<PAGE>
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BLIMPIE INTERNATIONAL, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] 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):
-------------------------------------------------------------------------
5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset 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 date of its filing.
1) Amount Previously Paid:
-------------------------------------------------------------------------
2) Form, Schedule or Registration Number:
-------------------------------------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE>
November 10, 2000
TO OUR SHAREHOLDERS:
You are cordially invited to attend our Annual Meeting of Shareholders for the
fiscal year ending June 30, 2001 which will be held on Monday, December 11, 2000
at 9:00 A.M., local time, at the offices of Hall Dickler Kent Goldstein & Wood,
LLP, 909 Third Avenue, New York, New York 10022, on the 27th Floor.
At this meeting, you will be asked to consider and vote upon the election of
six (6) directors who will serve until the annual meeting to be held in December
2001; to approve a new incentive stock ownership plan to replace our recently
expired Omnibus Stock Incentive Plan and to ratify the selection of Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending June
30, 2001.
The accompanying Notice of Annual Meeting and Proxy Statement set forth in
detail the business intended to be transacted. Time will be made available for a
discussion of these items as well as for other questions about the business
affairs of the Company.
If you are unable to join us at the meeting it is very important that you be
represented by proxy. Therefore, please take a moment to sign, date, and return
your proxy in the enclosed envelope. If you do not have a proxy, please call
your broker or the Company, and ask that a proxy be mailed to you. Your
cooperation in mailing your proxy promptly will not only be greatly appreciated;
it will also result in a significant benefit to the Company.
Sincerely yours,
ANTHONY P. CONZA
Chairman and Chief Executive Officer
<PAGE>
BLIMPIE INTERNATIONAL, INC.
740 BROADWAY
NEW YORK, NEW YORK 10003
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held Monday, December 11, 2000
---------------
--------------------------------------------------------------------------------
To The Holders Of Common Stock Of
BLIMPIE INTERNATIONAL, INC.
The Annual Meeting of the holders of the Common Stock of Blimpie
International, Inc. (the "Company") will be held at the offices of Hall Dickler
Kent Goldstein & Wood, LLP, 909 Third Avenue, New York, New York 10022, on the
27th Floor, on Monday, December 11, 2000 at 9:00 A.M., local time, for the
following purposes:
1. To elect six (6) persons to serve as directors of the Company until the
Annual Meeting to be held in December 2001 for the fiscal year ending
June 30, 2002;
2. To consider and vote upon a proposal to adopt the 2000 Omnibus Stock
Incentive Plan;
3. To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending June 30, 2001; and
4. To transact such other business as may properly come before the meeting.
Only holders of record of the Company's Common Stock at the close of business
on October 23, 2000, are entitled to notice of or to vote at this meeting and
any adjournment or adjournments thereof. Shareholders are entitled to vote upon
all business as may properly be presented for consideration at the meeting.
By Order of the Board of Directors
CHARLES G. LEANESS,
Secretary
New York, New York
November 10, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE AND
RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. THIS IS IMPORTANT FOR
THE PURPOSE OF ENSURING A QUORUM AT THE MEETING.
<PAGE>
PROXY STATEMENT
BLIMPIE INTERNATIONAL, INC.
740 BROADWAY
NEW YORK, NEW YORK 10003
---------------
ANNUAL MEETING OF SHAREHOLDERS
FOR THE FISCAL YEAR ENDING JUNE 30, 2001
---------------
SOLICITATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of Blimpie
International, Inc. (the "Company") for use at the Annual Meeting of
Shareholders to be held December 11, 2000, and at any adjournment or
adjournments thereof (the "Annual Meeting"). A proxy may be revoked by notice in
writing to the Secretary at any time prior to the exercise thereof. Each valid
proxy received in time will be voted at the Annual meeting, and, if a choice is
specified on the proxy, it will be voted in accordance with such specifications.
If no such specification is made, the persons named in the accompanying proxy
have advised the Company of their intention to vote the shares represented by
the proxies received by them (i) in favor of the election as directors, the
persons named in the proxy as nominees for directors; (ii) in favor of the
adoption of the 2000 Omnibus Stock Incentive Plan; (iii) in favor of ratifying
the selection of Ernst & Young LLP, as the Company's independent auditors for
the fiscal year ending June 30, 2001; and (iv) in accordance with their best
judgment on any other matters that may come before the meeting.
The cost of solicitation of proxies, including the reimbursement to banks and
brokers for reasonable expenses in sending proxy material to their principals,
will be borne by the Company. The Company's transfer agent, Registrar and
Transfer Company, is assisting the Company in the solicitation of proxies from
brokers, banks, institutions and other fiduciaries by mail, and will charge the
Company its customary fee therefor plus out-of-pocket expenses which, in the
aggregate, are estimated to be less than $5,000. In addition, proxies may be
solicited by officers of the Company by mail, in person or by telephone,
telegraph or telex. It is anticipated that on or about November 10, 2000, this
proxy statement and the enclosed form of proxy will be mailed to shareholders.
The outstanding voting securities of the Company on October 23, 2000 (the
"Record Date") consisted of 9,313,058 shares of Common Stock, $.01 par value
(the "Common Stock"). Only shareholders of record at the close of business on
the Record Date are entitled to notice of or to vote at the Annual Meeting.
Each share of Common Stock is entitled to one vote with respect to each
proposal which shall properly come before the Annual Meeting for consideration
by the shareholders. The holders of a majority of the outstanding shares
entitled to vote must be present at the Annual Meeting in person or by proxy to
constitute a quorum.
PROPOSAL NUMBER 1: ELECTION OF DIRECTORS
Six directors are to be elected at the meeting to hold office until the Annual
Meeting to be held in December 2001 for the fiscal year ending June 30, 2002,
and until their respective successors have been elected and qualified.
The persons named as proxies intend (unless authority is withheld) to vote for
the election of the persons hereinafter named as directors for terms expiring in
2001 upon their nomination for such office at the Annual Meeting. The
affirmative vote of the holders of a plurality of the outstanding shares of
Common Stock represented in person or by proxy at the Annual Meeting is required
for election of each director.
<PAGE>
If any nominee should become unavailable to serve, the proxy may be voted for
the election of another person designated by the Board. The Board has no reason
to believe any of the nominees will be unable to serve if elected.
The Board Of Directors recommends a vote FOR each of the nominees for election
as directors.
Pertinent information concerning the nominees for directors follows:
Nominees For Election As Directors
Anthony P. Conza, Age 60
Mr. Anthony P. Conza, together with two individuals who are not affiliated
with us, originally created the Blimpie concept in 1964. He is one of the
original founders of the Blimpie outlet chain, and is one of our co-founders. He
has been Chairman of our Board of Directors, and our President and Chief
Executive Officer since we commenced business operations in 1977. In 1992, the
"Entrepreneur of the Year" for New York, an award sponsored by Ernst & Young,
Merrill Lynch and Inc. Magazine, was presented to Mr. Conza. In the same year,
he was also named Chain Operator of the Year by the New York State Restaurant
Association. He is a member of the Board of the Jose Limon Dance Company, a
member of the Board of Governors of The Boys & Girls Clubs of America and he
serves on the Dean's Council at Harvard University's JFK School of Government.
