<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:
<TABLE>
<S> <C>
[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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
FAMILY STEAK HOUSES OF FLORIDA, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (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
FAMILY STEAK HOUSES OF FLORIDA, INC.
2113 FLORIDA BOULEVARD
NEPTUNE BEACH, FLORIDA 32266
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the Annual Shareholders' Meeting to be
held at the Sea Turtle Inn, One Ocean Boulevard, Atlantic Beach, Florida 32233,
on Tuesday, June 17, 1997 at 10:00 a.m. for the purpose of:
1. Electing Directors;
2. Approving an amendment to the Articles of Incorporation to classify
the Board of Directors into three classes serving staggered terms, permit
removal of directors only for cause and provide that vacancies in the Board
of Directors may only be filled by the affirmative vote of 80% of the
directors then in office ("Proposal 2").
3. Approving an amendment to the Articles of Incorporation to increase
the number of shares of the Company's common stock authorized for issuance
by an additional ten million shares ("Proposal 3");
4. Considering a shareholder proposal to opt out of the Florida
"Control Share Act"; and
5. Transacting such other business as may properly come before the
meeting.
The Board of Directors has fixed the close of business on May 8, 1997 as
the record date for determining shareholders entitled to vote at the Meeting.
Only shareholders of record at the close of business on that date will be
entitled to vote at the Meeting.
The vote of every shareholder is important. Whether or not you plan to
attend the Meeting, please complete the enclosed proxy and return it promptly so
that your shares will be represented. Sending in your proxy will not prevent you
from voting in person at the Meeting.
/s/ Lewis E. Christman, Jr.
Lewis E. Christman, Jr.
President & CEO
Date: May 9, 1997
<PAGE> 3
FAMILY STEAK HOUSES OF FLORIDA, INC.
2113 FLORIDA BOULEVARD
NEPTUNE BEACH, FLORIDA 32266
PROXY STATEMENT
FOR
1997 ANNUAL MEETING OF SHAREHOLDERS
GENERAL INFORMATION
The solicitation of the enclosed proxy is made by and on behalf of the
Board of Directors of Family Steak Houses of Florida, Inc. (the "Company") to be
used at the 1997 Annual Meeting of Shareholders, which will be held at the Sea
Turtle Inn, One Ocean Boulevard, Atlantic Beach, Florida, at 10:00 a.m. on
Tuesday, June 17, 1997. The principal executive offices of the Company are
located at 2113 Florida Boulevard, Neptune Beach, Florida 32266. The approximate
mailing date of this Proxy Statement is May 9, 1997.
The proxy may be revoked at any time before it is exercised by giving
notice of revocation to the Secretary of the Company. The shares represented by
proxies in the form solicited by the Board of Directors will be voted at the
meeting. Where a choice is specified with respect to a matter to be voted upon,
the shares represented by the proxy will be voted in accordance with such
specification. If no choice is specified, such shares will be voted as
hereinafter stated in this Proxy Statement.
RECORD DATE AND VOTING SECURITIES
The Board of Directors has fixed the close of business on May 8, 1997 as
the record date for determination of shareholders entitled to vote at the
meeting. Holders of the Company's common stock, par value $0.01 per share (the
"Common Stock") as of May 8, 1997 will be entitled to one vote for each share
held, with no shares having cumulative voting rights. No other class of the
Company's securities is entitled to vote at the meeting. As of April 15, 1997,
the Company had outstanding 11,030,000 shares of Common Stock.
VOTING PROCEDURES
Under Florida law and the Amended and Restated Bylaws of the Company (the
"Bylaws"), a majority of shares of the Common Stock entitled to vote,
represented by person or proxy, constitutes a quorum at a meeting of
shareholders.
Under the Florida Business Corporation Act, directors are elected by a
plurality of the affirmative votes cast by the shares entitled to vote in the
election at a meeting at which a quorum is present. Article IX of the Company's
Articles of Incorporation, as amended (the "Articles"), provides that an
amendment to such Articles must be approved at a shareholders' meeting by at
least a majority of the stock entitled to vote on the amendment. Accordingly,
Proposals 2 and 3 and the proposal by shareholder Glen F. Ceiley to opt out of
the Florida Control Share Act by amending the Articles (the "Ceiley Proposal")
must be approved by the affirmative vote of a majority of the shares of Common
Stock entitled to vote on these matters. Other matters are approved if a quorum
exists and the votes cast favoring the action exceed the votes opposing the
action.
Under Florida law, abstentions and broker non-votes have no effect on the
election of directors. Abstentions will have the effect of a negative vote on
each of the three proposed amendments to the Articles. A broker non-vote
generally occurs when a broker who holds shares in street name for a customer
does not have authority to vote on certain non-routine matters under the rules
of the market on which the stock is traded because the beneficial owner of the
shares held in street name has not provided voting instructions on the matter.
Under applicable market rules, brokers will not have authority to vote without
instruction from the beneficial owner on the shareholder proposal or other
matters which are subject to a counter solicitation, and thus a broker non-vote
will have no effect. With respect to other proposals on which brokers have the
authority to vote the shares without instruction from the beneficial owner, a
broker non-vote will have the same effect as a vote against such proposals.
<PAGE> 4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND OF MANAGEMENT
The table set forth below presents certain information regarding beneficial
ownership of the Company's Common Stock (the Company's only voting security), as
of April 15, 1997, by (i) each shareholder known to the Company to own, or have
the right to acquire within sixty (60) days, more than five percent (5%) of the
Common Stock outstanding and (ii) all officers and director nominees of the
Company as a group. The shares of Common Stock beneficially owned by each
director nominee are shown in the table beginning on page 4 of this Proxy
Statement.
<TABLE>
<CAPTION>
AMOUNT OF
COMMON
NAME AND ADDRESS OF STOCK BENEFICIALLY PERCENT OF
BENEFICIAL OWNER OWNED CLASS
- ------------------- ------------------ ----------
<S> <C> <C>
Heartland Advisors, Inc..................................... 900,000(1) 8.2%
790 N. Milwaukee Street
Milwaukee, WI 53202
Cerberus Partners, L.P...................................... 700,000(2) 6.0%
950 Third Ave., 20th Floor
New York, New York 10022
Bisco Industries, Inc....................................... 739,790(3) 6.7%
704 W. Southern Avenue
Orange, CA 92865
All Officers and Director................................... 458,891(4) 4.1%
Nominees as a Group (6 Persons)
</TABLE>
- ---------------
(1) Based on information contained in a Schedule 13G filed with the Securities
and Exchange Commission (the "Commission") as of February 12, 1997,
Heartland Advisors, Inc. claimed sole voting and dispositive power with
respect to all 900,000 shares of the Common Stock.
