<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 [ ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-12
</TABLE>
Eateries, 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:
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
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<PAGE> 2
[EATERIES LOGO]
NOTICE OF 2000 ANNUAL MEETING OF SHAREHOLDERS
DATE: July 3, 2000
TIME: 9:00 a.m.
PLACE: Garfield's Restaurant & Pub
Quail Springs Mall
2501 W. Memorial Road
Oklahoma City, OK
Dear Shareholders:
At the Annual Meeting, we will ask you to:
o Amend our Restated Articles of Incorporation and Restated Bylaws to,
among other things:
- Create three classes of directors to serve for staggered
three-year terms;
- Allow the Board of Directors to fill directorship vacancies,
- Allow removal of directors only for cause.
- Allow the Board of Directors to amend any portion of the Restated
Bylaws; and
- Permit future revisions of these amendments only upon the
approval of 66 2/3% of the outstanding stock.
o Amend our Omnibus Equity Compensation Plan to, among other things:
- Eliminate the portion of the Plan pertaining only to directors
and allow directors to receive awards under the Plan like any
employee;
- Clarify that the Board of Directors may elect to administer all
or any portion of the Plan in place of the Compensation
Committee; and
- Clarify that the Board of Directors may elect to re-price or
extend stock options previously granted under the Plan.
o Elect seven directors; and
o Transact any other business that may properly presented before the
Annual Meeting.
If you were a shareholder of record at the close of business on May 12,
2000, you may vote at the Annual Meeting.
By Order of the Board of Directors
PATRICIA L. ORZA
June 5, 2000 Secretary
PLEASE SIGN; DATE AND RETURN THE ENCLOSED PROXY AS SOON AS POSSIBLE WHETHER OR
NOT 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> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
INFORMATION ABOUT THE MEETING AND VOTING.......................................................................1
Why did you send me this Proxy Statement?.................................................................1
How many votes do I have?.................................................................................1
How do I vote by proxy?...................................................................................1
What does the Board of Directors recommend?...............................................................1
May I revoke my Proxy?....................................................................................1
How do I vote in person?..................................................................................3
What vote is required to approve each proposal?...........................................................3
INFORMATION ABOUT EATERIES, INC. COMMON STOCK OWNERSHIP........................................................5
Who owns the most Eateries, Inc. stock?...................................................................5
Did directors, executive officers and greater-than-10% shareholders
comply with Section 16(a) Beneficial Ownership Reporting in 1999?......................................6
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS.............................................................6
The Board of Directors....................................................................................6
The Committees of the Board of Directors..................................................................6
How do we compensate directors?...........................................................................7
Related transactions with directors.......................................................................7
Compensation Committee Interlocks and Insider Participation...............................................7
The Executive Officers....................................................................................7
How do we compensate the Executive Officers?..............................................................9
Summary Compensation Table............................................................................9
Options Granted in 1999..............................................................................10
Aggregated Option Exercises in 1999 and Year-end Option Values.......................................10
Omnibus Equity Compensation Plan.....................................................................11
Employment Agreements with the Chief Executive Officer and certain other Executive Officers..........11
Stock Put Agreements.................................................................................11
Report on Executive Compensation for 1999................................................................12
Executive Compensation Report........................................................................12
Principal Components of Executive Compensation..................................................12
Base Salaries...................................................................................12
Stock Incentives................................................................................12
Cash Bonuses....................................................................................13
401(k) Plan.....................................................................................13
Policy on Deductibility of Certain Compensation.................................................13
Compensation of Chief Executive Officer.........................................................13
Performance Graph........................................................................................14
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD OF DIRECTORS.................................................15
PROPOSAL I - 5: THE PROPOSED AMENDMENTS TO THE RESTATED ARTICLES OF
INCORPORATION AND RESTATED BYLAWS.....................................................................15
What is the purpose of the proposed amendments?..........................................................15
Current Anti-takeover Provisions.........................................................................17
PROPOSED AMENDMENT 1.....................................................................................18
Classification of Directors..........................................................................18
PROPOSED AMENDMENT 2.....................................................................................18
Filling of Directorships.............................................................................18
PROPOSED AMENDMENT 3.....................................................................................18
Removal of Directors Only For Cause..................................................................18
</TABLE>
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<TABLE>
<S> <C>
PROPOSED AMENDMENT 4.....................................................................................19
Clarification Under Current Oklahoma Law.............................................................19
PROPOSED AMENDMENT 5.....................................................................................19
Future Changes to Proposed Amendments................................................................19
PROPOSAL 6: THE PROPOSED AMENDMENTS TO
OMNIBUS EQUITY COMPENSATION PLAN......................................................................19
What is the purpose of the proposed amendments to the Plan?..........................................19
THE PROPOSED AMENDMENTS TO THE PLAN...........................................................................20
PROPOSAL 7: ELECT SEVEN DIRECTORS........................................................................20
Who has the Board of Directors nominated?............................................................20
Class I Nominees................................................................................20
Class II Nominees...............................................................................21
Class III Nominees..............................................................................22
OTHER INFORMATION ABOUT THE ANNUAL MEETING....................................................................23
Shareholder Proposals for the Next Annual Meeting....................................................23
Auditors.............................................................................................23
Who will bear the cost of soliciting these proxies?..................................................23
How do I obtain an Annual Report on Form 10-K?.......................................................24
EXHIBIT A - PROPOSED AMENDMENTS OF ARTICLE EIGHT OF
THE RESTATED ARTICLES OF INCORPORATION.....................................................................25
EXHIBIT B - PROPOSED AMENDMENTS OF THE AMENDED
AND RESTATED BYLAWS OF EATERIES, INC.......................................................................26
Exhibit C - PROPOSED AMENDMENTS OF THE OMNIBUS
EQUITY COMPENSATION PLAN...................................................................................27
</TABLE>
ii
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PROXY STATEMENT FOR
[EATERIES LOGO]
2000 ANNUAL MEETING OF SHAREHOLDERS
INFORMATION ABOUT THE MEETING AND VOTING
WHY DID YOU SEND ME THIS PROXY STATEMENT?
We sent you this Proxy Statement and the enclosed proxy card because our
Board of Directors is asking for your proxy to vote at the 2000 Annual Meeting
of the Shareholders. This Proxy Statement summarizes the information you need to
know to vote intelligently at the Annual Meeting. However, you do not need to
attend the Annual Meeting to vote your shares. Instead, you may simply sign,
date and return the enclosed proxy card.
We anticipate sending this Proxy Statement, the Notice of Meeting and the
enclosed proxy card on or around June 2, 2000 to all shareholders entitled to
vote. If you were a shareholder of record at the close of business on May 12,
2000, you may vote at the Annual Meeting. On May 12, 2000, there were 3,034,696
shares of our common stock outstanding. Common stock is our only class of voting
stock.
HOW MANY VOTES DO I HAVE?
Each share of Eateries, Inc. stock that you own entitles you to one vote on
each matter considered at the Annual Meeting. Your proxy card shows the number
of shares of common stock that you own.
HOW DO I VOTE BY PROXY?
Please sign, date and return the proxy card, whether or not you plan to
attend the Annual Meeting. You will not affect your right to attend and vote at
the Annual Meeting by returning the proxy card.
If you sign, date and return the proxy card to us in time to vote, your
"proxy" (one of the individuals named in the proxy card) will vote your shares
as you have directed. If you sign the proxy card but do not make specific
choices, your proxy will vote your shares as recommended by the Board of
Directors.
WHAT DOES THE BOARD OF DIRECTORS RECOMMEND?
The Board of Directors recommends a vote:
o "FOR" all proposed amendments to the Restated Articles of
Incorporation and Restated Bylaws;
o "FOR" all proposed amendments to the Omnibus Equity Compensation Plan;
and
o "FOR" all seven nominees for director.
At the time this Proxy Statement went to press, we knew of no other matters
which needed to be acted on at the Annual Meeting. We will not introduce any
substantive matters at the Annual Meeting which are not presented in this Proxy
Statement. If any other business, such as procedural matters, is presented at
the Annual Meeting, your proxy will vote according to his best judgment.
MAY I REVOKE MY PROXY?
o If you give a proxy, you may revoke it at any time before it is
exercised. You may revoke your proxy in three ways:
o You may notify Patricia L. Orza, our Secretary, in writing before the
Annual Meeting that you have revoked your proxy;
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o You may send another proxy with a later date to us in time to vote; or
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<PAGE> 7
o You may attend the Annual Meeting and request revocation of your
proxy. (You must request revocation - attendance at the Annual
Meeting alone will not revoke your proxy.)
HOW DO I VOTE IN PERSON?