Mr. Conza is the author of a book entitled, "Success... It's a Beautiful Thing,"
published by John Wiley & Sons, Inc. Mr. Conza is the brother of Joseph A.
Conza, the brother-in-law of Patrick Pompeo and the father-in-law of Joseph
Morgan.
David L. Siegel, Age 56
Mr. Siegel, one of our co-founders, served as our Executive Vice President
and General Counsel and as a member of our Board of Directors since our
formation in 1977. In September 1995, he was appointed as our Vice Chairman of
the Board, Chief Operating Officer and General Counsel. He also served as our
Treasurer from 1977 until January, 1991. He is also a practicing attorney in the
City of New York. Mr. Siegel received a Bachelor of Arts degree in 1965 from
Marietta College, a Juris Doctor Degree in 1968 from New York University School
of Law and a Master of Laws Degree in 1970 from New York University School of
Law. During the past five years, Mr. Siegel has also served as an officer of
each of our leasing subsidiaries.
Patrick J. Pompeo, Age 61
Mr. Pompeo has served as a director and Senior Vice President in charge of
operations since the time of commencement of our business operations in 1977. In
September 1995, he became Executive Vice President of Research Development and
Procurement. Mr. Pompeo is also a principal shareholder, officer and director of
Georgia Enterprises, Inc., our Subfranchisor for the State of Georgia. Mr.
Pompeo is the brother-in-law of Anthony Conza.
Charles G. Leaness, Age 50
Mr. Leaness has been a member of our Board of Directors since we commenced
business operations, and served as our Senior Vice President-Corporate Counsel
for more than the past five years. He was appointed Chief Executive Officer of
Maui Tacos International, Inc. in February 1999. In September, 1995, he was
appointed as one of our Executive Vice Presidents. Mr. Leaness is also a
principal shareholder, officer and director of Llewellyn Distributors, Inc., our
Blimpie Subfranchisor for a part of New Jersey, of Manhattan Maui, Inc., our
subfranchisor for Maui Tacos for the County of New York in New York State, and
of New Jersey Maui, Inc., our subfranchisor for Maui Tacos for parts of New
Jersey including Bergen, Essex, Hudson, Morris, and Middlesex counties. Mr.
Leaness received a Bachelor of Arts degree from Tulane University in 1972 and a
Juris Doctor degree from New York Law
2
<PAGE>
School in 1982. Mr. Leaness is a practicing attorney in New York State. He
currently serves as Director of the New York State Restaurant Association and is
President of the New York City Chapter. Mr. Leaness also serves on the Board of
Directors of the International Franchise Association (IFA).
Alvin Katz, Age 71
Mr. Katz was appointed to our Board of Directors on November 23, 1993. Mr.
Katz has been a member since September 1993 of the Board of Directors of Nastech
Pharmaceutical Company, Inc., a company engaged in the development of
pharmaceuticals. Since 1981, he has served as an adjunct professor of business
management at Florida Atlantic University. In 1991, Mr. Katz was appointed Chief
Executive Officer of Odessa Engineering Corp., a company engaged in the
manufacturing of pollution monitoring equipment. He held this position until
that company was sold in September 1992. Mr. Katz also serves on the Board of
Directors of Amtech Systems Inc. which is engaged in the manufacture of capital
equipment in the chip manufacturing business. Mr. Katz holds a B.S. in Business
Administration degree from New York University and has done graduate work at
C.U.N.Y.-Baruch School.
Harry G. Chernoff, Age 54
Dr. Chernoff was appointed to our Board of Directors on November 23, 1993.
For more than the past five years, Dr. Chernoff has been a principal of HMS
Properties, Inc., a real estate investment, development and management firm. Dr.
Chernoff has an active financial and operational consulting practice with major
financial institutions, and food and hospitality firms as his clients. Dr.
Chernoff received a Ph.D. in Operations Management from the New York University
Leonard N. Stern School of Business in 1985, and has been a member of the
faculty of New York University for 20 years. He also received a B.S. degree from
New York University in 1968 and an M.S. degree from that institution in 1975.
The Board Of Directors; Committees And Attendance
The Board of Directors held four meetings during the fiscal year ended June
30, 2000. All of the directors attended each of such meetings, except that Dr.
Chernoff was absent from one meeting. The Board of Directors has established an
Audit Committee and a Compensation Committee. The Audit Committee, among other
things, makes recommendations to the Board, for approval by the shareholders,
regarding the appointment of independent auditors to audit the financial
accounts, books and records of the Company, meets jointly and/or separately with
the chief financial officer of the Company and such auditors before commencement
and after conclusion of the audit to discuss the evaluation by the auditors of
the adequacy and effectiveness of the accounting procedures and internal
controls of the Company and its subsidiaries, to approve the overall scope of
the audit to be made and the fees to be charged, to review the audited financial
statements of the Company, to discuss the results of the audit, and to discuss
any significant recommendations by the auditors of improvement of accounting
systems and controls of the Company. The Compensation Committee develops
executive compensation policies and practices designed to enhance the Company's
business plans and strategies, and is responsible for the administration of the
Company's Omnibus Stock Incentive Plan. The Compensation Committee has full
authority in its discretion to determine the individuals to whom awards shall be
made under such plan, the time or times when they shall receive them and the
terms and conditions thereof, all as more fully set forth and described in such
plans. Messrs. Katz and Chernoff serve on both of such Committees. Mr. Conza is
also a member of the Compensation Committee. The Audit Committee met on one
occasion during fiscal year 2000, and the Compensation Committee acted once by
unanimous written consent in lieu of a meeting during such year.
EXECUTIVE COMPENSATION
The following table sets forth compensation awarded to, earned by or paid
to our Chief Executive Officer and our four highest-paid executive officers who
served as such at June 30, 2000 and whose annual compensation and bonus was
$100,000 or more (collectively, the "Named Executive Officers"). Information
with respect to salary, bonus, other annual compensation, restricted stock and
options is
3
<PAGE>
included for the fiscal years ended June 30, 2000, 1999 and 1998. We have not
paid any compensation that would qualify as "Restricted Stock Awards," payouts
pursuant to long-term incentive plans ("LTIP Payouts"), or "All Other
Compensation" in any of the three years in the period ended June 30, 2000.