(2) Represents shares of Common Stock issuable upon the exercise of certain
stock purchase warrants issued October 1, 1988 and March 14, 1995, pursuant
to which the holders thereof have the right to purchase an aggregate of up
to 700,000 shares for $.40 per share. None of such shares are outstanding.
(3) Based on information set forth in the Preliminary Proxy Statement filed with
the Commission on April 15, 1997, Bisco Industries, Inc. ("Bisco") owns
126,300 shares; Glen F. Ceiley, President and a director of Bisco, owns
95,300 shares, individually; the Bisco Industries Profit Sharing and Savings
Plan (the "Bisco Plan") owns 518,190 shares. The amount does not include
15,000 shares owned individually by Stephen Catanzaro, an executive officer
of Bisco. According to the Schedule 13D of Mr. Ceiley as amended on January
16, 1997, Mr. Ceiley has the sole power to vote and dispose of the shares of
Common Stock he owns individually and the power to vote and to dispose of
the shares owned by Bisco and the Plan.
(4) Includes an aggregate 262,250 of shares of Common Stock which certain of the
Company's executive officers and directors have the right to acquire
immediately or within sixty days (60) upon the exercise of certain options
granted pursuant to the Company's various stock option plans.
BOARD OF DIRECTORS AND STANDING COMMITTEES
The business of the Company is under the general management of a Board of
Directors as provided by the Florida Business Corporation Act. In accordance
with the Bylaws of the Company, which empower the Board of Directors to appoint
such committees as it deems necessary and appropriate, the Board of Directors
has appointed an Audit Committee and an Executive Compensation Committee.
The Audit Committee's basic functions are to assist the Board of Directors
in discharging its fiduciary responsibilities to the shareholders and the
investment community in the preservation of the integrity of the financial
information published by the Company, to maintain free and open means of
communication between the Company's directors, independent auditors and
financial management, and to ensure the independence of the independent
auditors. Currently, the members of the Audit Committee are Directors Gray and
Glickstein,
2
<PAGE> 5
each of whom are non-employee Directors, and Director Christman. The Audit
Committee held one meeting during fiscal year 1996. All members of the Audit
Committee attended this meeting.
The Executive Compensation Committee administers the Company's qualified
Employee Incentive Stock Option Plan and is responsible for granting qualified
stock options to officers and managerial employees of the Company. It is also
responsible for establishing the salary and annual bonuses paid to the Chief
Executive Officer and, in consultation with the CEO, the salaries of the other
executive officers of the Company. The current members of the Executive
Compensation Committee are Directors Glickstein and Gray, each of whom are
non-employee Directors, and Director Christman. The Executive Compensation
Committee held three meetings during fiscal year 1996. All members of the
Committee attended these meetings.
The Board of Directors held 9 meetings during fiscal year 1996. Each of the
directors attended at least 75% of the meetings of the Board of Directors.
The Board of Directors does not have a Nominating Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Christman, the Company's Chief Executive Officer, served as a member of
the Executive Compensation Committee in 1996. He does not participate in any
discussions or decisions regarding his own compensation.
DIRECTOR COMPENSATION
Three of the five director nominees are not employees of the Company. In
order to attract and retain highly qualified independent directors through an
investment interest in the Company's future success, the Company enacted in 1985
a non-qualified Stock Option Plan for Non-Employee Directors (the "Director's
Plan").
Each director eligible under the Directors Plan annually receives an option
to purchase 9,000 shares of Common Stock. Typically options are granted on the
first business day of each calendar year, at an option exercise price per share
equivalent to a price such that the aggregate fair market value on the date of
grant for all shares subject to the options exceeds the aggregate option
exercise price by the amount of $10,000. Options granted under the Director's
Plan are immediately exercisable and expire five years from the date of grant.
On January 1, 1997 options were granted to Directors Gray and Glickstein
for the purchase of 9,000 shares each at a purchase price of $.01 per share.
Since the price of the stock was $.5938 on January 2, 1997, the Company granted
an additional 8,130 shares to each eligible director at a purchase price of $.01
per share so that the market value of all options granted in 1997 exceeded the
option exercise price by $10,000.
Directors who are full-time employees of the Company receive $100 for each
Board of Directors meeting attended. Directors who are not employees of the
Company receive a fee of $500 for each Board of Directors meeting attended. No
fees are awarded directors for attendance at meetings of the Audit or Executive
Compensation Committees of the Board of Directors.
The Company has entered into a one-year consulting agreement with Mr.
Martin, a director of the Company, in connection with his retirement as an
officer of the Company, for a retainer of $13,500 and continued medical and
other insurance benefits. Under the consulting agreement, Mr. Martin also agreed
not to take certain actions to compete with the Company or to interfere with its
business relationships for a period of two years after termination of the
consulting agreement. If the consulting agreement is terminated by the Company
"without cause" (as defined in such agreement), the Company must pay the balance
of any consulting fee for the remaining term of the agreement.
Director Glickstein is a partner with the law firm of Glickstein &
Glickstein, P.A. which was retained by the Company in fiscal year 1996 and may
be retained to provide legal advice to the Company from time to time in the
future.
3
<PAGE> 6
MATTERS TO BE ACTED UPON
Proposal 1: Election of Directors
The Board of Directors recommends that the shareholders vote for the
election of the five (5) nominees listed below to serve as directors for the
terms outlined below and until their successors are elected and qualified. Each
of the nominees presently is serving as a director of the Company. Mr. Christman
was appointed in February 1993 and elected by the shareholders at the 1993
annual meeting. Directors Gray and Glickstein were appointed in June 1994 and
elected by the shareholders in August 1994. Director Martin was elected by the
shareholders in June 1995. Mr. Alexander was appointed to the Board in July
1996. Should any one or more of the nominees become unavailable to accept
nomination or election as a director, the enclosed proxy will be voted for such
other person or persons as the Board of Directors may recommend, unless the
Board reduces the number of directors.
<TABLE>
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED PERCENT
TERM AS OF OF
NAME EXPIRES(3) BUSINESS EXPERIENCE AND AGE APRIL 15,1997(1) CLASS(2)
---- ---------- --------------------------- ------------------ -----------
<S> <C> <C> <C> <C>
Lewis E. Christman, Jr. 1999 President & CEO of the Company 111,409 1.00%
since April 1994. Purchasing
consultant to the Company from
January 1994 to March 1994.
Partner, East Coast Marketing
since 1990; Chairman of the
Board of Neptune Marketing
Inc. (food broker) from 1979
to 1989. Age 77.
Joseph M. Glickstein, Jr. 2000 Partner, Glickstein & 60,059 .54%
Glickstein, law firm since
1950. Age 70.
Richard M. Gray 1999 Partner, Gray & Kelley, CPAs, 60,059 .54%
since 1973. President &
Director of Universal Marion
Corp. since 1973. Age 65.