If you attend the Annual Meeting and vote in person, we will give you a
ballot when you arrive. However, if your shares are held in the name of a
broker, bank or other nominee, you must bring an account statement or letter
from the nominee, which shows that you are the beneficial owner of the shares on
May 12, 2000, the record date for voting.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
PROPOSAL 1:
APPROVE AMENDMENTS TO THE RESTATED ARTICLES OF INCORPORATION AND RESTATED BYLAWS
TO CREATE THREE CLASSES OF DIRECTORS TO SERVE FOR STAGGERED THREE-YEAR TERMS.
The affirmative vote of a majority of the total outstanding shares of
common stock is required to approve the proposed amendments to the Restated
Articles of Incorporation and Restated Bylaws. So, if you do not vote, or
"abstain" from voting, it has the same effect as if you voted "against" an
amendment.
A broker non-vote has the same effect as a vote "against" an amendment.
PROPOSAL 2:
APPROVE AMENDMENTS TO THE RESTATED ARTICLES OF INCORPORATION AND RESTATED BYLAWS
TO ALLOW BOARD OF DIRECTORS TO FILL DIRECTORSHIP VACANCIES.
The affirmative vote of a majority of the total outstanding shares of
common stock is required to approve the proposed amendments to the Restated
Articles of Incorporation and Restated Bylaws. So, if you do not vote, or
"abstain" from voting, it has the same effect as if you voted "against" an
amendment.
A broker non-vote has the same effect as a vote "against" an amendment.
Proposal 3:
APPROVE AMENDMENTS TO THE RESTATED ARTICLES OF INCORPORATION AND RESTATED BYLAWS
TO ALLOW THE REMOVAL OF DIRECTORS ONLY FOR CAUSE.
The affirmative vote of a majority of the total outstanding shares of
common stock is required to approve the proposed amendments to the Restated
Articles of Incorporation and Restated Bylaws. So, if you do not vote, or
"abstain" from voting, it has the same effect as if you voted "against" an
amendment.
A broker non-vote has the same effect as a vote "against" an amendment.
PROPOSAL 4:
APPROVE AMENDMENTS TO THE RESTATED ARTICLES OF INCORPORATION AND RESTATED BYLAWS
TO ALLOW THE BOARD OF DIRECTORS TO AMEND ANY PORTION OF THE RESTATED BYLAWS.
The affirmative vote of a majority of the total outstanding shares of
common stock is required to approve the proposed amendments to the Restated
Articles of Incorporation and Restated Bylaws. So, if you do not vote, or
"abstain" from voting, it has the same effect as if you voted "against" an
amendment.
A broker non-vote has the same effect as a vote "against" an amendment.
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PROPOSAL 5:
APPROVE AMENDMENTS TO THE RESTATED ARTICLES OF INCORPORATION AND RESTATED BYLAWS
TO PERMIT FUTURE REVISIONS OF THE AMENDMENTS APPROVED AT THIS MEETING ONLY UPON
THE APPROVAL OF 66 2/3% OF THE OUTSTANDING COMMON STOCK.
The affirmative vote of a majority of the total outstanding shares of
common stock is required to approve the proposed amendments to the Restated
Articles of Incorporation and Restated Bylaws. So, if you do not vote, or
"abstain" from voting, it has the same effect as if you voted "against" an
amendment.
A broker non-vote has the same effect as a vote "against" an amendment.
PROPOSAL 6:
APPROVE AMENDMENTS TO THE OMNIBUS EQUITY COMPENSATION PLAN.
The affirmative vote of a majority of the total outstanding shares of
common stock is required to approve the proposed amendments to the Omnibus
Equity Compensation Plan. So, if you do not vote, or "abstain" from voting, it
has the same effect as if you voted "against" an amendment.
A broker non-vote has the same effect as a vote "against" an amendment.
PROPOSAL 7:
ELECT SEVEN DIRECTORS
The seven directors who receive the most votes will be elected. So, if you
do not vote for a particular nominee, or you withhold authority to vote for a
particular nominee on your proxy card, your vote will not count either "for" or
"against" the nominee.
A broker non-vote will have no effect on the election of the directors.
PROPOSAL 8:
OTHER BUSINESS
The affirmative vote of a majority of the shares represented in person or
by proxy and entitled to vote at the meeting is required to approve other
matters properly brought before the meeting. So, if you "abstain" from voting,
it has the same effect as if you voted "against" a proposal.
A broker non-vote will not count as a "share present". So, a broker
non-vote will reduce the number of affirmative votes that are necessary to
approve any proposal.
4
<PAGE> 9
INFORMATION ABOUT EATERIES, INC. COMMON STOCK OWNERSHIP
WHO OWNS THE MOST EATERIES, INC. STOCK?
This table shows, as of May 12, 2000, all of the persons we know to be
"beneficial owners" (1) of more than five percent of Eateries, Inc. common
stock. This table also shows the beneficial ownership of each director and
executive officer of Eateries, Inc. (even if he or she owns less than five
percent of the common stock) and of all our directors and executive officers as
a group.
<TABLE>
<CAPTION>
Presently Shares Beneficially Owned (4)
Directly Exercisable -----------------------------
Owned Stock Options
Name Shares (2) (3) Number Percent
--------------------------------- ---------- -------------- -------- -------
<S> <C> <C> <C> <C>
Vincent F. Orza, Jr. 385,353 340,000 725,353 21.7%
Patricia L. Orza
2001 Cambridge Way
Edmond, Oklahoma
--------------------------------- ---------- -------------- -------- -------
Edward D. Orza 448,900 40,000 488,900 16.1%
45 Lounsbury Rd.
Croton-on-Hudson, New York
--------------------------------- ---------- -------------- -------- -------
James M. Burke 190,345 140,000 330,345 10.5%
5209 Rock Port Way
Oklahoma City, Oklahoma 73013
--------------------------------- ---------- -------------- -------- -------
Bradley L. Grow 15,000 60,000 75,000 2.5%
--------------------------------- ---------- -------------- -------- -------
Marc Buehler -- 5,000 5,000 .2%
--------------------------------- ---------- -------------- -------- -------
Laurence M. Bader -- 10,000 10,000 .3%
--------------------------------- ---------- -------------- -------- -------
Philip Friedman 49,332 40,000 89,332 2.9%
--------------------------------- ---------- -------------- -------- -------
Thomas F. Golden 23,255 41,367 64,622 2.1%
--------------------------------- ---------- -------------- -------- -------
Larry Kordisch 5,000 30,000 35,000 1.2%
--------------------------------- ---------- -------------- -------- -------
Directors and Executive Officers as a 1,117,185 706,367 1,823,552 49.2%
group (10 persons)
--------------------------------- ---------- -------------- -------- -------
</TABLE>
(1) "Beneficial ownership" is a technical term broadly defined by the
Securities Exchange Commission to mean more than ownership in the
usual sense. So, for example, you "beneficially" own Eateries, Inc.
common stock not only if you hold it directly, but also if you
indirectly (through a relationship, a position as a director or
trustee, or a contract or understanding) have (or share) the power to
vote the stock, or to sell it, or if you have the right to acquire it
within 60 days.
(2) This column excludes shares which the shareholder has the right to
acquire by exercising stock options.
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(3) This column shows the number of shares the shareholder may acquire
though the exercise of presently exercisable stock options or stock
options which will become exercisable within 60 days of May 12, 2000.
(4) This column includes shares directly owned and shares subject to
presently exercisable stock options as described in footnotes (1), (2)
and (3) above.
DID DIRECTORS, EXECUTIVE OFFICERS AND GREATER-THAN-10% SHAREHOLDERS COMPLY WITH
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING IN 1999?
Section 16(a) of the Securities Exchange Act of 1934 requires our
directors, executive officers and greater-than-10% shareholders to file initial
reports of ownership and reports of changes in ownership with the Securities and
Exchange Commission and to give us copies of the reports. Based on our review of
these reports and of written representations of the reporting persons provided
to us, we believe that all reporting persons complied with the Section 16(a)
filing requirements for 1999.
INFORMATION ABOUT DIRECTORS AND EXECUTIVE OFFICERS
THE BOARD OF DIRECTORS
The Board of Directors oversees the business and affairs of Eateries, Inc.,
but does not participate in day-to-day operations. The Board of Directors
consists of seven members. During 1999, each director served for a term of one
year (or until his or her successor had been elected and qualified, subject to
earlier resignation, removal or death). If the shareholders approve the proposed
amendments to the Restated Articles of Incorporation and the Restated Bylaws,
the directors will serve staggered three-year terms as described on pages 16 and
17. On the other hand, if the shareholders do not approve the proposed
amendments, the directors will serve a one-year term. The number of directors
comprising the Board of Directors may be increased or decreased by amendment to
our bylaws. Our officers serve at the discretion of the Board of Directors,
subject to contractual arrangements.
