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. 1)
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
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
MAIN STREET AND MAIN INCORPORATED
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
------------------------------------------
2) Form, Schedule or Registration Statement No.:
--------------------
3) Filing Party:
----------------------------------------------------
4) Date Filed:
------------------------------------------------------
<PAGE>
MAIN STREET
AND MAIN INCORPORATED
----------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 11, 1999
----------------------------------------------------------
The Annual Meeting of Stockholders of Main Street and Main Incorporated, a
Delaware corporation (the "Company"), will be held at 11:00 a.m., on Friday,
June 11, 1999 (the "Meeting"), at the Hermosa Inn, 5532 North Palo Cristi Rd.,
Paradise Valley, Arizona, for the following purposes:
1. To elect directors to serve until the next Annual Meeting of
Stockholders and until their successors are elected and qualified.
2. To approve the Company's 1999 Incentive Stock Plan.
3. To ratify the appointment of Arthur Andersen LLP as the independent
auditors of the Company for the fiscal year ending December 27, 1999.
4. To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only stockholders of record at the close of business on April 23, 1999 are
entitled to notice of and to vote at the Meeting.
All stockholders are cordially invited to attend the Meeting in person. To
assure your representation at the Meeting, however, you are urged to mark,
sign, date, and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any stockholder attending
the Meeting may vote in person even if he or she previously has returned a
proxy.
Sincerely,
/s/ James Yeager
James Yeager
Secretary
Phoenix, Arizona
April 27, 1999
<PAGE>
MAIN STREET AND MAIN INCORPORATED
5050 North 40th Street, Suite 200
Phoenix, Arizona 85018
----------------------------------------------------
PROXY STATEMENT
----------------------------------------------------
VOTING AND OTHER MATTERS
GENERAL
The enclosed proxy is solicited on behalf of Main Street and Main
Incorporated, a Delaware corporation (the "Company"), by the Company's board of
directors (the "Board of Directors") for use at the Annual Meeting of
Stockholders to be held at 11:00 a.m. on Friday, June 11, 1999 (the "Meeting"),
or at any adjournment or adjournments thereof, for the purposes set forth in
this Proxy Statement and in the accompanying Notice of Annual Meeting of
Stockholders. The Meeting will be held at the Hermosa Inn, 5532 North Palo
Cristi Rd., Paradise Valley, Arizona.
These proxy solicitation materials are being mailed on or about April 29,
1999, to all stockholders entitled to vote at the Meeting.
VOTING SECURITIES AND VOTING RIGHTS
Stockholders of record at the close of business on April 23, 1999 (the
"Record Date") are entitled to notice of and to vote at the Meeting. On the
Record Date, there were issued and outstanding 10,011,052 shares of the
Company's Common Stock, $.001 par value (the "Common Stock").
The presence, in person or by proxy, of the holders of a majority of the
total number of shares of Common Stock outstanding constitutes a quorum for the
transaction of business at the Meeting. Each Stockholder voting at the Meeting,
either in person or by proxy, may cast one vote per share of Common Stock held
on all matters to be voted on at the Meeting. Assuming that a quorum is
present, the affirmative vote of a majority of the outstanding shares of Common
Stock of the Company present in person or represented by proxy at the Meeting
and entitled to vote is required (a) for the election of directors, (b) for the
approval of the Company's 1999 Incentive Stock Plan, and (c) for the
ratification of the appointment of Arthur Andersen LLP as the independent
auditors of the Company for the year ending December 27, 1999.
Votes cast by proxy or in person at the Meeting will be tabulated by the
election inspectors appointed for the Meeting and will determine whether a
quorum is present. The election inspectors will treat abstentions as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum but as unvoted for purposes of determining the approval of any
matter submitted to the stockholders for a vote. If a broker indicates on the
proxy that it does not have discretionary authority as to certain shares to
vote on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter.
VOTING OF PROXIES
When a proxy is properly executed and returned, the shares it represents
will be voted at the Meeting as directed. If no specification is indicated, the
shares will be voted (1) "for" the election of the nominees set forth in this
Proxy Statement, (2) "for" the approval of the Company's 1999 Incentive Stock
Plan, and (3) "for" the ratification of the appointment of Arthur Andersen LLP
as the independent auditors of the Company for the year ending December 27,
1999.
REVOCABILITY OF PROXIES
Any person giving a proxy may revoke the proxy at any time before its use
by delivering to the Company written notice of revocation or a duly executed
proxy bearing a later date, or by attending the Meeting and voting in person.
1
<PAGE>
SOLICITATION
The cost of this solicitation will be borne by the Company. In addition,
the Company may reimburse brokerage firms and other persons representing
beneficial owners of shares for expenses incurred in forwarding solicitation
materials to such beneficial owners. Proxies also may be solicited by certain
of the Company's directors and officers, personally or by telephone or
telegram, without additional compensation.
ANNUAL REPORT AND OTHER MATTERS
The 1998 Annual Report to Stockholders, which was mailed to stockholders
with or preceding this Proxy Statement, contains financial and other information
about the activities of the Company, but is not incorporated into this Proxy
Statement and is not to be considered a part of these proxy soliciting materials
or subject to Regulations 14A or 14C or to the liabilities of Section 18 of the
Securities Exchange Act of 1934 (the "Exchange Act"). The information contained
in the "Compensation Committee's Report on Executive Compensation" below and
"Performance Graph" below shall not be deemed "filed" with the Securities and
Exchange Commission (the "SEC") or subject to Regulations 14A or 14C or to the
liabilities of Section 18 of the Exchange Act.
THE COMPANY WILL PROVIDE UPON WRITTEN REQUEST, WITHOUT CHARGE TO EACH
STOCKHOLDER OF RECORD AS OF THE RECORD DATE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 28, 1998 AS FILED WITH THE SEC.
ANY EXHIBITS LISTED IN THE FORM 10-K REPORT ALSO WILL BE FURNISHED UPON REQUEST
AT THE ACTUAL EXPENSE INCURRED BY THE COMPANY IN FURNISHING SUCH EXHIBIT. ANY
SUCH REQUESTS SHOULD BE DIRECTED TO THE COMPANY'S SECRETARY AT THE COMPANY'S
EXECUTIVE OFFICES AT 5050 NORTH 40TH STREET, SUITE 200, PHOENIX, ARIZONA 85018.
ELECTION OF CORPORATE DIRECTORS
NOMINEES
The Company's Bylaws provide that the number of directors shall be fixed
from time to time by resolution of the Board of Directors or stockholders. All
directors are elected at each annual meeting of the Company's stockholders for
a term of one year and hold office until their successors are elected and
qualified.
A board of six directors is to be elected at the Meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for each
of the nominees named below. All of the nominees currently are directors of the
Company. In the event that any nominee of the Company is unable or declines to
serve as a director at the time of the Meeting, the proxies will be voted for
any nominee designated by the current Board of Directors to fill the vacancy.
It is not expected that any nominee will be unable or will decline to serve as
a director. The term of the office of each person elected as a director will
continue until the next Annual Meeting of Stockholders or until a successor has
been elected and qualified.
2
<PAGE>
The following table sets forth certain information regarding the nominees
for directors of the Company:
<TABLE>
<CAPTION>
Positions and Offices Presently
Name Age Held With the Company
- ---- --- -------------------------------
<S> <C> <C>
John F. Antioco(1)........... 49 Chairman of the Board
Bart A. Brown, Jr............ 67 President, Chief Executive Officer,
and Director
William G. Shrader........... 51 Executive Vice President, Chief Operating
Officer, and Director
Jane Evans(1)................ 54 Director
John C. Metz(1).............. 59 Director
Steven A. Sherman(1)......... 53 Director
</TABLE>
- ------------
(1) Member of the Audit and Compensation Committees.
JOHN F. ANTIOCO has served as Chairman of the Board of Directors since
August 9, 1996 and as a director of the Company since January 8, 1996. Mr.
Antioco has served as the Chairman of the Board and Chief Executive Officer of
the Blockbuster Entertainment Group since July 1997. Mr. Antioco previously
served as President and Chief Executive Officer of Taco Bell Corp. Mr. Antioco
served as the Chairman of Circle K Corporation ("Circle K"), from August 1995
until May 1996 and as President and Chief Executive Officer of Circle K from
July 1993 until May 1996. Mr. Antioco joined Circle K as Chief Operating
Officer in September 1991. Mr. Antioco was Chief Operating Officer of Pearle
Vision Centers, Inc. from June 1990 to August 1991. From 1970 to 1990, Mr.
Antioco held various positions with The Southland Corporation.
BART A. BROWN, JR. has served as the President, Chief Executive Officer
and a director of the Company since December 1996. Mr. Brown was affiliated
with Investcorp International, N.A., an international investment banking firm,
from April 1996 until December 1996. Mr. Brown served as the Chairman and Chief
Executive Officer of Color Tile, Inc. at the request of Investcorp
International, Inc., which owned all of that company's common stock, from
September 1995 until March 1996, shortly after Color Tile, Inc. filed under
Chapter 11 of the United States Bankruptcy Code. Mr. Brown served as Chairman
of the Board of the Circle K Corporation from June 1990, shortly after its
filing for reorganization under Chapter 11 of the United States Bankruptcy
Code, until September 1995. From September 1994 until September 1996, Mr. Brown
also served as the Chairman and Chief Executive Officer of Spreckels
Industries, Inc. Mr. Brown engaged in the private practice of law from 1963
through 1990 after seven years of employment with the Internal Revenue Service.