Robert J. Martin 1998 Consultant to the Company 105,614(4) .95%
since January 1997. Vice
President of the Company from
April 1994 to January 1997.
Vice President of Steak House
Construction Corporation, the
Company's wholly owned
construction subsidiary, since
1981. Age 68.
Edward B. Alexander 2000 Vice President of Finance of 94,500 .85%
the Company since December
1996. Secretary/Treasurer of
the Company from November 1990
to December 1996; Controller
of the Company from January
1989 to April 1990. Age 38.
</TABLE>
- ---------------
(1) Included in such beneficial ownership are shares of Common Stock issuable
upon the exercise of certain options exercisable immediately or within sixty
(60) days of April 15, 1997, as follows: Lewis E. Christman, Jr., 100,000
shares; Robert J. Martin, 53,000 shares; Edward B. Alexander, 82,000 shares.
4
<PAGE> 7
(2) The percentages represent the total of the shares listed in the adjacent
column divided by the issued and outstanding shares of Common Stock as of
April 15, 1997, plus any stock options or warrants exercisable by such
person within 60 days following April 15, 1997.
(3) The proposed terms for the director nominees assumes shareholder approval of
the amendment to the Articles of Incorporation discussed below as Proposal
2. If this proposed amendment is not approved by the shareholders, then each
nominee elected shall serve for one year and until their successors are
elected and qualified
(4) Includes 5,800 shares owned by the spouse of Mr. Martin.
There are no family relationships between any of the nominees and executive
officers of the Company. There are no arrangements or understandings between any
director and any other person pursuant to which any of the nominees has been
nominated.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires certain officers of the Company and its directors, and
persons who beneficially own more than ten percent of any registered class of
the Company's equity securities, to file reports of ownership in such securities
and changes in ownership in such securities with the Commission and the Company.
Based solely on a review of the reports and written representations
provided to the Company by the above referenced persons, the Company believes
that during 1996 all filing requirements applicable to its reporting officers,
directors and greater than ten percent beneficial owners were timely satisfied.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee (the "Committee"), currently
consisting of Directors Christman, Glickstein and Gray, uses the following
objectives as guidelines for its executive compensation decisions: to provide a
compensation package that will attract, motivate and retain qualified
executives; to ensure a compensation mix that focuses executive behavior on the
fulfillment of annual and long-term business objectives; and to create a sense
of ownership in the Company that causes executive decisions to be aligned with
the best interests of the Company's shareholders.
The Company's compensation package in 1996 for its executive officers
consisted of base salary and stock option grants. The Committee (with Mr.
Christman abstaining) determined stock option awards and salary level for the
Company's Chief Executive Officer. The Chief Executive Officer, in consultation
with the Committee, made decisions regarding salary and annual bonuses and
recommendations regarding stock option grants to other executive officers of the
Company.
General Compensation Policies
In general, base salary levels are set at the minimum levels believed by
the Company's Chief Executive Officer to be sufficient to attract and retain
qualified executives when considered with the other components of the Company's
compensation structure.
The Company's Chief Executive Officer adjusts salary levels for executive
officers based on achievement of specific annual performance goals, including
personal, departmental and overall Company goals depending upon each officer's
specific job responsibilities. The Chief Executive Officer also uses his
subjective judgment, based upon such criteria as the executive's knowledge of
and importance to the Company's business, willingness and ability to accomplish
the tasks for which he or she was responsible, professional growth and
potential, the Company's operating earnings and an evaluation of individual
performance, in making salary decisions. Compensation paid to executive officers
in prior years is also taken into account. No particular weighting is applied to
these factors.
Each of the Committee and Chief Executive Officer may determine that the
Company's financial performance and individual achievements merit the payment of
annual bonuses. In recent years, no bonuses have been awarded to any officers of
the Company.
5
<PAGE> 8
The non-employee members of the Committee determine stock option grants to
the Chief Executive Officer. The Committee determines annual stock option grants
to other executive officers and to other eligible employees based on
recommendations of the Chief Executive Officer. Stock options are intended to
encourage key employees to remain employed by the Company by providing them with
a long term interest in the Company's overall performance as reflected by the
market price of the Company's Common Stock. In making awards in 1996, the Chief
Executive Officer and the Committee considered, without assigning a particular
weighting, the number of options previously granted to the executive, the
executive's salary, the Company's performance and the need for a long term focus
on improving shareholder value.
The Committee will consider any federal income tax limitations on the
deductibility of executive compensation in reaching compensation decisions and
will seek shareholder approval where such approval will eliminate any
limitations on deductibility.
CEO Compensation
Mr. Christman has served as President and Chief Executive Officer of the
Company since April 1994. Considering the continued profitability of the Company
in 1996, the Company's successful debt refinancing, and the strategic vision for
the Company being developed and implemented by Mr. Christman, the Committee
(with Mr. Christman abstaining) recommended, and the Board of Directors
approved, an extension of Mr. Christman's Employment Agreement which maintains
his salary at $130,000 per year through June 1998.
Respectfully Submitted,
Lewis E. Christman, Jr.
Joseph M. Glickstein, Jr.
Richard M. Gray
EXECUTIVE PAY
The summary compensation table below sets forth a summary of the
compensation earned by the Company's chief executive officers from 1994 to 1996
(each a "Named Executive"). No disclosure of compensation paid to other
executive officers is required as the total salary and bonus paid to such
executive officers does not exceed the reporting threshold of $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION ---------------------------------
------------------------------ SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($)(1) COMPENSATION(2) OPTIONS #(3) COMPENSATION($)(4)
--------------------------- ---- ------------ --------------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
Lewis E. Christman, Jr.......... 1996 $130,000 -0- -0- $ 1,625
President & CEO 1995 109,538 $20,000 200,000 488
1994 63,794 -0- 20,409 --
George F. Staudter.............. 1994 $ 38,654 -0- -0- $20,000
President & CEO, December 1993
to April 1994
</TABLE>
Explanation of Columns:
(1) Salary: Total base salary paid during the year.
(2) Other Annual Compensation: Specific forms of cash and non-cash compensation
paid, awarded or earned not properly categorized as salary or bonus and
designated as Other Annual Compensation under the rules and regulations of
the Commission. The value of all personal benefits and perquisites received
by the Named Executives was less than the required reporting threshold,
except for an automobile allowance
6
<PAGE> 9
of $20,000 paid to Mr. Christman in 1995. This automobile allowance is paid
every other year under the terms of Mr. Christman's Employment Agreement.
(3) Securities Underlying Options: Number of shares of Common Stock underlying
grants of options made during the year.
