<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
EATERIES, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
EATERIES, INC.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
/ / 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>
[LOGO]
3240 W. Britton Road, Suite 202
Oklahoma City, Oklahoma 73120
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held June 26, 1996
The 1996 Annual Meeting of Shareholders of Eateries, Inc. will be held at
Garfield's Restaurant & Pub at Quail Springs Mall, 2501 W. Memorial Road,
Oklahoma City, Oklahoma, on Wednesday, June 26, 1996, at 9:00 a.m., CDT. The
Annual Meeting will be held for the following purposes:
1. The election of six directors; and
2. Such other matters as may properly come before the Annual Meeting or
any adjournment.
Shareholders of record at the close of business on April 29, 1996, are
entitled to notice of and to vote at the Annual Meeting or any adjournment.
By Order of the Board of Directors
PATRICIA L. ORZA
Secretary
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING. YOU MAY REVOKE YOUR PROXY
AT ANY TIME BEFORE ITS EXERCISE. IF YOU ATTEND THE MEETING, YOU MAY WITHDRAW THE
PROXY AND VOTE IN PERSON.
<PAGE>
[LOGO]
3240 W. Britton Road, Suite 202
Oklahoma City, Oklahoma 73120
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
June 26, 1996
The Board of Directors and management of Eateries, Inc. (the "Company") is
furnishing this Proxy Statement in connection with the solicitation of proxies
for use at the Company's 1996 Annual Meeting of Shareholders. The Annual
Meeting will be held at Garfield's Restaurant & Pub at Quail Springs Mall, 2501
W. Memorial Road, Oklahoma City, Oklahoma, on Wednesday, June 26, 1996, at 9:00
a.m., CDT. The accompanying Notice of Meeting states the Annual Meeting's
purposes.
This Proxy Statement, Notice of Meeting, and accompanying proxy card were
mailed to shareholders on or about May 13, 1996.
GENERAL INFORMATION
Only shareholders of record at the close of business on April 29, 1996,
will be entitled to notice of and to vote the shares of the Company's common
stock held by them on such date at the Annual Meeting or any adjournments. On
April 15, 1996, the Company had 3,834,436 shares of its common stock outstanding
and entitled to vote at the meeting.
If the accompanying proxy is properly signed, returned to the Company, and
not revoked, the persons named as proxies will vote the proxy according to its
instructions. Unless contrary instructions are given, the proxies will support
the recommendations of the Board of Directors. Shareholders may revoke their
unexercised proxies by giving the Secretary of the Company a revoking instrument
or a duly executed proxy bearing a later date. Shareholders may also revoke
their proxies if they attend the Annual Meeting in person and request
revocation. Attendance at the Annual Meeting will not itself revoke a proxy.
The presence at the meeting, in person or by proxy, of a majority of the
shares of common stock outstanding on April 29, 1996, will constitute a quorum.
Each share of common stock entitles its holder to one vote on each matter
considered at the meeting. The election of directors shall be determined by a
plurality of votes cast. Any other matters properly brought before the Annual
Meeting for a vote of shareholders shall require for approval the affirmative
vote by the holders of at least a majority of the shares of common stock
represented in person or by proxy and entitled to vote at the meeting.
Abstentions and broker non-votes are counted for purposes of determining
the presence of a quorum. Abstentions are counted on all proposals other than
the election of directors. Broker non-votes are counted only when a proposal
requires the affirmative vote of a majority of the outstanding shares for
passage. Abstentions and broker non-votes have the effect of negative votes
when counted.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" EACH OF THE DIRECTOR NOMINEES NAMED IN THIS PROXY STATEMENT. THE
ENCLOSED PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
ELECTION OF DIRECTORS
The Board of Directors proposes the election of the following six persons
to serve as members of the Company's Board of Directors for a term of one year
and until their successors are duly elected and qualified:
<PAGE>
James M. Burke Philip Friedman
Thomas F. Golden Edward D. Orza
Patricia L. Orza Vincent F. Orza, Jr.
The Board believes that each nominee will serve if elected. If any nominee
should become unavailable to serve as a director and if the Board should
designate a substitute nominee, the persons named as proxies will vote for the
substitute nominee designated by the Board of Directors.
One vacancy presently exists on the Board of Directors. The Board does not
have a candidate to fill the vacancy at this time but intends to continue to
seek a suitable candidate, and to fill the vacancy when such a candidate is
found.