THE COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has two permanent committees:
THE AUDIT COMMITTEE The 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.
Mr. Philip Friedman, Mr. Thomas Golden and Mr.
Larry Kordisch are members of the committee. Mr.
Kordisch serves as chairman of the committee. The
Audit Committee met four times in 1999.
THE COMPENSATION COMMITTEE The Compensation Committee administers the
executive compensation program of Eateries, Inc.
(except that the entire Board of Directors
administers the Omnibus Equity Compensation Plan.)
The members of the committee are independent
non-employee directors. Each year, as the Securities
Exchange Commission requires, the committee reports
to you on executive compensation. The Compensation
Committee's Report on Executive Compensation for
1999 is printed at pages 11 and 12.
Mr. Larry Kordisch and Mr. Thomas F. Golden are
members of the committee. Mr. Golden serves as
chairman of the committee. The
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Compensation Committee met one time in 1999.
HOW DO WE COMPENSATE DIRECTORS?
During 1999, we compensated the directors as follows:
ANNUAL FEE We paid each director an annual retainer fee of
$10,000 (paid in quarterly installments.)
MEETING FEE We paid each director $500 for each board meeting,
committee meeting or travel day.
STOCK OPTIONS We also grant each director stock options upon his or
her initial election as a director and additional
options after five years of service. (For more
information, see below at page 9 under "Omnibus
Equity Compensation Plan".)
RELATED TRANSACTIONS WITH DIRECTORS
We have a policy that requires that any transactions between Eateries, Inc.
and our officers, directors, and affiliates be on terms no less favorable than
those that we could obtain from unrelated third parties.
We have employed the firm of Advertising & Marketing Associates, which is
owned by Dr. Vincent F. Orza, Jr., as our advertising agency. The firm purchases
most of our electronic, outdoor and print media advertising, and has provided
creative materials and marketing research for us. We paid the firm $1,454,264
for media costs in 1999, from which it retained standard agency discounts. Dr.
Orza represents that the 1999 discounts were approximately $131,844 net of
expenses. The firm does not charge us for creative or marketing research. We
believe that our arrangement with Advertising & Marketing Associates is
consistent with our policy on transactions with directors and in the best
interest of Eateries, Inc.
We lease our corporate offices in Edmond, Oklahoma from Great Places,
L.L.C., an entity, which is owned by Dr. Orza, Jr. and Messrs. Burke and Grow.
Our lease with Great Places commenced in June 1999, and we paid a total of
$62,300 in rent to Great Places in 1999. The lease requires us to pay monthly
rental to Great Places of $8,900, and remains in effect until June 2014.
The Shawnee Oklahoma Garfield's Restaurant is leased from Great Places of
Shawnee, L.L.C., an entity owned by Dr. Orza and Messrs. Burke and Grow. Our
lease with Great Places of Shawnee commenced in October 1999, and we paid a
total of $27,000 in rent in 1999. The lease requires us to pay monthly rental to
Great Places of Shawnee of $9,000, and remains in effect until October 2014.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Thomas Golden, a member of our Audit and Compensation Committees, is a
shareholder and director of Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C.
(an Oklahoma law firm with offices in Tulsa and Oklahoma City), the primary
outside law firm of Eateries, Inc. We incurred legal fees of $224,778 with the
law firm in 1999.
THE EXECUTIVE OFFICERS
These are the biographies of the current executive officers of Eateries,
Inc., except for those officers who are also directors (whose biographies are
included beginning on page 18 under "Who has the Board of Directors
Nominated?").
<TABLE>
<S> <C>
BRADLEY L. GROW VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND ASSISTANT
Age 43 SECRETARY. Mr. Grow joined Eateries, Inc. in July
1998. From 1979 through 1981, Mr. Grow was with
Touche Ross and Company (now Deloitte and Touche) an
international accounting firm in their London,
England office. In 1982 he was
</TABLE>
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<PAGE> 12
<TABLE>
<S> <C>
BRADLEY L. GROW employed by Grant Thornton and Company, an
continued international accounting firm, and from 1983 to 1984
was the Chief Financial Officer of the Harper
Companies. From 1985 to July 1998, Mr. Grow was the
Managing Partner and Principle Owner of Grow and
Company, a CPA firm with offices in three states
where he specialized in mergers, acquisitions and
business structure work. Mr. Grow is a Certified
Public Accountant and holds a Bachelor of Science
degree in Accounting and a Masters of Business
Administration degree from the University of Central
Oklahoma. Mr. Grow is on the board of visitors at the
University of Tulsa, and is on the board of directors
of Azienda Acricola San Damiano, Italy; The Sabake
Fruit Company, Kenya; Quail Energy Company and
several other companies and charities.
MARC A. BUEHLER VICE PRESIDENT OF MARKETING. Mr. Buehler joined
Age 30 Eateries, Inc. in March 1999 as Vice President of
Marketing. Mr. Buehler is responsible for our
long-term strategic marketing efforts including
advertising, menu development, product research and
development, consumer research and support. From 1996
until joining Eateries, Inc., Mr. Buehler was
Franchise Marketing Manager for Applebee's
International, Inc., operator and franchisor of the
world's largest casual dining concept, Applebee's
Neighborhood Grill & Bar. From 1992 to 1996, Mr.
Buehler was employed by ESPN as an account executive.
Mr. Buehler holds a Bachelor of Science degree in
Business Administration and a Master of Science
degree in Advertising Management, both from the
University of Kansas.
LAURENCE M. BADER VICE PRESIDENT OF FRANCHISE DEVELOPMENT. Mr. Bader
Age 55 joined Eateries, Inc. in 1999, as Vice President of
Franchise Development. Mr. Bader is responsible for
creating a Franchising Department for Garfield's
Restaurant and Pub and for developing franchising
locations, both domestically and internationally. He
consults with franchisees on real estate and
construction, and manages a franchise relations team.
Mr. Bader brings more than 30 years of experience in
franchising, franchise relations, development, and
restaurant operations from Kentucky Fried Chicken
Corp., Marriott, Pizzeria Uno and, most recently,
from Applebee's International, where he established
and grew the franchise business from 115 restaurants
in 1990 to the 1100 they operate today. He has
developed franchisees in 49 of the 50 states, Canada,
Mexico, the Caribbean and Europe. Mr. Bader holds a
Marketing degree from the University of Maine. He is
a member of the International Council of Shopping
Centers, and has represented his companies as a
member and presenter at conventions of the
International Franchise Association.
</TABLE>
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HOW DO WE COMPENSATE THE EXECUTIVE OFFICERS?
The tables set forth on pages 8 and 9 show:
o Salaries, bonuses and other compensation (during the last
three years) of the executive officers of Eateries, Inc. who
earned over $100,000 in 1999;
o Options granted to the named executive officers in 1999; and
o Options exercised by the named executive officers and the
value of their outstanding options measured by the closing
price of our common stock on December 26, 1999.
SUMMARY COMPENSATION TABLE
This table shows the compensation paid over the last three years to the
Chief Executive Officer and other executive officers who received compensation
of $100,000 or more in 1999.
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
--------------------------------------------------------- --------------
# of Shares
Underlying All other
Name and Other Annual Stock Options Compensation
Principal Position Year Salary(1) Bonus Compensation Granted (2)
----------------------------- ------------ ------------ ------------ ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Vincent F. Orza, Jr. 1999 $ 300,758 -- $ 11,000(3) 20,000(4) --
Chairman of the Board, 1998 232,873 100,000 12,500(3) 20,000(4) 365
President and 1997 208,450 50,000 6,000(3) 20,000(4) 285
Chief Executive Officer
------------ ------------ ------------ ------------ -------------- ------------
James M. Burke 1999 $ 180,341 -- $ 11,000(3) 10,000 --
Vice President, Chief 1998 160,764 50,000 12,500(3) 10,000 161
Operating Officer, 1997 146,110 30,000 6,000(3) 10,000 133
Assistant Secretary and
Director
------------ ------------ ------------ ------------ -------------- ------------
Brad Grow 1999 $ 150,000 -- -- -- --
Vice President, Chief 1998 -- -- -- -- --
Financial Officer and 1997 -- -- -- -- --
Assistant Secretary
------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
(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. Amounts shown also include
automobile allowances as follows: Orza $8,450; Burke $6,110 and Grow
$0 ($14,560 for the group).
(2) Amounts shown under this column represent the premiums paid by
Eateries, Inc. under split-dollar life insurance plans. Under these
plans, Eateries, Inc. 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) Amounts shown represent directors' fees.
(4) Amount shown includes stock options granted to Dr. Orza's spouse,
Patricia L. Orza, a director of Eateries, Inc.
