTRATION
The Plan shall be administered by the Committee which shall comprise
not less than three members of the Board; provided, however, that the Board may
assume, at its sole discretion, administration of the Plan. The Committee shall
have full authority to construe and interpret the Plan, to establish, amend and
rescind rules and regulations relating to the Plan, to administer the Plan, and
to take all such steps and make all such determinations in connection with the
Plan and Awards granted thereunder as it may deem necessary or advisable. Each
grant of Restricted Shares shall, if required by the Committee, be evidenced by
an agreement to be executed by the Company and the Participant and to contain
provisions not inconsistent with the Plan. All determinations of the Committee
shall be by a majority of its members and shall be evidenced by resolution,
written consent or other appropriate action, and the Committee's determinations
shall be final. Each member of the Committee, while serving as such, shall be
considered to be acting in his or her capacity as a director of the Company.
4. ELIGIBILITY
All Non-Employee Directors are eligible to participate in the Plan.
5. STOCK SUBJECT TO THE PLAN
Subject to the provisions of Section 9, the maximum number of shares of
Common Stock subject to Awards under the Plan shall be 100,000 shares. Shares of
Common Stock subject to Awards under the Plan, in the discretion of the Board,
may be either authorized but unissued shares or shares previously issued and
reacquired by the Company. Upon the forfeiture (in whole or in part) of a grant
of Restricted Shares, the shares of Common Stock subject to such forfeiture
shall not be available for grant as Restricted Shares under the Plan.
6. AWARDS UNDER THE PLAN
All Non-Employee Directors shall each receive each year during the term
of the Plan, restricted shares having a fair market value of $10,000, such
restricted shares to be granted quarterly, commencing in 1998, at the close of
trading on the first business day in January, April, July and October. Each such
quarterly grant of restricted shares to each Non-Employee Director shall be that
number of shares of common stock which shall have a value of $2,500 based on the
closing price of the Company's common stock on the day of the grant. Each
Participant shall immediately notify the Company of any election made by the
Participant under Section 83(b) of the Internal Revenue Code with respect to a
grant received by the Participant.
<PAGE> 20
7. TERMS AND CONDITIONS OF AWARDS
(a) General. With respect to each grant of Restricted Shares under the
Plan to a director, the restrictions set forth in Section 7(b) shall apply to
such Restricted Shares for a period (the "Restriction Period") commencing on the
date of grant and ending on the date such director ceases to be a director of
the Company by reason of death, disability or retirement. A grant of Restricted
Shares shall be effective for the Restriction Period and may not be revoked.
(b) Restrictions. A the time of grant of Restricted Shares to a
Participant, a certificate representing the appropriate number of shares of
Common Stock as set forth in Section 6 hereof, shall be registered in the
Participant's name but shall be held by the Company for his or her account. The
Participant shall have the entire beneficial ownership interest in, and all
rights and privileges of a stockholder as to, such Restricted Shares, including
the right to vote such Restricted Shares and the right to receive dividends,
subject to the following restrictions: (i) the Participant shall not be entitled
to delivery of the stock certificate until the expiration of the Restriction
Period; (ii) none of the Restricted Shares may be sold, transferred, assigned,
pledged, or otherwise encumbered or disposed of during the Restriction Period;
and (iii) all of the Restricted Shares shall be forfeited and all rights of the
Participant to such Restricted Shares shall terminate without further obligation
on the part of the Company if the Participant ceases to be a director of the
Company for any reason other than death, disability or retirement. Any shares of
Common Stock or other securities or property received as a result of a
transaction listed in Section 9 shall be subject to the same restrictions as
such Restricted Shares.
(c) Delivery of Restricted Shares. At the end of the Restriction Period
all restrictions applicable to the Restricted Shares shall lapse, and a stock
certificate for a number of shares of Common Stock equal to the number of
Restricted Shares, free of all restrictions, shall be delivered to the
Participant or his Beneficiary, as the case may be.
8. REGULATORY APPROVALS AND LISTING
The Company shall not be required to issue to a Participant or a
Beneficiary, as the case may be, any certificate for any Restricted Shares
granted under the Plan prior to (i) the obtaining of any approval from any
governmental agency which the company, in it sole discretion, shall determine to
be necessary or advisable, (ii) the admission of such shares to listing on any
stock exchange on which the Common Stock may then be listed, (iii) the
completion of any registration or other qualification of such shares under any
state or Federal law or rulings or regulations of any governmental body which
the Company, in its sole discretion, shall determine to be necessary or
advisable, and (iv) six months and one day after any grant of Restricted Shares
to a Participant.