BIOGRAPHICAL INFORMATION
The following information is submitted concerning the nominees named for
election as directors and August A. Hehemann and Norma C. Karter, executive
officers of the Company who are not nominees for director:
JAMES M. BURKE, age 34, Vice President and Chief Operating Officer,
Assistant Secretary, and a director since 1987, joined the Company in October
1984 as General Manager of the Company's first Garfield's restaurant. The
Company promoted him to Supervisor in March 1985 and to Vice President in August
1985. His responsibilities include restaurant construction and development,
restaurant and corporate operations, personnel planning, new product development
and vendor relationships. From 1979 to 1984, Mr. Burke worked as a management
trainer and General Manager for Chi-Chi's Mexican Restaurants. Mr. Burke serves
as a director of the Meadows Center for Retarded Adults.
PHILIP FRIEDMAN, age 49, served as a director of the Company from 1986
until 1991 when he became an advisory director. He served as an advisory
director until November 1992, when he was appointed to the Board to fill the
vacancy created by the death of Mr. George H. Marx. Mr. Friedman is the
president and principal shareholder of P. Friedman & Associates, Inc., a food
management and consulting company based in Rockville, Maryland. From 1984
through 1986, he was Vice President of Finance and Administration for Cini-
Little International, Inc., the largest food service consulting firm in the
United States. While with P. Friedman & Associates, Inc., Mr. Friedman has
taken interim executive positions with certain clients. In 1996, Mr. Friedman
was named interim President of Panda Management Company, Inc., a national chain
of restaurants serving Chinese food. In 1990, he became the Chief Financial
Officer of Service America Corporation during its financial and organizational
restructuring. Service America Corporation filed for reorganization under
Chapter 11 of the federal bankruptcy laws approximately 18 months after
Mr. Friedman resigned as chief financial officer. In 1988, he served as
Executive Vice President of Sutton Place Gourmet in Washington, D.C.
Mr. Friedman graduated from the University of Connecticut with Bachelors and
Masters degrees and received his MBA from the Wharton School of Business at the
University of Pennsylvania.
THOMAS F. GOLDEN, age 53, has served as a director since 1991. He is a
shareholder and director of the law firm of Hall, Estill, Hardwick, Gable,
Golden & Nelson, P.C., an Oklahoma law firm with offices in Tulsa and Oklahoma
City. Mr. Golden has been with this firm since 1967. He served as outside
general counsel for Williams Realty Corp. (1974-1987), the real estate developer
of major downtown mixed-used centers including Tabor Center in Denver, Colorado
and Rivercenter in San Antonio, Texas. He holds a Bachelor of Science degree in
Economics from Oklahoma State University and a Juris Doctorate from the
University of Tulsa. He is a member of the Urban Land
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<PAGE>
Institute and a board member of the Boys Home Foundation, DTU, Ltd. and
Midwesco Industries, Inc. of Tulsa, Oklahoma.
EDWARD D. ORZA, age 45, has served as a director since 1984. He has
served as Chairman of the Board and President of Brockway Truck Sales, Inc., a
heavy-duty truck parts distributor in New York, since August 1983. From
September 1975 through August 1983, Mr. Orza served as Secretary/Treasurer and a
director of TriCounty Crane Carriers, Inc., which engaged in new truck sales.
PATRICIA L. ORZA, age 42, has served as Secretary and a director of the
Company since 1984. Prior to ceasing active employment in 1982, Ms. Orza worked
in management and purchasing positions with several retail stores. Ms. Orza
earned a Bachelors degree from the University of Central Oklahoma in 1980.
VINCENT F. ORZA, JR., age 45, has been Chairman of the Board of Directors,
President and Chief Executive Officer of the Company since its organization in
June, 1984. Dr. Orza created the Garfield's Restaurant & Pub concept with the
Company's Vice President, James M. Burke. Before that time, Dr. Orza was Senior
Vice President of Marketing and Administration at a franchisee of Chi-Chi's
Mexican Restaurants. Dr. Orza also operates Advertising and Marketing
Associates, an Oklahoma City-based, market research and advertising company.
Dr. Orza is a speaker, panelist, and organizer of numerous national
restaurant conferences and conventions. He serves as a director of the Oklahoma
Restaurant Association, the Juvenile Diabetes Foundation and the Oklahoma
Leukemia Society, Chairman of the United Cerebral Palsy Telethon of Oklahoma,
and was a 1990 candidate for Governor of the State of Oklahoma.
