SCHEDULE 14A-INFORMATION REQUIRED IN PROXY STATEMENT
(Last amended in Rel. No. 34-34832, eff. 11/23/94)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
APPLE SOUTH, INC.(Name of Registrant as Specified in its Charter)
...............................................................................
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
.....................................................................
2) Aggregate number of securities to which transaction applies:
.....................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
.....................................................................
4) Proposed maximum aggregate value of transaction:
.....................................................................
Set forth the amount on which the filing fee is calculated and state
how it was determined.
[ ] 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>
APPLE SOUTH, INC.
Hancock at Washington
Madison, Georgia 30650
(706)342-4552
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 29, 1997
The Annual Meeting of Shareholders of APPLE SOUTH, INC. (the "Company")
will be held at the Madison- Morgan Cultural Center, 434 South Main Street,
Madison, Georgia, on April 29, 1997, at 11:00 a.m. local time, for the following
purposes:
(1) To elect eight members of the Board of Directors of the
Company to hold office until the next Annual Meeting of
Shareholders and until their successors are elected and have
qualified;
(2) To consider and act upon a proposal to approve the Company's
1995 Stock Incentive Plan, as amended;
(3) To consider and act upon ratification of the appointment of
KPMG Peat Marwick LLP as the auditors of the Company for the
current year; and
(4) To transact such other business as may properly come before
the Meeting or any adjournment thereof.
Holders of Common Stock of record of the Company at the close of
business on February 26, 1997 are the only shareholders entitled to notice of
and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors,
John G. McLeod, Jr.
Secretary
Madison, Georgia
March 17, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING OF SHAREHOLDERS, YOU ARE
REQUESTED TO FILL IN AND SIGN THE ENCLOSED FORM OF PROXY AND MAIL IT IN THE
ENCLOSED RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. IF YOU DO NOT ATTEND
THE MEETING AND DECIDE THAT YOU WISH TO VOTE IN PERSON, YOU MAY WITHDRAW YOUR
PROXY.
<PAGE>
APPLE SOUTH, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON APRIL 29, 1997
GENERAL INFORMATION
Shareholders Meeting
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Apple South, Inc. (the "Company") of proxies to be
used at the Annual Meeting of Shareholders to be held at 11:00 a.m. local time
on April 29, 1997 at the Madison-Morgan Cultural Center, 434 South Main Street,
Madison, Georgia. This Proxy Statement was mailed to shareholders on
approximately March 17, 1997.
Matters to be Acted Upon
The following matters will be acted upon at the Annual Meeting:
(1) The election of eight members of the Board of Directors, each
to serve a term of one year and until his or her successor is
duly elected and qualified;
(2) A proposal to approve the Company's 1995 Stock Incentive Plan,
as amended;
(3) Ratification of the selection of KPMG Peat Marwick LLP as
auditors of the Company for the current year; and
(4) Such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Proxies and Voting
The Board of Directors solicits all holders of the Common Stock of the
Company to vote by marking, signing, dating and returning their proxies.
Submitting a signed proxy will not affect a shareholder's right to attend the
Annual Meeting and vote in person. A proxy may be revoked at any time before it
is exercised by giving written notice of such revocation to the Secretary of the
Company at the Company's principal executive office at Hancock at Washington,
Madison, Georgia 30650. If a shareholder wishes to give a proxy to someone other
than the Company's designees, he or she may cross out the names appearing on the
enclosed proxy card, insert the name of such other person, and sign and give the
card to that person for use at the meeting.
Each holder of Common Stock of record at the close of business on
February 26, 1997 is entitled to one vote for each share of Common Stock then
held. At the close of business on that date, there were outstanding and entitled
to vote __________ shares of Common Stock. A majority of the outstanding shares
of Common Stock entitled to vote at the Annual Meeting is a quorum.
When the enclosed proxy is properly signed and returned, the shares
which it represents will be voted at the Annual Meeting in accordance with the
instructions noted thereon. In the absence of such instruction, the shares
represented by a signed proxy will be voted in favor of the seven nominees for
election to the Board of Directors, in favor of the proposed approval of
amending the Company's 1995 Stock Incentive Plan, and in favor of the proposed
ratification of the selection of auditors. Votes will be counted manually, and
abstentions and broker non-votes will not be counted. The Board of Directors
does not know of any other business to be brought before the Annual Meeting, but
it is intended that as to other business, if any, shares represented by a signed
proxy will be voted in accordance with the judgment of the person or persons
acting thereunder.
2
<PAGE>
INFORMATION ABOUT THE BOARD OF DIRECTORS
Committees of the Board
The responsibilities of certain committees of the Board of Directors
are summarized below. The Board does not have a nominating committee or other
committee serving a similar function. Action taken by any committee of the Board
is reported to the Board of Directors, usually at its next meeting.
Audit Committee. The Audit Committee is comprised of James W. Rowe and
Thomas R. Williams, with Mr. Rowe as Chairman. The Audit Committee reviews the
independence, qualifications and activities of the Company's independent
certified public accountants and the activities of the Company's accounting
staff. The Audit Committee recommends to the Board the appointment of the
independent certified public accountants and reviews and approves the Company's
annual financial statements together with other financial reports and related
matters. The Audit Committee is also responsible for the review of transactions
between the Company and other entities in which a Company officer or director
has a material interest. The Audit Committee met two times during 1996.
Compensation Committee. The Compensation Committee is comprised of
Messrs. Rowe and Williams, with Mr. Williams serving as Chairman. The
Compensation Committee reviews and makes recommendations concerning officer
salaries, termination arrangements, bonus programs, executive perquisites,
performance award grants and other benefits. The Compensation Committee also
makes recommendations to the Board with respect to the issuance of options under
the Company's 1988 Stock Option Plan, 1993 Stock Incentive Plan and 1995 Stock
Incentive Plan. The Compensation Committee met two times during 1996.
Director Compensation
Directors, who are not officers of the Company, receive an annual
retainer of $15,000, plus $1,000 for each Board meeting attended, $500 for each
committee meeting attended, $200 for each special meeting in which he or she
participates by telephone and reimbursement of out-of-pocket expenses. The
Company anticipates that it will pay approximately $25,000 per year to each of
its outside directors. Upon election to the Board of Directors each
non-management director receives options to purchase 10,000 shares of Common
Stock at the market value at the date of grant. These options become exercisable
at the rate of 20% per year of service as a director. Directors who are also
officers of the Company do not receive any additional compensation for serving
as directors.
Meetings of the Board of Directors
During the fiscal year ended December 29, 1996, eight special or
regularly scheduled meetings of the Board of Directors were held. Each director
then in office attended at least 75% of the total of all meetings of the Board
and of the Committees of the Board on which he or she served.
Proposal 1: ELECTIONS OF DIRECTORS
The Company's Board of Directors presently consists of eight directors.
Unless otherwise directed, it is the intention of the persons named in the
enclosed form of proxy to vote executed proxies in favor of the election of the
eight persons named below, and such proxies cannot be voted in favor of the
election of a greater number of persons. Each person elected will serve until
the next Annual Meeting of Shareholders and thereafter until his or her
successor is elected and has qualified. Should any nominee become unavailable
for election, an event which is not anticipated, the persons named in the proxy
will have the right to use their discretion to vote for a substitute or
substitutes or to vote only for the remaining nominees. Directors will be
elected by a plurality of the votes cast in person or by proxy.
3
<PAGE>
Nominees for Director
Tom E. DuPree, Jr. founded the Company and has been Chairman of the Board
of Directors and Chief Executive Officer of the Company since its formation in
1987. Mr. DuPree has been actively involved in developing and managing
restaurants since 1978. He is a graduate of Georgia Institute of Technology and
holds a Master's degree in Accounting from Georgia State University. Mr. DuPree
is 44 years old.
John G. McLeod, Jr. has served as Senior Vice President of Human Resources
since 1992, Vice President of Human Resources from 1987 to 1992, and a director
and Secretary of the Company since its formation in 1987. From 1983 to 1987, Mr.
McLeod was the Personnel Director of a predecessor of the Company. Mr. McLeod is
a graduate of Wofford College. Mr. McLeod is 53 years old.