(4) All Other Compensation: All other compensation that does not fall under any
of the aforementioned categories. Amounts shown include $20,000 as severance
payment to Mr. Staudter upon his resignation, and contributions of $1,625
and $488 to the Company's 401(k) Plan on behalf of Mr. Christman to match a
portion of his deferred contributions in 1996 and 1995, respectively.
Option Exercises And Year-End Option Value
The following table sets forth information concerning the number and value
of unexercised options to purchase the Company's Common Stock held by the Named
Executive at fiscal year end.
AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR, AND YEAR-END OPTION VALUE
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL OPTIONS AT FISCAL
ACQUIRED YEAR-END (#) YEAR-END ($)
ON EXERCISE VALUE ----------------- -----------------
IN 1996 REALIZED EXERCISABLE/ EXERCISABLE/
NAME (#) ($) UNEXERCISABLE UNEXERCISABLE (1)
---- ----------- -------- ----------------- -----------------
<S> <C> <C> <C> <C>
Lewis E. Christman, Jr..................... -- -- 100,000/100,000 $22,500/22,500
</TABLE>
- ---------------
(1) Market value of underlying securities at year end ($.625 at December 31,
1996, the last trading day of the Company's fiscal year), minus the exercise
price of $.40.
EMPLOYMENT AGREEMENTS
In December 1996, the Company extended until June 19, 1998 its employment
agreement with Lewis E. Christman, Jr., providing for continued base
compensation of $130,000 per year, in addition to medical, disability and other
benefits in accordance with Company policy, such stock options as may be granted
by the Board of Directors from time to time and a bi-annual automobile
allowance. The agreement further provides that Mr. Christman will be entitled to
receive, in a lump sum, the salary due for the remaining term of the agreement
upon the Company's termination of his employment "without cause" (as defined in
such agreement).
INTERESTS OF CERTAIN PERSONS
In addition to other arrangements and agreements described elsewhere in
this Proxy Statement, the following arrangements and agreements between Company
and its officers and directors may be affected if the shareholder proposal
described below is duly approved by the shareholders and the partial tender
offer initiated by Bisco on March 6, 1997 is consummated.
On October 1, 1996, the Company entered into a two year employment
agreement with Edward B. Alexander pursuant to which he agreed to serve as the
Company's Chief Financial Officer and Treasurer for an annual salary of $90,000
plus benefits in accordance with Company policy and such stock options as may be
granted by the Board of Directors from time to time. The agreement further
provides that Mr. Alexander will be entitled to receive, in a lump sum, the
salary due for the remaining term of the agreement upon the Company's
termination of his employment "without cause" (as defined in such agreement).
The Company's Amended Employee Stock Option Plan and option agreements
executed thereunder provide that options granted thereunder become immediately
exercisable if a person acquires beneficial ownership of 33% or more of the
outstanding shares of the Company's Common Stock. Similarly, the
7
<PAGE> 10
Company's Long Term Incentive Plan provides that options granted thereunder will
become immediately exercisable upon, among other events, any person's becoming
the beneficial owner directly or indirectly of 25% or more of the combined
voting power of the shares or the first purchase of the Company's shares
pursuant to a tender or exchange offer (other than a tender or exchange offer
made by the Company). The executive officers holding affected options, the
number of affected shares and the exercise price thereof were set forth in a
table included in the Company's Schedule 14D-9 previously provided to the
shareholders.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The Commission requires a five-year comparison of stock price performance
of the Company with both a broad equity market index and a published industry
index or peer group. The Company's total return compared with the NASDAQ market
index and the Media General Restaurant Index is shown on the following graph.
The Media General Restaurant Index includes 243 publicly held restaurant
companies.
This graph assumes that $100 was invested on January 1, 1992 and all
dividends were reinvested in the Company's Common Stock and the other indices.
Each of the indexes is weighted on a market capitalization basis at the time of
each reported data point.
<TABLE>
<CAPTION>
Measurement Period Family Steak
(Fiscal Year Covered) Houses of Florida Industry Index Broad Market
<S> <C> <C> <C>
1991 100.00 100.00 100.00
1992 70.84 122.90 100.98
1993 66.67 134.29 121.13
1994 37.51 120.90 127.17
1995 104.17 165.23 164.96
1996 83.33 167.06 204.98
</TABLE>
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee has not yet recommended to the Board of Directors an
accounting firm to be engaged as independent auditor for the Company for 1997.
The firm of Deloitte & Touche, LLP, served as the independent accountants for
the Company for the fiscal year ending January 1, 1997. That firm has served as
the auditor for the Company since 1991. Representatives of Deloitte & Touche are
expected to be present at the annual meeting of shareholders to respond to
appropriate questions.
8
<PAGE> 11
Proposal 2. Amendment of Articles of Incorporation
The Board of Directors has voted unanimously to authorize an amendment to
the Company's Articles and to recommend such proposed amendment to the
shareholders for adoption. This Proposal 2 would replace Article VII with a new
Article that would (i) classify the Board of Directors into three classes
serving staggered terms, (ii) permit removal of directors only for cause, and
(iii) provide that vacancies occurring in the Board of Directors may only be
filled by the affirmative vote of 80% of the directors then in office. The text
of Proposal 2 is set forth in Appendix A and will replace the current text of
Article VII if approved.
Proposal 2 provides for three classes of directors, each consisting as
nearly as possible of one-third ( 1/3) of the members of the Board and for
one-third ( 1/3) of the members of the Board to be elected each year. However,
members of all three classes would be elected initially at the 1997 Annual
Meeting. If Proposal 2 is approved and the slate of five directors proposed for
election at the 1997 Annual Meeting is elected, they would be elected in three
separate classes as follows: one (1) "Class I Director" would be elected for a
term expiring at the 1998 Annual Meeting; two (2) "Class II Directors" would be
elected for a term expiring at the 1999 Annual Meeting; and two (2) "Class III
Directors" would be elected for a term expiring at the 2000 Annual Meeting. At
each annual meeting after this Annual Meeting, only directors of the class whose
term is expiring would be voted upon and, upon election, each such director
would serve a three-year term. Currently, directors are elected annually to
serve one-year terms.
Under Proposal 2, the Board of Directors would be empowered to determine
from time to time the size of the Board of Directors, but in no event could they
determine to have a Board consisting of more than seven directors or less than
three directors. The total number of directors and the number of directors
constituting each class of directors (with each of three classes being as nearly
equal as possible) could be fixed or changed from time to time by the Board of
Directors subject to the three director minimum. Currently, the Company's
Articles provide that the number of directors of the Company shall be fixed by
the Bylaws, but shall never be less than one, and the Bylaws provide that the
number of directors shall be no more than seven and no less than one.