Dr. Orza also served as Business and Economics Editor and News Anchor for
KOCO-TV, an ABC news affiliate, where he received numerous national awards for
excellence in business journalism. He was also a tenured professor in
Oklahoma's largest School of Business at the University of Central Oklahoma. A
contributor and editor of several professional textbooks, journals, and other
publications, Dr. Orza was awarded several fellowships in various marketing
disciplines. He holds a Doctor of Education degree from the University of
Oklahoma and a Bachelor of Science in Business and a Master of Education degrees
from Oklahoma City University.
Mr. Edward Orza is the cousin and Ms. Patricia Orza is the spouse of Dr.
Vincent Orza, Jr.
AUGUST A. HEHEMANN, age 42, joined the Company in January, 1995, and was
elected Vice President of Finance and Treasurer. Mr. Hehemann is the Company's
Chief Financial and Accounting Officer and is also responsible for the Company's
corporate administration. From August, 1985, until he joined the Company, Mr.
Hehemann served as Vice President and Treasurer of Scrivner, Inc., a $6 billion
food wholesaler and retailer. As Vice President and Treasurer at Scrivner, Mr.
Hehemann was responsible for maintaining relationships with over one hundred
financial institutions and was instrumental in establishing credit facilities
aggregating $1.7 billion. He was also a member of Scrivner's strategic planning
and acquisition/divestiture teams along with being responsible for treasury
operations, payroll, budgeting and various special tax and accounting projects.
Prior to August 1985 Mr. Hehemann served in various management positions
for nine years as a certified public accountant in the audit division of Arthur
Andersen & Co., an international accounting firm. He graduated from the
University of Dayton in 1976 with a Bachelor of Science degree in Accounting.
-3-
<PAGE>
NORMA C. KARTER, age 45, joined the Company in August, 1995 as Vice
President of Marketing. Ms. Karter is responsible for the Company's long-term
strategic marketing efforts including advertising, menu development and consumer
research and support. From January, 1980 until she joined the Company, Ms.
Karter was employed by Metromedia Restaurant Group, an $800 million company, and
owners of Bennigan's, Ponderosa and Steak and Ale restaurants. Just prior to
joining the Company, Ms. Karter served as Director of Marketing for the Steak
and Ale chain.
BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors of the Company consists of seven members, including
one vacant board seat. Each director serves for a term of one year or until his
successor has been elected and qualified, subject to earlier resignation,
removal or death. The number of directors comprising the Board of Directors may
be increased or decreased by amendment to the Company's bylaws. Each director
attended the two meetings of the Board of Directors which were held during 1995.
The Company's officers serve at the discretion of the Board of Directors,
subject to contractual arrangements. The Board has established an Audit
Committee and a Compensation Committee.
The Board's Audit Committee recommends the appointment of independent
auditors, supervises the engagement, performance and fees of the auditors, and
reviews and responds to all recommendations and reports of the auditors. The
members of the Audit Committee are Mr. Thomas Golden and Mr. Philip Friedman who
serves as chairman of the committee. The Audit Committee met one time in 1995,
with all members attending.
The Board's Compensation Committee comprises Mr. Thomas Golden, Mr. Phil
Friedman and Mr. Edward Orza, who chairs the committee. The Compensation
Committee recommends, reviews and approves salary ranges and benefits for all
employees at the executive level, including all awards under the Company's
Omnibus Equity Compensation Plan. As previously stated, Mr. Edward Orza is the
cousin of Mr. Vincent Orza, Jr. Mr. Golden is a shareholder and director of the
law firm that generally represents the Company. The Compensation Committee met
three times in 1995, with all members present at each meeting.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for developing, implementing and
administering the Company's management compensation programs. It develops or
reviews the Company's compensation programs and policies, administers the
Company's Omnibus Equity Compensation Plan, monitors management's performance
and compensation, and makes recommendations and reports to the Board of
Directors about the levels of management compensation. Its members are
directors employed outside the Company.
No member of the Committee is a current officer or employee of the Company
and no employee of the Company serves or has served on the compensation
committee (or board of directors of a corporation lacking a compensation
committee) of a corporation employing a member of this Committee.