WILLIAM G. (BILL) SHRADER has served as Executive Vice President, Chief
Operating Officer and a director of the Company since March 1, 1999. Prior to
joining the Company, Mr. Shrader was Senior Vice President of Marketing for
Tosco Marketing Company from February 1997 to March 1999. From August 1992 to
February 1997, Mr. Shrader served in several capacities at Circle K Stores,
Inc., including President of the Arizona Region, President of the Petroleum
Products/Services Division, Vice President of Gasoline Operations and Vice
President of Gasoline Marketing. Mr. Shrader began his career in 1976 at The
Southland Corporation and departed in 1992 as National Director of Gasoline
Marketing.
JANE EVANS has served as a director of the Company since March 1997. Ms.
Evans has served as President and Chief Operating Officer of Smart TV since
April 1995. Ms. Evans served as Vice President and General Manager of U.S. West
Communications, Home and Personal Services from February 1991 until March 1995;
as President and Chief Executive Officer of Interpacific Retail Group from
March 1989 until January 1991; as a General Partner of Montgomery Securities
from January 1987 until February 1989; as President and Chief Executive Officer
of Monet Jewelers from May 1984 until December 1987; as Executive Vice
President -- Fashion Group of General Mills, Inc. from October 1979 until April
1984; as Vice President -- Corporate Development of Fingerhut from November
1977 until September 1979; as
3
<PAGE>
President of Butterick Fashions from May 1974 until October 1977; and as
President of the I. Miller Division of Genesro, Inc. from May 1970 until May
1973. Ms. Evans serves on the Boards of Directors of the Philip Morris
Companies, Inc., Georgia-Pacific Corp., Kaufman & Broad Home Corp., and
Petsmart, Inc.
JOHN C. METZ has served as a director of the Company since April 1996. Mr.
Metz has served as Chairman and Chief Executive Officer of Metz Enterprises,
Inc., a contract food management and retail restaurant company, since 1987. Mr.
Metz also is a director of Longhorn Steaks, Inc., a chain of approximately 60
Texas-style roadhouse casual dining restaurants.
STEVEN A. SHERMAN has served as a director of the Company since June 1990.
Mr. Sherman served as the Chairman of the Company from June 1990 until August
1996, as Chief Executive Officer of the Company from June 1990 until January
1996, and as the President of the Company from January 1993 until April 1994.
Mr. Sherman has served as Chairman of the Board of Novatel Wireless, Inc. since
1996. Mr. Sherman also served as President of Novatel Wireless, Inc. from 1996
until November 1998. Mr. Sherman served as Chairman of the Board of Vodavi
Technology, Inc. ("Vodavi"), a company involved in the design, development and
distribution of telephones, telephone systems, and related products, from March
1994 until October 1997, and served as a director of Vodavi from March 1994
until June 1998. Mr. Sherman was Chairman of the Board of Executone Information
Systems, Inc. (formerly Vodavi Technology Corporation, a provider of
information systems, which was founded by Mr. Sherman) from 1983 until his
resignation in July 1988 and a director of Executone from 1983 until his
resignation in January 1990. In April 1994, Vodavi purchased the business of
the Vodavi Communications Division from Executone Information Systems, Inc. Mr.
Sherman is a principal of Sherman Restaurants, L.L.C., which he founded during
1997, and Sherman Capital Group, L.L.C., a merchant banking organization that
he founded in 1988.
There are no family relationships among any of the Company's directors and
executive officers.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's Bylaws authorize the Board of Directors to appoint among its
members one or more committees consisting of one or more directors. The Board
of Directors has appointed two committees. The Audit Committee reviews the
annual financial statements, any significant accounting issues, and the scope
of the audit with the Company's independent auditors and is available to
discuss with the auditors any other audit-related matters that may arise during
the year. The Compensation Committee makes recommendations to the Board of
Directors concerning remuneration arrangements for senior management and
directors. The Board of Directors has not appointed any other committees.
The Board of Directors of the Company held a total of three meetings
during the fiscal year ended December 28, 1998. The Company's Audit Committee
met separately at one formal meeting during the fiscal year ended December 28,
1998, and the Company's Compensation Committee met separately at one formal
meeting during the fiscal year ended December 28, 1998. No director attended
fewer than 75% of the aggregate of (i) the total number of meetings of the
Board of Directors, and (ii) the total number of meetings held by all
committees of the Board on which such director was a member.
DIRECTOR COMPENSATION
Employees of the Company do not receive additional compensation for
serving as members of the Company's Board of Directors. Bart A. Brown, the
President, Chief Executive Officer, and a director of the Company, has an
employment agreement with the Company. See "Executive Compensation --
Employment Agreements."
During 1998 the Company's non-employee directors received $15,000 in
annual compensation plus $1,000 for each Board of Directors meeting attended
and $500 for each telephonic Board of Directors meeting. The Company reimburses
the costs and expenses for each director attending meetings of the Board of
Directors. In prior years, the Company's non-employee directors received
automatic grants of stock options pursuant to the Automatic Program of the
Company's 1995 Stock Option Plan. There currently is not a sufficient number of
shares remaining authorized under the 1995 Stock Option Plan to
4
<PAGE>
permit grants under the Automatic Program. In February 1999, the Board of
Directors adopted the 1999 Incentive Stock Plan, subject to stockholder
approval at the Meeting. Directors of the Company will be eligible to receive
stock options and other awards under that plan. See "Proposal to Approve the
Company's 1999 Incentive Stock Plan."
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth, for the periods indicated, the
compensation received by the Company's Chairman of the Board, Chief Executive
Officer, and its other executive officers whose annual salary and bonus
exceeded $100,000 for the fiscal year ended December 28, 1998 (the "Named
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
------------
Awards
------------
Annual Compensation Securities
-------------------- Underlying All Other
Name and Principal Position Year Salary($) Bonus($) Options(#) Compensation(1)
- --------------------------- ---- --------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
John F. Antioco 1998 -- -- -- --
Chairman of the Board(2) 1997 -- -- -- --
1996 -- -- 817,500 (2) --
Bart A. Brown, Jr. 1998 $250,000 $50,000 200,000 (3) --
President and Chief 1997 250,000 -- 350,000 (3) --
Executive Officer (3) 1996 -- -- 250,000 --
Gerard T. Bisceglia 1998 $175,000 -- 160,000 (4) $2,375
Chief Operating Officer (4) 1997 175,000 -- 275,000 (4) --
1996 10,103 -- 200,000 --
</TABLE>
- ------------
(1) Amounts for 1998 represent matching contributions made by the Company to
the Company's 401(k) plan.
(2) Mr. Antioco does not receive any salary for serving as Chairman of the
Board. During 1997, 200,000 options previously granted to Mr. Antioco were
cancelled and regranted to Messrs. Brown and Bisceglia. During 1998,
200,000 options previously granted to Mr. Antioco were cancelled and
regranted to Messrs. Brown, Bisceglia, and three other employees of the
Company.
(3) Mr. Brown served as President and Chief Executive Officer of the Company
from December 16, 1996 through December 30, 1996 for no cash compensation.
The options granted to Mr. Brown in 1997 consist of 250,000 fully vested
options granted at an exercise price of $2.50 per share and 100,000
options at exercise prices of $3.00 and $5.00, which were regranted after
being surrendered by Mr. Antioco. The options granted to Mr. Brown in 1998
consist of 50,000 fully vested options at an exercise price of $3.25 per
share, 75,000 options at an exercise price of $3.25 per share that vest on
December 31, 1999, and 75,000 options at exercise prices of $3.00 and
$5.00 which were regranted after being surrendered by Mr. Antioco.
(4) Mr. Bisceglia served as Chief Operating Officer of the Company from
November 4, 1996 until November 24, 1998. The options granted to Mr.
Bisceglia in 1997 consist of 175,000 fully vested options granted at an
exercise price of $2.50 per share, and 100,000 options at exercise prices
of $3.00 and $5.00 which were regranted after being surrendered by Mr.
Antioco. The options granted to Mr. Bisceglia in 1998 consist of 35,000
fully vested options at an exercise price of $3.25 per share, 50,000
options at an exercise price of $3.25 per share that vest over a three
year period, and 75,000 options at exercise prices of $3.00 and $5.00
which were regranted after being surrendered by Mr. Antioco. Following Mr.
Bisceglia's resignation from the Company, 137,500 options previously
granted to him that had not vested were cancelled pursuant to the terms of
those options.
5
<PAGE>
Officers and key personnel of the Company are eligible to receive stock
options and awards under the Company's 1990 Stock Option Plan and 1995 Stock
Option Plan. Executive officers serve at the discretion of the Board of
Directors. See "Executive Compensation -- Employment Agreements."
OPTION GRANTS
The following table provides information on stock options granted to the
Named Officers during the fiscal year ended December 28, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
---------------------------------------------------------- Value at Assumed Annual
Number of Rates of Stock Price
Securities % of Total Appreciation For Option
Underlying Options Granted Exercise Term(2)
Options to Employees Price Expiration -----------------------
Name Granted (#)(1) in Fiscal Year ($/Sh) Date 5% 10%
---- -------------- -------------- ------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
John F. Antioco............ -- -- -- -- -- --
Bart A. Brown, Jr.......... 75,000 12% $3.25 6/15/08 $153,293 $388,475
50,000 8% $3.25 6/15/08 $102,195 $258,983
37,500 (3) 6% $3.00 8/5/06 $ 68,446 $151,252
37,500 (3) 6% $5.00 8/5/06 $ -- $ 76,252
Gerard T. Bisceglia........ 50,000 (4) 8% $3.25 6/15/08 $102,195 $258,983
35,000 6% $3.25 6/15/08 $ 71,537 $181,288
37,500 (3) 6% $3.00 8/5/06 $ 68,446 $151,252
37,500 (3)(4) 6% $5.00 8/5/06 $ -- $ 76,252
</TABLE>
- ------------
(1) The options were granted at or above the fair value of the shares on the
date of grant and have 10-year terms.