<TABLE>
<CAPTION>
Long Term
Compen-
Annual Compensation sation
------------------------------- ------
Fiscal Other Securities All
Year Annual Underlying Other
Name and Ended Compen- Options/ Compen-
Principal Position June 30 Salary($) Bonus ($) sation SARs(#) sation
----------------------------------- ------- --------- --------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Anthony P. Conza,
Chairman & CEO 2000 $242,320 $10,804 $ 498(1) -- $2,385(3)
1999 235,330 30,736 919(1) 25,000 2,715(3)
1998 217,375 41,006 1,172(1) -- --
David L. Siegel,
Vice Chairman & COO 2000 180,474 5,527 498(1) -- 2,100(3)
1999 174,297 15,498 919(1) 25,000 1,914(3)
1998 156,748 21,558 1,172(1) -- --
Charles G. Leaness,
Exec. V.P. 2000 172,182 3,768 1,618(1) -- 2,050(3)
1999 141,250 8,391 3,399(1) 25,000 1,922(3)
1998 124,028 14,521 4,397(1) -- --
Patrick J. Pompeo,
Exec. V.P. 2000 148,084 3,768 498(1) -- 2,050(3)
1999 138,971 9,891 919(1) 25,000 2,000(3)
1998 115,615 14,521 1,172(1) -- --
Joseph W. Morgan,
Sr. V.P., President - 2000 175,940 2,886 498(1) 125,000 2,050(3)
Blimpie Subs & Salads 1999 136,437 6,856 919(1) 35,000 1,828(3)
and Pasta Central 1998 114,654 10,451 3,938(1,2) -- --
</TABLE>
(1) Represents commissions paid with respect to master license sales
consummated.
(2) Reflects the fair market value on the date of grant of shares of our Common
Stock granted to Mr. Morgan of $2,766 in 1998.
(3) Represents matching contributions which we made to our 401(k) Plan on
behalf of each of the Named Executive Officers.
4
<PAGE>
Options/SAR Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
Number of % of Total Potential Realizable
Securities Options Value at Assumed
Underlying Granted to Exercise Annual Rates of Stock
Options Employees or Base Price Appreciation
Granted in Fiscal Price Expiration for Option Term
---------------
Name (#) Year ($/Sh) Date 5($) 10($)
---- --- ---- ------ ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Anthony P. Conza -- -- $ -- -- $ -- $ --
David L. Siegel -- -- -- -- -- --
Charles G. Leaness -- -- -- -- -- --
Patrick J. Pompeo -- -- -- -- -- --
Joseph W. Morgan 125,000 96.2% 2.69 8/24/09 211,305 535,484
</TABLE>
Fiscal Year End Option Values
The following table sets forth the number of unexercised options held by
our Named Executive Officers during the fiscal year ended June 30, 2000. No
options were exercised during such period.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options/SARs Options/SARs
at FY-End(#) at FY-End($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise(#) Realized($) Unexercisable Unexercisable
---- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Anthony P. Conza -- -- 47,000/18,000 $ -- / --
David L. Siegel -- -- 47,000/18,000 -- / --
Charles G. Leaness -- -- 31,000/14,000 -- / --
Patrick J. Pompeo -- -- 31,000/14,000 -- / --
Joseph W. Morgan -- -- 91,000/94,000 -- / --
</TABLE>
Compensation Committee Report On Executive Compensation
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
OF BLIMPIE INTERNATIONAL, INC.
The primary purpose of this Committee is to develop executive compensation
policies and practices which coincide with and enhance the business plans and
strategies which the Company undertakes in connection with the pursuit of its
business objectives.
During the past several years, this Committee has almost exclusively
followed a policy of rewarding its senior executives with compensation packages
consisting of salaries which are determined upon the basis of the following four
factors (1) appreciation or depreciation in the Company's Common Stock during
the prior year, (2) increase or decrease in earnings during the prior year, (3)
changes in the size and industry position of the Company through expansions or
contractions in the overall size of the franchise chain, and (4) the growth of
the Company's international franchise operations. In determining the salary to
be paid to the Company's Chief Executive Officer and its other senior
executives, this Committee also considers, in addition to the foregoing factors,
the comparative salaries paid to other Chief Executives
5
<PAGE>
and senior executives in the quick service restaurant industry, based upon the
Executive Compensation Rankings published annually by Restaurant Business
Magazine. Recently, we added a fifth factor, i.e., the impact of the Company's
new franchise initiatives Maui Tacos, Pasta Central and Smoothie Island upon the
Company's current and future earnings prospects.
The payment of bonuses to the Company's senior executives is not a matter
which falls within the jurisdiction of this Committee. Instead, during the
fiscal year ended June 30, 1991, the Board of Directors adopted a Company-wide
standard policy regarding such payments. Such policy is based upon the Company's
annual net income, as determined for financial reporting purposes. A bonus pool
is funded with 10% of the Company's annual net income. In prior fiscal years, a
percentage of the bonus pool was assigned to each level of employment in the
Company. The funds assigned to each of the levels were divided by the number of
employees on each level, and payments were made on a quarterly basis with each
payment being made two months after the end of the quarter. During the fiscal
year ended June 30, 2000, this methodology was changed in order to allocate a
greater percentage of the overall bonuses to non-executive employees. Under the
new methodology, each level of employment is assigned a targeted bonus amount
based on the budgeted net income for the year. Bonuses are paid quarterly based
on the actual net income as a percentage of the budgeted net income for the
quarter. This change resulted in a decrease in the targeted bonus for the senior
executives of approximately 40%, with the offsetting increase being allocated to
non-executive employees. The targeted bonus amounts assigned to each of the
senior executive levels are as follows:
Chief Executive Officer $24,000
Chief Operating Officer 12,000
Executive Vice Presidents 8,000
Senior Vice Presidents 6,000
In applying the above-described factors to the determination of the
compensation to be paid to Anthony P. Conza, the Company's Chief Executive
Officer, during fiscal 2000 your Committee included in its deliberation of the
above-described factors, such matters as the Company's efforts to achieve
increases in quarterly and annual revenues, income and earnings, and the strides
taken by the Company to expand the scope of its operations both internationally
and in terms of the development of its new product and franchise offerings. As a
result of our consideration of all of such factors, this Committee awarded Mr.
Conza a modest 3.0% salary increase to $242,320 for the year ended June 30,
2000, and no stock options. By comparison, during the prior fiscal year, Mr.
Conza received an 8.3% salary increase to $235,330, and incentive-based
compensation in the form of options to purchase 25,000 shares of the Company's
common stock which were issued under the Omnibus Stock Incentive Plan. Our
decision to provide only a modest increase in the cash compensation to be paid
to Mr. Conza during fiscal 2000, and no additional grants of Plan options was
based upon our views that the efforts previously commenced by Mr. Conza and the
other members of the Company's senior management to establish and sustain
momentum in the Company's efforts to expand internationally, and to develop new
product and franchise offerings, showed promise as sources of additional
revenues. As a consequence of these views, the compensation packages of Messrs.