PRINCIPAL COMPONENTS OF EXECUTIVE COMPENSATION
The Company's management compensation policies are designed to attract and
retain capable personnel, and to motivate them through rewards based on employee
performance, the Company's financial performance and stock price appreciation.
These programs have three components: (i) base salary; (ii) stock incentives
that reward management for stock price appreciation and align management and
shareholder interests; and (iii) possible cash bonuses based on achieving annual
operating income targets.
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<PAGE>
BASE SALARIES
The base salary component has been historically fixed by a subjective mix
of the Company's performance, its size, cash availability, and the levels of
compensation received by executives at similar companies. From 1990 through
1992, the base salaries of the President and the Vice Presidents were held
constant. In 1993 and 1994, these persons were given base salary increases in
light of the Company's financial performance for the previous years, however,
the 1994 increases did not take effect until 1995. The Compensation Committee
believes that management's base salary levels are and have been lower than the
levels of compensation received by executives at similar companies. This belief
is based on the collective knowledge of the Committee members and on published
and informal compensation surveys of public corporations in the restaurant
industry, which the Committee regards as a reasonable sampling of industry
standards.
STOCK INCENTIVES
The stock incentive program was introduced in 1987. Its purpose is to
provide long-term management incentives for stock price appreciation and to
align management and shareholder interests. The stock incentive program is
currently composed of (i) a stock grant program and stock option grants for
lower level management; (ii) stock option agreements for the President and
Company Vice Presidents; and (iii) stock option grants for incoming and long-
term directors.
Beginning in 1987, the Company has granted stock options to its executives.
These options have offered incentive compensation instead of more traditional
compensation packages offering broad insurance coverages, retirement plans, and
higher base salaries. By placing a major portion of management's compensation
in a stock incentive program, the Company put that compensation "at risk" in
much the same way that a shareholder's stock purchase price is "at risk".
Management only earns this incentive compensation through its ability to make
the Company perform, thereby improving its value and the corresponding price of
its stock. Thus management and the shareholders benefit together, and their
interests are aligned.
In 1987, the Company created a director stock option plan. This plan
currently grants incoming directors an option to purchase 50,000 shares of
common stock. Directors who have served as such for five or more years receive
annual grants of options to purchase 10,000 shares of common stock. The purpose
of the director stock option plan was and is the same as the upper level
management stock option agreements: to reward shareholder interests. As in the
case of senior management, the Company was unwilling to pay the level of
director fees commonly paid directors of publicly held companies. Moreover, it
felt it must compensate its directors for their personal risks in serving a
company with no director liability insurance. It did so through its director
stock option plan. The Board of Directors has been stable and enjoyed greater
longevity than might otherwise be expected from emerging young companies like
Eateries.
The Company adopted in 1994 an employee stock purchase plan which gives all
employees (except for those owning 5% or more of the Company's common stock) the
right to purchase shares of common stock at a discount from market price. This
program is intended to give all employees a financial stake in the Company's
success.
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<PAGE>
CASH BONUS
The cash bonus program was introduced in 1992. In contrast to the long-
term stock incentive program, the discretionary cash bonus program offers
incentives for short-term (annual) performance. The program is based on the
Company's achievement of an annual net earnings target. The Committee sets the
target based on internal financial forecasts prepared before the target year.
Extraordinary, unusual or infrequently occurring items are disregarded. In 1994
and 1995, no bonuses were paid. The Committee believes that, while short-term
performance is important and should be rewarded, it is less important than long-
term growth, profitability and stock price appreciation. Accordingly, the
levels of compensation from the cash bonus program are significantly less than
that potentially available from the stock incentive programs.
401-K PLAN
Effective May 1, 1996, the Company adopted the Eateries, Inc. and
Subsidiaries 401(k) Savings Plan which allows employees who have attained age 21
and have completed one year of service to defer receipt of a portion of their
compensation and contribute such amounts to various investment funds. The
Company does not intend to match any portion of the employees contributions
during 1996.
POLICY ON DEDUCTIBILITY OF CERTAIN COMPENSATION
A 1993 amendment to the federal tax code prohibited public companies from
deducting annual compensation in excess of $1,000,000 paid to certain executive
officers after 1993. The Committee does not believe this restriction is likely
to affect its compensation decisions because of the relatively low levels of
salary and cash bonus historically paid its management. Although the exercise
of stock options could cause the $1,000,000 cap to be exceeded, the Compensation
Committee does not intend to consider the cap when awarding stock options.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The base salary of the Company's Chief Executive Officer is $200,000. Dr.