(2) Potential gains are net of the exercise price, but before taxes associated
with the exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if exercised at the end of the option
term. The assumed 5% and 10% rates of stock price appreciation are
provided in accordance with SEC rules and do not represent the Company's
estimate or projection of the future price of the Company's Common Stock.
Actual gains, if any, on stock option exercises will depend upon the
future market prices of the Company's Common Stock.
(3) These options were granted to Messrs. Brown and Bisceglia after being
surrendered by Mr. Antioco.
(4) These options were cancelled upon Mr. Bisceglia's resignation from the
Company on November 24, 1998.
OPTION HOLDINGS
None of the Named Officers exercised any options during fiscal 1998. The
following table provides information on the value of unexercised options held
by the Named Officers at December 28, 1998.
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised in-the-Money Options
Options at Fiscal Year-End(1) at Fiscal Year-End ($)(2)
------------------------------ -----------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
John F. Antioco............. 417,500 0 $552,775 --
Bart A. Brown, Jr........... 550,000 250,000 $400,000 $23,438
Gerard T. Bisceglia......... 497,500 137,500 (3) $277,813 $ 6,250
</TABLE>
- ------------
(1) Amounts reflect options outstanding as of December 28, 1998.
(2) Calculated based upon the Nasdaq National Market closing price of the
Company's Common Stock on December 28, 1998, of $3.375 per share. The
exercise prices of certain of the options held by the Company's executive
officers on December 28, 1998 were greater than $3.375 per share.
(3) These options were cancelled upon Mr. Bisceglia's resignation from the
Company on November 24, 1998.
6
<PAGE>
1990 STOCK OPTION PLAN
On July 25, 1990, the Company's Board of Directors adopted, and on July 1,
1991 the Company's stockholders approved, the 1990 Stock Option Plan (the "1990
Plan"). The 1990 Plan provides for the granting of both incentive stock options
and nonstatutory stock options to qualified employees and non-employee
directors. The 1990 Plan also provides for various other incentive awards,
including stock appreciation rights. Options granted under the 1990 Plan
generally cannot be exercised for at least one year and typically vest and
become exercisable in installments of equal numbers of shares over a three- to
five-year period. As of April 23, 1999, 250,000 options were authorized under
the 1990 Plan, 64,325 shares of Common Stock have been issued upon exercise of
options granted pursuant to the 1990 Plan, and there were outstanding options
to purchase 173,000 shares of Common Stock under the 1990 Plan. An additional
12,675 shares of Common Stock remain reserved for issuance under the 1990 Plan.
No incentive awards other than stock options have been granted under the 1990
Plan.
The exercise price of all incentive stock options and options granted to
directors under the 1990 Plan must be at least equal to the fair market value
of the shares on the date of the grant or, in the case of incentive stock
options granted to a holder of 10% or more of the Company's Common Stock (a
"10% Stockholder"), at least 110% of the fair market value of such shares on
the date of the grant. The maximum exercise period for which incentive stock
options may be granted is ten years (five years in the case of a 10%
Stockholder).
The 1990 Plan provides for its administration in accordance with the
requirements of Rule 16b-3 under the Exchange Act. The 1990 Plan currently is
administered by the Board of Directors. The Board of Directors has
discretionary authority, subject to certain restrictions, to determine the
individuals to whom, the times at which, and, with respect to nonstatutory
stock options, the exercise price for which options will be granted.
Notwithstanding the foregoing, the 1990 Plan provides that the Company will not
grant any nonstatutory stock options to purchase shares at an exercise price of
less than 85% of the fair market value of such shares on the date of the grant.
1995 STOCK OPTION PLAN
The Company's 1995 Stock Option Plan (the "1995 Plan") was adopted by the
Company's Board of Directors on January 8, 1996 and was approved by the
Company's stockholders on May 22, 1996.The 1995 Plan is divided into two
programs: the Discretionary Grant Program (the "Discretionary Program") and the
Automatic Grant Program (the "Automatic Program"). The Discretionary Program
provides for the grant of options to acquire Common Stock of the Company
("Options"), the direct grant of Common Stock ("Stock Awards"), the grant of
stock appreciation rights ("SARs"), and the grant of other cash awards ("Cash
Awards") (Stock Awards, SARs, and Cash Awards are collectively referred to
herein as "Awards"). The Automatic Program provides for the automatic grant of
options to acquire the Common Stock of the Company to non-employee members of
the Company's Board of Directors.
A maximum of 325,000 shares of Common Stock of the Company may be issued
under the 1995 Plan. If any Option or SAR terminates or expires without having
been exercised in full, stock not issued under such Option or SAR will again be
available for the purposes of the 1995 Plan. As of April 23, 1999, 1,250 shares
of Common Stock have been issued upon exercise of options granted under the
1995 Plan and there were outstanding Options to acquire 323,000 shares of the
Company's Common Stock under the 1995 Plan. Accordingly, only an additional 750
shares remain available for grants under the 1995 Plan. See "Proposal to
Approve the Company's 1999 Incentive Stock Plan." The 1995 Plan will remain in
effect until January 8, 2006.
Options and Awards may be granted pursuant to the Discretionary Program
only to persons ("Eligible Persons") who at the time of grant are either (i)
key personnel (including officers and directors) of the Company, or (ii)
consultants and independent contractors who provide valuable services to the
Company. Options granted pursuant to the Discretionary Program may be incentive
stock options or non-qualified stock options. Options that are incentive stock
options may be granted only to key personnel of the Company who are also
employees of the Company. To the extent that granted Options are incentive
stock options, the terms and conditions of those Options must be consistent
with the qualification requirements set forth in the Internal Revenue Code of
1986, as amended.
7
<PAGE>
To exercise an Option, the optionholder will be required to deliver to the
Company full payment of the exercise price for the shares as to which the
Option is being exercised. Generally, Options can be exercised by delivery of
cash, check, or shares of Common Stock of the Company.
SARs will entitle the recipient to receive a payment equal to the
appreciation in market value of a stated number of shares of Common Stock from
the price on the date the SAR was granted or became effective to the market
value of the Common Stock on the date first exercised or surrendered. Stock
Awards will entitle the recipient to receive shares of the Company's Common
Stock directly. Cash Awards will entitle the recipient to receive direct
payments of cash depending on the market value or the appreciation of the
Common Stock or other securities of the Company.
The Automatic Program provides for the automatic grant of Options
("Automatic Options") to non-employee directors of the Company. Each
non-employee director serving on the Board of Directors on the date of the
adoption of the 1995 Plan received Automatic Options to acquire 7,500 shares of
Common Stock, and each subsequent newly elected non-employee member of the
Board of Directors receives Automatic Options to acquire 15,000 shares of
Common Stock on the date of his or her first appointment or election to the
Board of Directors. In addition, Automatic Options to acquire 2,500 shares of
Common Stock were granted to each non-employee director at the meeting of the
Board of Directors held immediately after each annual meeting of stockholders.
Automatic Options become exercisable and vest immediately upon grant. The
exercise price per share of Automatic Options was equal to 100% of the fair
market value of the Company's Common Stock (as defined in the 1995 Plan) on the
date such Automatic Options are granted. Each Automatic Option expires on the
tenth anniversary of the date on which an Automatic Option grant was made.
Non-employee members of the Company's Board of Directors who do not serve on
the committee that administers the 1995 Plan with respect to the Company's
executive officers and directors who are employees of the Company also may be
eligible to receive Options or Awards under the Discretionary Program of the
1995 Plan or option grants or direct stock issuances under any other plans of
the Company. There currently is not a sufficient number of shares remaining
authorized under the 1995 Stock Option Plan to permit grants under the
Automatic Program. In February 1999, the Board of Directors adopted the 1999
Incentive Stock Plan, subject to stockholder approval at the Meeting. Directors
of the Company will be eligible to receive stock options and other awards under
that plan. See "Proposal to Approve the Company's 1999 Incentive Stock Plan."
1999 INCENTIVE STOCK PLAN
On February 19, 1999, the Board of Directors adopted the 1999 Incentive
Stock Plan, subject to approval by the Company's stockholders. See "Proposal to
Approve the Company's 1999 Incentive Stock Plan."
401(K) PROFIT SHARING PLAN
The Company's qualified 401(k) Profit Sharing Plan (the "401(k) Plan") was
adopted by the Board of Directors on January 14, 1991, effective as of January
1, 1991, and covers corporate management and restaurant employees. The 401(k)
Plan currently provides for a Company matching contribution equal to 25% of the
first 6% of the salary deduction a participant elects to defer as a
contribution to the 401(k) Plan. The 401(k) Plan further provides for a special
discretionary contribution equal to a percentage of a participant's salary to
be determined each year by the Company. The Company also may contribute a
discretionary amount in addition to the special discretionary contribution.
Contributions to the 401(k) Plan by the Company for fiscal 1998 totalled
approximately $99,500.