9
<PAGE> 14
OPTIONS GRANTED IN 1999
This table shows the options granted to the named executive officers who
received compensation of $100,000 or more in 1999.
<TABLE>
<CAPTION>
# of Potential Realized Value
Shares % of Total at Assumed Annual Rates of
Underlying Options Stock Price Appreciation
Options Granted to Exercise Expiration for Option Term
Date of Granted in Employees Price(2) Date ----------------------------
Name Grant 1999 in 1999(1) ($ share) (Mo/Yr) 5%(3) 10%(4)
--------------------- ---------- ------------ ------------ ------------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Vincent F. Orza, Jr. 7/20/99 20,000(5) 11.7% $3.563 7/7/04 19,685 42,499
---------- ------------ ------------ ------------- ----------- --------------- ------------
James M. Burke 7/20/99 10,000 5.8% $3.563 7/7/04 9,843 21,749
---------- ------------ ------------ ------------- ----------- --------------- ------------
Brad Grow -- -- -- -- -- -- --
---------- ------------ ------------ ------------- ----------- --------------- ------------
</TABLE>
(1) Includes options granted to non-employee directors.
(2) Exercise price was market price on date of grant.
(3) Assumes 5% annual increase in stock price over term of option.
(4) Assumes 10% annual increase in stock price over term of option.
(5) Includes options granted to Dr. Orza's spouse, Ms. Patricia L. Orza,
a director of Eateries, Inc.
AGGREGATED OPTION EXERCISES IN 1999 AND YEAR-END OPTION VALUES
This table shows options exercised by the named executive officers (who
received compensation of $100,000 or more in 1999) and the value of their
outstanding options measured by the closing price of Eateries, Inc.'s common
stock on December 26, 1999.
<TABLE>
<CAPTION>
Shares Value Number of Shares Underlying Value of Unexercised in-the-
Acquired on Realized Unexercised Options at FY-End Money Options at FY-End($)
Name Exercise (1) (#) Exercisable/Unexercisable Exercisable/Unexercisable
---------------------------- ------------- ----------- ------------------------------- -----------------------------
<S> <C> <C> <C> <C>
Vincent F. Orza, Jr.(2)(3) -- -- 280,000/70,000 56,240/12,5000
------------- ----------- ------------------------------- -----------------------------
James M. Burke(2) -- -- 120,000/30,000 23,120/5,000
------------- ----------- ------------------------------- -----------------------------
Brad Grow -- -- 60,000/90,000 --/--
------------- ----------- ------------------------------- -----------------------------
</TABLE>
(1) Market value at exercise date less exercise price.
(2) The options held by Dr. Vincent F. Orza, Jr. and Mr. James M. Burke
include options received for service as directors of Eateries, Inc.
(3) The information shown for Dr. Orza includes the beneficial ownership
of director options for 50,000 shares held by his spouse, Ms.
Patricia Orza.
10
<PAGE> 15
OMNIBUS EQUITY COMPENSATION PLAN
Under the Omnibus Equity Compensation Plan of Eateries, Inc., the Board of
Directors may grant stock options, restricted stock or other derivative
securities to our employees. Currently, we have issued non-qualified stock
options to key employees to acquire a total of 1,606,000 shares of common stock.
Options to acquire 951,500 shares of employee stock options have been exercised
and options to acquire 517,500 shares remain outstanding. The Omnibus Plan also
includes an employee stock purchase plan.
At the time of his or her initial election, we issue each director
(including both outside and employee directors) options for 50,000 shares of
common stock. Once a director serves for more than five years, we grant the
director annual stock options of 10,000 shares upon re-election. Under the
Omnibus Equity Compensation Plan, we may not grant options at an exercise price,
which is less than 85% of the fair market value of the common stock on the date
of grant. We grant all director options at fair market value on the date of
grant.
Currently, 387,417 shares of common stock are reserved for issuance under
currently outstanding director options. Directors may exercise their initial
options at the rate of 20% per year beginning on the first anniversary of a
director's initial election to the Board of Directors (or, as to directors
elected before 1988, beginning in 1989). Directors may exercise their
re-election options one full 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. Directors may not
transfer their options except by will or the laws of descent.
Under the Omnibus Equity Compensation Plan, if there is a change in control
of Eateries, Inc., all unvested stock options will vest and all outstanding
stock options or other plan awards will be cashed out unless the Compensation
Committee determines otherwise.
EMPLOYMENT AGREEMENTS WITH THE CHIEF EXECUTIVE OFFICER
AND CERTAIN OTHER EXECUTIVE OFFICERS
We have employment agreements with Dr. Vincent F. Orza, Jr. and Mr. James
M. Burke dated as of October 1, 1995, and with Bradley L. Grow dated as of
September 30, 1998. 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 agreement with
Mr. Grow has an indefinite term and may be terminated by us or Mr. Grow for any
reason upon ninety days advance written notice. The current base salary of each
executive under his or her respective employment agreement is as follows:
o Vincent F. Orza, Jr. $292,308
o James M. Burke $174,231
o Bradley L. Grow $150,000
If Dr. Orza or Mr. Burke should die during the term of his employment
agreement, we will pay his estate an amount equal to two years' salary out of
the proceeds of the key man life insurance policy maintain on the executive's
life. If Mr. Grow should die during the term of his agreement, we will pay his
estate regular installments of base salary for one year from the date of his
death.
STOCK PUT AGREEMENTS. If Dr. Orza or Mr. Burke should die, the executive's
estate or other legal representative has the right (but not the obligation) to
compel Eateries, Inc. to purchase all or part of the common stock:
o Owned by or under stock options to the executive;
o Owned by the executive's immediate family members (i.e. spouse
or children); or
o Controlled by the executive or his immediate family members
through trusts, partnerships, corporations or other entities on
the date of the executive's death.
11
<PAGE> 16
We will pay for any compelled purchase of stock out of (and limited to)
the proceeds of the key man life insurance policies we hold on the executive.
REPORT ON EXECUTIVE COMPENSATION FOR 1999
The Compensation Committee develops, implements, reviews and administers
the executive compensation programs and policies of Eateries, Inc. It also
monitors the performance and compensation of the management, and makes
recommendations and reports to the Board of Directors about the levels of
executive compensation. The Compensation Committee furnished the following
report on executive compensation for 1999:
EXECUTIVE COMPENSATION REPORT
PRINCIPAL COMPONENTS OF EXECUTIVE COMPENSATION
We have designed the executive compensation program of Eateries, Inc. to:
o Attract and retain capable personnel; and
o To motivate them through rewards based on:
- Employee performance;
- The financial performance of Eateries, Inc.; and
- Stock price appreciation.
We compensate our executives through base salary, stock incentives (that
reward management for stock price appreciation and align management and
shareholder interests) and possible cash bonuses (based on achieving annual
operating income targets).
BASE SALARIES
We determine base salaries by a subjective mix of the performance of
Eateries, Inc., its size, cash availability, and the levels of compensation
received by executives at similar companies. For an overview of executive
salaries, see the Summary Compensation Table on page 8. We believe that the
management's base salary levels are and have been at or below the levels of
compensation received by executives at similar companies. This belief is based
on the collective knowledge of our committee members and on informal
compensation surveys of public corporations in the restaurant industry, which we
regard as a reasonable sampling of industry standards.
STOCK INCENTIVES
We provide long-term incentive awards for our management through our stock
incentive program (introduced in 1987). The stock incentive program is currently
composed of:
o A stock grant program and stock option grants for lower level
management;
o Stock option agreements for our President and Vice Presidents;
and
o Stock option grants for incoming and long-term directors.
We offer this incentive compensation to our executives instead of more
traditional compensation packages (offering broad insurance coverages,
retirement plans, and higher base salaries) because we believe it helps align
the interests of our management with our shareholders. By placing a substantial
portion of management's compensation in a stock incentive program, their
compensation is "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 Eateries, Inc. perform, therefore, improving its
value and the corresponding price of its stock. So, management and the
shareholders benefit together, and their interests are aligned. We have the same
goal for our director stock option plan: to reward shareholder interests.
12
<PAGE> 17
EMPLOYEE PURCHASE PLAN. In 1994, we adopted an employee stock purchase
plan, which gives all employees (except for those owning 5% or more of our
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 our success.
CASH BONUSES
In contrast to our stock incentive program, our discretionary cash bonus
program (introduced in 1992) offers incentives for short-term (annual)
performance. The program is based on a combination of factors including net
income, revenue, growth and various other criteria. We believe 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
We have a 401(k) plan (introduced in 1996) which assists employees in
providing for their retirement.