Proposal 2 would further provide that any vacancy occurring on the Board of
Directors, including any vacancy created by reason of an increase in the number
of directors, may be filled only by the affirmative vote of 80% of the directors
then in office. Any increase or decrease in the number of directors shall be
apportioned among the three classes of directors to keep all such classes as
nearly equal as possible.
Proposal 2 would also provide that directors may only be removed for cause.
Under Florida law, directors may be removed by the shareholders with or without
cause, unless the articles of incorporation provide that directors may be
removed only for cause. Currently, the Company's Articles do not address removal
of directors.
The foregoing summary description of Proposal 2 is not intended to be
complete and is qualified by reference to the complete text of this proposed
amendment, which appears as Appendix A.
REASONS FOR AND EFFECTS OF THE ARTICLES AMENDMENT
The Board of Directors believes that the adoption of Proposal 2 is
advantageous to the Company and its shareholders for a number of reasons.
Public corporations are potentially subject to attempts by various
individuals and entities to acquire significant minority positions in the
corporation with the intent either of obtaining actual control of the
corporation by electing their own slate of directors, or of achieving some other
goal, such as the repurchase of their shares by the corporation at a premium.
Public companies also are potentially subject to inadequately priced or coercive
bids for control through majority share ownership. These prospective acquirors
may be in a position to elect a corporation's entire board of directors through
a proxy contest or otherwise, even though they do not own a majority of the
corporation's outstanding shares at the time. As the shareholders are aware, the
Company has recently been the target of an unsolicited tender offer by Bisco
commenced on March 6, 1997, and currently scheduled to expire on May 9, 1997.
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If Proposal 2 is approved, an acquiror could not control a majority of the
Company's directors until two annual meetings of shareholders have occurred,
unless the existing directors had been removed for cause with the approval of
the requisite vote of shareholders or the number of directors had been increased
and 80% of the directors then in office had approved the appointment of each
director filling the vacancies. By providing this additional time to the Board
of Directors and eliminating the possibility of rapid removal of the Board, the
directors of the Company will have the necessary time to most effectively
discharge their responsibility to the Company's shareholders to evaluate any
proposal and to assess and develop alternatives without the pressure created by
the threat of imminent removal.
In addition, Proposal 2, by providing that all directors will serve
three-year terms rather than one-year terms, will eventually enhance continuity
and stability in the composition of the Company's Board of Directors and in the
policies formulated by the Board. The Board believes that this, in turn, will
permit it to more effectively represent the interests of all shareholders,
including responding to demands or actions by any shareholder or group.
Proposal 2 may discourage potential purchasers because its provisions would
operate to delay the purchaser's ability to obtain control of the Board of
Directors, since it will generally take a purchaser two annual meetings of
shareholders to elect a majority of the Board. In addition, Proposal 2 would
similarly delay shareholders who do not approve of policies of the Board from
replacing a majority of the directors, unless they can show cause for removal,
obtain the requisite shareholder vote and then convince 80% of the remaining
directors to elect more acceptable replacements. For the same reasons, the
adoption of Proposal 2 may also deter certain mergers, tender offers or other
takeover attempts which some of the Company's shareholders may deem to be in
their best interests.
Bisco has taken certain preliminary steps to gain control of the Company
and to organize a proxy contest. The Board believes that adopting Proposal 2 is
prudent, advantageous and in the best interests of shareholders because it will
give the Board more time to fulfill its responsibilities to shareholders, and it
will provide greater assurance of continuity and stability in the composition
and policies of the Board of Directors. The Board also believes such advantages
outweigh any disadvantage relating to discouraging potential acquirors from
attempting to obtain control of the Company.
Proposal 2 must be approved by a majority of the shares of Common Stock
entitled to vote.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED AMENDMENT IS IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE
FOR APPROVAL OF PROPOSAL 2.
Proposal 3. Amendment of Articles of Incorporation to Increase the Number
of Authorized Shares
The Board of Directors has voted unanimously to authorize a second
amendment to the Company's Articles and to recommend such proposed amendment to
the shareholders for adoption. Proposal 3 would amend Part A of Article IV to
increase the number of shares of Common Stock authorized for issuance from 20
million to 30 million. The text of Proposal 3 is set forth in Appendix B and
will replace the current text of Part A of Article IV if approved.
REASONS FOR AND EFFECTS OF THE ARTICLES AMENDMENT
As previously described in a mailing to shareholders on or about March 19,
1997, the Company has declared a distribution of Rights to each holder of Common
Stock as of March 18, 1997 under a Rights Agreement dated as of March 18, 1997
(the "Rights Agreement") with ChaseMellon Shareholder Services, Inc., as rights
agent (the "Rights Agent").
The Rights Agreement gives the Board of Directors the option of issuing one
share of Common Stock for each Right or to issue additional shares of Common
Stock upon the exercise of the Rights upon the occurrence of certain events
described in the Rights Agreement.
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<PAGE> 13
The Board of Directors is seeking to amend the Articles to increase the
number of shares of Common Stock authorized for issuance so that it will have an
adequate number of shares of Common Stock to declare this one-for-one exchange
of Common Stock for Rights under the Rights Agreement. Currently, the number of
shares of Common Stock authorized for issuance is not sufficient to fully
implement this exchange under the Rights Agreement. In addition to having the
ability to issue the additional 10 million shares of Common Stock as part of an
exchange pursuant to the Rights Agreement, the Board may also issue these
additional shares from time to time for proper corporate purposes including
issuing shares under options and other incentive compensation plans, to declare
stock dividends, to make acquisitions and to raise additional capital. If the
shareholders approve Proposal 3, the Board of Directors may issue additional
shares of Common Stock without further shareholder approval except to the extent
required by the Articles, by Florida or federal securities laws, or by the
market on which the shares of Common Stock are listed at the time of the
issuance. In addition, any additional shares of Common Stock to be sold in a
public sale would have to be registered under the Securities Act of 1933, as
amended.
Prior to its obtaining shareholder approval of Proposal 3, if certain
triggering events outlined in the Rights Agreement occur, the Board may decide
to issue available shares upon exercise of the Rights or to exchange Rights on a
pro rata basis up to the number of shares of Common Stock currently available
for issuance with the remaining shares of Common Stock issuable subject to
shareholder approval of Proposal 3. If the shareholders do not approve Proposal
3, the Board will consider such other options as may be available to it under
the Rights Agreement and applicable law in light of the then current
circumstances.