David P. Frazier has served as a director of the Company since its merger
with DF&R Restaurants, Inc. (the "DF&R merger") in November 1995. Mr. Frazier is
the Company's Chief Concept Officer and Chairman of DF&R Restaurants,
Inc.("DF&R"), a wholly-owned subsidiary of the Company. From 1979 to 1996, Mr.
Frazier was President, Chief Executive Officer, and a director of DF&R, which he
co-founded. Mr. Frazier has worked in the restaurant industry for more than 30
years. He is a graduate of Texas Tech University and is 49 years old.
John L. Moorhead became a director of the Company in January 1997. Mr.
Moorhead joined Best Foods in 1992 in his current position, Vice President of
Business Management and Marketing. Prior to joining Best Foods, he was with
PepsiCo, Inc. from 1979 to 1991 and last served as Vice President of Marketing
Services for the Pepsi-Cola Company, a division of Pepsico, Inc. Prior to
establishing Pepsi-Cola's Marketing Services Group, Mr. Moorhead had served as
Vice President of Marketing for the Taco Bell Worldwide Division, Marketing
Director at Frito Lay and within the brand management system at General Mills.
Mr. Moorhead is 54 years old.
Marc D. Redus has served as a director of the Company since the DF&R
merger with the Company in November 1995. Mr. Redus is an Executive Vice
President of the Company and Secretary for DF&R. From 1979 to 1996 Mr. Redus was
Secretary and a director for DF&R, which he co-founded in 1979. Prior to that
time, Mr. Redus worked in the restaurant industry for five years. He is 43 years
old.
James W. Rowe became a director of the Company in March 1992. He also
serves as Chairman of the Audit Committee and as a member of the Compensation
Committee. Mr. Rowe is a former Vice Chairman of the Executive Committee of The
Great Atlantic & Pacific Tea Company, Inc., from which he retired in 1993. He is
73 years old.
Dr. Ruth G. Shaw became a director of the Company in May 1996. Dr. Shaw is
Senior Vice President of Corporate Resources and Chief Administrative Officer
for Duke Power Company. She was named Senior Vice President in 1994 after
joining Duke Power in 1992 as Vice President of Corporate Communications. Prior
to joining Duke Power, she was President of Charlotte's Central Piedmont
Community College from 1986 to 1992. Dr. Shaw is 49 years old.
Thomas R. Williams became a director of the Company in December 1991. He
also serves as Chairman of the Compensation Committee and as a member of the
Audit Committee. Mr. Williams is President of The Wales Group, Inc., a closely
held corporation engaged in investments. He is a former Chairman of the Board of
First Wachovia Corporation, from which he retired in 1987. Mr. Williams is a
director of American Software, Inc., BellSouth Corporation, ConAgra, Inc.,
Georgia Power Company, and National Life Insurance Company of Vermont and a
trustee of The Fidelity Group of Mutual Funds. Mr. Williams is 67 years old.
There are no family relationships among the Company's executive
officers and directors.
In the Agreement and Plan of Merger pursuant to which the company
acquired DF&R, the Company agreed to cause Mr. Frazier and Mr. Redus to be
elected to the Board of Directors of the Company and to be nominated for
re-election as directors and included in the slate of directors contained in
proxies solicited by management for the 1997 Annual Meeting of Shareholders.
4
<PAGE>
Executive Officers
In addition to the executive officers named above, the following
persons also serve as executive officers of the Company.
S. Kirk Kinsell was elected to the position of President and Chief
Operating Officer in January 1997. Before joining Apple South, Mr. Kinsell had
been President of the Franchise Division of ITT Sheraton, where he created the
Four Points Hotels by ITT Sheraton concept. Prior to joining ITT Sheraton, Mr.
Kinsell served as Senior Vice President for Holiday Inn Worldwide. From 1980 to
1988, Mr. Kinsell was a partner with Trammell Crow Company. He earned a Master's
degree from Cornell University and a Bachelor's degree from the University of
California. Mr. Kinsell is 42 years old.
Erich J. Booth has served as the Chief Financial Officer and Treasurer
of the Company since 1991. Before joining the Company, Mr. Booth had been Vice
President of Finance of Dun & Bradstreet Software (formerly Management Science
America, Inc.) since 1989. From 1984 to 1989, he served as Vice President and
Chief Financial Officer of Ward White USA Holding, Inc., a diversified specialty
retailer. Mr. Booth, a Certified Public Accountant, worked from 1973 to 1984 for
Peat, Marwick, Mitchell & Co. He is a graduate of the University of North
Carolina at Greensboro. He is 48 years old.
Officers of the Company serve at the pleasure of the Board of
Directors. The term of office for each director of the Company ends at the next
annual meeting of the Company's shareholders or when his successor is elected
and qualifies.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
The following table summarizes the compensation paid or accrued by the
Company for services rendered during the years indicated to the Chief Executive
Officer, the four most highly compensated executive officers, other than the
Chief Executive Officer and Mr. Evans, who was no longer serving as an executive
officer at the end of the Company's last completed fiscal year. The Company did
not grant any restricted stock awards or stock appreciation rights or make any
long-term incentive plan payouts during the years indicated.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long-Term
Compensation
Securities All Other
Annual Compensation Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Options(#) ($)(1)
- ------------------------------------------ ---- --------- -------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Tom E. DuPree Jr. 1996 285,577 81,750 - 122,218
Chairman and Chief Execuive Officer 1995 7,368 - 199,716 51,934
1994 268,569 155,000 - -
John G. McLeod, Jr. 1996 100,000 64,890 - 2,000
Senior Vice President, Human Resources 1995 100,000 22,500 - 1,291
and Secretary 1994 98,914 45,000 - 5,101
Erich J. Booth 1996 160,000 69,525 10,125 3,706
Chief Financial Officer and Treasurer 1995 160,000 20,000 64,750 4,167
1994 120,892 60,000 - 6,130
David P. Frazier (2) 1996 160,000 81,667 - 706
Chief Concept Officer 1995 160,000 16,000 6,000 -
Marc D. Redus (3) 1996 160,000 101,667 - 706
Executive Vice President 1995 160,000 16,000 6,000 -
Michael W. Evans (4) 1996 120,467 142,758 22,781 88,831
Former President and 1995 207,000 51,750 154,437 1,291
Chief Operating Officer 1994 199,767 120,000 - 6,213
5
<PAGE>
<FN>
(1)Except for Mr. DuPree and Mr. Evans, the amounts shown in this column consist
of contributions by the Company to its 401(k) savings plan on behalf of the
named executive officers, and the fair market value of shares of Common Stock
allocated to the executive officer's account pursuant to the Company's Employee
Stock Ownership Plan and Trust ("ESOP"). Amounts shown for 1996 include for Mr.
McLeod $2,000 of matching contributions to the 401(k) plan and for Mr. Booth
$3,000 of matching contributions to the 401(k) plan and $706 allocated to the
ESOP, for Mr. Frazier $706 allocated to the ESOP; and for Mr. Redus $706
allocated to the ESOP. Mr. DuPree does not participate in either the ESOP or the
401(k) plan. The amount shown in this column for Mr. DuPree includes $122,218
reflecting the current dollar value of the benefit to Mr. DuPree of the
unreimbursed portion of the premiums paid by the Company with respect to a
split-dollar insurance agreement (See "Certain Relationships and Related
Transactions" below for a description of such agreement), which benefit was
determined by calculating the time value of money (using the Company's 1996
weighted average borrowing rate of 7.5%) of the unreimbursed portion of the
premiums paid by the Company for the period ended December 29, 1996. The amount
shown in this column for Mr. Evans consists of $706 allocated to the ESOP and
$88,125 in severance payments.
(2) Mr. Frazier became an executive officer upon the merger between the Company
and DF&R in November 1995. Compensation shown is for services performed for the
entire fiscal year including the period prior to the merger.
(3) Mr. Redus became an executive officer upon the merger between the Company
and DF&R in November 1995. Compensation shown is for services performed for the
entire fiscal year including the period prior to the merger.
(4) Mr. Evans resigned as of July 22, 1996.