EMPLOYMENT AGREEMENTS
The Company is a party to an employment agreement with Bart A. Brown, Jr.
with a term through December 31, 2000. The agreement automatically renews for
successive one-year terms unless either party terminates by giving the other
party at least 60 days' written notice. Mr. Brown's employment agreement
provides for him to serve as the President and Chief Executive Officer of the
Company. The employment agreement provides for Mr. Brown to receive a salary of
$300,000 per annum. In addition, the employment agreement provides that Mr.
Brown will be eligible to receive discretionary bonuses
8
<PAGE>
in amounts determined by the Company's Board of Directors. The employment
agreement contains provisions regarding non-competition, non-solicitation of
employees, and non-disclosure of confidential information.
The employment agreement provides for Mr. Brown to receive his fixed
compensation to the date of the termination of his employment by reason of
resignation or as a result of termination of employment "for cause," as defined
in the agreement. In the event of the termination of employment by reason of
death or disability, the employment agreement provides for the payment of fixed
compensation to Mr. Brown for a period of one year from the date of death or
disability. If the Company terminates Mr. Brown's employment other than "for
cause" or in the event of any termination of employment following any "change
in control" of the Company, as defined in the agreement, the employment
agreement also provides for Mr. Brown to receive his fixed compensation as if
his employment had not been terminated. Section 280G of the Internal Revenue
Code may limit the deductibility of such payments for federal income tax
purposes. If these payments are not deductible and if the Company has income at
least equal to such payments, an amount of income equal to the amount of such
payments could not be offset. As a result, the income that was not offset would
be "phantom income" (i.e., income without cash) to the Company. A change in
control would include a merger or consolidation of the Company, a sale of all
or substantially all of the assets of the Company, changes in the identity of a
majority of the members of the Board of Directors of the Company, or
acquisitions of more than 15% of the Company's Common Stock, subject to certain
limitations.
During 1998, the Company was a party to an employment agreement with
Gerard T. Bisceglia, who served as the Company's Executive Vice President and
Chief Operating Officer from November 1996 until his resignation on November
24, 1998. The terms of the employment agreement were substantially similar to
the terms of Mr. Brown's employment agreement, except that the Company paid Mr.
Bisceglia a salary of $175,000 per annum. Under the terms of that agreement and
an agreement entered into between the Company and Mr. Bisceglia in connection
with his resignation, the Company will pay Mr. Bisceglia $175,000 plus certain
health and other benefits during 1999. In addition, in connection with his
resignation, the Company accelerated the vesting of certain options held by Mr.
Bisceglia and extended the period in which he was permitted to exercise his
vested options following his resignation.
The Company was a party to an employment agreement with Steven A. Sherman,
a director of the Company, that expired on December 31, 1998. Under that
agreement, the Company paid Mr. Sherman an annual salary of $200,000.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Certificate of Incorporation and Bylaws of the Company provide that
the Company will indemnify and advance expenses, to the fullest extent
permitted by the Delaware General Corporation Law, to each person who is or was
a director, officer, or agent of the Company or who serves or served any other
enterprise or organization at the request of the Company (an "Indemnitee").
Under Delaware law, to the extent that an Indemnitee is successful on the
merits of a suit or proceeding brought against him or her by reason of the fact
that he or she is or was a director, officer, or agent of the Company, or
serves or served any other enterprise or organization at the request of the
Company, the Company will indemnify him or her against expenses (including
attorneys' fees) actually and reasonably incurred in connection with such
action. If unsuccessful in defense of a third-party civil suit or a criminal
suit, or if such suit is settled, an Indemnitee may be indemnified under
Delaware law against both (i) expenses, including attorneys' fees, and (ii)
judgments, fines, and amounts paid in settlement if he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed
to, the best interests of the Company, and, with respect to any criminal
action, had no reasonable cause to believe his or her conduct was unlawful. If
unsuccessful in defense of a suit brought by or in the right of the Company,
where the suit is settled, an Indemnitee may be indemnified under Delaware law
only against expenses (including attorneys' fees) actually and reasonably
incurred in the defense or settlement of the suit if he or she acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed
to, the best interests of the Company, except that if the Indemnitee is
adjudged to be liable for negligence or misconduct in the performance of his or
her duty to the Company, he or she cannot be made whole even for expenses
unless
9
<PAGE>
a court determines that he or she is fully and reasonably entitled to
indemnification for such expenses. Also under Delaware law, expenses incurred
by an officer or director in defending a civil or criminal action, suit, or
proceeding may be paid by the Company in advance of the final disposition of
the suit, action, or proceeding upon receipt of an undertaking by or on behalf
of the officer or director to repay such amount if it is ultimately determined
that he or she is not entitled to be indemnified by the Company. The Company
also may advance expenses incurred by other employees and agents of the Company
upon such terms and conditions, if any, that the Board of Directors of the
Company deems appropriate. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers, or
persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is therefore unenforceable.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW AND PHILOSOPHY
Decisions on compensation of the Company's executives are made by the
Compensation Committee, consisting of independent members of the Board of
Directors appointed by the Board of Directors (the "Committee"). The Board of
Directors and the Compensation Committee make every effort to ensure that the
compensation plan is consistent with the Company's values and is aligned with
the Company's business strategy and goals.
The Company's compensation program for executive officers consists
primarily of base salary, bonus, and long-term incentives in the form of stock
options. Executives also participate in various other benefit plans, including
medical and retirement plans, which generally are available to all employees of
the Company.
The Company's philosophy is to pay base salaries to executives at levels
that enable the Company to attract, motivate, and retain highly qualified
executives. The bonus program is designed to reward individuals for performance
based on the Company's financial results as well as the achievement of personal
and corporate objectives that will contribute to the long-term success of the
Company in building stockholder value. Stock option grants are intended to
result in minimal or no rewards if stock price does not appreciate, but may
provide substantial rewards to executives as all of the Company's stockholders
benefit from stock price appreciation.
The Company follows a subjective and flexible approach rather than an
objective or formula approach to compensation. Various factors (as discussed
herein) receive consideration without any particular weighting or emphasis on
any one factor. In establishing compensation for the year ended December 28,
1998, the Committee took into account, among other things, the financial
results of the Company, compensation paid in prior years, and compensation of
executive officers employed by companies of similar size in the restaurant
industry.
BASE SALARY AND ANNUAL INCENTIVES
Base salaries for executive positions are established relative to the
Company's financial performance and comparable positions in similarly sized
companies. The Committee from time to time may use competitive surveys and
outside consultants to help determine the relevant competitive pay levels. The
Company targets base pay at the level required to attract and retain highly
qualified executives. In determining salaries, the Committee also takes into
account individual experience and performance, salary levels relative to other
positions with the Company, and specific needs particular to the Company.
Annual incentive awards are based on the Company's financial performance
and the efforts of its executives. Performance is measured based on
profitability and revenue and the successful achievement of functional and
personal goals. James Yeager, the Company's Corporate Controller, Secretary,
and Treasurer during 1998, received a bonus of $20,000 during the fiscal year
ended December 28, 1998.
STOCK OPTION GRANTS
The Company strongly believes in tying executive rewards directly to the
long-term success of the Company and increases in stockholder value through
grants of executive stock options. Stock option
10
<PAGE>
grants also will enable executives to develop and maintain a significant stock
ownership position in the Company's Common Stock. The amount of options granted
takes into account options previously granted to an individual. The Company
granted options to the Company's executive officers during fiscal 1998. See
"Executive Compensation -- Option Grants."
OTHER BENEFITS
Executive officers are eligible to participate in benefit programs
designed for all full-time employees of the Company. These programs include
medical insurance, a qualified retirement program allowed under Section 401(k)
of the Internal Revenue Code, and life insurance coverage equal to one times
base salary to a maximum of $50,000.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Brown has served as President and Chief Executive Officer of the
Company since December 16, 1996. Effective January 1, 1999, the Company entered
into a new employment agreement with Mr. Brown. See "Executive Compensation --
Employment Agreements." The Board of Directors determined Mr. Brown's salary
based on a number of factors, including the Company's performance and his
individual performance and salaries paid by comparable companies. Mr. Brown
received a bonus of $50,000 for fiscal 1998. The Company granted Mr. Brown
options during 1998. See "Executive Compensation -- Option Grants."
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Internal Revenue Code currently limits the deductibility for federal
income tax purposes of compensation paid to the Company's Chief Executive
Officer and to each of its other four most highly compensated executive
officers. The Company may deduct certain types of compensation paid to any of
these individuals only to the extent that such compensation during any fiscal
year does not exceed $1.0 million. The Company does not believe that its
compensation arrangements with any of its executive officers will exceed the
limits on deductibility during its current fiscal year.
This report has been furnished by members of the Compensation Committee of
the Board of Directors of the Company.
John F. Antioco
Jane Evans
John C. Metz
Steven A. Sherman
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 28, 1998, the Company's Compensation
Committee consisted of John F. Antioco, Jane Evans, John C. Metz, and Steven A.
Sherman. Except for the Company's lease of its corporate office space in a
building in which Mr. Sherman owns a majority interest, none of the members of
the Compensation Committee had any contractual or other relationships with the
Company during fiscal 1998 except as directors. The Company made rental
payments for its corporate offices totalling approximately $177,000 during
1998. Mr. Sherman served as the Company's Chairman of the Board from June 1990
until August 1996, as Chief Executive Officer of the Company from June 1990
until January 1996, and as the Company's President from January 1993 until
April 1994.