Siegel and Pompeo also consisted of modest salary increases of less than 7% with
no additional grants of Plan options. Messrs. Leaness and Morgan received
greater increases of 21.9% and 29.0%, respectively, to reflect increased
responsibilities assumed during the year. Mr. Morgan also received additional
grants of Plan options amounting to 125,000 shares in order to keep his level of
incentive compensation more in line with the compensation packages received by
executives performing services at other quick service restaurant franchise
companies similar to those performed for the Company by Mr. Morgan.
In summary, it is this Committee's belief that the compensation policies
that we have described in this report have served the best interests of the
shareholders and the Company. Such policies have been designed to provide
appropriate levels of compensation to the Company's senior executives based upon
the particular combination of factors which apply to this Company. As and when
those factors change, this Committee will make every effort to make adjustments
to its policies in a manner which will provide fair
6
<PAGE>
and reasonable levels of compensation and appropriate incentives to its
executives, while continuing to be in the best interests of the shareholders and
the Company.
Respectfully submitted,
The Compensation Committee
/S/ ALVIN KATZ /S/ HARRY G. CHERNOFF
------------------------ ---------------------------
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
OF BLIMPIE INTERNATIONAL, INC.
The audit committee oversees the Company's financial reporting process on
behalf of the Board of Directors. Management has the primary responsibility for
the financial statements and the reporting process including the systems of
internal controls. In fulfilling its oversight responsibilities, the committee
reviewed the audited financial statements in the Annual Report with management
including a discussion of the quality, not just the acceptability, of the
accounting principles, the reasonableness of significant judgments, and the
clarity of disclosures in the financial statements.
The committee reviewed with the independent auditors, who are responsible
for expressing an opinion on the conformity of those audited financial
statements with accounting principles generally accepted in the United States,
their judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the committee under auditing standards generally accepted in the United
States. In addition, the committee has discussed with the independent auditors
the auditors' independence from management and the Company including the matters
in the written disclosures required by the Independence Standards Board.
The committee discussed with the Company's independent auditors the overall
scope and plans for their audit. The committee meets with the independent
auditors, with and without management present, to discuss the results of their
examinations, their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting. The committee held one
meeting during fiscal 2000 in addition to a number of informal correspondences
during the year.
In reliance on the reviews and discussions referred to above, the committee
recommended to the Board of Directors (and the Board has approved) that the
audited financial statements be included in the Annual Report on Form 10-K for
the year ended June 30, 2000 for filing with the Securities and Exchange
Commission. The committee and the Board have also recommended, subject to
shareholder approval, the selection of the company's independent auditors.
Respectfully submitted,
The Audit Committee
/S/ ALVIN KATZ /S/ HARRY G. CHERNOFF
------------------------ ---------------------------
7
<PAGE>
Comparison Of Total Shareholder Returns
The performance graph which follows compares the cumulative total
shareholder returns on the Company's Common Stock for the five-year period ended
June 30, 2000 with the S&P 500 Index and the S&P 500 Restaurants Index during
the same period. The graph assumes that the value of the Company's Common Stock
and the value of each Index was $100 on June 30, 1995, and that all dividends
have been reinvested. The shareholder returns shown below may not be indicative
of future performance.
[GRAPH]
<TABLE>
<CAPTION>
Company / Index Jun-95 Jun-96 Jun-97 Jun-98 Jun-99 Jun-00
------------------- ---------- --------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Blimpie International, Inc. 100 197.74 74.95 42.42 39.22 26.70
S&P 500 Index 100 126.00 169.73 220.92 271.19 290.85
S&P Restaurants Index 500 100 117.67 123.06 166.71 209.00 160.78
</TABLE>
Omnibus Stock Incentive Plan
The Company's Omnibus Stock Incentive Plan (the "Plan"), which expired on
June 30, 2000, permitted the grant of awards to employees of the Company
(including officers and directors who are employees of the Company or a
subsidiary of the Company) of restricted shares of the Company's Common Stock,
performance shares of the Company's Common Stock, stock appreciation rights
relative to the Company's Common Stock and both incentive stock options and non-
qualified options to purchase shares of the Company's Common Stock. A maximum of
950,000 shares maybe issued under the Plan. Through June 30, 2000, the Company
granted to certain employees, pursuant to the Plan: (a) options to acquire a
total of 792,500 shares of Common Stock, net of amounts canceled or exercised;
and (b) stock grants of 93,500 shares of Common Stock. The options are
exercisable at the fair market value on the date of grant, with prices ranging
from $2.13 to $14.75 per share. The options and stock grants generally provide
for vesting at the rate of 20% per annum and expire five to ten years after the
date of the grant. As of June 30, 2000, 7,850 options had been exercised,
378,800 options had been vested and not exercised, and 91,200 shares of stock
had been issued under the stock grant program. The aggregate value of the shares
issuable pursuant to vested options under the Plan was $640,172 based on the
closing price of the Common Stock on September 26, 2000 of $1.69 per share. The
Plan was adopted in order that the participants in the Plan will have financial
incentives to contribute to the Company's growth and profitability, and to
enhance the ability of the Company to attract and retain in its employ
individuals of outstanding ability.
8
<PAGE>
Warrants and Options Issued To Non-Employee Directors
On November 24, 1993, the Company issued to each of Harry Chernoff and
Alvin Katz, two non-employee directors of the Company, warrants to purchase up
to 7,500 shares of the Company's Common Stock at the purchase price of $6.00 per
share at any time prior to November 24, 1998. On September 1, 1995, the Company
issued to each of Messrs. Chernoff and Katz warrants to purchase up to 4,000
shares of the Company's Common Stock at the purchase price of $8.875 per share
at any time prior to September 1, 2000. On September 11, 1998, the Company
canceled all of the warrants issued to the non-employee directors and replaced
them with incentive stock options to purchase up to 17,000 shares of the
Company's Common Stock at the purchase price of $2.56 per share, vesting at 20%
per year beginning September 11, 1998, and exercisable through September 2008.
DIRECTORS' COMPENSATION
The Board has adopted a compensation policy to help the Company to attract
and maintain the services of qualified outside directors. Such compensation
consists of (a) payment of a directors fee of $9,000 per annum plus $500 per
meeting attended; (b) issuance of five year warrants or options to purchase
5,000 shares of the Company's Common Stock at an exercise price equal to the
closing price of such stock on the date of his or her appointment or election to
the Board; (c) issuance of additional warrants or options, at the discretion of
the Board, periodically during the tenure of an outside director; and (d)
reimbursement of the reasonable travel and lodging expenses incurred by each
outside director in attending Board meetings which are not held within a 75 mile
radius of his or her residence or principal place of business.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the holdings of our Common Stock as of
September 26, 2000 by (1) each person or entity known to us to be the beneficial
owner of more than five percent (5%) of the outstanding shares of our Common
Stock; (2) each director and executive officer; and (3) all directors and
executive officers as a group. All of the holders of our Common Stock are
entitled to one vote per share.