The one-for-one exchange of shares of Common Stock or other issuance of
additional shares of the Common Stock under the Rights Agreement or the issuance
of additional shares of Common Stock in certain other circumstances could render
it more difficult or discourage an attempt to gain control of the Company, even
if the takeover attempts may be considered desirable by some of the Company's
shareholders. Tender offers are often made at prices higher than the prevailing
market price of the corporation's stock. Similarly, accumulations of the
Company's shares in the open market by persons seeking to acquire control of the
corporation may increase the market price to levels that are higher than might
otherwise be the case. Accordingly, the deterrence of such takeover attempts may
deprive shareholders of opportunities to sell their shares at temporarily higher
market prices. In the Company's current circumstances, if Proposal 3 is approved
and the Board issues additional shares under the Rights Agreement, Bisco may
decide not to acquire any shares of the Common Stock pursuant to its tender
offer.
The Board believes that adopting Proposal 3 is prudent, advantageous and in
the best interests of shareholders because it will enable the Board to fully
implement the protections provided by the Rights Agreement. If the circumstances
change and the Board determines that the Bisco offer is in the best interests of
the Company and its shareholders, it may decide not to issue any additional
shares, redeem the Rights as provided by the Rights Agreement and take other
action it deems advisable. The Board also believes the advantages of having the
ability to fully implement the Rights Agreement and to issue additional shares
from time to time for general corporate purposes outweigh any disadvantage
relating to discouraging potential acquirors from attempting to obtain control
of the Company.
The foregoing summary description of Proposal 3 is not intended to be
complete and is qualified by reference to the complete text of the amendment,
which appears as Appendix B. In addition, the foregoing description of the
Rights Agreement is not intended to be complete and is qualified by reference to
the full text of the Rights Agreement which has been filed with the Commission
as an exhibit to the Company's Registration Statement on Form 8-A dated March
19, 1997. A copy of the Rights Agreement can be obtained by writing the
Secretary of the Company at its principal executive offices.
Proposal 3 must be approved by the affirmative vote of a majority of the
shares of Common Stock entitled to vote on the matter.
THE BOARD OF DIRECTORS BELIEVES THAT THE PROPOSED AMENDMENT IS IN THE BEST
INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS A VOTE
FOR APPROVAL OF PROPOSAL 3.
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Proposal 4. Shareholder Proposal to Opt Out of the Florida Control Share
Act
Glen F. Ceiley, the President, a director and sole shareholder of Bisco,
has notified the Company that he will present the following amendment to the
Company's Articles for consideration at the Company's 1997 Annual Meeting of
Shareholders. The address and number of shares of the Company's Common Stock
beneficially owned by Mr. Ceiley are set forth above under "Security Ownership
of Certain Beneficial Owners and Management." The Ceiley Proposal to amend the
Articles is as follows:
WHEREAS, the Florida "Control Share Act" eliminates the right of
a holder of a significant percentage of the Company's voting
securities from voting all such shares unless, subject to certain
exceptions, such rights are approved by the shareholders or Board of
Directors.
WHEREAS, the Company is permitted to "opt out" of the provisions
of the "Control Share Act" by an amendment to its Articles of
Incorporation or Bylaws;
NOW, THEREFORE, be it
RESOLVED, that the Articles of Incorporation of the Company be
amended to provide that Section 607.0902 of the Florida Business
Corporation shall not apply to control-share acquisitions of shares of
the Company.
Adoption of the Ceiley Proposal will make the provisions of Section
607.0902 of the Florida Business Corporation Act (the "Control Share Act")
inapplicable to control share acquisitions of shares of the Company's Common
Stock. As the shareholders are aware, Mr. Ceiley through his company Bisco
commenced an unsolicited tender offer on March 6, 1997 which is currently
scheduled to expire on May 9, 1997. He is also seeking shareholder consent to a
number of proposals, including a proposal to opt out of the Control Shares Act
through an amendment to the Company's Bylaws. The Board unanimously opposes each
of the proposals set forth in the Bisco consent solicitation and has mailed to
each shareholder a revocation of consent statement outlining the reasons for its
opposition.
Approval of the Ceiley Proposal requires the affirmative vote of a majority
of the shares of Common Stock entitled to vote on the matter.
BACKGROUND ON THE CONTROL SHARE ACT
Pursuant to the Control Share Act, an "acquiring person" who makes a
"control share acquisition" of shares of an "issuing public corporation" may not
exercise voting rights for any "control shares" unless (1) the corporation's
articles of incorporation or bylaws provide that the Control Share Act does not
apply to control share acquisitions of the corporation's shares, (2) the
acquisition is consummated in certain circumstances including an acquisition of
shares approved by the issuing public corporation's board of directors, or (3)
such voting rights are conferred by the affirmative vote of a majority of the
issuing public corporation's disinterested shareholders at a meeting or by
written consent of such shareholders.
A "control share acquisition" is defined as the acquisition, directly or
indirectly, by any person of ownership of, or the power to direct the exercise
of voting power with respect to, issued and outstanding control shares. "Control
shares" are shares that, except for the Control Share Act, would have voting
power with respect to shares of an issuing public corporation that, when added
to all other shares of the issuing public corporation owned by a person or in
respect to which that person may exercise or direct the exercise of voting
power, would entitle that person, immediately after acquisition of the shares,
directly or indirectly, alone or as part of a group, to exercise or direct the
exercise of the voting power of the issuing public corporation in the election
of directors within any of the following ranges of voting power: (i) one-fifth
or more but less than one-third of all voting power; (ii) one-third or more but
less than a majority of all voting power; and (iii) a majority or more of all
voting power. All shares, the beneficial ownership of which is acquired within
ninety (90) days before or after the date of acquisition of beneficial ownership
of shares which result in a control share acquisition, and all shares the
beneficial ownership of which is acquired pursuant to a plan to make a control
share acquisition, are deemed to have been acquired in the same acquisition.
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An "issuing public corporation" means a corporation that has (i) 100 or
more shareholders, (ii) its principal place of business, principal office or
substantial assets in Florida, and (iii) either (a) more than 10% of its
shareholders resident in Florida, (b) more than 10% of its shares owned by
residents of Florida, or (c) 1,000 shareholders resident in Florida.
The above provisions do not apply to a control share acquisition of shares
of an issuing public corporation whose articles of incorporation or bylaws in
effect before such control share acquisition provide that the Control Share Act
does not apply to control share acquisitions of its shares. The Company's
Articles and Bylaws currently do not exclude the Company from the protections
provided by the Control Share Act. If the Ceiley Proposal is adopted, the
Control Share Act will no longer apply to control share acquisitions of the
shares of the Company's common stock, whether by Mr. Ceiley, his company, Bisco,
or otherwise.