11
<PAGE>
PERFORMANCE GRAPH
The following line graph compares cumulative total stockholder returns for
(i) the Company's Common Stock; (ii) the Nasdaq Stock Market (U.S.) Index (the
"Index"); and (iii) a peer group consisting of the following five companies in
the restaurant industry (the "Peer Group"): Avado Brands, Inc. (formerly
AppleSouth, Inc.); Eateries, Inc.; Cheesecake Factory, Inc.; O'Charley's, Inc.;
and Cooker Restaurant Corp. In previous years, the Peer Group included El Chico
Restaurants, Inc. ("El Chico"). The Peer Group no longer includes El Chico
because that company's stock was not publicly traded during all of 1998.
The graph assumes an investment of $100 in each of the Company's Common
Stock, the Peer Group, and the Index on December 27, 1993. The calculation of
cumulative stockholder return on the Peer Group and the Index include
reinvestment of dividends, but the calculation of cumulative stockholder return
on the Company's Common Stock does not include reinvestment of dividends
because the Company did not pay dividends during the measurement period. The
stock price and index performance shown in the graph are not necessarily
indicative of future results.
CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
12/27/93 12/26/94 12/25/95 12/30/96 12/29/97 12/28/98
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
MAIN STREET AND
MAIN INCORPORATED 100 49 15 8 15 16
PEER GROUP 100 83 123 94 107 107
NASDAQ STOCK
MARKET (U.S.) 100 99 141 173 208 298
</TABLE>
12
<PAGE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
officers, and persons who own more than 10% of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the SEC. SEC regulations require directors, officers, and
greater than 10% stockholders to furnish the Company with copies of all Section
16(a) forms they file.
During 1999, the directors, officers, and 10% stockholders of the Company
became aware that certain transactions that are required to be disclosed under
Section 16(a) had not previously been reported. The Company currently is
assisting the following persons to prepare and file Section 16(a) filings to
disclose beneficial ownership and/or transactions that were required to be
previously reported on Form 3, Form 4, or Form 5: Bart A. Brown, Jr. (Form 3
beneficial ownership disclosure and a total of five exempt option grants during
1997 and 1998); James Yeager (Form 3 beneficial ownership disclosure and a
total of three exempt option grants during 1998); Jane Evans (Form 3 beneficial
ownership disclosure and a total of three exempt option grants during 1997 and
1998); and John C. Metz (Form 3 beneficial ownership disclosure and a total of
two exempt option grants during 1997 and 1998). The Company has implemented a
program that is intended to ensure that directors, officers, and 10%
stockholders comply with their Section 16(a) filing requirements on a timely
basis in the future.
CERTAIN TRANSACTIONS
The Company has adopted a policy that it will not enter into any
transactions with directors, officers, or holders of more than 5% of its Common
Stock on terms that are less favorable to the Company than could be obtained
from independent third parties and that any loans to directors, officers, or 5%
stockholders will be approved by a majority of the disinterested directors.
In December 1993, the Company entered into a five-year lease for space to
serve as the corporate offices of the Company. Steven A. Sherman owns a
majority interest in the building housing the space. The lease was approved by
the disinterested directors of the Company. During 1998, the lease was amended
to extend the original term through January 31, 2004. Rental payments under
this agreement were approximately $177,000 during 1998. The lease provides for
annual rent of approximately $236,000 in 1999.
The Company believes that the foregoing transaction was no less favorable
to the Company than could be obtained from non-affiliated parties.
13
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS, DIRECTORS, AND OFFICERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 23, 1999 by (i)
each person who is known to the Company to own beneficially more than 5% of the
Company's Common Stock, (ii) each director, (iii) each of the named executive
officers, and (iv) all directors and executive officers as a group. The Company
is not aware of any other person that beneficially owns more than 5% of its
Common Stock as of the Record Date.
<TABLE>
<CAPTION>
Name and Address of Shares Beneficially Approximate Percentage
Beneficial Owner(1) Owned of Outstanding Shares(2)
- ------------------- ------------------- ------------------------
<S> <C> <C>
John F. Antioco.......................................... 2,118,100 (3) 20.3%
Bart A. Brown............................................ 1,501,200 (4) 14.0%
William G. Shrader....................................... 12,015 *
Jane Evans............................................... 20,000 (5) *
John C. Metz............................................. 37,500 (6) *
Steven A. Sherman........................................ 459,306 (7) 4.6%
James Yeager............................................. 14,583 (8) *
All directors and officers as a group (seven persons).... 4,162,704 37.1%
</TABLE>
- ------------
* Less than 1.0%.
(1) Each of such persons may be reached through the Company at 5050 North 40th
Street, Suite 200, Phoenix, Arizona 85018.
(2) The percentages shown include the shares of Common Stock actually owned as
of April 23, 1999 and the shares of Common Stock that the person or group
had the right to acquire within 60 days of such date. In calculating the
percentage of ownership, all shares of Common Stock that the identified
person or group had the right to acquire within 60 days of April 23, 1999
upon the exercise of options are deemed to be outstanding for the purpose
of computing the percentage of the shares of Common Stock owned by such
person or group, but are not deemed to be outstanding for the purpose of
computing the percentage of the shares of Common Stock owned by any other
person.
(3) Includes vested options to purchase 417,500 shares of Common Stock held by
Mr. Antioco.
(4) Includes vested options to purchase 687,500 shares held by Mr. Brown.
(5) Represents vested options to purchase 20,000 shares held by Ms. Evans.
(6) Includes vested options to purchase 22,500 shares held by Mr. Metz.
(7) Includes options to acquire 40,000 shares of Common Stock held by Mr.
Sherman; 7,812 shares of Common Stock held by Mr. Sherman's wife, as to
which shares Mr. Sherman disclaims any beneficial interest; 25,000 shares
held by Mr. Sherman as custodian for his children, as to which shares Mr.
Sherman disclaims any beneficial interest; 110,000 shares held by Sherman
Capital Partners, L.L.C., of which Mr. Sherman is the managing member;
16,250 shares held by The Sherman Group, of which he is the sole
proprietor; and 2,500 shares held by Sherman Capital Group, L.L.C., of
which Mr. Sherman is a managing member.
(8) Represents vested options to purchase 14,583 shares held by Mr. Yeager.
Mr. Yeager serves as Vice President-Finance, Secretary, and Treasurer of
the Company.
14
<PAGE>
PROPOSAL TO APPROVE THE COMPANY'S
1999 INCENTIVE STOCK PLAN
The Board of Directors adopted the Company's 1999 Incentive Stock Plan
(the "Incentive Plan"), on February 19, 1999, subject to approval by the
Company's stockholders at the Meeting. The full text of the Incentive Plan is
included as "Appendix A" to this Proxy Statement.
By February 19, 1999, the Company had an aggregate of only 13,425 shares
of Common Stock remaining available for issuance under the 1990 Plan and 1995
Plan. At that time, the Board of Directors considered the likelihood that the
Company will be required to grant stock options or other stock-based awards in
the future in order to attract, retain, and motivate key employees, directors,
and independent contractors to provide services to the Company. Accordingly,
the Board of Directors adopted the Incentive Plan, which is intended to
attract, retain, and motivate directors, employees, and independent contractors
who provide valuable services to the Company by providing them with the
opportunity to acquire a proprietary interest in the Company and to link their
interest and efforts to the long-term interests of the Company's shareholders.
The Board of Directors believes that it is in the best interests of the Company
to adopt the Incentive Plan. Accordingly, the Board of Directors recommends a
vote "FOR" the proposal to approve the Incentive Plan.
GENERAL TERMS OF THE INCENTIVE PLAN; SHARES AVAILABLE FOR ISSUANCE
The Incentive Plan provides for the granting of awards to employees,
directors, and independent contractors eligible to receive awards under the
Incentive Plan. Such awards may include, but are not limited to, incentive
stock options, nonqualified stock options, stock appreciation rights ("SARs"),
and restricted stock awards.
The Incentive Plan authorizes the issuance of 1,000,000 shares of Common
Stock. The maximum number of shares covered by awards granted to any individual
in any year may not exceed 15% of the total number of shares that may be issued
under the Incentive Plan. If any award is forfeited, terminated, canceled, does
not vest, or expires without having been exercised in full, stock not issued
under such award will again be available for the purposes of the Incentive
Plan. If SARs are settled in cash, the shares covered by such SARs will remain
available for the granting of other awards. If any change is made in the stock
subject to the Incentive Plan, or subject to any award granted under the
Incentive Plan (through consolidation, spin-off, recapitalization, stock
dividend, split-up, combination of shares, exchange of shares, or otherwise),
the Incentive Plan provides that appropriate adjustments will be made as to the
aggregate number and type of shares available for awards, the maximum number
and type of shares that may be subject to awards to any individual, the number
and type of shares covered by each outstanding award, and the exercise price
per share (but not the total price) for stock options, SARs, or similar
outstanding awards.
The Incentive Plan provides that it is not intended to be the exclusive
means by which the Company may issue options to acquire its Common Stock or any
other type of award. To the extent permitted by applicable law, the Company may
issue any other options, warrants, or awards other than pursuant to the
Incentive Plan without stockholder approval. Stockholder approval of the
Incentive Plan will authorize the Board of Directors to issue or confirm the
issuance of stock options outside of the Incentive Plan.
ELIGIBILITY AND ADMINISTRATION
Employees of the Company, non-employee directors, proposed directors,
proposed employees, and independent contractors will be eligible to receive
Awards under the Incentive Plan. Options that are incentive stock options may
be granted only to employees of the Company.