Orza has not been awarded any cash bonus for 1995. The Committee believes that
the Company's growth and strong earnings in recent years justify the
compensation paid to Dr. Orza.
Dated: April 15, 1996 Compensation Committee of Eateries, Inc.
Mr. Edward D. Orza, Chairman
Mr. Thomas F. Golden
Mr. Philip Friedman
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<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE. The following table sets forth information
about the compensation of the Company's chief executive officer and the other
executive officers of the Company (the "named executives").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION(1) AWARDS
-------------------------------------------- -------------
# OF SHARES
UNDERLYING
NAME AND OTHER ANNUAL STOCK OPTIONS ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION GRANTED COMPENSATION(2)
- - ---------------------- ---- ---------- --------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Vincent F. Orza, Jr., 1995 $208,450 -- * 20,000(3) $280
Chairman of the Board, 1994 $158,450 -- * 20,000(3) $280
President and CEO 1993 $158,450 $ 4,828 * -- $280
James M. Burke 1995 $146,110 -- * 10,000 $175
Vice President of 1994 $106,110 -- * 10,000 $175
Operations, Assistant 1993 $106,110 $ 3,621 * -- $175
Secretary and Director
August Hehemann 1995 $136,110 -- * 100,000 --
Vice President of 1994 -- -- * -- --
Finance, Treasurer 1993 -- -- * -- --
and CFO
</TABLE>
_________________
* Less than 10% of total annual salary and bonus.
(1) Amounts shown include cash and non-cash compensation earned and received by
executive officers as well as amounts earned but deferred at the election
of those officers and includes automobile allowances for the three named
individuals in the amounts of $8,450, $6,110, and $6,110, respectively, and
in the amount of $20,670 for the group.
(2) The amounts shown under this column represent the premiums paid by the
Company under split dollar life insurance plans. Under these plans, the
Company pays the premiums for life insurance issued to the named executive.
Repayment of the premiums is secured by the death benefit or the cash
surrender value of the policy, if any, if the executive cancels and
surrenders the policy.
(3) Includes stock options granted to Dr. Orza's spouse, Patricia Orza, a
director of the Company.
EMPLOYMENT AGREEMENTS. The Company has employment agreements with Dr.
Vincent F. Orza, Jr. and Mr. James M. Burke, dated as of October 1, 1995,
with Norma C. Karter dated as of August 16, 1995, and with Mr. August
Hehemann, dated as of January 1, 1995. The employment agreements with Dr.
Orza and Mr. Burke provide for three-year terms which, unless terminated,
automatically renew for additional one-year terms on each December 31. The
employment agreements with Ms. Karter and Mr. Hehemann are for one-year terms
which, unless terminated, automatically renew for another one-year term as of
the last day of each contract year. The current base salary of each
executive under his or her respective employment agreement is as follows:
Vincent F. Orza, Jr. $200,000
James M. Burke 140,000
August Hehemann 130,000
Norma C. Karter 100,000
If Dr. Orza or Mr. Burke should die during the term of the agreement, the
Company must pay to his estate an amount equal to two years' salary out of
the proceeds of the key man life insurance policy maintained on the life of
the
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<PAGE>
employee. If Ms. Karter or Mr. Hehemann should die during the term of the
agreement, the Company must pay their estates regular installments of base
salary for a period of one year from the date of death.
OPTIONS GRANTED. The following table provides information regarding
options granted to each of the named executives during 1995:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZED VALUE
# OF SHARES % OF TOTAL AT ASSUMED ANNUAL RATES OF
DATE UNDERLYING OPTIONS STOCK PRICE APPRECIATION
OF OPTIONS GRANTED TO EXERCISE EXPIRATION FOR OPTION TERM
GRANT GRANTED EMPLOYEES PRICE(1) DATE --------------------------
NAME (MO/DAY) DURING 1995 IN 1995 ($ SHARE) (MO./YR.) 5%(2) 10%(3)
- - ---- -------- ----------- ---------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Vincent F. Orza, Jr. 6/15 20,000(4) 8.3% $3.25 5/01 $ 22,100 $ 50,050
James M. Burke 6/15 10,000 4.2% $3.25 6/01 $ 11,050 $ 22,100
August Hehemann 1/4 100,000 41.7% $3.00 (5) $165,000 $407,370
</TABLE>
__________________
(1) Exercise Price was market price on date of grant.