SUPPORTING STATEMENT
Mr. Ceiley submitted the following statement in support of the Ceiley
Proposal:
"The Company currently is subject to the provisions of Section
607.0902 of the Florida Business Corporation Act, also known as the
"Control Share Act". Under this law, except in certain limited
circumstances, the right of a shareholder to vote shares of the Company's
common stock acquired above certain specified thresholds of ownership (20%,
33%, and 50%) is eliminated, unless voting rights for such shares have been
approved by either the shareholders of the corporation or its board of
directors. The "Control Share Act" permits a corporation to "opt out" of
its provisions by amending its articles of incorporation or bylaws to
provide that the act shall not apply to control-share acquisitions of
shares of the corporation. The proponent of this proposal encourages all
shareholders to vote for this resolution and affirm the rights of all
shareholders to vote their shares regardless of the percentage of the
outstanding shares of the Company's common stock owned by them.
The proponent of this proposal believes that all shareholders of a
public corporation should have equal voting rights, regardless of the
number of shares owned. The proponent believes that the possibility of
owning shares without voting rights decreases the attractiveness of the
Company's shares to an investor who might be interested in paying a premium
price for a significant number of shares, since such an investor would not
be likely to do so if such shares could not be voted on matters submitted
to the shareholders for approval. In addition, the proponent believes that
requiring a shareholder to seek approval from the shareholders or Board of
Directors to vote shares acquired above certain thresholds, the Florida
"Control Share Act" erects an unnecessary barrier to a shareholder seeking
to obtain a significant interest in the Company's shares. In summary, it
decreases potential purchases which in turn decreases share price and
shareholder value.
The proponent urges all shareholders to vote for this resolution."
RECOMMENDATION OF THE BOARD
The Board recommends AGAINST the Ceiley Proposal to opt out of the Control
Share Act for a number of reasons. The Board believes the Control Share Act was
enacted to protect Florida corporations and their shareholders from a person
seeking to acquire a substantial block of shares of a public company and to
limit such person's ability to control the corporation. Without the Control
Share Act, a person could acquire a controlling block of a corporation's stock
through periodic purchases at current market prices without paying a premium to
shareholders for such control. The Control Share Act also encourages a person
interested in acquiring control of a public corporation to negotiate with its
board of directors. The Company's Board believes that its ability to negotiate
with a potential acquiror is significantly greater than that of the
shareholders, individually. While a bidder may make an offer that is higher than
the current market price, without negotiations with the corporation's board of
directors, the premium may not compensate for the long-term prospects and other
factors affecting the corporation's value. The Board is also in a better
position to discuss and evaluate other aspects of the offer with the acquiror,
such as the acquiror's experience, future strategies for the corporation,
financial resources, and other matters that can affect the value of the offer.
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<PAGE> 16
The Board also objects to Mr. Ceiley's use of the shareholder proposal
process to obtain voting rights for shares of the Company's stock he seeks to
acquire. The Control Share Act provides that voting rights may be granted by a
shareholder resolution. If voting rights are accorded by shareholder resolution,
rather than an amendment to the Articles as proposed by Mr. Ceiley, and if
certain other conditions are met, the shareholders would have the right to
assert dissenters' rights and obtain the "fair value" of their shares of the
Company's Common Stock. By seeking an amendment to the Articles rather than
using the process specified in the Control Share Act, Ceiley deprives the
shareholders of their dissenters' rights to obtain the "fair value" of their
shares which, under the Control Share Act, may not be less than the highest
price paid per share in a control share acquisition. Furthermore, the Control
Share Act provides that in approving a shareholder resolution to accord voting
rights to control shares, "interested shares" are excluded from the votes
entitled to be cast. As defined under the Control Share Act, interested shares
are those held by (1) an acquiring person or a member of a group with respect to
a control share acquisition, (2) the Company's officers, and (3) directors who
are also employees of the Company. By proposing an amendment to the Articles
rather than a shareholder resolution, Mr. Ceiley retains the ability to vote his
shares and those of Bisco on his proposal and circumvents the protection
provided by Florida law of excluding interested shares from the vote.
The Board believes that approval of the Ceiley Proposal will facilitate
further acquisitions of the Company's stock by Mr. Ceiley, Bisco and their
affiliates. As previously noted in the Schedule 14d-9 which was mailed to each
shareholder as of March 6, 1997, the Board has serious concerns about Mr.
Ceiley's and Bisco's acquisition of control of the Company. These concerns
include, without being limited to, the lack of information provided about his
strategies for the Company, his stated potential strategy to dispose of the
Company's restaurant operations which could lead to the Company's loss of its
exclusive franchise rights in North and Central Florida, the disruptive
influence of Mr. Ceiley and Bisco on the Company's relationships with its
franchisor and lender, the lack of depth in Bisco's management team, Mr.
Ceiley's lack of experience and expertise in the franchised restaurant industry
and with public companies, Bisco's apparently limited financial resources and
the relatively slight premium offered in the tender offer compared to the
trading price of the Company's common stock immediately prior to announcement of
the tender offer.
The Board has also learned that Mr. Ceiley has a history of unsuccessful
hostile offers, including an offer to acquire Bell Industries, Inc., a large
distributor of electronic components, which was rejected by Bell as not being
credible, and a second unsolicited offer to acquire RB&W Corporation ("RB&W"),
an Ohio-based maker and distributor of fasteners and metal parts. RB&W also
rejected the offer citing Bisco's failure to identify the source and viability
of its financing. Mr. Ceiley then submitted a shareholder proposal recommending
the active and immediate solicitation of offers to sell RB&W. Mr. Ceiley's
proposal was included in RB&W's proxy statement for the 1992 annual meeting of
shareholders and was overwhelmingly rejected by the RB&W shareholders. In both
of these situations, Mr. Ceiley's offer likely resulted in additional costs to
these companies and diversion of management time without Mr. Ceiley paying any
amounts to these companies' shareholders through his offers. The Board believes
that the Bisco tender offer and the Ceiley Proposal also waste the Company's
time and money and urges its shareholders to vote against the Ceiley Proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY OPPOSES THE CEILEY PROPOSAL AND
RECOMMENDS A VOTE AGAINST THE CEILEY PROPOSAL.
Proposal 5. Other Matters
The Board of Directors is not aware of any other matters to come before the
meeting. If any other business should come before the meeting, the persons named
on the enclosed proxy will have discretionary authority to vote such proxy in
accordance with their best judgment.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be presented at the 1998 Annual Meeting of
Shareholders must be received by the Company (addressed to the attention of the
Secretary) not later than January 9, 1998 to be considered for inclusion in the
Company's proxy materials relating to that meeting. To be submitted at the
meeting, any
14
<PAGE> 17
such proposal must be a proper subject for shareholder action under the laws of
the State of Florida, and must otherwise conform to applicable regulations of
the Commission. Excluding shareholder proposals to be included in the Company's
proxy materials, a shareholder is required to comply with the Company's Bylaws
with respect to any proposal to be brought before an annual meeting. The Bylaws
generally require that each written proposal be delivered to or mailed and
received by the Secretary of the Company at its principal executive office not
less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the prior year's annual meeting, among other conditions. The
notice must include certain additional information as specified in the Bylaws.