The Board of Directors will administer the Incentive Plan. The Board of
Directors may delegate all or any portion of its authority and duties under the
Incentive Plan to one or more committees appointed by the Board of Directors
under such conditions and limitations as the Board of Directors may from time
to time establish. The Board of Directors and/or any committee that has been
delegated the authority to administer the Incentive Plan is referred to as the
"Plan Administrator." The Plan Administrator will have the authority, in its
discretion, to determine all matters relating to awards, including the
selection of the
15
<PAGE>
individuals to be granted awards, the type of awards, the number of shares of
Common Stock subject to an award, vesting conditions, and any and all other
terms, conditions, restrictions, and limitations, if any, of an award.
GRANT AND EXERCISE OF AWARDS
STOCK OPTIONS
The expiration date, maximum number of shares purchasable, vesting
provisions, and any other provisions of options granted under the Incentive
Plan will be established at the time of grant. The Plan Administrator will set
the term of each option, but no incentive stock options may be granted for
terms of greater than 10 years. Options will vest and become exercisable in
whole or in one or more installments at such time as may be determined by the
Plan Administrator. The Board of Directors will have the discretion to provide
for the automatic acceleration of the vesting of outstanding options in the
event of a "Transfer of Control" (as defined in the Incentive Plan).
The exercise prices of options will be determined by the Plan
Administrator, but if the option is intended to be an incentive stock option,
the exercise price may not be less than 100% of the fair market value of the
Common Stock at the time of the grant (110% of the fair market value if the
option is granted to a stockholder who at the time the option is granted owns
stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of its subsidiaries). On April 23, 1999, the
closing price of the Company's Common Stock on the Nasdaq National Market was
$3.47 per share.
STOCK APPRECIATION RIGHTS
SARs will entitle the holder to receive a payment equal to the
appreciation in the market value of a stated number of shares of Common Stock
from the price stated in the award agreement to the market value of the Common
Stock on the date the SAR is exercised. Such payment may be made in cash or in
shares of Common Stock valued as of the date of the surrender, or partly in
cash and partly in shares of Common Stock, as determined in the sole discretion
of the Plan Administrator. The Plan Administrator may grant SARs either in
tandem with an option or with respect to a number of shares for which no
options are granted. Consistent with the provisions of the Incentive Plan, the
Plan Administrator may determine such terms, conditions, restrictions, and
limitations, if any, on any SARs, including a maximum appreciation value
payable for SARs.
RESTRICTED STOCK AWARDS
The Plan Administrator also may grant restricted stock awards in Common
Stock or denominated in units of Common Stock. The Plan Administrator, in its
discretion, may make such awards subject to conditions and restrictions that
may be based on continuous service with the Company or the attainment of
certain performance goals related to profits, profit growth, profit-related
return ratios, cash flow or shareholder returns. The Plan Administrator may
choose, at the time of granting a restricted stock award or at any time
thereafter up to the time of payment of the award, to include as part of such
award an entitlement to receive dividends or dividend equivalents, subject to
such terms as the Plan Administrator may establish. All dividends or dividend
equivalents that are not paid currently, in the Plan Administrator's sole
discretion, may accrue interest and be paid to the award holder if, when, and
to the extent such award is paid.
TRANSFERABILITY OF OPTIONS; TERMINATION OF EMPLOYMENT OR SERVICES TO THE
COMPANY
Except as otherwise allowed by the Plan Administrator, options granted
under the Incentive Plan are nontransferable other than by will or by the laws
of descent and distribution upon the death of the holder and, during the
lifetime of the holder, are exercisable only by such holder. The Plan
Administrator will determine the terms and conditions under which options may
be exercised following the termination of the holder's relationship with the
Company. Incentive stock options, however, will not be exercisable for more
than (i) up to three months after termination of the holder's employment for
reasons other than death or disability, or (ii) up to one year after
termination due to disability.
16
<PAGE>
DURATION AND MODIFICATION
The Incentive Plan will remain in force until February 19, 2009, unless
sooner terminated by the Board of Directors. After the Incentive Plan is
terminated, no future awards may be granted, but awards previously granted will
remain outstanding in accordance with their applicable terms and conditions.
The Board of Directors may amend, suspend or terminate the Incentive Plan at
any time, except that that the Board of Directors may not amend the Incentive
Plan to increase the number of shares available for issuance under the
Incentive Plan (other than through consolidation, spin-off, recapitalization,
stock dividend, split-up, combination of shares, exchange of shares, or
otherwise) without the approval of the Company's shareholders. Despite the
foregoing, the Board of Directors, in its sole discretion, may bifurcate the
Incentive Plan so as to restrict, limit, or condition the use of any provision
of the Incentive Plan to participants who are officers, directors or
shareholders subject to Section 16 of the Exchange Act without so restricting,
limiting or conditioning the Incentive Plan with respect to other participants.
FEDERAL INCOME TAX CONSEQUENCES
Certain options granted under the Incentive Plan will be intended to
qualify as incentive stock options under Section 422 of the Internal Revenue
Code. Accordingly, there will be no taxable income to an employee when an
incentive stock option is granted to him or her or when that option is
exercised. The amount by which the fair market value of the shares at the time
of exercise exceeds the exercise price, however, generally will be treated as
an item of preference in computing the alternate minimum taxable income of the
optionholder. If an optionholder exercises an incentive stock option and does
not dispose of the shares within either two years after the date of the grant
of the option or one year of the date the shares were transferred to the
optionholder upon exercise, any gain realized upon disposition will be taxable
to the optionholder as a capital gain. If the optionholder does not satisfy the
applicable holding periods, however, the difference between the exercise price
and the fair market value of the shares on the date of exercise of the option
will be taxed as ordinary income, and the balance of the gain, if any, will be
taxed as capital gain. If the shares are disposed of before the expiration of
the one-year and two-year periods and the amount realized is less than the fair
market value of the shares at the date of exercise, the employee's ordinary
income is limited to the amount realized less the exercise price paid. The
Company will be entitled to a tax deduction only to the extent the optionholder
has ordinary income upon the sale or other disposition of the shares received
when the option was exercised.
Certain other options issued under the Incentive Plan may be nonqualified
options. The income tax consequences of nonqualified options, as well as other
awards granted under the Incentive Plan, will be governed by Section 83 of the
Internal Revenue Code. Under Section 83, the excess of the fair market value of
the shares of the Company's Common Stock acquired pursuant to the exercise of
any nonqualified option or the grant of other awards over the amount paid for
such stock (the "Excess Value") must be included in the gross income of the
holder in the first taxable year in which the Common Stock acquired by the
holder is not subject to a substantial risk of forfeiture. In calculating the
Excess Value, fair market value will be determined on the date that the
substantial risk of forfeiture expires, unless a Section 83(b) election is made
to include the Excess Value in income immediately after the acquisition, in
which case fair market value will be determined on the date of the acquisition.
Generally, the Company will be entitled to a federal income tax deduction in
the same taxable year that holders recognize income. The Company will be
required to withhold income taxes with respect to income reportable pursuant to
Section 83 by a holder. The basis of the shares acquired by an optionholder or
award recipient will be equal to the exercise price of those shares plus any
income recognized pursuant to Section 83. Subsequent sales of the acquired
shares will produce capital gain or loss. Such capital gain or loss will be
long term if the stock has been held for more than 12 months from the date the
substantial risk of forfeiture lapsed or, if a Section 83(b) election is made,
more than 12 months from the date the shares were acquired. The maximum federal
capital gains tax rate currently is 20% for property held more than 12 months.
RATIFICATION BY STOCKHOLDERS OF THE INCENTIVE PLAN
Approval of the Incentive Plan will require the affirmative vote of the
holders of a majority of the shares of Common Stock of the Company present in
person or by proxy at the Meeting. Upon
17
<PAGE>
approval of the Incentive Plan by the Company's stockholders, any awards
granted pursuant to the Incentive Plan prior to stockholder approval will
remain valid and unchanged. In the event that the proposal to approve the
Incentive Plan is not approved by the stockholders of the Company at the
Meeting, any awards granted pursuant to the Incentive Plan will automatically
terminate and be forfeited to the same extent and with the same effect as
though the Incentive Plan had never been adopted, and the Company will not make
any further grants of awards under the Incentive Plan.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Arthur Andersen LLP, independent
public accountants, to audit the consolidated financial statements of the
Company for the fiscal year ending December 27, 1999 and recommends that
stockholders vote in favor of the ratification of such appointment. In the
event of a negative vote on such ratification, the Board of Directors will
reconsider its selection. The Board of Directors anticipates that
representatives of Arthur Andersen LLP will be present at the Meeting, will
have the opportunity to make a statement if they desire, and will be available
to respond to appropriate questions.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented by such
stockholders at the annual meeting of stockholders of the Company to be held
during calendar 2000 must be received by the Company no later than December 30,
1999 in order to be included in the proxy statement and form of proxy relating
to such meeting. Pursuant to Rule 14a-4 under the Exchange Act, the Company
intends to retain discretionary authority to vote proxies with respect to
stockholder proposals for which the proponent does not seek to have the Company
include the proposed matter in the proxy statement for the annual meeting to be
held during calendar 2000, except in circumstances where (i) the Company
receives notice of the proposed matter no later than March 15, 2000 and (ii)
the proponent complies with the other requirements set forth in Rule 14a-4.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Meeting. If
any other matters properly come before the Meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
Dated: April 27, 1999
18
<PAGE>
APPENDIX A
MAIN STREET AND MAIN INCORPORATED
1999 INCENTIVE STOCK PLAN
ADOPTED BY THE BOARD OF DIRECTORS AS OF FEBRUARY 19, 1999
1. PURPOSE. The purpose of this 1999 Incentive Stock Plan (the "Plan") is
to attract, retain and motivate employees, directors, and independent
contractors by providing them with the opportunity to acquire a proprietary
interest in MAIN STREET AND MAIN INCORPORATED, a Delaware corporation (the
"Company") and to link their interest and efforts to the long-term interests of
the Company's shareholders.