<TABLE>
<CAPTION>
Number of Shares Percent
Name and Address of Beneficial Owner (1) Beneficially Owned (2) Owned (3)
----------------------------------------- ---------------------- ---------
<S> <C> <C>
Heartland Advisors, Inc.(4) 500,000 5.2%
Anthony P. Conza...................................... 2,993,713 (5) 31.9%
David L. Siegel....................................... 1,530,875 (6) 16.3%
Charles G. Leaness.................................... 467,188 (7) 5.0%
Patrick Pompeo........................................ 431,157 (8) 4.6%
Alvin L. Katz (9)..................................... 30,200 (10) *
Harry G. Chernoff (11)................................ 22,468 (12) *
Joseph W. Morgan...................................... 225,533 (13) 2.4%
Joseph A. Conza....................................... 79,080 (14) *
Robert S. Sitkoff..................................... 60,815 (15) *
Brian D. Lane......................................... 22,799 (16) *
All Directors and Executive Officers
As a Group (10 Persons)............................... 5,863,828 (17) 60.6%
</TABLE>
-------------
* Represents less than 1%.
(1) Except as otherwise noted, the address of each of the persons listed below
is 740 Broadway, New York, New York 10003.
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(2) Includes shares actually and beneficially owned.
(3) Based upon 9,314,116 shares outstanding on October 12, 2000 (not including
319,910 treasury shares), increased by the number of shares under options
which the holder(s) thereof have the right to acquire within 60 days from
October 12, 2000.
(4) The address of Heartland Advisors, Inc. is 789 North Water Street,
Milwaukee, Wisconsin 53202.
(5) Includes 47,000 shares which Mr. Conza may acquire pursuant to options
exercisable within 60 days of October 12, 2000. Does not include (a)
37,050 shares owned by Mr. Conza's daughter, (b) 9,300 shares owned by Mr.
Morgan (Mr. Conza's son-in-law), (c) 125,000 shares owned jointly by Mr.
Conza's daughter and Mr. Morgan over which Mr. Morgan has sole voting
power, (d) 4,150 shares owned by Mr. Conza's parents, (e) 44,913 shares
owned by Joseph Conza, the brother of Mr. Conza, and (f) 44,000 shares
held by Mr. Conza's daughter as Trustee for the Anthony P. Conza
Charitable Remainder Trust, as to all of which Mr. Conza disclaims
beneficial ownership.
(6) Includes 47,000 shares which Mr. Siegel may acquire pursuant to options
exercisable within 60 days of October 12, 2000. Does not include 13,046
shares held by Mr. Siegel's daughter, as to which Mr. Siegel disclaims
beneficial ownership.
(7) Includes 31,000 shares which Mr. Leaness may acquire pursuant to options
exercisable within 60 days of October 12, 2000.
(8) Includes 31,000 shares which Mr. Pompeo may acquire pursuant to options
exercisable within 60 days of October 12, 2000. Does not include 6,300
shares held by Mr. Pompeo's sister and brother-in-law, as to which Mr.
Pompeo disclaims beneficial ownership.
(9) The address of Mr. Katz is 301 N. Birch Road, Ft. Lauderdale, Florida
33304.
(10) Includes 10,200 shares which Mr. Katz may acquire pursuant to options
exercisable within 60 days of October 12, 2000.
(11) The address of Dr. Chernoff is 286 Spring Street, Suite 401, New York, New
York 10013.
(12) Includes 10,200 shares which Dr. Chernoff may acquire pursuant to options
exercisable within 60 days of October 12, 2000.
(13) Includes 91,000 shares which Mr. Morgan may acquire pursuant to options
exercisable within 60 days of October 12, 2000. Does not include (a)
37,050 shares held by Mr. Morgan's wife (Mr. A. Conza's daughter), (b)
13,100 shares held by Mr. Morgan's children, (c) 700 shares held by Mr.
Morgan's wife as custodian for his son under the Transfers to Minors Act,
(d) 44,000 shares held by Mr. Morgan's wife as Trustee for the Anthony P.
Conza Charitable Remainder Trust, and (e) 16,500 shares held by a
corporation of which Mr. Morgan's wife is the sole shareholder, as to all
of which Mr. Morgan disclaims beneficial ownership.
(14) Includes 32,500 shares which Mr. Conza may acquire pursuant to options
exercisable within 60 days of October 12, 2000.
(15) Includes 53,000 shares which Mr. Sitkoff may acquire pursuant to options
exercisable within 60 days of October 12, 2000.
(16) Includes 15,000 shares which Mr. Lane may acquire pursuant to options
exercisable within 60 days of October 12, 2000.
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<PAGE>
(17) Includes 367,900 shares which all of such persons may acquire pursuant to
options exercisable within 60 days of October 12, 2000. Does not include
the shares excluded from the percentage ownership calculations made with
respect to Messrs. Conza, Siegel, Pompeo and Morgan pursuant to notes 5,
6, 8 and 13 above.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the fiscal years ended June 30, 2000, 1999 and 1998, we paid
$1,162,000, $1,155,000, and $1,149,000, respectively, to Georgia Enterprises,
Inc. ("Georgia Enterprises"), a corporation partially owned by Patrick Pompeo,
one of our Executive Vice Presidents and directors, and Joseph Conza, one of our
Senior Vice Presidents and President of B I Concept Systems, Inc., in payment of
the fees that Georgia Enterprises earned as the Subfranchisor for the Georgia
market. During the same three fiscal years, we paid $280,000, $305,000, and
$281,000, respectively, to Llewellyn Distributors, Inc. ('Llewellyn"), a
corporation partially owned by Charles G. Leaness, one of our directors and
Executive Vice Presidents, who also serves as CEO of Maui Tacos International,
Inc., in payment of Llewellyn's share of the fees that it earned as the
Subfranchisor for the northern New Jersey market. We also paid $53,000 in fiscal
1999 and $146,000 in fiscal 1998 to International Southwest Blimpie, Inc.
('Southwest'), a corporation principally owned and controlled by Joseph Conza
until its sale to an unrelated third party in November 1998, in payment of said
corporation's share of the fees that it earned as the Subfranchisor for the
Houston, Texas market. In fiscal 2000, we paid $8,000 to Manhattan Maui, Inc., a
corporation partially owned by Charles G. Leaness, in payment of fees that
Manhattan Maui, Inc. earned as subfranchisor for the New York County, NY market
for Maui Tacos.
Each of the aforementioned transactions was effected pursuant to written
agreements between us and the parties thereto. Such agreements are substantially
identical to the standard form of subfranchise agreement that we enter into with
unaffiliated subfranchisors. In the opinion of our management, each such
agreement is on terms as favorable to us as would be available from an unrelated
third party.
During the years ended June 30, 2000, 1999 and 1998, we paid $13,000,
$11,000 and $11,000, respectively, to Joseph Conza as compensation for the use
of his apartment in New York City by employees of our Atlanta and Houston
offices during business trips. In our estimation, this practice reduced our
lodging expense inasmuch as the per diem amounts paid to Mr. Conza were below
the market rates for hotel accommodations which we would have been required to
pay in order to house such employees during such trips to New York.