POLICY ON DEDUCTIBILITY OF CERTAIN COMPENSATION
A 1993 amendment to the Internal Revenue Code prohibits public companies
from deducting annual compensation in excess of $1,000,000 paid to certain
executive officers after 1993. We do not believe this restriction will affect
our compensation decisions because of the relatively low levels of salary and
cash bonus historically paid to the management of Eateries, Inc. Although the
exercise of stock options could cause the $1,000,000 cap to be exceeded, we do
not intend to consider the cap when awarding stock options.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Dr. Orza's current base salary is $292,308. We believe that the stability,
growth and earnings of Eateries, Inc. in recent years justifies the
compensation paid to Dr. Orza.
Dated: June 5, 2000 THE COMPENSATION COMMITTEE OF EATERIES, INC.
Mr. Thomas F. Golden, Chairman
Mr. Larry Kordisch
13
<PAGE> 18
PERFORMANCE GRAPH
This graph compares the five-year total return to shareholders (stock price
appreciation plus reinvested dividends) for Eateries, Inc. common stock with the
comparable return of two indexes: the CRSP Total Return Index for the NASDAQ
Market and the NASDAQ Retail Trade Index. The graph assumes that you invested
$100.00 in Eateries, Inc. common stock and in each of the indexes on December
31, 1994, and that all dividends were reinvested. Points on the graph represent
the performance as of the last business day of each of the years indicated.
[GRAPH]
<TABLE>
<CAPTION>
1994 1995 1996 1997 1998 1999
GRAPH DOLLAR VALUES
<S> <C> <C> <C> <C> <C> <C>
Eateries, Inc. $ 100 $ 69 $ 81 $ 92 $ 141 $ 72
CRSP Total Return Index 100 141 174 213 300 542
NASDAQ Retail Trade Index 100 110 131 159 187 182
</TABLE>
Historical returns may not necessarily be indicative of actual returns,
which may be achieved in the future.
14
<PAGE> 19
DISCUSSION OF PROPOSALS RECOMMENDED BY THE BOARD OF DIRECTORS
PROPOSAL 1 - 5: The Proposed Amendments to the Restated Article of Incorporation
and Restated Bylaws
We recommend that you approve the proposed amendments to our Restated
Articles of Incorporation and Restated Bylaws, which provide for:
o Classifying the directors;
o Filling vacant director positions;
o Removing directors only "for cause";
o Allowing the Board of Directors to amend any portion of the
Bylaws; and
o Permitting future revisions to the amendments adopted at this
meeting only upon approval of 66 2/3% of the outstanding common
stock.
The proposed amendments may affect your rights and may be characterized as
"anti-takeover" measure. "Anti-takeover" measures tend to insulate management
and make a change of control in the management more difficult.
Carefully study this discussion of the proposed amendments and the text of
the proposed amendments, which is attached as Exhibits A and B to this Proxy
Statement. Always rely on the text of the proposed amendments, which is attached
as Exhibits A and B over this discussion of the proposed amendments.
WHAT IS THE PURPOSE OF THE PROPOSED AMENDMENTS?
Lately, there has a trend toward outside parties accumulating substantial
stock positions in public corporations either:
o With the intention of using a controlling block of stock to
force a merger or consolidation; or
o As groundwork for proposing a restructuring or sale of all or
part of a corporation or other similar extraordinary corporate
action requiring the approval of its board of directors.
Such outside parties often fail to notify or consult with the management of
the corporation and in many cases; they seek representation on the corporation's
board of directors to increase the likelihood that their proposals will be
implemented by the corporation. If the corporation resists their efforts to
obtain representation on the corporation' s board, the outside parties may
commence proxy contests to have themselves or their nominees elected to the
board in place of certain directors or the entire board.
In many circumstances, such efforts may not be beneficial to the interests
of a corporation and its shareholders. They may deprive the management of the
time and information necessary to evaluate the proposals, to study alternative
proposals and to help ensure that the best price is obtained in any transaction
which may ultimately be undertaken. Thus, we designed the proposed amendments to
protect against rapid shifts in control of our Board of Directors and assist in
assuring continuity in the management, affairs and business strategies of
Eateries, Inc. We are not aware of any specific effort by a party to obtain
control of Eateries, Inc.
Because the officers and directors of Eateries, Inc. as a group
beneficially own or control approximately 50% of the outstanding common stock,
our Board of Directors has generally enjoyed continuity of membership in recent
years (although individual directors have from time to time resigned for
personal reasons and have been replaced). We believe that the proposed
amendments will help ensure continuity of experience, which is desirable, and in
the best interests of Eateries, Inc. and its shareholders generally. However,
the proposed amendments will make a change in directors and management for any
reason more difficult (even if a change would be beneficial to shareholders
generally). The staggered terms of directors will have the effect of requiring
15
<PAGE> 20
at least two shareholder meetings (instead of one, as at present) to effect a
change in majority control of the Board of Directors. The proposed amendments
also prohibit the removal of incumbent directors by a
16
<PAGE> 21
holder of a large block of the shares except for cause. If the shareholders
approve the proposed amendments, you will elect directors to longer terms and
existing directors, if re-elected, will be the initial beneficiaries of the
extended terms.
The proposed amendments are consistent with Oklahoma corporate law, which
authorizes the classification of a board of directors into two or three classes.
Oklahoma corporate law also provides that a corporation's certificate of
incorporation may contain procedures for removal of directors and filling
vacancies on the board. You should note that when a board of directors is not
classified, the shareholders have the right under applicable Oklahoma corporate
law to remove directors, with or without cause, by a majority vote.
The full text of the proposed amendments is attached as Exhibits A and B to
this Proxy Statement. The affirmative vote of the holders of at least 50% plus
one share of the outstanding common stock of Eateries, Inc. is required to adopt
the proposed amendments.
CURRENT ANTI-TAKEOVER PROVISIONS
The management of Eateries, Inc. beneficially owns approximately 50% of the
outstanding common stock, including shares subject to acquisition upon the
exercise of outstanding stock options. The Board of Directors also has the
ability to issue preferred stock, which may make it more difficult for, and may
discourage other persons or companies from making a tender offer for, or
attempting to acquire, substantial amounts of our common stock. This could have
the effect of inhibiting changes in management and may also prevent temporary
fluctuations in the market price of our common stock, which often can result
from actual or rumored takeover attempts.
The Restated Bylaws of Eateries, Inc. provide that shareholders may take
action without a meeting by unanimous consent. This provision could be
considered an anti-takeover provision. Subsequent to the adoption of this bylaw,
the Corporate Code of the State of Oklahoma was revised to provide that
shareholders may take action without a meeting by less than unanimous consent
provided holders of sufficient shares to take the proposed action consented in
writing to the action. Because the present statutory provision allowing less
than unanimous consent may be altered only by an amendment to a corporation's
Certificate of Incorporation, we believe that our current bylaw provision is
void.
Eateries, Inc. is subject to the provisions of the Oklahoma Take-over
Disclosure Act of 1985, which regulates corporate takeovers. The act requires
certain notices to be given prior to a person making a take-over offer. Such
notices include filing a registration statement with the Administrator of the
Department of Securities of Oklahoma and delivering a copy of such notice to the
subject corporation. The act applies to offers to take-over an issuer of
publicly traded securities of which at least 20% of its equity securities are
held by Oklahoma residents and which has substantial assets in Oklahoma. Subject
to certain exceptions, a "take-over" offer is an offer to acquire any equity
securities of the subject corporation from a resident of Oklahoma in which the
offeror discloses its intention that, as a result of the acquisition, either:
(i) the offeror will own more than 10% any class of the outstanding equity
securities, or (ii) the ownership by the offeror of any class of equity
securities will be increased more than 5%.
Eateries, Inc. is subject to the provisions of Section 1090.3 of the
Oklahoma Corporation Act. That section provides, with certain exceptions, that
an Oklahoma corporation may not engage in any of a broad range of business
combinations with a person or an affiliate or associate of such person who is an
"Interested Shareholder" for a period of three years from the date that such
person became an Interested Shareholder unless:
o The transaction, or business combination, resulting in a
person's becoming an Interested Shareholder is approved by the
board of directors of the corporation before the person becomes
an Interested Shareholder;
o Upon consummation of the transaction which resulted in the
person becoming an Interested Shareholder, the Interested
Shareholder owned 85% or more of the voting stock of the
corporation outstanding at the time the transaction commenced
(excluding shares owned by
17
<PAGE> 22
persons who are both officers and directors of the corporation
and shares held by certain employee stock ownership plans); or
o On or after the date the person became an Interested
Shareholder, the business combination is approved by the
corporation's board of directors and by the holders of at least
66-2/3% of the corporation's outstanding voting stock at an
annual or special meeting, excluding shares owned by the
Interested Shareholder.