2. PLAN ADMINISTRATION
2.1 IN GENERAL. The Plan shall be administered by the Company's Board
of Directors (the "Board"). Except for the power to amend the Plan as provided
in Section 11, the Board, in its sole discretion, may delegate all or any
portion of its authority and duties under the Plan to one or more committees
appointed by the Board and consisting of at least one member of the Board, under
such conditions and limitations as the Board may from time to time establish.
The Board and/or any committee that has been delegated the authority to
administer the Plan shall be referred to as the "Plan Administrator." Except as
otherwise explicitly set forth in the Plan, the Plan Administrator shall have
the authority, in its discretion, to determine all matters relating to awards
(as described in Section 5) under the Plan, including the selection of the
individuals to be granted awards, the type of awards, the number of shares of
the Company's common stock ("Common Stock") subject to an award, vesting
conditions, and any and all other terms, conditions, restrictions and
limitations, if any, of an award. All decisions made by the Plan Administrator
pursuant to the Plan and related orders and resolutions shall be final and
conclusive.
2.2 RULE 16b-3 AND CODE SECTION 162(m). Notwithstanding any provision
of this Plan to the contrary, only the Board or a committee composed of two or
more "Non-Employee Directors" may make determinations regarding grants of awards
to officers, directors, and 10% shareholders of the Company. For purposes of
this Plan, the term "Non-Employee Directors" shall have the meaning set forth in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "1934 Act"). The Plan Administrator shall have the authority and discretion
to determine the extent to which awards will conform to the requirements of
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") and
to take such action, establish such procedures, and impose such restrictions as
the Plan Administrator determines to be necessary or appropriate to conform to
such requirements.
2.3 OTHER PLANS. The Plan Administrator also shall have authority to
grant awards as an alternative to or as the form of payment for grants or rights
earned or due under other compensation plans or arrangements of the Company,
including the plan of any entity acquired by the Company.
3. ELIGIBILITY. Any employee of the Company shall be eligible to receive
any award under the Plan. Directors who are not employees, proposed directors,
proposed employees and independent contractors shall be eligible to receive
awards other than Incentive Stock Options (as defined in SECTION 5.2). For
purposes of this SECTION 3, the "Company," with respect to all awards under the
Plan, other than Incentive Stock Options, includes any entity that is directly
or indirectly controlled by the Company or any entity in which the Company has a
significant equity interest, as determined by the Plan Administrator. With
respect to Incentive Stock Options, the "Company" includes any parent or
subsidiary of the Company as defined in Section 424 of the Code.
4. SHARES SUBJECT TO THE PLAN
4.1 NUMBER AND SOURCE. The shares offered under the Plan shall be
shares of Common Stock and may be unissued shares or shares now held or
subsequently acquired by the Company as treasury shares, as the Plan
Administrator may from time to time determine. Subject to adjustment as provided
in SECTION 4.3, the
A-1
<PAGE>
aggregate number of shares that may be issued under the Plan shall not exceed
1,000,000 shares. The aggregate number of shares that may be covered by awards
granted to any one individual in any year shall not exceed 15% of the total
number of shares that may be issued under the Plan.
4.2 SHARES AVAILABLE. Any shares subject to an award granted under the
Plan that is forfeited, terminated or canceled, or any shares that do not vest,
shall again be available for the granting of awards under the Plan. If a stock
appreciation right is settled in cash, the shares covered by such award shall
remain available for the granting of other awards. The payment of cash dividends
and dividend equivalents paid in cash in conjunction with outstanding awards
shall not be counted against the shares available for issuance.
4.3 ADJUSTMENT OF SHARES AVAILABLE. The aggregate number and type of
shares available for awards under the Plan, the maximum number and type of
shares that may be subject to awards to any individual under the Plan, the
number and type of shares covered by each outstanding award, and the exercise
price per share (but not the total price) for stock options, stock appreciation
rights or similar awards outstanding under the Plan shall all be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from any split-up, combination or exchange of shares,
consolidation, spin-off or recapitalization of shares or any like capital
adjustment or the payment of any stock dividend.
4.4 TRANSFER OF CONTROL. In the event of a Transfer of Control of the
Company (as defined below), the surviving, continuing, successor or purchasing
corporation or parent corporation thereof, as the case may be (the "Acquiring
Corporation") shall either assume the Company's rights and obligations under
outstanding awards or substitute for outstanding awards substantially equivalent
awards for the Acquiring Corporation's stock. In the event the Acquiring
Corporation elects not to assume or substitute for such outstanding awards in
connection with the Transfer of Control, the Board may, in its discretion,
provide that any unexercisable and/or unvested portion of the outstanding awards
shall be immediately exercisable and vested in full on or before the date of the
Transfer of Control. The exercise and/or vesting of any award that is
permissible solely by reason of this SECTION 4.4 shall be conditioned upon the
consummation of the Transfer of Control. Any awards that are neither (i) assumed
or substituted for by the Acquiring Corporation in connection with the Transfer
of Control nor (ii) exercised on or before the date of the Transfer of Control
shall terminate and cease to be outstanding effective as of the date of the
Transfer of Control. Unless otherwise determined by the Board, a "Transfer of
Control" shall be deemed to have occurred in the event of any of the following:
(a) the direct or indirect sale or exchange by the shareholders of the Company
of all or substantially all of the stock of the Company if the shareholders of
the Company before such sale or exchange do not retain, directly or indirectly,
at least a majority of the beneficial interest in the voting stock of the
Company after such sale or exchange; (b) a merger or consolidation if the
shareholders of the Company before such merger or consolidation do not retain,
directly or indirectly, at least a majority of the beneficial interest in the
voting stock of the Company after such merger or consolidation (regardless of
whether the Company is the surviving corporation); (c) the sale, exchange or
transfer of all or substantially all of the assets of the Company; or (d) a
liquidation or dissolution of the Company.
5. AWARDS
5.1 TYPES OF AWARDS. Awards granted under this Plan may include, but
are not limited to, Incentive Stock Options or Nonqualified Stock Options (as
defined in SECTION 5.2), stock appreciation rights or restricted stock awards.
Such awards may be granted either alone, in addition to, or in tandem with any
other type of award granted under the Plan.
5.2 STOCK OPTIONS. The Plan Administrator may grant stock options,
designated as "Incentive Stock Options," which comply with the provisions of
Section 422 of the Code or any successor statutory provision, or "Nonqualified
Stock Options" that do not comply with the provisions of Section 422 of the Code
or any successor statutory provision. The price for which shares may be
purchased upon exercise of a particular option shall be determined by the Plan
Administrator; however, the exercise price of an Incentive Stock Option shall
not be less than 100% of the Fair Market Value (as defined below) of such shares
on the date such option is granted (110% of the Fair Market Value if options are
intended to be Incentive Stock Options and are granted to a shareholder who at
the time the option is granted owns or is deemed to own stock possessing more
than 10% of the total combined
A-2
<PAGE>
voting power of all classes of stock of the Company or of any parent or
subsidiary of the Company). For purposes of the Plan, "Fair Market Value" as to
a particular day shall be the per-share closing price for the Common Stock as
reported for the prior trading day in THE WALL STREET JOURNAL or in such other
source as the Plan Administrator deems reliable. The Plan Administrator shall
set the term of each stock option, but no Incentive Stock Option shall be
exercisable more than 10 years after the date such option is granted and, to the
extent the aggregate Fair Market Value (determined as of the date the option is
granted) of Common Stock with respect to which Incentive Stock Options granted
to a particular individual become exercisable for the first time during any
calendar year (under the Plan and all other stock option plans of the Company)
exceeds $100,000 (or such corresponding amount as may be set by the Code) such
options shall be treated as Nonqualified Stock Options. An optionholder and the
Plan Administrator can agree at any time to convert an Incentive Stock Option to
a Nonqualified Stock Option.
5.3 STOCK APPRECIATION RIGHTS. The Plan Administrator may grant stock
appreciation rights, either in tandem with a stock option granted under the Plan
or with respect to a number of shares for which an option is not granted. A
stock appreciation right shall entitle the holder to receive, with respect to
each share of stock as to which the right is exercised, payment in an amount
equal to the excess of the share's Fair Market Value on the date the right is
exercised over its Fair Market Value on the date the right was granted. Such
payment may be made in cash or in shares of Common Stock valued at Fair Market
Value as of the date of the surrender, or partly in cash and partly in shares of
Common Stock, as determined by the Plan Administrator in its sole discretion.
The Plan Administrator may establish a maximum appreciation value payable for
stock appreciation rights.
5.4 RESTRICTED STOCK AWARDS. The Plan Administrator may grant
restricted stock awards under the Plan in Common Stock or denominated in units
of Common Stock. The Plan Administrator, in its discretion, may make such awards
subject to conditions and restrictions, as set forth in the instrument
evidencing the award, which may be based on continuous service with the Company
or the attainment of certain performance goals related to profits, profit
growth, profit-related return ratios, cash flow or shareholder returns, where
such goals may be stated in absolute terms or relative to comparison companies
or indices or to be achieved during a period of time. The Plan Administrator may
choose, at the time of granting a restricted stock award or at any time
thereafter up to the time of payment of the award, to include as part of such
award an entitlement to receive dividends or dividend equivalents, subject to
such terms as the Plan Administrator may establish. All dividends or dividend
equivalents that are not paid currently may, in the Plan Administrator's sole
discretion, accrue interest and be paid to the participant if, when, and to the
extent such award is paid.