During the fiscal years ended June 30, 2000, 1999 and 1998, we received
$111,000, $110,000 and $119,000, respectively, in reimbursements of expenses
from Llewellyn. Such amounts were paid pursuant to a written agreement which
provides that we shall be reimbursed by Llewellyn for costs incurred by us in
providing operational support services to Llewellyn. The agreement also provides
that in the event the costs of such support services shall rise, then the fees
paid pursuant to the agreement shall rise accordingly. In the opinion of our
management, the agreement is on terms as favorable to us as would be available
from an unrelated third party.
In April 1994, Mr. Leaness borrowed the sum of $20,000 from us, and
collateralized the payment thereof with the same 120,000 shares of Common Stock
which he pledged in connection with a $60,000 option exercise and loan
transaction consummated in December 1991. This $20,000 loan is payable upon
demand and bears interest at the rate of 5% per annum.
In March 1995, Joseph Conza borrowed the principal amount of $55,500 from
us. That indebtedness is payable in constant bi-monthly payments of principal
and interest computed at the rate of 8% per annum through April 15, 2015. Mr.
Conza pledged 10,000 unregistered shares of our Common Stock as collateral
security for the payment of all sums due under the loan. As of the end of the
fiscal year, Mr. Conza was current with respect to his payment obligations and
the outstanding principal balance had been reduced to approximately $48,000.
11
<PAGE>
Compliance With Section 16(a) Of The Securities Exchange Act Of 1934
Section 16(a) of the Securities Exchange Act of 1934 (the 'Exchange Act')
requires the Company's Directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission initial reports of ownership
and reports of changes in ownership of the Company's Common Stock. Officers,
Directors and greater than ten-percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended June 30, 2000, the Company's
officers, Directors and greater than ten-percent beneficial owners complied with
all applicable Section 16(a) filing requirements.
PROPOSAL NUMBER 2: ADOPTION OF THE 2000 OMNIBUS STOCK INCENTIVE PLAN
At the Company's Annual Meeting of Shareholders held in December 1995, the
shareholders approved a proposal to replace the incentive stock ownership plan
that had been in effect since 1993 with a new plan which we called the Omnibus
Stock Incentive Plan (the "1995 Plan"). On June 30, 2000, the 1995 Plan
expired. Thus, at the present time, we have no incentive stock ownership plan in
place. In order to continue to provide proper incentives for existing and
future employees who contribute to the Company's continued growth and expansion,
the Company would like the shareholders to adopt a new omnibus incentive stock
ownership plan (the "2000 Omnibus Plan") which will continue to provide the same
array of incentive compensation tools offered under the 1995 Plan, and which
would provide the Compensation Committee with an appropriate number of shares
with which to provide such incentives.
The 1995 Plan authorized the Company to issue a total of 950,000 shares of
our common stock. As of June 30, 2000, options to purchase 792,500 shares had
been granted under the 1995 Plan (378,800 of which had vested as of said date).
Also as of that date, 93,500 shares of restricted stock had been awarded under
the 1995 Plan (all, except 1,200 of such shares have vested and have been issued
as of said date). The aggregate value of the restricted shares issued, and of
the shares issuable pursuant to vested options, under the 1995 Plan was
$546,000, based on the closing price of the Company's Common Stock on October
12, 2000.
The 2000 Omnibus Plan provides for the issuance of a total of 500,000
shares of common stock plus, up to 793,700 additional shares, making a total of
1,293,700 shares which may be issued thereunder. The 793,700 additional shares
consist of the 792,500 shares issuable pursuant to vested and unvested options
granted under the 1995 Plan, and the 1,200 shares of unvested restricted shares
awarded under the 1995 Plan. Upon cancellation, forfeiture or expiration of any
those 1995 Plan restricted share awards and option grants, the shares of common
stock which had been reserved for issuance thereunder shall be available for
issuance pursuant to new awards of restricted shares or performance shares, and
new grants of options and SARs to be made under the 2000 Omnibus Plan. Based
upon the 9,314,116 shares of common stock which are currently outstanding, if
all of the vested and unvested options issued under the 1995 plan were to be
exercised, all of the unvested restricted shares issued under the 1995 Plan were
to vest, and all of the shares issuable under the 2000 Omnibus Plan were to be
issued, the total number of outstanding shares of common stock would increase to
by 13.9% to 10,607,816 shares.
The 2000 Omnibus Stock Incentive Plan was adopted by the Board of
Directors, subject to approval by the shareholders, on September 18, 2000. The
2000 Omnibus Plan will become effective, if its adoption is approved by the
shareholders, on the date of the Annual Meeting, i.e., December 11, 2000.
Vote Required for Approval
The affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock represented in person or by proxy at the
Annual Meeting is required for approval of adoption of the Omnibus Plan.
12
<PAGE>
The Board of Directors recommends a vote "FOR" such approval.
The principal features of the 2000 Omnibus Plan are summarized below, but
the summary is qualified in its entirety by the full text of the 2000 Omnibus
Plan, which is set forth as Exhibit A to this Proxy Statement.
General
The 2000 Omnibus Plan is intended to assist the Company in recruiting and
retaining employees with ability and initiative by enabling employees to
participate in its future success and to associate their interests with those of
the Company and its shareholders.
Administration
The 2000 Omnibus Plan will be administered by the Compensation Committee
which will have full authority to make grants and awards upon such terms (not
inconsistent with the provisions of the 2000 Omnibus Plan) as it may consider
appropriate; to prescribe the forms of agreements and instruments relating to
such grants and awards; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the 2000 Omnibus Plan; and to make all other
determinations necessary or advisable for the administration of the 2000 Omnibus
Plan. In order to provide a mechanism for administering the 2000 Omnibus Plan
under circumstances where a vote in favor of a particular grant or award by one
or members of the Compensation Committee might pose a conflict of interest, the
Board of Directors also has authority to administer the 2000 Omnibus Plan in the
same manner as, and with the same rights and powers possessed by, the
Compensation Committee. One example in which a potential conflict of interest
could arise which would prevent the Committee from acting favorably upon a
proposed grant or award, but which would not pose such a problem if the Board
acted on the proposal instead, would be the granting of options or restricted
shares to the members of the Committee.