9. ADJUSTMENT UPON CHANGES IN SHARES
(a) In the event of a recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation, rights offering,
separation, reorganization or liquidation, or any other change in the corporate
structure or shares of the Company, the Board shall make such equitable
adjustments to preserve benefits under the Plan as it may deem appropriate in
the number and kind of shares authorized by the Plan and in the number and kind
of shares or other securities or property covered by Awards.
<PAGE> 21
(b) Other than in the case of a reincorporation of the Company in
another state, in the event of (i) dissolution or liquidation of the Company,
(ii) a transaction in which more than 50 percent of the shares of the Company
that are entitled to vote are exchanged, or (iii) any merger or consolidation or
other reorganization in which the Company is not the surviving corporation (or
in which the Company becomes a subsidiary of another corporation), outstanding
awards under this Plan shall become free of all restrictions immediately prior
to any such event.
10. TERM OF THE PLAN
No Restricted Shares shall be granted pursuant to the Plan after
December 31, 2002, but grants of Restricted Shares theretofore granted may
extend beyond that date and the terms an conditions of the Plan shall continue
to apply thereto.
11. TERMINATION OR AMENDMENT OF THE PLAN
The Board may at any time terminate the Plan with respect to any shares
of Common Stock not at the time subject to outstanding Awards, and may from time
to time alter or amend the Plan or any part thereof (including, but without
limiting the generality of the foregoing, any amendment deemed necessary to
ensure that the Company may obtain any approval referred to in Section 8 or to
ensure that the grant of Awards, the payment of Restricted Shares or any other
provision of the Plan complies with Section 16(b) of the Act), or any other
applicable laws, regulations or exchange requirements.
12. GENERAL PROVISIONS
(a) Neither the Plan nor the grant of any Award nor any action by the
Company or the Committee shall be held or construed to confer upon any person
any right to continue to be a director of the Company.
(b) All questions pertaining to the construction, regulation, validity
and effect of the Plan shall be determined in accordance with the laws of the
State of Delaware.
13. EFFECTIVE DATE
The Plan shall become effective on January 1, 1998
<PAGE> 22
PANCHO'S MEXICAN BUFFET, INC.
PROXY FOR ANNUAL MEETING FEBRUARY 2, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE DIRECTORS
That I, the undersigned, revoking all previous proxies do make, constitute
and appoint Jesse Arrambide III, Samuel L. Carlson and Hollis Taylor, or any of
them, my true and lawful attorneys, with power of substitution, for me and in my
name to vote at the annual meeting of the stockholders of PANCHO'S MEXICAN
BUFFET, INC. to be held on the 2nd day of February, 2000, and at any adjournment
thereof, on all shares of stock of said Company standing in my name upon its
books. No business other than the proposals described below are expected to come
before the meeting, but should any other matter requiring a vote of stockholders
arise, the persons named herein will vote thereon in accordance with their best
judgment to the extent permitted by law or regulation. The Board of Directors
recommends a vote FOR proposals 1 & 2.
(1) [ ] FOR [ ] WITHHOLD VOTE The election of Hollis Taylor, Robert L.
List and George Riordan as directors. If you desire to withhold authority
to vote for any individual nominee, please write that nominee's name on
the space provided:
- --------------------------------------------------------------------------------
(2) [ ] FOR [ ] AGAINST [ ] ABSTAIN The proposal to approve the 1998
Restricted Stock Plan for Non-Employee Directors and the issuance of the
Company's Common Stock heretofore issued pursuant to such Plan.
<PAGE> 23
THIS PROXY, PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREON
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 & 2, AND IN THE DISCRETION OF THE PROXIES SUCH OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE MEETING.
Date:
---------------------- ---------------------------------
Signature
---------------------------------
INSTRUCTIONS
If signing in a representative
capacity (as attorney, executor
or administrator, trustee,
guardian or custodian, corporate
officer or general partner)
please indicate such capacity
following signature. Proxies for
custodial accounts must be signed
by the named custodian, not by
the minor.