(2) Assumes 5% annual increase in stock price over term of option.
(3) Assumes 10% annual increase in stock price over term of option.
(4) Includes options granted to Dr. Orza's spouse, Ms. Patricia Orza, director
of the Company.
(5) Expires in annual increments of 25,000 shares commencing 1/2001 and ending
on 1/2004.
As of January 4, 1996, Dr. Orza was granted stock options to acquire a
total of 250,000 shares, and Mr. Burke was granted stock options to acquire a
total of 100,000 shares, at an exercise price of $2.625 per share.
OPTIONS EXERCISED AND HOLDINGS. The following table provides
information about options exercised by each of the named executives in 1995
and the value of their outstanding options measured by the closing price of
the Company's common stock on December 31, 1995:
AGGREGATED OPTION/SAR EXERCISES AND
FISCAL YEAR-END OPTION/SAR VALUE TABLE
<TABLE>
<CAPTION>
SHARES NUMBER OF SHARES VALUE OF UNEXERCISED
ACQUIRED UNDERLYING UNEXERCISED IN-THE-MONEY
ON VALUE OPTIONS AT FY-END(#) OPTIONS AT FY-END($)
NAME EXERCISE REALIZED(1) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
- - ---- -------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Vincent F. Orza, Jr.(2)(3) - - 119,830/20,000 $212,139/0
James M. Burke(2) - - 60,665/10,000 $107,663/0
August Hehemann - - 25,000/75,000 0/0
</TABLE>
__________________
(1) Market value at exercise date less exercise price.
(2) The options held by Dr. Vincent Orza, Jr. and Mr. James Burke include
options received for service as directors of the Company.
(3) The information shown for Dr. Orza includes the beneficial ownership of
director options for 69,165 shares held by his spouse, Ms. Patricia Orza.
DIRECTOR COMPENSATION. The Company's directors receive $2,000 for each
meeting and $1,000 for each full board committee meeting. Outside directors
receive $1,000 for travel days and for each day devoted to Company business.
Aggregate director compensation in 1995 was $34,000. In addition, each
director receives stock options upon initial election as a director and
additional options after five years of service. See "Omnibus Equity
Compensation Plan." During 1995, the Company incurred legal fees of $127,000
with the law firm of which Mr. Golden is a shareholder.
-8-
<PAGE>
OMNIBUS EQUITY COMPENSATION PLAN. Under the Company's Omnibus Equity
Compensation Plan (the "Omnibus Plan"), the Compensation Committee may grant
stock options, restricted stock or other derivative securities to employees
of the Company. At present, non-qualified stock options to acquire a total
of 1,405,000 shares of common stock have been issued to key employees,
options to acquire 878,000 shares of employee stock options have been
exercised and options to acquire 527,500 shares remain outstanding. An
employee stock purchase plan is also included in the Omnibus Plan. Also,
during 1995, 120,000 restricted (not granted under the Omnibus Plan) stock
options were issued and remain outstanding.
Under the Omnibus Plan, at the time of his or her initial election, each
director (including both outside and employee directors) receives options
("Director Initial Options") for 50,000 shares of common stock. Directors
who have served for more than five years receive an annual stock option grant
of 10,000 shares [upon re-election] ("Director Continuing Options"). No
options may be granted under the Omnibus Plan at an exercise price which is
less than 85% of the fair market value of the common stock on the date of
grant, and all director options must be granted at fair market value on the
date of grant.
At present, 226,993 shares of common stock are reserved for issuance
under currently outstanding director options. Director Initial Options are
exercisable at the rate of 20% per year beginning on the first anniversary of
a director's initial election to the Board or, as to directors elected before
1988, beginning in 1989. Director Continuing Options become exercisable in
full one year from the date of grant. All director options have a term of
five years from the start of the exercise period, subject to a one year
extension to the estate of a deceased director. Director options are
nontransferable except by will or the laws of descent.
Under the Omnibus Plan, a change in control of the Company will cause
all unvested stock options to vest and all outstanding stock options or other
Plan awards shall be cashed out unless the Compensation Committee determines
otherwise.