An "Interested Shareholder" is defined as any person that is (a) the owner
of 15% or more of the outstanding voting stock of the corporation or (b) an
affiliate or associate of the corporation and was the owner of 15% or more of
the outstanding voting stock of the corporation at any time within the
three-year period immediately prior to the date on which it is sought to be
determined whether such person is an Interested Shareholder.
The Oklahoma Shares Control Act (Section 1145 et seq. of the Oklahoma
Corporation Act) prohibits the voting of "control shares" without the approval
of a majority of shares held by non-interested shareholders. Under the act,
"control shares" are shares acquired by a person which causes his percentage
ownership to exceed certain statutorily prescribed ranges of ownership beginning
at 20%. The act was ruled unconstitutional shortly after its adoption in 1987;
however, certain amendments to the act in 1990 and 1991 may have cured its
constitutional infirmities.
PROPOSED AMENDMENT 1: CLASSIFICATION OF DIRECTORS
If the shareholders approve the proposed amendments, the Board of Directors
will be divided into three classes (each class to be substantially equal in
number). At the Annual Meeting, the shareholders will elect two directors for a
term expiring at the 2001 Annual Meeting; two directors for a term expiring at
the 2002 Annual Meeting; and three directors for a term expiring at the 2003
Annual Meeting (and, in each case, until their respective successors are duly
elected and qualified). Starting with the 2001 Annual Meeting of shareholders,
one class will be elected each year for a three-year term.
The proposed amendments, if approved, will increase the number of annual
meetings necessary to effect a change in majority membership of the Board of
Directors from one annual meeting to two annual meetings.
PROPOSED AMENDMENT 2: FILLING OF DIRECTORSHIPS
If the shareholders approve the proposed amendments, a majority of the
remaining directors may fill a vacancy on the Board of Directors occurring
during the course of the year, and the new director will serve for the remainder
of his or her predecessor's term. If a new directorship is created due to an
increase in the fixed number of directors, a majority of the directors in office
may fill the new directorship, and the new director will serve for the same term
as that of the other directors of the class of which he or she is a member.
PROPOSED AMENDMENT 3: REMOVAL OF DIRECTORS ONLY FOR CAUSE
If the shareholders approve the proposed amendments, the shareholders
(holding at least a majority of the outstanding common stock acting at a meeting
called for such purpose) may only remove directors for cause. "For cause" will
exist only if:
o A court of competent jurisdiction convicts the director of a
felony (and such conviction is no longer subject to direct
appeal);
o A court of competent jurisdiction finds the director liable for
negligence or misconduct in the performance of his or her duty
to Eateries, Inc. in a matter of substantial importance (and
such finding is no longer subject to direct appeal); or
o Any other situation exists which eighty percent (80%) of the
other directors agree constitutes cause for removal.
Our bylaws currently provide for removal with or without cause.
18
<PAGE> 23
PROPOSED AMENDMENT 4: CLARIFICATION UNDER CURRENT OKLAHOMA LAW
At the time the Restated Bylaws were adopted, the Oklahoma Corporate Code
prohibited the Board of Directors from adopting amendments related to directors.
Since then, Oklahoma has adopted a new Corporate Code eliminating that
restriction. Your vote on Amendment 4 makes the bylaws consistent with current
Oklahoma corporate law.
PROPOSED AMENDMENT 5: FUTURE CHANGES TO PROPOSED AMENDMENTS
If the shareholders approve the proposed amendments, the affirmative vote
of sixty-six and two-thirds percent (66-2/3%) of the total outstanding shares of
common stock is required to amend or repeal any provision inconsistent with the
proposed amendments. Without this change, a hostile acquiror could acquire
enough shares to repeal these amendments, including the requirement of a
classified board. Because directors and executive officers as a group
beneficially own 50% of the outstanding common stock, they would be in a
position to block any amendment even if the amendment would be desired by or
beneficial to shareholders holding a majority of the outstanding common stock.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE PROPOSED AMENDMENTS.
--------------------------------------------------------------------------------
PROPOSAL 6: THE PROPOSED AMENDMENTS TO THE OMNIBUS EQUITY COMPENSATION PLAN
We recommend that you approve the proposed amendments to our Omnibus Equity
Compensation Plan which provide for:
o Elimination of the special director option portion of the Plan
and inclusion of directors in the portion of the Plan that
applies to all employees;
o Clarifying that the Board of Directors, rather than the
Compensation Committee, may elect to administer all or any
portion of the Plan; and
o Clarifying that the Board of Directors has the authority, at its
discretion, to re-price existing stock options or to extend the
term of existing stock options.
Carefully study this discussion of the proposed amendments to the Plan and
the text of the proposed amendments, which is attached as Exhibit C to this
proxy statement.
WHAT IS THE PURPOSE OF THE PROPOSED AMENDMENTS TO THE PLAN?
The director option portion of the Plan is a "formula" plan, that
automatically grants 50,000 options upon a director's election. The 50,000
options vest at the rate of 10,000 per years of service. Directors are granted
options to purchase an additional 10,000 shares for each additional year they
serve on the board after their initial five-year term.
Directors have a "fiduciary" responsibility to make all decisions in the
best interest of the Company and shareholders, and thus believe they should be
allowed discretion in making all awards under the Plan. The issue in granting of
each stock option, whether to employees or directors, should be whether the
grant is in the best interests of the Company and not compliance with a
mechanical formula.
The other amendments to the Plan are likewise intended to expand the
discretion the Board of Directors. The first amendment makes clear that the
Board of Directors, rather than just the Compensation Committee, may administer
all of the Plan, since the compensation committee may not always meet the wholly
disinterested requirements of Section 16. Therefore, administration by the
entire Board of Directors will remove any concern as to whether the Plan
qualifies under Section 16.
19
<PAGE> 24
Another proposed clarifying change is that the Board of Directors may
re-price or extend the term of existing stock options. At present, the Plan
provides that the Board may amend the Plan but does not expressly address the
re-pricing of stock options or extension of the term of options. The Board
believes that it is important that it be allowed discretion to take these
actions if it believes them to be in the best interests of the Company.
Conditioned upon the approval of the proposed amendments to the plan,
options for 50,000 shares currently allocated to the Board, could be repriced
and or extended for an additional 5 year, or for certain purposes, be viewed as
the granting of new options.
THE PROPOSED AMENDMENTS TO THE PLAN
If the shareholders approve the proposed amendments to the Plan, directors
of the Company will be treated like any other employee with respect to the grant
of awards, that is, the grant of the award will be within the sole discretion of
the Board of Directors, the Compensation Committee or another committee, which
the Board establishes for that purpose. This discretion will relate to every
term of each award, including term and price.
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
APPROVAL OF THE PROPOSED AMENDMENT TO THE PLAN.
--------------------------------------------------------------------------------
PROPOSAL 7: ELECT SEVEN DIRECTORS
At the Annual Meeting of Shareholders, seven directors constituting the
entire Board of Directors will be elected. If the shareholders approve the
proposed amendments to the Restated Articles of Incorporation and Restated
Bylaws, the directors will be elected for the following terms:
o Class I directors: Elected to serve until the 2003 Annual
Meeting.
o Class II directors: Elected to serve until the 2002 Annual
Meeting.
o Class III directors: Elected to serve until the 2001 Annual
Meeting.
If the shareholders do not approve the proposed amendments to the Restated
Articles of Incorporation and Restated Bylaws, the directors will be elected to
hold office until the next annual meeting of the shareholders or until their
successors are duly elected and qualified.
The Board of Directors has nominated seven directors for election. Each
nominee currently serves as one of our directors. We know of no reason why any
nominee may be unable to serve as director. However, if any of them should be
unable to serve, your proxy may be voted for a substitute nominee proposed by
the Board of Directors.
WHO HAS THE BOARD OF DIRECTORS NOMINATED?
-------------------------------------------------------------------------------
CLASS I NOMINEES
-------------------------------------------------------------------------------
JAMES M. BURKE VICE PRESIDENT AND CHIEF OPERATING OFFICER,
ASSISTANT SECRETARY AND A DIRECTOR SINCE 1987. Mr.
Age 38 Burke joined us in October 1984 as General Manager
of our first Garfield's restaurant. We promoted him
to Supervisor in March 1985 and to Vice President in
August 1985. Mr. Burke is responsible for 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.
20
<PAGE> 25
EDWARD D. ORZA DIRECTOR SINCE 1984. Mr. Orza has served as Chairman
of the Board and President of Brockway Truck Sales,
Age 49 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. Mr. Orza is Dr.
Vincent F. Orza, Jr.'s cousin.