Grants and Awards to be Made Under the 2000 Omnibus Plan
The Compensation Committee will be authorized:
(a) to make grants of incentive stock options ("Incentive Options")
meeting the requirements of Section 422 of the Internal Revenue Code of 1986
(the "Code") and options not meeting such requirements ("Nonstatutory Options"
which, together with Incentive Options and Reload Options, as described below,
are hereinafter collectively referred to as "Options") which shall entitle
participants in the 2000 Omnibus Plan to purchase shares of the Company's Common
Stock at exercise prices to be determined by the Compensation Committee, subject
to the condition that the exercise price of an Option must be equal to the fair
market value of the Common Stock on the date of grant;
(b) to make grants of SARs, either in tandem with an option grant, or as
a separate grant, which will entitle a participant to receive with respect to
each share of Common Stock as to which an SAR is exercised, either (i) the
amount specified by the Compensation Committee in the agreement evidencing the
grant of the SAR; or (ii) if no such amount is specified, the difference between
the fair market value1 of the underlying share of Common Stock on the date of
exercise of the SAR and the fair market value thereof on the date of grant;
------------------------
/1/
Fair market value, for purposes of the Omnibus Plan, will generally be the
mean between the publicly reported high and low sale prices per share of Common
Stock on the date as of which such value is to be determined. On October 12,
2000, the fair market value of a share of the Company's Common Stock, as so
computed, was $1.47.
13
<PAGE>
(c) to make awards of shares of Common Stock, subject to such vesting
conditions and other restrictions regarding forfeiture as the Compensation
Committee may specify at the time of the award ("Restricted Shares"); and
(d) to make awards of "Performance Shares," i.e., awards to be earned by
a participant based on the level of performance of the Company, a subsidiary or
subsidiaries, a branch, department or other unit thereof or the participant
individually over a specified period of not less than one year.
A Nonstatutory Option may contain, if the Compensation Committee so
determines, a "Reload Option Feature" providing that, if a participant exercises
all or part of such Option (the "Original Option") by surrendering already owned
shares of Common Stock in full or partial payment of the exercise price under
such Original Option, he shall be automatically granted on the date of such
exercise a new Nonstatutory Option (a "Reload Option"), subject to the
availability of shares of Common Stock under the 2000 Omnibus Plan at the time
of exercise. Each Reload Option shall cover a number of shares of Common Stock
equal to the number of shares of Common Stock surrendered in payment of the
exercise price, shall have an exercise price per share of Common Stock equal to
the fair market value of the Common Stock on the date of grant of such Reload
Option and shall expire on the stated expiration date of the original Option. A
Reload Option shall be generally exercisable at any time and from and after the
date of grant of such Reload Option (or, as the Committee, in its sole
discretion, shall determine at the time of grant, at such time or times as shall
be specified in the Reload Option). The first such Reload Option may provide
for the grant, when exercised, of one subsequent Reload Option to the extent and
upon such terms and conditions, as the Committee, in its sole discretion, shall
specify at or after the time of grant of such Reload Option.
The Compensation Committee may grant Incentive Options and Non-statutory
Options to the same participant, but not in tandem. Each Option shall expire no
later than ten years from the date of grant; provided, however, that except as
provided in the 2000 Omnibus Plan or as otherwise provided by the Compensation
Committee, no participant may exercise an Option unless at the time of exercise
he or she has been continuously in the employ of the Company or a subsidiary
since the date of grant thereof. If a participant voluntarily terminates his or
her employment with the consent of the Company, retires, becomes totally
disabled, or dies during employment, the 2000 Omnibus Plan provides for limited
periods following termination of employment during which Options held by the
participant at the time of his or her termination may be exercised by the
participant or by his or her estate. The exercise price of an Option shall be
paid in full upon each exercise thereof in cash or, if authorized by the
Compensation Committee, by delivering to the Company or its transfer agent
shares of Common Stock having a fair market value on the date of such delivery
equal to the exercise price, or by a combination of payment cash and Common
Stock or as otherwise provided for in the 2000 Omnibus Plan. No Option will be
transferable other than by Will or by the laws of descent and distribution. An
Option may be exercised during the lifetime of the recipient thereof only by
such recipient. Subject to the foregoing, and the other provisions of the 2000
Omnibus Plan, Options granted thereunder may be exercised at such times, and in
such amounts, and may be subject to such restrictions and other terms and
conditions, if any, as shall be determined, in the discretion of the
Compensation Committee.
Restricted shares of Common Stock awarded by the Compensation Committee
will be subject to such restrictions (which may include restrictions on the
right to transfer or encumber the shares while subject to restriction) as the
Compensation Committee may impose thereon and will be subject to forfeiture if
certain events (which may, in the discretion of the Compensation Committee,
include termination of employment and/or performance-based events) specified by
the Compensation Committee occur prior to the lapse of the restrictions. The
restricted share agreement between the Company and the participant will set
forth the number of restricted shares awarded to the participant, the
restrictions imposed thereon, the duration of such restrictions, the events the
occurrence of which would cause a forfeiture of the restricted shares and such
other terms and conditions as the Compensation Committee in its discretion deems
appropriate.
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<PAGE>
Following a restricted share award and prior to the lapse or termination of
the applicable restrictions, share certificates for the restricted shares will
be held in escrow. Upon the lapse or termination of the restrictions (and not
before), the share certificates will be delivered to the participant. From the
date a restricted share award is effective, however, the participant will be a
shareholder with respect to the restricted shares and will have all the rights
of a shareholder with respect to such shares, including the right to vote the
shares and to receive all dividends and other distributions paid with respect to
the shares, subject only to the restrictions imposed by the Compensation
Committee.
The Compensation Committee may award Performance Shares (expressed in
dollars or shares) to be earned by a participant based on the level of
performance of the Company, a subsidiary or subsidiaries, a branch, department
or other unit thereof or the participant individually over a specified period of
not less than one year ("Performance Period"). For each Performance Period the
Compensation Committee will establish a Performance Target and a Minimum Target,
which may be the same or less than the Performance Target. Targets may be
expressed in terms of earnings per share, return on assets, return on equity,
asset growth, ratio of capital to assets or such other level or levels of
performance by the Company, a subsidiary or subsidiaries, a branch, department
or other unit thereof or the participant individually as the Compensation
Committee may establish.
A participant will earn the Performance Shares in full by meeting the
Performance Target for the Performance Period. If the Minimum Target has not
been attained at the end of the Performance Period, no part of the Performance
Shares will have been earned by the participant. If the Minimum Target is
attained but the Performance Target is not attained, the portion of the
Performance Shares earned by the participant will be determined on the basis of
a formula established by the Compensation Committee.
At any time prior to the end of a Performance Period, the Compensation
Committee may adjust downward (but not upward) the Performance Target and/or the
Minimum Target as a result of major events unforeseen at the time of the
Performance Share award, such as changes in the economy, the industry, laws
affecting the operations of the Company or a subsidiary or any other event the
Compensation Committee determines would have a significant impact upon the
probability of attaining the previously established Performance Target.
Payment in respect of earned Performance Shares, whether expressed in
dollars or shares, may be made in cash, in shares of Common Stock, or partly in
cash and partly in shares of Common Stock, as determined by the Compensation
Committee at the time of payment. For this purpose, Performance Shares
expressed in dollars will be converted to shares, and Performance Shares
expressed in shares will be converted to dollars, based on the fair market value
of the Common Stock as of the date the amount payable is determined by the
Compensation Committee.