</FN>
</TABLE>
<TABLE>
The following table sets forth information concerning options granted
during the fiscal year ended December 29, 1996, under the Company's 1995 Stock
Incentive Plan to the executives named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Individual Grants(1) Value at Assumed
Percentage of Annual Rates of Stock
Number of Total Options Exercise or Price Appreciation for
Securities underlying Granted to Base Price Expiration Option Term
Name Options Granted Employees in 1996 ($/share) Date 5%($) 10%($)
----- ------------------- ------------------ ------------ ---------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Erich J. Booth 10,125 1.4% 21.69 12/31/05 138,112 350,004
Michael W. Evans 22,781 3.1% 21.69 12/31/05 310,749 787,500
</TABLE>
The following table sets forth information concerning the options
exercised during 1996 and the value of unexercised options as of December 29,
1996 held by the executives named in the Summary Compensation Table. No stock
appreciation rights were outstanding during 1996.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Shares
Shares Underlying Unexercised Value of Unexercised
Acquired Options at In-the-Money Options
on Value December 29, 1996(#) at December 29, 1996($)
----------------------- -----------------------
Name Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Tom E. DuPree, Jr. ....... - - - / 199,716 - / -
John G.McLeod, Jr. ....... 250,000 4,694,660 - - / -
Erich J. Booth ........... 40,000 417,200 500 / 85,000 5,466 / 110,688
David P. Frazier.......... - - 10,400 / 1,600 3,652 / 1,328
Marc D. Redus............. - - 10,400 / 1,600 3,652 / 1,328
Michael W. Evans.......... 200,987 3,548,240 68,344 / 200,000 753,893 / 251,297
</TABLE>
6
<PAGE>
Comparison of Five-Year
Cumulative Shareholder Return
The following graph compares the cumulative total shareholder return on
the Company's Common Stock with the cumulative total return of the Standard and
Poor's 500 Stock Index, and Nation's Restaurant News Stock Index, for a period
of five years comencing December 31, 1991 and ending December 29, 1996. The
graph assumes that $100 was invested on December 31, 1991, in Company Common
Stock, Standard and Poor's 500 Stock Index and the Nations Restaurant News Peer
Index.
Data Points for Graph:
<TABLE>
<CAPTION>
Apple South S&P 500 Nation's Restaurant News(1)
<S> <C> <C> <C>
Dec. 91 100 100 100
Dec. 92 284 108 125
Dec. 93 617 119 137
Dec. 94 585 121 146
Dec. 95 949 166 205
Dec. 96 597 204 208
<FN>
(1)Does not reflect dividend reinvestment, which management of the Company
believes to be immaterial.
</FN>
</TABLE>
7
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors is charged with
the responsibility of periodically reviewing and making recommendations to the
Board concerning the salaries, bonus programs, stock options, benefits and other
components of compensation for all officers with individual base salaries of
$100,000 or more. All members of the Committee are independent directors.
The primary components of executive compensation are base salary, cash
bonus and long-term incentives in the form of stock options.
The Committee considers both internal and external factors as bases for
determining executive compensation. External factors include compensation survey
data relating to salary, bonus, long-term incentives and total compensation
programs for executives in companies of similar size, growth and industry, as
well as general surveys of executive compensation nationally. Internal factors
affecting targeted total compensation include Company performance measures,
length of service and individual job performance. Based on these factors,
weighted subjectively by the Committee, total compensation for 1996 was targeted
at approximately the third quartile of the range for each position.
Total compensation was then divided between salary and bonus. The
Committee's objective is to target bonus as a meaningful percentage of total
compensation (30%-50%) while remaining competitive within the industry. To
qualify for bonus, the Company's quarterly earnings per share must meet or
exceed the highest prevailing quarterly earnings estimate, at the end of the
prior year as published by financial analysts that actively follow the Company.
Bonus earned and paid to executives in 1996 are shown in the Summary
Compensation Table.
The compensation for the Chief Executive Officer for 1996 was
determined in accordance with the foregoing policy. As the long term component
of executive compensation, the Company grants options to purchase Common Stock
of the Company in the future at the market value of the stock on the date of
grant. Option terms are for a period of up to ten years with vesting schedules
generally averaging six years. The Committee believes that the Company's
executive officers should acquire substantial equity ownership, either through
stock options or direct stock ownership, as a means of integrating management
decisions with the long-term interests of the shareholders. Based on the fact
that some officers either had no current options or had become fully vested in
past options and to accomplish the goals as stated above, the following grants
were made to officers and directors of the Company in 1996: Michael W. Evans,
Former President and Chief Operating Officer, 22,781 shares; and Erich J. Booth,
Chief Financial Officer, 10,125 shares. These option grants were made at an
option price equal to the market value of the stock on the date of grant and are
vested over a period of ten years with 50% becoming purchasable during the
second half of the option term. At February 5, 1997, the executive officers
beneficially owned or held the right to acquire stock representing 9,915,217 of
the Company's outstanding shares, 8,841,610 of which are beneficially owned by
the Chief Executive Officer.
Report submitted Febraury 5, 1997.
By: Thomas R. Williams
James W. Rowe
8
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of February 10, 1997 by
(i) each person known by the Company to own beneficially more than 5% of the
Company's Common Stock, (ii) each director and executive officer of the Company
and (iii) all executive officers and directors of the Company as a group.
Shares Beneficially
Owned (1)(2)
Name Number Percent
---- ------ -------
Tom E. DuPree, Jr. (3) 8,841,610 22.6%
Marc D. Redus (4) 459,453 1.2%
David P. Frazier (5) 421,392 1.1%
John G. McLeod, Jr. (6) 353,400 *
Erich J. Booth (7) 53,345 *
Thomas R. Williams (8) 52,143 *
James W. Rowe (9) 41,625 *
Michael W. Evans (10) 14,021 *
Ruth G. Shaw 1,000 *
State of Wisconsin Investment Board(11) 3,125,500 8.0%
FMR Corp.(12) 3,331,000 8.5%
All directors and executive officers
as a group (9 persons) (13) 9,915,217 25.3%
Mr. DuPree, the Wisconsin Investment Board and FMR Corp. are the only
shareholders known by the Company to be the beneficial owners of more than 5% of
the Company's Common Stock. Mr. DuPree's address is Hancock at Washington,
Madison, Georgia 30650. The address of the Wisconsin Investment Board is P.O.
Box 7842, Madison, Wisconsin 53707. The address of FMR Corp.is 82 Devonshire
Street, Boston, Massachusetts 02109.
*Less than one percent.
(1) The named shareholders have sole voting and investing power with
respect to all shares shown as being beneficially owned by them except with
respect to the shares owned by the Company's Employee Stock Ownership Plan and
Trust ("ESOP"). Each participant in the ESOP has the right to direct voting of
all shares allocated to his account on all matters. Power to direct the
investment of shares held by the ESOP presently rests with the Company's
Employee Benefit Committee, whose members are Messrs. DuPree, Evans and McLeod;
however, each participant in the ESOP may elect to direct the investment of 25%
of shares allocated to his account.
(2) Except as indicated below, does not include shares issuable upon
exercise of stock options.
(3) Includes 681,701 shares held by The DuPree Foundation, 473,377 held by
Madison Investment Partnership, 57,150 shares held by the Thomas E. DuPree III
Trust and 114,285 shares held by the DuPree Family Trust. Mr. DuPree's wife is
the sole trustee of these foundations and trusts. Includes 276,045 shares held
by the ESOP which are allocated to other employees and for which Mr. DuPree has
shared investment power. See Footnote (1) above. Mr. DuPree is the Chairman of
the Board of Directors and Chief Executive Officer of the Company.
(4) Includes 10,400 shares which Mr. Redus has the right to acquire within
60 days upon the exercise of stock options at an average exercise price of
$15.07 per share. Mr. Redus is a director and Senior Vice President of the
Company.
(5) Includes 10,400 shares which Mr. Frazier has the right to acquire
within 60 days upon the exercise of stock options at an average exercise price
of $15.07 per share. Mr. Frazier is a director and the President - DF&R division
of the Company.
(6) Includes 11,185 shares held by the ESOP which are vested and allocated
to Mr. McLeod and 264,860 shares held by the ESOP which are allocated to other
employees and for which Mr. McLeod has shared investment power. See Footnote (1)
above. Mr. McLeod is a director, the Senior Vice President - Human Resources and
the Secretary of the Company.
9
<PAGE>
(7) Includes 600 shares held by the ESOP which are vested and allocated to
Mr. Booth, but does not include 249 shares held by ESOP which are unvested. Mr.