SOLICITATION OF PROXIES
This proxy is solicited by the Board of Directors of the Company. The cost
of soliciting proxies will be borne by the Company. The Company has retained
Corporate Investor Communications ("CIC") to assist in the solicitation of the
revocation of shareholder consents, proxies for the 1997 Annual Meeting and
other shareholder communications for a fee of $25,000 plus reasonable
disbursements, postage, filing fees, courier charges, data transmissions and
other expenses approved by the Company. Following the original mailing of the
proxy solicitation material, regular employees of the Company may solicit
proxies by mail, telephone, facsimile and other electronic means. The Company
may request brokerage houses and other nominees or fiduciaries to forward copies
of its proxy material and Annual Report to beneficial owners of stock held in
their names, and the Company will reimburse them for reasonable out-of-pocket
expenses incurred with respect to such action.
By Order of the Board of Directors
/s/ Lewis E. Christman, Jr.
Lewis E. Christman, Jr.
President and CEO
Date: May 9, 1997
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<PAGE> 18
APPENDIX A
TEXT OF PROPOSED ARTICLE VII OF THE ARTICLES OF INCORPORATION ESTABLISHING
A CLASSIFIED BOARD OF DIRECTORS AND RELATED PROVISIONS:
Directors. The number of directors may be increased or decreased from
time to time by bylaws adopted by the directors, but shall be no more than
seven (7) directors and no less than three (3) directors. The directors
shall be divided into three classes: Class I, Class II, and Class III. The
number of directors included in each such class shall be as nearly equal as
may be possible. At the annual meeting of shareholders of the Corporation
held in 1997, Class I directors shall be initially elected for a three-year
term, Class II directors for a two-year term and Class III directors for a
one-year term; provided, however, that each such Class I, Class II or Class
III director shall hold office until his or her successor is elected and
qualified or until his or her earlier death, resignation or removal from
office. At each succeeding annual meeting of the shareholders of the
Corporation, commencing in 1998, the directors elected to succeed those
directors whose terms then expire shall belong to the same class as the
directors they succeed and shall hold office until the third succeeding
annual meeting of shareholders or until their earlier death, resignation or
removal from office. Any increase or decrease in the number of directors
shall be apportioned by the Board of Directors among the classes so that
the number of directors included in each such class shall continue to be as
nearly equal as possible. The shareholders may remove a director only for
cause. Any vacancy occurring on the Board of Directors, including any
vacancy created by reason of an increase in the number of directors, may be
filled only by the affirmative vote of 80% of the directors then in office.
A director elected to fill a vacancy shall hold office until the next
shareholders' meeting at which directors of such class are elected.
A-1
<PAGE> 19
APPENDIX B
TEXT OF PROPOSED REVISION TO PART A OF ARTICLE IV OF THE ARTICLES OF
INCORPORATION:
A. Common Stock. Thirty Million (30,000,000) shares of Common Stock
having a par value of one cent ($.01) per share. The whole or any part of
the Common Stock of this corporation shall be payable in lawful money of
the United States of America, or in property, labor or services at a just
valuation to be fixed by the Board of Directors.
B-1
<PAGE> 20
APPENDIX C
FAMILY STEAK HOUSES OF FLORIDA, INC.
2113 Florida Boulevard, Neptune Beach, Florida 32266
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael Walters, and Patrick Fekula
(the "Proxy Agents"), and each of them individually, the attorneys, agents, and
proxies of the undersigned with full power of substitution, to vote all of the
shares of stock of Family Steak Houses of Florida, Inc. (the "Company"), owned
by the undersigned on May 8, 1997, at the 1997 Annual Meeting of Shareholders of
the Company, to be held at 10:00 a.m. on June 17, 1997 and any adjournment
thereof, with all powers that the undersigned would possess if personally
present, pursuant to the following directions:
(Continued and to be signed on the reverse side)
FOLD AND DETACH HERE
<PAGE> 21
<TABLE>
<S> <C>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY PLEASE MARK [X]
THE UNDERSIGNED. IF NO DIRECTION IS GIVEN THIS PROXY WILL BE VOTED FOR YOUR VOTES AS
PROPOSALS 1, 2, 3 AND 5 AND AGAINST PROPOSAL 4. THIS EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1,2,3 AND 5 AND AGAINST PROPOSAL 4.
1. ELECTION OF DIRECTORS 2. AMENDMENT TO COMPANY ARTICLES TO CLASSIFY 3. AMENDMENT TO COMPANY ARTICLES TO
BOARD INCREASE AUTHORIZED COMMON SHARES
FOR all nominees listed WITHHOLD FOR amendment to Company articles to FOR the proposal to amend Articles
(except as marked in the AUTHORITY classify Board AGAINST amendment to increase authorized common shares
contrary, see instruction to vote for all Company articles classify board AGAINST the proposal to amend
below nominees listed Articles to increase authorized
common shares.
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
[ ] [ ] [ ] [ ] [ ] [ ] [ ] [ ]
Edward B. Alexander, 4. PROPOSAL TO OPT OUT OF FLORIDA CONTROL SHARE ACT 5. OTHER MATTERS FOR Proxy Agents to
Lewis E. Christman, Jr. FOR proposal to Opt out of Florida Control Share Act vote in their discretion as to such
Joseph M. Glickstein, Jr. AGAINST proposal to Opt out of Florida Control other materials as may properly come
Richard M. Gray and Share Act. before the meeting WITHHOLD
Robert J. Martin AUTHORITY for Proxy Agents to vote in
their discretion as to such other
matters as may presently come before
the meeting
WITHHOLD
FOR AGAINST ABSTAIN FOR AUTHORITY
[ ] [ ] [ ] [ ] [ ]
(To withhold authority to vote for any
individual nominee, strike out that
nominee's name) The undersigned hereby ? less any
proxy here ? given with respect to said
stock and acknowledges receipt of the
Notice of ? ? and Proxy
Statement dated May 8, 1997.
----------------------------------------
Signature(s)
-----------------------------------------
Signature(s)
-----------------------------------------
Title or Capacity
DATED: , 1997
---------------------------
IMPORTANT: Please date this proxy and
sign exactly as your name or names ?
? If the shares are held jointly,
signatures should include both
names. Personal representatives ?
as guardians and others signed in a
representative capacity should give ?
PLEASE RETURN PROMPTLY IN THE
ACCOMPANYING ENVELOPE
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