CERTAIN TRANSACTIONS
The Company has employed as its advertising agency the firm of
Advertising & Marketing Associates ("AMA"), which is owned by Dr. Vincent F.
Orza, Jr. AMA purchases most of the Company's electronic and print media
advertising, and has provided creative materials and marketing research for
the Company. AMA billed the Company $424,000 for media costs in 1995, from
which AMA retained standard agency discounts. Dr. Orza has represented that
the 1995 discounts were approximately $40,000 net of expenses. AMA does not
charge the Company for creative or marketing research. The Company has
budgeted approximately $250,000 for media and advertising in 1996 of which
AMA will be reimbursed with a commission at or below standard agency
commissions.
The Board of Directors has adopted a policy that requires that any
transactions between the Company and its officers, directors, and affiliates
be on terms no less favorable to the Company than those that the Company
could obtain from unrelated third parties. The Board has considered AMA's
media purchases and creative and marketing research in light of this policy,
and believes that the Company's arrangement with AMA is consistent with the
policy and in the Company's best interests.
ADDITIONAL INFORMATION WITH RESPECT TO COMPENSATION COMMITTEE INTERLOCK AND
INSIDER PARTICIPATION IN COMPENSATION DECISIONS.
Tom Golden, a member of the Company's Compensation Committee, is a
shareholder and director of the Company's primary outside law firm. In 1995,
the Company incurred legal fees of $127,000 with such law firm.
-9-
<PAGE>
PERFORMANCE GRAPH
The following graph compares the Company's performance for the periods
indicated with the respective performances of the CRSP Total Return Index for
the NASDAQ Market and the NASDAQ Retail Trade Index. The five-year
cumulative total returns reflect reinvested dividends and are weighted on a
market capitalization basis.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
Among Eateries, Inc., CRSP Total Return Index for the NASDAQ Market
and NASDAQ Retail Trade Index
Fiscal Year Ending December 31
[GRAPH]
GRAPH DOLLAR
VALUES 1990 1991 1992 1993 1994 1995
Eateries, Inc. 100 179 916 1,095 714 491
CRSP Total
Return Index 100 161 187 215 210 296
NASDAQ Retail
Trade Index 100 190 179 189 172 190
The foregoing graph depicts the comparative return on an investment in
the common stock for the periods indicated. Historical returns may not
necessarily be indicative of actual returns which may be attained in the
future.
-10-
<PAGE>
OTHER INFORMATION ABOUT DIRECTORS, OFFICERS
AND CERTAIN SHAREHOLDERS
BENEFICIAL OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of April 15, 1996, by
(i) each person known by the Company to own beneficially more than 5% of the
Company's common stock, (ii) each director and executive officer of the
Company, and (iii) all executive officers and directors of the Company as a
group.
<TABLE>
<CAPTION>
PRESENTLY- SHARES BENEFICIALLY
SHARES EXERCISABLE OWNED(3)
DIRECTLY STOCK -------------------
NAME OWNED(1) OPTIONS(2) NUMBER PERCENT
---- -------- ----------- --------- -------
<S> <C> <C> <C> <C>
Vincent F. Orza, Jr. 344,261 143,332 487,593 11.7%
Patricia L. Orza
2001 Cambridge Way
Edmond, Oklahoma
Edward D. Orza 465,119 20,000 485,119 11.7%
45 Lounsbury Rd.
Croton-on-Hudson, New York
James M. Burke 177,993 66,666 244,659 5.9%
6701 Reed Dr.
Oklahoma City, Oklahoma
August A. Hehemann 0 25,000 25,000 *
Norma C. Karter 0 0 0 0
Philip Friedman 35,999 33,333 69,332 1.7%
Thomas F. Golden 11,000 33,652 44,652 1.1%
Wasatch Advisors, Inc. 472,361 0 472,361 11.4%
68 South Main Street, Suite 400
Salt Lake City, Utah 84101
Kennedy Capital Management, Inc. 234,850 0 234,850 5.7%
425 N. New Ballas Road, Suite 181
St. Louis, Missouri 63141-6821
First Union Corporation 234,000 0 234,000 5.6%
One First Union Center
Charlotte, North Carolina 28288
Executive Officers and Directors 1,034,372 321,983 1,356,355 32.6%
as a group (8 persons)
</TABLE>
_________________
* Less than one percent.
(1) Excludes shares which the shareholder has the right to acquire through the
exercise of stock options.