DR. VINCENT F. ORZA, JR. CHAIRMAN OF THE BOARD OF DIRECTORS, PRESIDENT AND
CHIEF EXECUTIVE OFFICER SINCE ITS ORGANIZATION IN
Age 49 JUNE 1984. Dr. Orza created the Garfield's
Restaurant & Pub concept with our Vice President and
Chief Operating Officer, 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 Bachelor of Science in
Business and Master of Education degrees from
Oklahoma City University.
-------------------------------------------------------------------------------
CLASS II NOMINEES
-------------------------------------------------------------------------------
PHILIP FRIEDMAN DIRECTOR SINCE 1992. Mr. Friedman served as a
director of the Company from 1986 until 1991 when he
Age 53 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 of McAlister's Corporation, operator
and franchisor of the McAlister's Deli Restaurant
chain. He is also Chairman of the Board for Rosti
Restaurants and 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
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PHILIP FRIEDMAN named interim President of Panda Management Company,
Inc., a national chain of restaurants serving
continued 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. 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. Mr. Friedman serves as a director of
Roadhouse Grill, Inc., Paramark Enterprises, Inc.
and Romacorp, Inc. Roadhouse Grill, Inc. and
Paramark Enterprises, Inc. are both publicly owned
corporations.
THOMAS F. GOLDEN DIRECTOR SINCE 1991. Mr. Golden is shareholder and
director of the law firm of Hall, Estill, Hardwick,
Age 57 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), a real estate developer of major
downtown mixed-use centers, including Tabor Center
in Denver, Colorado and River Center 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 Institute and a board
member of DTU, Ltd., American Red Cross and Midwesco
Industries, Inc.
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CLASS III NOMINEES
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LARRY KORDISCH DIRECTOR SINCE 1997. Mr. Kordisch was appointed to
fill a vacancy in the Board of Directors in April
Age 52 1997. Mr. Kordisch is a financial consultant. He was
the Executive Vice President - Finance and Chief
Financial Officer of Homeland Stores, Inc., a
leading retail grocery store chain based in Oklahoma
City, Oklahoma, from February 1995 to May 1998.
While at Homeland he was responsible for finance,
accounting, risk management, and information
technology functions. From 1985 to 1995, Mr.
Kordisch served as Executive Vice President -
Finance and Administration, Chief Financial Officer
and member of the Board of Directors of Scrivner,
Inc., a $6 billion food distribution company. Mr.
Kordisch holds a Bachelor of Science in Business
Administration degree from the University of
Colorado.
PATRICIA L. ORZA SECRETARY AND A DIRECTOR SINCE 1984. Prior to
ceasing active employment in 1982, Ms. Orza worked
Age 46 in management and purchasing positions with several
retail stores. Ms. Orza earned a Bachelors degree
from the University of Central Oklahoma in 1980. Ms.
Orza is Dr. Vincent F. Orza, Jr.'s wife.
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THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR"
THE ELECTION OF ALL SEVEN NOMINEES FOR DIRECTOR.
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OTHER INFORMATION ABOUT THE ANNUAL MEETING
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Any shareholder who wishes to present a proposal at the 2001 Annual Meeting
of Shareholders must deliver such proposal to the Secretary of Eateries, Inc. by
December 31, 2000, for inclusion in our proxy, notice of meeting, and proxy
statement for the 2001 Annual Meeting.
AUDITORS
Arthur Andersen LLP audited our financial statements for the years ended
December 26, 1999, December 27, 1998 and December 28, 1997. Their reports are
included in the Eateries, Inc. Annual Report to Shareholders that accompanies
this Proxy Statement.
Representatives of Arthur Andersen LLP will be at the Annual Meeting and
available to answer questions about their audit. They may make a statement if
they wish. As in prior years, we have not asked the shareholders to ratify our
selection of auditors because we believe that shareholder ratification is
unnecessary.
WHO WILL BEAR THE COST OF SOLICITING THESE PROXIES?
We will pay all of the cost of soliciting these proxies. In addition to
mailing proxy-soliciting material, our officers and regular employees may also
solicit proxies in person, by further mailing, or by telephone or telegraph. We
will not compensate them for soliciting these proxies (other than their regular
compensation). We will, upon request, reimburse brokerage firms and others for
their reasonable expenses in forwarding solicitation material to the beneficial
owners of stock.
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HOW DO I OBTAIN AN ANNUAL REPORT ON FORM 10-K?
If you would like a copy of our Annual Report on Form 10-K (including the
financial statements and schedules to the report) for the year ended December
26, 1999 that we filed with the Securities and Exchange Commission, we will send
you one without charge. Please write to or e-mail:
MS. PATRICIA L. ORZA, SECRETARY
EATERIES, INC.
1220 SOUTH SANTA FE
EDMOND, OKLAHOMA 73003
[email protected]
If you would also like a copy of the exhibits to the Form 10-K, you must
first send us payment for the cost of copying the exhibits. Contact Ms. Orza at
(405) 705-5000 or at the e-mail address shown above for the copying cost.
By order of the Board of Directors
PATRICIA L. ORZA
June 5, 2000 Secretary
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EXHIBIT A
PROPOSED AMENDMENTS OF ARTICLE EIGHT OF
THE RESTATED ARTICLES OF INCORPORATION
RESOLVED, That the Restated Articles of Incorporation of the Corporation,
as amended, be further amended by the deletion of existing Article Eight and the
substitution of the following text, so that Article Eight shall be and read in
its entirety as follows:
ARTICLE EIGHT
(a) The number of directors which shall constitute the entire Board of
Directors shall be not less than three (3) nor more than fifteen (15) directors.
Within these limits, the number of directors shall be fixed from time to time in
the bylaws. The directors shall be elected at the annual shareholders' meeting,
except as otherwise provided in subparagraph (b) of this Article Eight. The
directors shall be divided into three (3) classes as nearly equal in number as
may be. At the annual shareholders' meeting in 2000, one class of two directors
shall be elected for a one-year term, one class of two directors shall be
elected for a two-year term and one class of three directors shall be elected
for a three-year term. Commencing with the annual shareholders' meeting in 2001
and at each succeeding annual shareholders' meeting, successors to the class of
directors whose terms expire at such annual shareholders' meeting shall be
elected for a three-year term. If the number of directors is changed, any
increase or decrease in directors shall be apportioned among the classes so as
to maintain the number of directors comprising each class as nearly equal as
possible. Any additional directors of a class shall hold office for a term,
which will coincide with the remaining term of the other directors of the class.
(b) A director shall hold office until the annual shareholders' meeting for
the year in which his or her term expires and until his or her successor shall
be elected. Directors may be removed only by the holders of at least a majority
of the outstanding Common Stock and only for cause at a meeting called for such
purpose. Except as may otherwise be provided by law, cause for removal shall be
construed to exist only if (i) the director whose removal is proposed has been
convicted of a felony by a court of competent jurisdiction and the conviction is
no longer subject to direct appeal, (ii) the director has been adjudged by a
court of competent jurisdiction to be liable for negligence or misconduct in the
performance of his or her duty to the corporation in a matter of substantial
importance to the corporation, and the adjudication is no longer subject to
direct appeal or (iii) any other situation exists which eighty percent (80%) of
the other directors, in their sole discretion, agree constitutes cause for
removal.
(c) If any vacancy occurs on the Board of Directors or any new directorship
is created by an increase in the authorized number of directors, a majority of
the directors in office, though less than a quorum, may fill the vacancy or fill
the newly created directorship. Any director elected to fill a vacancy shall
have the same term as that of his or her predecessor, or, if such vacancy is a
result of an increase in the number of directors, as that of the other directors
of the class of which he or she shall be a member.
(d) Notwithstanding any other provision of this Certificate of
Incorporation or of the Bylaws, the affirmative vote of the holders of sixty-six
and two-thirds percent (66-2/3%) of all classes of stock of the Corporation
entitled to vote generally in elections of directors, shall be required to
amend, alter, change, repeal, or adopt any provision inconsistent with, this
Article Eight.
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<PAGE> 30
EXHIBIT B
PROPOSED AMENDMENTS OF THE AMENDED
AND RESTATED BYLAWS OF EATERIES, INC.
1. RESOLVED, That Sections 1, 2, 5 and 6 of Article IV of the Amended and
Restated Bylaws of the Corporation be and are hereby deleted in their entirety
and the following provisions placed in their stead:
Section 1. Number. The number of Directors of the Corporation shall be
seven (7).