Booth is Chief Financial Officer and Treasurer of the Company.
(8) Includes 50,625 shares which Mr. Williams has the right to acquire
within 60 days upon the exercise of stock options at a price of $2.17 per share.
Mr. Williams is a director of the Company.
(9) Includes 32,000 shares held by Rowe Family Investments, L.P. Mr. Rowe
is a director of the Company.
(10) Includes 14,021 shares held by ESOP which are vested and allocated
to Mr. Evans.
(11) Based on a Form 13G dated January 21, 1997, filed by State of
Wisconsin Investment Board.
(12) Based on a Form 13G dated February 14, 1997, filed by FMR Corp.
(13) Includes 20,800 shares which the officers and directors have the right
to acquire within 60 days upon the exercise of stock options at an average
exercise price of $15.07 per share, 25,912 shares held by the ESOP which are
vested and allocated to directors and executive officers, and 250,133 shares
held by the ESOP which are unvested or allocated to other employees. See
Footnote (1) above.
Certain Relationships and Related Transactions
In March 1995, the Company entered into a Split Dollar Insurance
Agreement (the "Agreement") with The DuPree Insurance Trust (the "Trust")
whereby the Company agreed to make premium payments on certain life insurance
policies of which the Trust is the owner and beneficiary. These policies provide
a total of $50 million in death proceeds payable upon death of the survivor of
Tom E. DuPree, Jr., the Chairman of the Board and Chief Executive Officer of the
Company, and his wife. The devisees under the wills of Mr. DuPree and his wife
are the beneficiaries of the Trust.
The Trust has agreed to reimburse the Company on an annual basis for
that portion of the premiums which equals the current value of the economic
benefit, as defined by the Internal Revenue Service, attributable to the life
insurance protection provided. The premiums due under the policies total
$850,000 per year. Reimbursements for the current value of the economic benefit
attributable to the life insurance provided in fiscal 1996 totaled $1,622. There
were no reimbursements due to the Company from the Trust at December 29, 1996.
The Company or the Trust can cancel the Agreement at any time. Upon
cancellation, the Trust is obligated to repay the Company an amount equal to the
lesser of either the cash surrender value of the policies or the total amount of
unreimbursed premiums paid by the Company. Upon receipt of the death proceeds
under the policies, the Trust is required to repay the Company for all
unreimbursed premium payments. The policies have been assigned to the Company to
secure the repayment obligations of the Trust.
10
<PAGE>
Proposal 2: APPROVAL OF THE APPLE SOUTH, INC.
1995 STOCK INCENTIVE PLAN, AS AMENDED
Introduction
On February 5, 1997, the Board of Directors approved, subject to
shareholder approval, amendments to the Apple South, Inc. 1995 Stock Incentive
Plan (the "Plan"). Except for these amendments, the Plan, as initially approved
by the Board of Directors on June 26, 1995, and as approved by the shareholders
on April 30, 1996, will remain in effect. The amendments are summarized below.
The full text of the Plan, as amended, is set forth as Appendix A to this Proxy
Statement.
Summary of Amendments
The amendments to the Plan increase the number of shares of Common
Stock reserved for issuance thereunder from 2,000,000 shares to 2,700,000 shares
and establish an annual per participant limit of 220,000 shares represented by
grants of stock options to be made to any named executive officer. The proposed
limit on stock option grants per participant equates to the number of options
currently granted at the Company's CEO level.
Purpose of the Amendments
The shareholders of the Company approved the Plan in 1996 to advance
the interests of the Company and its shareholders by encouraging and enabling
directors and key employees of the Company to acquire or increase financial
interests in the Company through the stock options granted under the Plan. As of
February 26, 1997, the Company had ______ options outstanding and ________
remaining options available for issuance pursuant to the Plan.
The Board of Directors of the Company believes that it is in the best
interests of the Company to increase the number of shares of the Company's
Common Stock reserved for issuance under the Plan to 2,700,000 shares, an
increase of 700,000 shares. The Board of Directors of the Company believes that
the success of the Company is greatly dependent upon its ability to attract and
retain directors and key employees of outstanding ability who are motivated to
exert their best efforts on behalf of the Company and that the Plan has been
effective in achieving this goal. Principally due to the Company's acquisition
program, it is probable that the number of shares available and likely to become
available for stock options under the Plan will prove within a relatively short
period of time to be inadequate for future requirements. In the opinion of he
Board of Directors of the Company, the authorization of the additional shares
will give the Company sufficient stock reserved for issuance under the Plan to
allow the Company to attract and retain employees and acquisition candidates,
which will contribute to the successful conduct of the Company's operations.
In 1993, the United States Congress adopted Section 162(m) of the
Internal Revenue Code of 1986 (the "Code"), which provision places limits on the
Company's ability to deduct certain compensation in excess of $1,000,000 for any
taxable year paid to its executive officers ("Section 162(m)"). The amounts
includible in an executive's compensation upon the exercise of nonqualified
stock options is subject to this limitation. However, there is one exception to
this limitation for "performance based" compensation that has been disclosed to
and approved by shareholders prior to payment of the awards. Final federal
income tax regulations were promulgated in December 1995, which provide
guidelines for compliance with this exception to the deduction limitation rules.
The amendment to the Plan to establish an annual limit on the number of
shares of Stock subject to options which can be granted under the Plan was
approved by the Board of Directors in response to Section 162(m) in order for
compensation attributable to stock options granted under the Plan to be
"performance-based" compensation exempt from the limitations of Section 162(m).
11
<PAGE>
Summary of the Plan
The principal features of the Plan are summarized below. The summary is
qualified by reference to the actual provisions of the Plan, a copy of which is
attached as Appendix A.
At February 26, 1997, the Company estimates that approximately 450
persons, of which six are the executive officers and four are non-executive
directors) are currently eligible to participate in the Plan, ___ of whom
participate. The aggregate market value of the shares of Common Stock underlying
outstanding options under the Plan was $ ______ based on a February 26, 1997
closing price of $_____.
For information concerning stock options granted during fiscal 1996
under the Plan to the named executive officers and all non-employee directors,
see "Compensation of Directors and Executive Officers."
The Plan is administered by the Company's Option Allocation Committee,
which consists of the Company's executive officers. Except for options granted
to executive officers and directors the Option Allocation Committee selects the
recipients of the options, and also determines the number of shares, exercise
price, terms and conditions of exercise, consequences of any termination of
employment, whether or not an option qualifies as an Incentive Stock Option
("ISO") (described below), and other terms of each option. The options for
executive officers are granted by the Compensation Committee of the Board, which
determines the number of options to be granted and the terms and conditions of
such options. The Option Allocation Committee and the Compensation Committee are
referred to hereinafter as the "Committee", with each exercising the authority
with respect to the designated group of directors and key employees.
Options may be granted to directors, officers and other employees of
the Company, as determined by the Committee. The Committee has determined that
the Company's officers, departmental directors, area supervisors, general
managers, and certain other employees are currently eligible to participate in
the Plan.
Options granted under the Plan represent rights to purchase shares of
Common Stock of the Company within a fixed period of time and at a specified
price per share (the "exercise price"), which will be determined by the
Committee but shall be no less than the market price of the Common Stock of the
Company on the date of grant of the option. The Company receives no monetary
consideration for the granting of stock options.
Options granted under the Plan become vested and exercisable at such
times and pursuant to such terms as determined by the Committee; provided that
no option granted to officers or directors of the Company may be exercisable
prior to six months after grant (except in the case of death or disability). In
the case of an option intended to be an ISO, the term of the option may not
exceed ten years from the date of grant and the option price may not be less
than 100% of fair market value per share of the Common Stock on the date of
grant. Generally, it is anticipated that options will vest at 10% per year for
ten years with 50% becoming purchasable during the second half of the option
term. It is also anticipated that nonvested options will expire upon termination
of employment of an optionee for any reason other than a change in control of
the Company. Pursuant to the Plan, in the event of a reorganization of the
Company in which the Company's existence terminates, the Committee in its
discretion may declare that all outstanding options become exercisable
immediately and shall terminate if not exercised prior to the reorganization.
Options may be exercised with cash or, at the sole discretion of the Committee,
by delivery of shares of Common Stock of the Company owned by the option holder.