5.5 PAYMENT; DEFERRAL. Awards granted under the Plan may be settled
through cash payments, the delivery of Common Stock (valued at Fair Market
Value) or the granting of awards or combinations thereof as the Plan
Administrator shall determine. Any award settlement, including payment
deferrals, may be subject to such conditions, restrictions, and contingencies as
the Plan Administrator shall determine. The Plan Administrator may permit or
require the deferral of any award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits to
deferred stock unit equivalents.
5.6 INDIVIDUAL AWARD AGREEMENTS. Stock Options shall and other awards
may be evidenced by agreements between the Company and the recipient in such
form and content as the Plan Administrator from time to time approves, which
agreements shall substantially comply with and be subject to the terms of the
Plan. Such individual agreements may contain such provisions or conditions as
the Plan Administrator deems necessary or appropriate to effectuate the sense
and purpose of the Plan and may be amended from time to time in accordance with
the terms thereof.
6. AWARD EXERCISE
6.1 PRECONDITION TO STOCK ISSUANCE. No shares shall be delivered
pursuant to the exercise of any stock option or stock appreciation right, in
whole or in part, until qualified for delivery under such securities laws and
regulations as may be deemed by the Plan Administrator to be applicable thereto
and until, in the case of the exercise of an option, payment in full of the
option price thereof (in cash or stock as provided in SECTION 6.3) is received
by the Company. No holder of an option or stock appreciation right, or any legal
representative, legatee or
A-3
<PAGE>
distributee shall be or be deemed to be a holder of any shares subject to such
option or right unless and until such option or right is exercised, the exercise
price is paid, and such shares are issued.
6.2 NO FRACTIONAL SHARES. No stock option may at any time be exercised
with respect to a fractional share. No fractional share shall be issued with
respect to a stock appreciation right; however, a fractional stock appreciation
right may be exercised for cash.
6.3 FORM OF PAYMENT. An optionee may exercise a stock option using as
the form of payment (a) cash or cash equivalent, (b) stock-for-stock payment (as
described below), (c) cashless exercises, (d) any combination of the above, or
(e) such other means as the Plan Administrator may approve. Any optionee who
owns Common Stock may use such shares as a form of payment to exercise stock
options granted under the Plan. The Plan Administrator, in its discretion, may
restrict or rescind this right by notice to optionees. A stock option may be
exercised in such manner only by tendering (actually or by attestation) to the
Company whole shares of Common Stock having a Fair Market Value equal to or less
than the exercise price. If an option is exercised by surrender of shares having
a Fair Market Value less than the exercise price, the optionholder must pay the
difference in cash.
7. TRANSFERABILITY. Any Incentive Stock Option granted under the Plan
shall, during the recipient's lifetime, be exercisable only by such recipient,
and shall not be assignable or transferable by such recipient other than by will
or the laws of descent and distribution. Except as specifically allowed by the
Plan Administrator, any other award under the Plan and any of the rights and
privileges conferred thereby shall not be assignable or transferable by the
recipient other than by will or the laws of descent and distribution and such
award shall be exercisable during the recipient's lifetime only by the
recipient.
8. WITHHOLDING TAXES; OTHER DEDUCTIONS. The Company shall have the right to
deduct from any settlement of an award granted under the Plan, including the
delivery or vesting of shares, (a) an amount of cash or shares of Common Stock
having a value sufficient to cover withholding as required by law for any
federal, state or local taxes, and (b) any amounts due from the recipient of
such award to the Company or to any parent or subsidiary of the Company or to
take such other action as may be necessary to satisfy any such withholding or
other obligations, including withholding from any other cash amounts due or to
become due from the Company to such recipient an amount equal to such taxes or
obligations. The Plan Administrator also may, in its discretion, permit the
holder of an award to deliver to the Company, at the time the award is exercised
or vests, one or more shares of Common Stock previously acquired by such
individual (other than pursuant to the transaction triggering the taxes) with an
aggregate Fair Market Value up to or equal to (but not in excess of) the amount
of the taxes incurred in connection with such exercise or vesting.
9. TERMINATION OF SERVICES. The terms and conditions under which an award
may be exercised following termination of a recipient's employment, directorship
or independent contractor relationship with the Company shall be determined by
the Plan Administrator; provided, however, that Incentive Stock Options shall
not be exercisable at any time after the earliest of the date that is (a) three
months after termination of employment, unless due to death or Disability (as
defined in Section 22(e)(3) of the Code); (b) one year after termination of
employment due to Disability; or (c) ten years after the date of grant (five
years if granted to a shareholder who at the time the option is granted owns or
is deemed to own stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or of any parent or subsidiary of
the Company).
10. TERM OF THE PLAN. The Plan shall become effective as of the date of
adoption by the Board and shall remain in full force and effect through the date
that is ten years thereafter, unless sooner terminated by the Board. After the
Plan is terminated, no future awards may be granted, but awards previously
granted shall remain outstanding in accordance with their applicable terms and
conditions and the Plan's terms and conditions.
11. PLAN AMENDMENT; BIFURCATION OF THE PLAN. The Board may amend, suspend
or terminate the Plan at any time; provided that no such amendment shall be made
without the approval of the Company's shareholders (a) that would increase the
number of shares available for issuance under the Plan (other than in accordance
with SECTION 4.3), or (b) if such approval is required (i) to comply with
Section 422 of the Code with
A-4
<PAGE>
respect to Incentive Stock Options, or (ii) for purposes of Section 162(m) of
the Code. Notwithstanding any provision of this Plan to the contrary, the Board,
in its sole discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to participants who are officers,
directors or shareholders subject to Section 16 of the 1934 Act without so
restricting, limiting or conditioning the Plan with respect to other
participants
12. PLAN NOT EXCLUSIVE. This Plan is not intended to be the exclusive means
by which the Company may issue awards to acquire its Common Stock.
13. GOVERNING LAW. The Plan shall be governed by, and all questions arising
hereunder shall be determined in accordance with, the laws of the State of
Delaware.
14. APPROVAL BY SHAREHOLDERS. This Plan shall be submitted to the
shareholders of the Company for their approval at a regular or special meeting
to be held within 12 months after the adoption of this Plan by the Board.
Shareholder approval shall be evidenced by the affirmative vote of the holders
of a majority of the shares of the Company's Common Stock present in person or
by proxy and voting at the meeting. If the shareholders decline to approve this
Plan at such meeting or if this Plan is not approved by the shareholders within
12 months after its adoption by the Board, this Plan (and all awards granted
hereunder) shall automatically terminate to the same extent and with the same
effect as though this Plan had never been adopted. If this Plan is approved by
shareholders, all awards granted under the Plan to persons who are "Affiliates"
of the Company (as defined under the Securities Act of 1933, as amended) shall
be deemed acquired on the date such approval is obtained.
A-5
<PAGE>
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
MAIN STREET AND MAIN INCORPORATED
1999 ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of MAIN STREET AND MAIN INCORPORATED, a Delaware
corporation (the "Company"), hereby acknowledges receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement of the Company, each dated April 27,
1999, and hereby appoints Bart A. Brown, Jr. and James Yeager, and each of them,
proxies and attorneys-in-fact, with full power to each of substitution, on
behalf and in the name of the undersigned, to represent the undersigned at the
1999 Annual Meeting of Stockholders of the Company, to be held on Friday, June
11, 1999, at 11:00 a.m., local time, at the Hermosa Inn, 5532 North Palo Cristi
Rd., Paradise Valley, Arizona and at any adjournment or adjournments thereof,
and to vote all shares of Common Stock that the undersigned would be entitled to
vote if then and there personally present, on the matters set forth below:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY to vote for
(except as indicated) all nominees listed below:
If you wish to withhold authority to vote for any individual nominee,
strike a line through that nominee's name in the list below:
John F. Antioco, Bart A. Brown, Jr., William G. Shrader,
Jane Evans, John C. Metz, Steven A. Sherman
2. PROPOSAL TO APPROVE THE 1999 INCENTIVE STOCK PLAN:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
INDEPENDENT AUDITORS OF THE COMPANY FOR THE FISCAL YEAR ENDING
DECEMBER 27, 1999:
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and upon such matter or matters that may properly come before the meeting or
any adjournment or adjournments thereof.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM OTHER SIDE)
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS; FOR THE APPROVAL OF THE
COMPANY'S 1999 INCENTIVE STOCK PLAN; FOR THE RATIFICATION OF THE APPOINTMENT OF
ARTHUR ANDERSEN LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY; AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
A majority of such attorneys or substitutes as shall be present and shall act
at said meeting or any adjournment or adjournments thereof (or if only one shall
be present and act, then that one) shall have and may exercise all of the powers
of said attorney-in-fact hereunder.
(This Proxy should be dated, signed
by the stockholder(s) exactly as
his or her name appears hereon, and
returned promptly in the enclosed
envelope. Persons signing in a
fiduciary capacity should so
indicate. If shares are held by
joint tenants or as community
property, both stockholders should
sign.)
Dated:_______________________, 1999
___________________________________
(Signature)
___________________________________
(Signature if jointly held)
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD IN THE ENCLOSED ENVELOPE.