Section 2. Election and Terms. The Directors shall be elected at the annual
shareholders' meeting. The Directors shall be divided into three (3) classes as
nearly equal in number as may be. At the annual shareholders' meeting in 2000,
one class of two directors shall be elected for a one-year term, one class of
two directors shall be elected for a two-year term and one class of three
directors shall be elected for a three-year term. Commencing with the annual
shareholders' meeting in 2001 and at each succeeding annual shareholders'
meeting, successors to the class of directors whose terms expire at such annual
shareholders' meeting, shall be elected for a three-year term. If the number of
directors is changed, any increase or decrease in directors shall be apportioned
among the classes so as to maintain the number of directors comprising each
class as nearly equal as possible. Any additional directors of a class shall
hold office for a term, which will coincide with the remaining term of the other
directors of the class.
Section 5. Vacancies. If any vacancy occurs on the Board of Directors or
any new directorship is created by an increase in the authorized number of
directors, a majority of the directors in office, though less than a quorum may
fill the vacancy or fill the newly created directorship. Any director elected to
fill a vacancy shall have the same term as that of his or her predecessor, or,
if such vacancy is a result of an increase in the number of directors, as that
of the other directors of the class of which he or she shall be a member.
Section 6. Removal. A director shall hold office until the annual
shareholders' meeting for the year in which his or her term expires and until
his or her successor shall be elected. Directors may be removed only by the
holders of at least a majority of the outstanding Common Stock and only for
cause at a meeting called for such purpose. Except as may otherwise be provided
by law, cause for removal shall be construed to exist only if (i) the director
whose removal is proposed has been convicted of a felony by a court of competent
jurisdiction and the conviction is no longer subject to direct appeal, (ii) the
director has been adjudged by a court of competent jurisdiction to be liable for
negligence or misconduct in the performance of his or her duty to the
corporation in a matter of substantial importance to the corporation, and the
adjudication is no longer subject to direct appeal or (iii) any other situation
exists which eighty percent (80%) of the other directors, in their sole
discretion, agree constitutes cause for removal.
2. RESOLVED, That Article XIII of the Amended and Restated Bylaws of the
Corporation be and is hereby deleted in its entirety and the following provision
placed in its stead:
ARTICLE XIII
AMENDMENTS
Section 1. Method of Amendment. These bylaws may be altered, amended or
repealed or new bylaws may be adopted by the shareholders or by the board of
directors. Approval of an amendment to these bylaws by the shareholders shall
require the approval of a majority of the outstanding capital stock of the
Corporation except that the affirmative vote of the holders of sixty-six and
two-thirds percent (66-2/3%) of the outstanding capital stock of each class of
stock of the Corporation entitled to vote generally in elections of directors,
shall be required to directly or indirectly amend, alter, change, repeal, or
adopt any provision inconsistent with, Article IV of these bylaws.
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EXHIBIT C
PROPOSED AMENDMENTS OF THE OMNIBUS
EQUITY COMPENSATION PLAN
RESOLVED, that the Omnibus Equity Compensation Plan of the Corporation, as
amended, be amended by the deletion of Section 6. (Director Options Rules and
Conditions) and all references throughout the Plan to "Director Options"; and
FURTHER RESOLVED, that the following provisions of the Plan shall be
revised as follows:
1. A new definition shall be added to the Plan to read as follows:
"Administrator: The person or group of persons who
administer all or any portion of the Plan, including the
Committee or the Board of Directors."
2. All references to the "Committee" in the following sections of
the Plan shall be changed to the "Administrator":
Sections 2(n), 2(o), 2(t), 2(u), 4(b), 7(a), 7(b), 7(d),
8(a), 8(b), 8(e), 9(a), 9(b), 9(c), 9(d), 10(a), 10(b), 13, 15,
17(f), 17(h), 17(i), 17(j)(1)(c).
3. The following sections of the Plan are revised to read as
follows:
"Agent: An Employee, director, person, or entity performing
services for or selling goods to the company or transacting
business by or through its names, or an employee of such person
or entity.
Eligibility: Any Agent is eligible to receive an Award.
Administrator: The Plan shall be administered by the
Committee, the Board of Directors or any other committee
designated by the Board of Directors.
Administrative Powers: The Administrator shall have full
power to interpret and administer the Plan and full authority to
act in selecting the Agents or class of Agents to whom Awards
will be granted, in determining the type and amount of Award to
be granted to each Agent or class of Agent, the terms and
conditions of Awards granted under the Plan and the terms of
agreements which will be entered into with Awardees. The
Administrator shall have the power to make regulations for
carrying out the Plan, and to make changes in such regulations as
they from time to time deem proper. Any interpretation by the
Administrator of the terms and provisions of the Plan and the
administration thereof, and all action taken by the
Administration, shall be final, binding, and conclusive on the
Company, its shareholders, Affiliates, all Agents, their
respective persons claiming under or through any of them. As to
the selection of and grants of awards to Awardees who are not
subject to Sections 16(a) and 16(b) of the Act, the Administrator
may delegate any or all of its responsibilities to appropriate
Employees of the Company.
5. Shares Subject to Grant. (a) Subject to adjustment as provided
in Section 11, the total number of shares of Common Stock which
the Company may grant under the Plan shall be the sum of: (i)
Two Million (2,000,000) shares of Common Stock and (ii) ten
percent (10%) of the total shares outstanding from time to time;
provided, however, that no more than two million (2,000,000)
shares of Common Stock shall be available for the grant of
Incentive Stock Options under the Plan. Any shares issued by the
Company through the assumption or substitution of outstanding
grants from an acquired company shall not reduce the shares
available for grants under the Plan. Any shares issued hereunder
may consist, in whole or in part, of authorized and unissued
shares or treasury shares. If any shares necessary to an Award
are forfeited or the Award otherwise terminates without the
issuance of shares, the shares subject to such Award, to the
extent of any such forfeiture or termination, shall again be
available for grant under the Plan.
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<PAGE> 32
8. (b) Option Price. The price at which Common Stock may be
purchased upon exercise of an Option shall be determined by the
Administrator in accordance with its rules, or, in their
absence, by the Administrator's discretion; provided, that, the
exercise price shall not in any case be less than 85% of Fair
Market Value of the Common Stock on the date of grant or the
date of re-pricing an existing option, except for options
granted under an employee stock purchase plan which may have an
exercise price equal to the lesser of (i) 85% of Fair Market
Value of the Common Stock on the first day of an offering period
or (ii) 85% of Fair Market Value of the Common Stock on the last
business day of an offering period.
12. Effective Date, Termination and Amendment. The Plan shall become
effective on March 13, 1989, subject to shareholder approval.
The Plan shall remain in full force and effect until terminated
by the Board of Director, who shall have the power to amend,
suspend or terminate the Plan at any time. The terms of any
existing Awards (including without limitation price and term)
shall be subject to amendment upon the agreement of the Awardee
and the Administrator."
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<PAGE> 33
EATERIES, INC.
1220 S. SANTA FE AVENUE
EDMOND, OK 73003
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 May 12,
2000, at the Annual Meeting of Shareholders to be held on July 3, 2000, or any
adjournment thereof.
1. Approval of Proposed Amendments to the Restated Articles of Incorporation and
the Amended and Restated Bylaws of Eateries, Inc. which will have the effect of
approving a classified board of directors. Board recommends "FOR".
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. Approval of Proposed Amendments to the Restated Articles of Incorporation and
the Amended and Restated Bylaws which will have the effect of allowing the board
of directors to fill vacancies among the directors. Board recommends "FOR".
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval of Proposed Amendments to the Restated Articles of Incorporation and
the Amended and Restated Bylaws which will have the effect of allowing the
removal of directors only for cause. Board recommends "FOR".
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. Approval of Proposed Amendments to the Restated Articles of Incorporation and
the Amended and Restated Bylaws which will have the effect of allowing the board
of directors to amend any provision of the Restated Bylaws. Board recommends
"FOR".
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. Approval of Proposed Amendments to the Restated Articles of Incorporation and
the Amended and Restated Bylaws which will have the effect of permitting future
revisions of the amendments approved at the meeting only upon the approval of
66 2/3% of the outstanding common stock. Board recommends "FOR".
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. Approval of Proposed Amendments of the Omnibus Equity Compensation Plan
eliminating the Director Option portion of the Plan, allowing Directors to
receive awards under the Plan in the same manner as employees. Board recommends
"FOR".
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. Election of Directors: FOR all nominees listed below [ ]
Board recommends "FOR". (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. The year in the parenthesis after each
director's name indicates the year his term in office will expire if the
Proposed Amendments described in proposal 1 above are approved.
James M. Burke(2003), Thomas F. Golden (2002), Edward D. Orza (2003),
Larry Kordisch (2001), Philip Friedman (2002), Patricia L. Orza (2001)
and Vincent F. Orza, Jr. (2003)
<PAGE> 34
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'S 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: , 2000
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-----------------------------------------
(Signature)
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(Signature if held jointly)
Please mark, sign, date and return this
Proxy Card promptly using the enclosed
envelope.