The options granted under the Plan are, during the lifetime of the
optionee, exercisable only by the optionee (or by an appointed guardian or legal
representative) and are not transferable or assignable in whole or in part
except by will or by the laws of decent and distribution. In general, the
unexercised portion of any option granted under the Plan will terminate upon the
earlier to occur of (i) the expiration of the option in accordance with its
terms (anticipated normally to be ten years) or (ii) the expiration of three
months from the date of termination of the option holder's employment;
provided, however, that unless otherwise determined by the Committee, all
options held by an optionee shall be terminated if the optionee provides
services to a competitor of the Company.
12
<PAGE>
The Board of Directors has the right at any time to terminate or amend
the Plan, but no such action may terminate options already granted or otherwise
affect the rights of any optionee under an outstanding option without the
optionee's consent. Without shareholder approval, the Board may not amend the
Plan to (i) increase the total number of shares of stock subject to option
(except for an adjustment of shares for stock splits, stock dividends or the
like, (ii) change or modify the class of eligible participants, or (iii)
materially increase the benefits accruing to Plan participants. Unless the Plan
is terminated earlier by the Board, no options may be granted under the Plan
after June 26, 2005.
The shares of Common Stock to be issued upon exercise of the options
granted and to be granted under the Plan will be registered under the Securities
Act of 1933, as amended (the "Act") prior to the time that any options become
exercisable. Therefore, shares received by optionees (other than officers,
directors and other "affiliates" of the Company as defined by the Act) upon
exercise of the options will be freely transferable.
Federal Income Tax Consequences
There are no federal income tax consequences to an optionee or to the
Company on the granting of options. Federal tax consequences upon exercise will
vary depending on whether the option is an ISO or a Non-ISO.
Incentive Stock Options
When an optionee exercises an incentive stock option, the optionee will
not recognize any taxable income at that time, and the Company will not be
entitled to a deduction. The optionee will recognize capital gain or loss at the
time of disposition of shares acquired through the exercise of an incentive
stock option if the shares have been held for at least two years after the
option was granted and one year after it was exercised. The Company will not be
entitled to a tax deduction if the optionee satisfies these holding-period
requirements. The Federal income tax advantage to the holder of incentive stock
options who meets the holding-period requirements is a deferral, until the
acquired stock is sold, of taxation of any increase in the stock's value from
the time of grant of the option to the time of its exercise, and taxation of
such gain, at the time of sale, as capital gain rather than ordinary income.
If the holding period requirements are not met, then upon sale of the
shares the optionee generally recognizes as ordinary income the excess of the
fair market value of the shares at the date of exercise over the option price;
any increase in the value of the option stock subsequent to exercise is long or
short-term capital gain to the optionee depending on the optionee's holding
period for the stock. However, if the sale is for a price less than the value of
the shares on the date of exercise, the optionee may recognize ordinary income
only to the extent the sales price exceeded the option price. In either case,
the Company is entitled to a deduction to the extent of ordinary income
recognized by the optionee.
Non-Qualified Stock Options
Generally when an optionee exercises a non-qualified stock option, the
optionee recognizes income in the amount of the aggregate fair market value of
the shares received upon exercise, less the aggregate amount paid for those
shares, and the Company may deduct as an expense the amount of income so
recognized by the optionee, provided that the Company satisfies certain tax
withholding requirements. The holding period of the acquired shares begins upon
the exercise of the option, and the optionee's basis in the shares is equal to
the fair market value of the acquired shares on the date of exercise.
Vote Required and Recommendation of the Board
Approval of the Plan, as amended requires the affirmative vote of the holders of
a majority of the Company's outstanding shares of Common Stock present in person
or by proxy and voting at the meeting. If the shareholders do not vote a
sufficient number of shares of Common Stock in favor of the Plan, as amended,
the amendment will not take effect and the Plan will continue as initially
approved.
The Board of Directors recommends a vote "For" approval of the Plan, as amended
13
<PAGE>
Proposal 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors of the Company, upon the recommendation of the
Audit Committee, has appointed the firm of KPMG Peat Marwick LLP to serve as
independent auditors of the Company for the fiscal year ending December 28,
1997, subject to ratification of this appointment by the shareholders of the
Company. KPMG Peat Marwick LLP has served as independent auditors of the Company
and a predecessor of the Company since 1985 and is considered by management of
the Company to be well qualified. The Company has been advised by that firm that
neither it nor any member thereof has any financial interest, direct or
indirect, in the Company or any of its subsidiaries in any capacity. One or more
representatives of KPMG Peat Marwick LLP will be present at the Annual Meeting,
will have an opportunity to make a statement if he or she desires to do so and
will be available to respond to appropriate questions.
The affirmative vote of the holders of a majority of the shares voted
on the matter is required to ratify the selection of auditors. If the
shareholders should not ratify the appointment of KPMG Peat Marwick LLP, the
Board of Directors will reconsider the appointment.
The Board of Directors recommends a vote "For" ratification of
selection of the auditors.
COMPLIANCE WITH FILING REQUIREMENTS
Pursuant to Section 16(a) of the Securities Exchange Act of 1934,
officers, directors and beneficial owners of more than ten percent of the
outstanding Common Stock are required to file reports with the Securities and
Exchange Commission reporting their beneficial ownership of the Common Stock at
the time that they become subject to the reporting requirements and changes in
beneficial ownership occurring thereafter. Based on a review of reports
submitted to the Company and written representations from persons known to the
Company to be subject to these reporting requirements, the Company believes that
all such reports due in 1996 were filed on a timely basis.
FORM 10-K ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION, MAY BE OBTAINED WITHOUT CHARGE BY ANY
SHAREHOLDER, UPON WRITTEN REQUEST TO THE CHIEF FINANCIAL OFFICER, APPLE SOUTH,
INC., HANCOCK AT WASHINGTON, MADISON, GEORGIA 30650.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. Officers,
directors and employees of the Company may solicit proxies in person or by
telephone, telegraph or other means of communication, for which no special
compensation will be paid. Arrangements will be made with brokerage houses and
other custodians, nominees and fiduciaries to forward proxy materials to the
beneficial owners of the Common Stock, and such persons will be reimbursed for
their reasonable expenses.
SHAREHOLDER PROPOSALS
No proposals by non-management shareholders have been presented for
consideration at the Annual Meeting. The Company expects that its 1998 Annual
Meeting will occur during April 1998. Any proposals by non-management
shareholders intended for presentation at the 1998 Annual Meeting must be
received by the Company at its principal executive offices, attention of the
Secretary, no later than November 21, 1997, in order to be included in the proxy
material for that Meeting.
OTHER MATTERS
Management of the Company is not aware of any other matters that may
come before the Annual Meeting of Shareholders. However, as to any such matters,
it is the intention of the persons named in the proxy to vote thereon in
accordance with their judgement.
Madison, Georgia
March 17, 1997
14
<PAGE>
PRELIMINARY COPIES
PROXY CARD
APPLE SOUTH, INC.
PROXY
This Proxy is solicited by the Board of Directors for the Annual
Meeting of Shareholders to be held on April 29, 1997.
The undersigned hereby appoints Tom E. DuPree, Jr., and John G.
McLeod, Jr., or either of them with individual power of
substitution, proxies to vote all shares of Common Stock of Apple
South, Inc. (the "Company") which the undersigned is entitled to
vote at the Annual Meeting of Shareholders to be held on April 29,
1997, and at all adjournments thereof, as follows:
1. Election of Directors (Proposed by the Company).
Tom E. DuPree, Jr., John G. McLeod, Jr., David P. Frazier,
John L. Moorhead, Marc D. Redus, James W. Rowe, Ruth G. Shaw and
Thomas R. Williams.
FOR all nominees listed above WITHHOLD AUTHORITY for
(except as marked to the all nominees listed above.
contrary below)
(Instructions: To withhold authority to vote for any one or
more nominees, write their names in the space provided below.)
_________________________________________________________________
IF NO PREFERENCE IS INDICATED, THIS PROXY WILL BE VOTED "FOR" ALL
THE NOMINEES.
<PAGE>
2. Approval of the Apple South, Inc. 1995 Stock Incentive Plan,
as Amended.
FOR approval AGAINST approval
IF NO PREFERENCE IS INDICATED, THIS PROXY WILL BE VOTED "FOR"
THE PLAN.