(2) Shares the shareholder may acquire through the exercise of presently
exercisable stock options or stock options which will become exercisable
within 60 days of April 15, 1996.
(3) Includes shares directly owned and shares subject to presently exercisable
stock options as described in footnotes (1) and (2) above.
-11-
<PAGE>
OTHER INFORMATION ABOUT THE ANNUAL MEETING
OTHER MATTERS COMING BEFORE THE MEETING
As of the date of this proxy statement, the Company knows of no business
to come before the meeting other than that referred to above. The Company's
rules of conduct for the annual meeting prohibit the introduction of
substantive matters not previously presented to the shareholders in a proxy
statement. As to other business, such as procedural matters, that may come
before the meeting, the persons holding proxies will vote those proxies in
the manner they believe to be in the best interests of the Company and its
shareholders.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any shareholder who wishes to present a proposal at the Company's 1996
Annual Meeting of Shareholders must deliver such proposal to the Secretary of
the Company by December 31, 1996, for inclusion in the Company's proxy,
notice of meeting, and proxy statement for the 1997 Annual Meeting.
AUDITORS
Ernst & Young has audited the Company's financial statements for the
years ended December 31, 1993, 1994 and 1995. Their report is included in
the Company's Annual Report to Shareholders that accompanies this Proxy
Statement.
Representatives of Ernst & Young will be present at the Annual Meeting
and available to answer questions regarding their audit, and will make a
statement if they wish. Consistent with prior practices, the Board has not
asked the shareholders to ratify its selection of auditors, believing that
shareholder ratification is unnecessary.
ADDITIONAL INFORMATION
The Company will bear the cost of soliciting proxies. Officers and
regular employees of the Company may solicit proxies by further mailing,
personal conversations, or by telephone or telegraph. They will do so
without compensation other than their regular compensation. The Company
will, upon request, reimburse brokerage firms and others for their reasonable
expenses in forwarding solicitation material to the beneficial owners of
stock.
THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL
STATEMENTS AND SCHEDULES THERETO, FOR THE YEAR ENDED DECEMBER 31, 1995, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, WILL BE FURNISHED WITHOUT
CHARGE TO ANY SHAREHOLDER UPON WRITTEN REQUEST ADDRESSED TO MS. PATRICIA L.
ORZA, SECRETARY, EATERIES, INC., 3240 W. BRITTON ROAD, SUITE 202, OKLAHOMA
CITY, OKLAHOMA 73120. SHAREHOLDERS REQUESTING EXHIBITS TO THE FORM 10-K WILL
BE PROVIDED THE SAME UPON PAYMENT OF REPRODUCTION EXPENSES.
By order of the Board of Directors
PATRICIA L. ORZA
Secretary
April 29, 1996
-12-
<PAGE>
EATERIES, INC.
3240 W. Britton Rd., Suite 202
Oklahoma City, Oklahoma 73120
- - ------------------------------
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Vincent F. Orza, Jr., James M.
Burke and Edward D. Orza as Proxies, each with the power
to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated below, all the shares of
common stock of Eateries, Inc. held of record by the undersigned
on April 29, 1996, at the Annual Meeting of Shareholders to be
held on June 26, 1996, or any adjournments thereof.
ELECTION OF DIRECTORS FOR all nominees listed below / /
(except as marked to the contrary below)
WITHHOLD AUTHORITY / /
to vote for all nominees listed below
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE THROUGH THE NOMINEE'S NAME BELOW.)
James M. Burke, Thomas F. Golden, Edward D. Orza
Philip Friedman, Patricia L. Orza, and Vincent F. Orza, Jr.
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR EACH OF THE DIRECTOR NOMINEES. THIS PROXY
CONFERS DISCRETIONARY AUTHORITY UPON THE NAMED PROXIES TO VOTE THE
UNDERSIGNED SHARES ON ANY OTHER MATTERS WHICH MAY BE PROPERLY BROUGHT
BEFORE THE MEETING, INCLUDING VOTING AGAINST ANY DIRECTOR NOMINEES NOT
IDENTIFIED ABOVE.
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If
a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name
by authorized person.
DATED: _________________________________, 1996
______________________________________________
(Signature)
______________________________________________
(Signature if held jointly)
Please mark, sign, date and return this Proxy
Card promptly using the enclosed envelope.