3. Ratification of the selection of KPMG Peat Marwick LLP as
auditors of the Company for the fiscal year ending December
28, 1997 (Proposed by the Company).
FOR ratification AGAINST ratification
IF NO PREFERENCE IS INDICATED, THIS PROXY WILL BE VOTED "FOR"
THE RATIFICATION
4. In accordance with their best judgement upon such other
matters as may properly come before the Meeting.
PRELIMINARY COPIES
_______________________________
Signature of Shareholder
_______________________________
Signature of Shareholder
IMPORTANT: Please sign this Proxy exactly as your name or names
appear hereon. If shares are held by more than one owner, each
must sign. Executors, administrators, trustees, guardians, and
others signing in a representative capacity should give their full
titles.
DATED: _______________________, 1997
BE SURE TO DATE THIS PROXY
<PAGE>
APPENDIX A
Apple South, Inc.
1995 Stock Incentive Plan
as amended and restated
<PAGE>
APPLE SOUTH, INC.
1995 STOCK INCENTIVE PLAN
As amended and restated
February 5, 1997
<PAGE>
APPLE SOUTH, INC.
1995 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................1
(a) "Board".....................................................1
(b) "Code"......................................................1
(c) "Committee".................................................1
(d) "Company"...................................................1
(e) "Director"..................................................2
(f) "Disinterested Person"......................................2
(g) "Employee"..................................................2
(h) "Employer"..................................................2
(i) "Fair Market Value".........................................2
(j) "ISO".......................................................3
(k) "1934 Act"..................................................3
(l) "Officer"...................................................3
(m) "Option"....................................................3
(n) "Option Agreement"..........................................4
<PAGE>
(o) "Optionee"..................................................4
(p) "Option Price"..............................................4
(q) "Parent"....................................................4
(r) "Plan"......................................................4
(s) "Purchasable"...............................................4
(t) "Qualified Domestic Relations Order"........................4
(u) "Stock".....................................................4
(v) "Subsidiary"................................................5
ARTICLE II THE PLAN..........................................................5
Section 2.1 Name....................................................5
Section 2.2 Purpose.................................................5
Section 2.3 Effective Date..........................................5
Section 2.4 Termination Date........................................5
ARTICLE III ELIGIBILITY......................................................6
ARTICLE IV ADMINISTRATION....................................................6
Section 4.1 Duties and Powers of the Committee......................6
Section 4.2 Interpretation; Rules...................................6
Section 4.3 No Liability............................................7
<PAGE>
Section 4.4 Majority Rule...........................................7
Section 4.5 Company Assistance......................................7
ARTICLE V SHARES OF STOCK SUBJECT TO PLAN....................................7
Section 5.1 Limitations.............................................7
Section 5.2 Antidilution............................................8
ARTICLE VI OPTIONS...........................................................9
Section 6.1 Types of Options Granted................................9
Section 6.2 Option Grant and Agreement.............................10
Section 6.3 Optionee Limitations...................................10
Section 6.4 $100,000 Limitation....................................10
Section 6.5 Option Price...........................................11
Section 6.6 Exercise Period........................................11
Section 6.7 Option Exercise........................................12
Section 6.8 Nontransferability of Option...........................13
Section 6.9 Termination of Employment..............................13
Section 6.10 Employment Rights......................................13
Section 6.11 Certain Successor Options..............................14
Section 6.12 Conditions to Issuing Option Stock.....................14
<PAGE>
ARTICLE VII TERMINATION, AMENDMENT AND MODIFICATION
OF PLAN ....................................................................15
ARTICLE VIII MISCELLANEOUS..................................................16
Section 8.1 Replacement of Amended Grants..........................16
Section 8.2 Forfeiture for Competition.............................16
Section 8.3 Plan Binding on Successors.............................16
Section 8.4 Gender.................................................16
Section 8.5 Headings Not a Part of Plan............................16
<PAGE>
APPLE SOUTH, INC.
1995 STOCK INCENTIVE PLAN
ARTICLE I
DEFINITIONS
As used herein, the following terms have the meanings
hereinafter set forth unless the context clearly indicates to the contrary:
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the United States Internal Revenue Code
of 1986, as amended. Any reference herein to a specific section or sections of
the Code shall be deemed to include a reference to any corresponding provision
of future law.
(c) "Committee" shall mean a committee of at least two
Directors appointed from time to time by the Board, having the duties and
authority set forth herein in addition to any other authority granted by the
Board; provided, however, that with respect to any Options granted to an
individual who is also an Officer or Director, the Committee shall consist of at
least two Directors (who need not be members of the Committee with respect to
Options granted to any other individuals) who are Disinterested Persons, and all
authority and discretion shall be exercised by such Disinterested Persons, and
references herein to the "Committee" shall mean such Disinterested Persons
insofar as any actions or determinations of the Committee shall relate to or
affect Options held by any Officer or Director. If the Board has not established
a committee as described above, then references in this Plan to the "Committee"
shall be deemed to refer to the Board.
(d) "Company" shall mean Apple South, Inc., a Georgia
corporation.
<PAGE>
(e) "Director" shall mean a member of the Board.
(f) "Disinterested Person" shall have the meaning set forth in
Rule 16b-3 under the 1934 Act, as the same may be in effect from time to time,
or in any successor rule thereto, and shall be determined for all purposes under
the Plan according to interpretative or "no-action" positions with respect
thereto issued by the Securities and Exchange Commission.
(g) "Employee" shall mean any employee of the Company or
any Subsidiary of the Company.
(h) "Employer" shall mean the corporation that employs an
Optionee.
(i) "Fair Market Value" of the shares of Stock on any
date shall mean:
(i) the closing price, regular way, or in the
absence thereof the mean of the last reported bid and
asked quotations, on such date on the exchange having
the greatest volume of trading in the shares during
the thirty-day period preceding such date (or if such
exchange was not open for trading on such date, the
next preceding date on which it was open); or
(ii) if there is no price as specified in (i), the
final reported sales price, or if not reported in the
following manner, the mean of the closing high bid
and low asked prices, in the over-the-counter market
for the shares as reported by the National
Association of Securities Dealers Automatic Quotation
System or, if not so reported, then as reported by
the National Quotation Bureau Incorporated, or if
such organization is not in existence, by an
organization providing similar services, on such date
(or if such date is not a date for which such system
or organization generally provides reports, then on
the next preceding date for which it does so); or
(iii) if there also is no price as specified in
(ii), the price determined by the Committee by
reference to bid-and-asked quotations for the shares
provided by members of an association of brokers and
dealers registered pursuant to subsection 15(b) of
the 1934 Act, which members make a market in the
shares, for such recent dates as the Committee shall
determine to be appropriate for fairly determining
current market value; or
(iv) if there also is no price as specified in
(iii), the amount determined in good faith by the
Committee based on such relevant facts, which may
include opinions of independent experts, as may be
available to the Committee.
(j) "ISO" shall mean an Option that complies with and is
subject to the terms, limitations and conditions of Code section 422 and any
regulations promulgated with respect thereto.
(k) "1934 Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
(l) "Officer" shall mean a person who constitutes an officer
of the Company for the purposes of Section 16 of the 1934 Act, as determined by
reference to such Section 16 and to the rules, regulations, judicial decisions,
and interpretative or "no-action" positions with respect thereto of the
Securities and Exchange Commission, as the same may be in effect or set forth
from time to time.
(m) "Option" shall mean a contractual right to purchase Stock
granted pursuant to the provisions of Article VI hereof.
<PAGE>
(n) "Option Agreement" shall mean an agreement between
the Company and an Optionee setting forth the terms of an Option.
(o) "Optionee" shall mean a person to whom an Option has
been granted hereunder.
(p) "Option Price" shall mean the price at which an
Optionee may purchase a share of Stock pursuant to an Option.
(q) "Parent" shall mean any corporation (other than the
corporation with respect to which the determination is being made) in an
unbroken chain of corporations ending with the corporation with respect to which
the determination is being made if, at the relevant time, each of the
corporations other than the corporation with respect to which the determination
is being made owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
(r) "Plan" shall mean the 1995 Stock Incentive Plan of
the Company.
(s) "Purchasable," when used to describe Stock, shall refer to
Stock that may be purchased by an Optionee under the terms of this Plan on or
after a certain date specified in the applicable Option Agreement.
(t) "Qualified Domestic Relations Order" shall have the
meaning set forth in the Code or in the Employee Retirement Income Security Act
of 1974, as amended, or the rules and regulations promulgated under the Code or
such Act.
(u) "Stock" shall mean the $.01 par value common stock of the
Company or, in the event that the outstanding shares of such stock are hereafter
changed into or exchanged for shares of a different class of stock or securities
of the Company or some other corporation, such other stock or securities.
<PAGE>
(v) "Subsidiary" shall mean any corporation (other than the
corporation with respect to which the determination is being made) in an
unbroken chain of corporations beginning with the corporation with respect to
which the determination is being made if, at the relevant time, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
ARTICLE II
THE PLAN
2.1 Name. This plan shall be known as the "Apple South, Inc.
1995 Stock Incentive Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, its shareholders, and any Subsidiary of the Company, by offering
certain Employees and Directors an opportunity to acquire or increase their
proprietary interests in the Company. Options will promote the growth and
profitability of the Company, and any Subsidiary of the Company, because
Optionees will be provided with an additional incentive to achieve the Company's
objectives through participation in its success and growth.
2.3 Effective Date. The Plan shall become effective on
June 26, 1995.
2.4 Termination Date. No further Options shall be granted hereunder on
or after June 26, 2005, but all Options granted prior to that time shall remain
in effect in accordance with their terms; provided, however, that the Plan shall
terminate on June 26, 1996, and all Options theretofore granted shall become
void and may not be exercised if the shareholders of the Company shall not have
approved the Plan's adoption prior to that date.
<PAGE>
ARTICLE III
ELIGIBILITY
The persons eligible to participate in this Plan shall consist only of
Directors and those Employees whose participation the Committee determines is in
the best interests of the Company.
ARTICLE IV
ADMINISTRATION
4.1 Duties and Powers of the Committee. The Plan shall be administered
by the Committee. The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it may determine. The
Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it may deem necessary. The
Committee shall have the power to act by unanimous written consent in lieu of a
meeting, and shall have the right to meet telephonically. In administering the
Plan, the Committee's actions and determinations shall be binding on all
interested parties. The Committee shall have the power to grant Options in
accordance with the provisions of the Plan. Subject to the provisions of the
Plan, the Committee shall have the discretion and authority to determine those
individuals to whom Options will be granted, the number of shares of Stock
subject to each Option, such other matters as are specified herein, and any
other terms and conditions of an Option Agreement. To the extent not
inconsistent with the provisions of the Plan, the Committee shall have the
authority to amend or modify an outstanding Option Agreement, or to waive any
provision thereof, provided that the Optionee consents to such action.
4.2 Interpretation; Rules. Subject to the express provisions of the
Plan, the Committee also shall have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, and to make
all other determinations necessary or advisable in the administration of the
Plan, including, without limitation, the amending or altering of any Options
granted hereunder as may be required to comply with or to conform to any
federal, state or local laws or regulations.
4.3 No Liability. Neither any member of the Board nor any member
of the Committee shall be liable to any person for any act or determination made
in good faith with respect to the Plan or any Option granted hereunder.
4.4 Majority Rule. A majority of the members of the Committee shall
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of the
Committee.
4.5 Company Assistance. The Company shall supply full and timely
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.
ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN
5.1 Limitations. Subject to any antidilution adjustment pursuant to the
provisions of Section 5.2 hereof, the maximum number of shares of Stock that may
be issued hereunder shall be 2,700,000. Shares subject to an Option may be
either authorized and unissued shares or shares issued and later acquired by the
Company. The shares covered by any unexercised portion of an Option that has
terminated for any reason (except as set forth in the following paragraph), may
again be optioned under the Plan, and such shares shall not be considered as
having been optioned or issued in computing the number of shares of Stock
remaining available for option hereunder.
5.2 Antidilution.
(a) If the outstanding shares of Stock are changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of merger, consolidation, reorganization, recapitalization,
reclassification, combination or exchange of shares, stock split or stock
dividend, or if any spin-off, spin-out or other distribution of assets
materially affects the price of the Company's stock:
(i) The aggregate number and kind of shares of Stock
for which Options may be granted hereunder shall be
adjusted proportionately by the Committee; and
(ii) The rights of Optionees (concerning the number
of shares subject to Options and the Option Price) under
outstanding Options shall be adjusted proportionately by the
Committee.
(b) If the Company shall be a party to any reorganization in
which it does not survive, involving merger, consolidation, or acquisition of
the stock or substantially all the assets of the Company, the Committee, in its
discretion, may:
(i) notwithstanding other provisions hereof, declare
that all Options granted under the Plan shall become
exercisable immediately notwithstanding the provisions of the
respective Option Agreements regarding exercisability, that
all such Options shall terminate a specified period of time
after the Committee gives written notice of the immediate
right to exercise all such Options and of the decision to
terminate all Options not exercised within such period; and/or
(ii) notify all Optionees that all Options granted
under the Plan shall be assumed by the successor corporation
or substituted on an equitable basis with options issued by
such successor corporation.
(c) If the Company is to be liquidated or dissolved in
connection with a reorganization described in paragraph 5.2(b), the provisions
of such paragraph shall apply. In all other instances, the adoption of a plan of
dissolution or liquidation of the Company shall, notwithstanding other
provisions hereof, cause every Option outstanding under the Plan to terminate to
the extent not exercised prior to the adoption of the plan of dissolution or
liquidation by the shareholders, provided that, notwithstanding other provisions
hereof, the Committee may declare all Options granted under the Plan to be
exercisable at any time on or before the fifth business day following such
adoption notwithstanding the provisions of the respective Option Agreements
regarding exercisability.
(d) The adjustments described in paragraphs (a) through (c) of
this Section 5.2, and the manner of their application, shall be determined
solely by the Committee, and any such adjustment may provide for the elimination
of fractional share interests. The adjustments required under this Article V
shall apply to any successors of the Company and shall be made regardless of the
number or type of successive events requiring such adjustments.
ARTICLE VI
OPTIONS
6.1 Certain Limitations. The maximum number of shares of Stock subject
to Options which can be granted under the Plan during a 12-month period to a
person who is a Named Executive Officer shall be 220,000 shares. For purposes of
the Plan, a Named Executive Officer is a person who as of the date is determined
by the Committee to be one of a group of "covered employees" under Code Section
162(m) and the regulation thereunder.
<PAGE>
6.2 Option Grant and Agreement. Each Option granted or modified
hereunder shall be evidenced (a) by either minutes of a meeting or a written
consent of the Committee, and (b) by a written Option Agreement executed by the
Company and the Optionee. The terms of the Option, including the Option's
duration, time or times of exercise, exercise price and whether the Option is
intended to be an ISO, shall be stated in the Option Agreement. Separate Option
Agreements shall be used for Options intended to be ISO's and those not so
intended, but any failure to use such separate Agreements shall not invalidate,
or otherwise adversely affect the Optionee's rights under and interest in, the
Options evidenced thereby.
6.3 Optionee Limitations. The Committee shall not grant an
ISO to any person who, at the time the ISO would be granted:
(a) is not an Employee; or
(b) owns or is considered to own stock possessing more than
10% of the total combined voting power of all classes of stock of the Employer,
or any Parent or Subsidiary of the Employer; provided, however, that this
limitation shall not apply if at the time an ISO is granted the Option Price is
at least 110% of the Fair Market Value of the Stock subject to such Option and
such Option by its terms would not be exercisable after the expiration of five
years from the date on which the Option is granted. For the purpose of this
paragraph (b), a person shall be considered to own (i) the stock owned, directly
or indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors and lineal descendants, (ii) the stock owned, directly
or indirectly, by or for a corporation, partnership, estate, or trust in
proportion to such person's stock interest, partnership interest or beneficial
interest therein, and (iii) the stock which such person may purchase under any
outstanding options of the Employer or of any Parent or Subsidiary of the
Employer.
6.4 $100,000 Limitation. Except as provided below, the
Committee shall not grant an ISO to, or modify the exercise provisions of
outstanding ISO's held by, any person who, at the time the ISO is granted (or
modified), would thereby receive or hold any incentive stock options
(as described in Code section 422) of the Employer and any Parent or Subsidiary
of the Employer, such that the aggregate Fair Market Value (determined as of the
respective dates of grant or modification of each option) of the stock with
respect to which such incentive stock options are exercisable for the first time
during any calendar year is in excess of $100,000; provided, that the foregoing
restriction on modification of outstanding ISO's shall not preclude the
Committee from modifying an outstanding ISO if, as a result of such modification
and with the consent of the Optionee, such Option no longer constitutes an ISO;
and provided that, if the $100,000 limitation described in this Section 6.4 is
exceeded, an Option that otherwise qualifies as an ISO shall be treated as an
ISO up to the limitation and the excess shall be treated as an Option not
qualifying as an ISO. The preceding sentence shall be applied by taking options
intended to be ISO's into account in the order in which they were granted.
6.5 Option Price. The Option Price under each Option shall be
determined by the Committee. However, the Option Price shall not be less than
the Fair Market Value of the Stock on the date that the Option is granted (or,
in the case of an ISO that is subsequently modified, on the date of such
modification).
6.6 Exercise Period. The period for the exercise of each Option granted
hereunder shall be determined by the Committee, but the Option Agreement with
respect to each Option intended to be an ISO shall provide that such Option
shall not be exercisable after the expiration of ten years from the date of
grant (or modification) of the Option. In addition, no Option granted to an
Employee who is also an Officer or Director shall be exercisable prior to the
expiration of six months from the date such Option is granted, other than in the
case of the death or disability of such Employee.
<PAGE>
6.7 Option Exercise.
(a) Unless otherwise provided in the Option Agreement, an
Option may be exercised at any time or from time to time during the term of the
Option as to any or all whole shares that have become Purchasable under the
provisions of the Option, but not at any time as to less than 100 shares unless
the remaining shares that have become so Purchasable are less than 100 shares.
The Committee shall have the authority to prescribe in any Option Agreement that
the Option may be exercised only in accordance with a vesting schedule during
the term of the Option.
(b) An Option shall be exercised by (i) delivery to the
Secretary of the Company at its principal office of written notice of exercise
with respect to a specified number of shares of Stock, and (ii) payment to the
Company at that office of the full amount of the Option Price for such number of
shares.
(c) The Option Price shall be paid in full upon the exercise
of the Option; provided, however, that the Committee may provide in an Option
Agreement that, in lieu of cash, all or any portion of the Option Price may be
paid by tendering to the Company shares of Stock duly endorsed for transfer and
owned by the Optionee, to be credited against the Option Price at the Fair
Market Value of such shares on the date of exercise (however, no fractional
shares may be so transferred, and the Company shall not be obligated to make any
cash payments in consideration of any excess of the aggregate Fair Market Value
of shares transferred over the aggregate Option Price).
(d) In addition to and at the time of payment of the Option
Price, the Optionee shall pay to the Company in cash the full amount of any
federal, state and local income, employment or other taxes required to be
withheld from the income of such Optionee as a result of such exercise;
provided, however, that in the discretion of the Committee any Option Agreement
may provide that all or any portion of such tax obligations, together with
additional taxes not
<PAGE>
exceeding the actual additional taxes to be owed by the Optionee as a result of
such exercise, may, upon the irrevocable election of the Optionee, be paid by
tendering to the Company whole shares of Stock duly endorsed for transfer and
owned by the Optionee, or by authorization to the Company to withhold shares of
Stock otherwise issuable upon exercise of the Option, in either case in that
number of shares having a Fair Market Value on the date of exercise equal to the
amount of such taxes thereby being paid, and subject to such restrictions as to
the approval and timing of any such election as the Committee may from time to
time determine to be necessary or appropriate to satisfy the conditions of the
exemption set forth in Rule 16b-3 under the 1934 Act.
(e) The holder of an Option shall not have any of the rights
of a shareholder with respect to the shares of Stock subject to the Option until
such shares have been issued upon the exercise of the Option.
6.8 Nontransferability of Option. No Option or any rights therein shall
be transferable by an Optionee other than by will or the laws of descent and
distribution, or pursuant to a Qualified Domestic Relations Order. During the
lifetime of an Optionee, an Option granted to that Optionee shall be exercisable
only by such Optionee (or by such Optionee's guardian or other legal
representative, should one be appointed).
6.9 Termination of Employment. The Committee shall have the power to
specify, with respect to the Options granted to any particular Optionee, the
effect upon such Optionee's right to exercise an Option of the termination of
such Optionee's employment under various circumstances, which effect may include
immediate or deferred termination of such Optionee's rights under an Option, or
acceleration of the date at which an Option may be exercised in full.
6.10 Employment Rights. Nothing in the Plan or in any Option
Agreement shall confer on any person any right to continue in the
employ of the Company or any Subsidiary of the Company, or shall
<PAGE>
interfere in any way with the right of the Company or any such Subsidiary to
terminate such person's employment at any time.
6.11 Certain Successor Options. To the extent not inconsistent with the
terms, limitations and conditions of Code section 422, and any regulations
promulgated with respect thereto, an Option issued in respect of an option held
by an employee to acquire stock of any entity acquired, by merger or otherwise,
by the Company (or any Subsidiary of the Company) may contain terms that differ
from those stated in this Article VI, but solely to the extent necessary to
preserve for any such employee the rights and benefits contained in such
predecessor option, or to satisfy the requirements of Code section 424(a).
6.12 Conditions to Issuing Option Stock. The Company shall not be
required to issue or deliver any Stock purchased upon the full or partial
exercise of any Option granted hereunder prior to fulfillment of all of the
following conditions:
(a) The admission of such shares to listing on all stock
exchanges on which the Stock is then listed, if any;
(b) The completion of any registration or other qualification
of such shares that the Company shall determine to be necessary or advisable
under any federal or state law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body, or
the Company's determination that an exemption is available from such
registration or qualification;
(c) The obtaining of any approval or other clearance from any
federal or state governmental agency that the Company shall determine to be
necessary or advisable; and
(d) The lapse of such reasonable period of time following
exercise as shall be appropriate for reasons of administrative convenience.
<PAGE>
Unless the shares of Stock covered by the Plan shall be the subject of
an effective registration statement under the Securities Act of 1933, as
amended, stock certificates issued and delivered to Optionees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws.
ARTICLE VII
TERMINATION, AMENDMENT AND MODIFICATION OF PLAN
The Board may at any time, (i) cause the Committee to cease granting
Options, (ii) terminate the Plan, or (iii) in any respect amend or modify the
Plan; provided, however, that the Board (unless its actions are approved or
ratified by the shareholders of the Company within twelve months of the date the
Board amends the Plan) may not amend the Plan to:
(a) Materially increase the number of shares of Stock
subject to the Plan;
(b) Materially change or modify the class of persons that
may participate in the Plan; or
(c) Otherwise materially increase the benefits accruing
to participants under the Plan.
No termination, amendment or modification of the Plan shall affect
adversely an Optionee's rights under an Option Agreement without the consent of
the Optionee or his legal representative.
<PAGE>
ARTICLE VIII
MISCELLANEOUS
8.1 Replacement or Amended Grants. At the sole discretion of the
Committee, and subject to the terms of the Plan, the Committee may modify
outstanding Options or accept the surrender of outstanding Options and grant new
Options in substitution for them. Provided, however, no modification of an
Option shall adversely affect an Optionee's rights under an Option Agreement
without the consent of the Optionee or his legal representative and no
modification or substitution of an outstanding option shall change or result in
a change of any option price.
8.2 Forfeiture for Competition. If an Optionee provides services to a
competitor of the Company or any of its Subsidiaries, whether as an employee,
officer, director, independent contractor, consultant, agent or otherwise, such
services being of a nature that can reasonably be expected to involve the skills
and experience used or developed by the Optionee while an Employee, then that
Optionee's rights under any Options outstanding hereunder shall be forfeited and
terminated, subject to a determination to the contrary by the Committee.
8.3 Plan Binding on Successors. The Plan shall be binding
upon the successors of the Company.
8.4 Gender. Whenever used herein, the masculine pronoun shall
include the feminine gender.
8.5 Headings Not a Part of Plan. Headings of Articles and
Sections hereof are inserted for convenience and reference, and do not
constitute a part of the Plan.
<PAGE>