Performance Share awards may have such other terms and conditions as the
Compensation Committee in its discretion deems appropriate.
Eligible participants
All employees of the Company and its various majority-owned subsidiaries,
including officers and employee directors, as well as the non-employee directors
of the Company and such subsidiaries, are eligible to receive grants and awards
under the 2000 Omnibus Plan. All persons receiving grants or awards under the
2000 Omnibus Plan are hereinafter referred to as "participants."
Term of 2000 Omnibus Plan; Termination of 1993 Plan
If adoption of the 2000 Omnibus Plan is authorized by the shareholders at
the Annual Meeting, it shall become effective on the date thereof, and shall
remain in effect until June 30, 2005, provided that Restricted Share and
Performance Share awards and Options and SARs granted before that date shall
remain valid in accordance with their terms.
15
<PAGE>
Shares Authorized for Issuance; Replenishment Feature
The maximum aggregate number of shares of Common Stock that may be issued
pursuant to the exercise of Options and SARs and the award of Restricted Shares
and the settlement of Performance Shares under the 2000 Omnibus Plan is 500,000.
The maximum number of shares issuable under the 2000 Omnibus Plan shall be
increased on a share for share basis for each share of common stock which is
currently reserved for issuance pursuant to awards of restricted shares and
grants of options made under the 1995 Plan which shall not be issued prior to
the cancellation, forfeiture or termination of such award or grant. Thus, the
number of shares authorized for issuance under the 2000 Omnibus Plan may
increase from 500,000 up to a maximum of 1,293,700 shares. The maximum number
of shares authorized for issuance under the 2000 Omnibus Plan also shall be
adjusted to account for stock dividends, stock split-ups and other
recapitalization transactions, and may also be increased each year by 8% of (the
Replenishment Percentage) of the amount, if any, by which the total number of
shares of Common Stock outstanding as of the last day of the Company's fiscal
year exceeds the total number of shares of Common Stock outstanding as of the
first day of such fiscal year. Provided, however, that in no event shall the
total number of shares authorized for issuance under the 2000 Omnibus Plan
exceed 8% of the issued and outstanding shares of Common Stock as of the time of
any replenishment adjustment.
Amendment; Termination
The Board of Directors may amend or terminate the 2000 Omnibus Plan from
time to time; provided, however, that no amendment may become effective until
shareholder approval is obtained if (i) the amendment increases the aggregate
number of shares of Common Stock that may be issued under thereunder or (ii) the
amendment changes the class of individuals eligible to become participants. No
amendment shall, without a participant's consent, adversely affect any rights of
such participant under any outstanding Restricted Share or Performance Share
award or under any Option or SAR outstanding at the time such amendment is made.
Federal Income Tax Matters
The following is a brief summary of the principal Federal income tax
consequences of the grant and exercise of 2000 Omnibus Plan awards under present
law.
Incentive Options. A participant will not recognize any taxable income for
Federal income tax purposes upon receipt of an Incentive Option or, generally,
at the time of exercise of an Incentive Option. The exercise of an Incentive
Option generally will result in an increase in a participant's taxable income
for alternative minimum tax purposes.
If a participant exercises an Incentive Option and does not dispose of the
shares received in a subsequent "disqualifying disposition" (a sale, gift or
other transfer within two years after the date of grant of the Incentive Option
or within one year after the shares are transferred to the participant), upon
disposition of the shares any amount realized in excess of the participant's
tax basis in the shares disposed of will be treated as a long-term capital gain,
and any loss will be treated as a long-term capital loss. In the event of a
"disqualifying disposition," the difference between the fair market value of the
shares received on the date of exercise and the exercise price (limited, in the
case of a taxable sale or exchange, to the excess of the amount realized upon
disposition over the participant's tax basis in the shares) will be treated as
compensation received by the participant in the year of disposition. Any
additional gain will be taxable as a capital gain and any loss as a capital
loss, which will be long-term or short-term depending on whether the shares were
held for more than one year. If shares of Common Stock received upon the prior
exercise of an Incentive Option are transferred to the Company in payment of the
exercise price of an Incentive Option within either of the periods referred to
above, the transfer will be considered a "disqualifying disposition" of the
shares transferred.
Neither the Company nor any of its subsidiaries will be entitled to a
deduction with respect to shares received by a participant upon exercise of an
Incentive Option and not disposed of in a
16
<PAGE>
"disqualifying disposition." If an amount is treated as compensation received by
a participant because of a "disqualifying disposition," the Company or one of
its subsidiaries generally will be entitled to a corresponding deduction in the
same amount for compensation paid.
Nonstatutory Options. A participant will not recognize any taxable income
for Federal income tax purposes upon receipt of a Nonstatutory Option. Upon the
exercise of a Nonstatutory Option the amount by which the fair market value of
the shares received, determined as of the date of exercise, exceeds the exercise
price will be treated as compensation received by the participant in the year of
the exercise. If the exercise price of a Nonstatutory Option is paid in whole
or in part with shares of Common Stock, no income, gain or loss will be
recognized by the participant on the receipt of shares equal in value on the
date of exercise to the shares delivered in payment of the exercise price. The
fair market value of the remainder of the shares received upon exercise of the
Nonstatutory Option, determined as of the date of exercise, less the amount of
cash, if any, paid upon exercise will be treated as compensation income received
by the participant on the date of exercise of the stock option.
The Company or one of its subsidiaries generally will be entitled to a
deduction for compensation paid in the same amount treated as compensation
received by the participant.
Reload Option Rights. A participant should not recognize any taxable
income for Federal income tax purposes upon receipt of reload option rights and
a Reload Option should be treated as a Nonstatutory Option. See "Nonstatutory
Options" above.
Restricted Shares. A recipient of Restricted Shares will not recognize any
taxable income for Federal income tax purposes in the year of the award,
provided the shares are subject to restrictions (that is, they are
nontransferable and subject to a substantial risk of forfeiture). If a
recipient is subject to Section 16(b) of the Exchange Act on the date of the
award, the shares generally will be deemed to be subject to restrictions (in
addition to the restrictions imposed by the award) for at least six months
following the date of the award. However, the recipient may elect under Section
83(b) of the Code to recognize compensation income in the year of the award in
an amount equal to the fair market value of the shares on the date of the award,
determined without regard to the restrictions. If the recipient does not make a
Section 83(b) election, the fair market value of the shares on the date the
restrictions lapse will be treated as compensation income to the recipient and
will be taxable in the year the restrictions lapse. The Company or one of its
subsidiaries generally will be entitled to a deduction for compensation in the
same amount treated as compensation income to the grantee.
Stock Appreciation Rights A participant who is granted an SAR recognizes
no income upon the grant thereof. At the time of exercise, the participant will
recognize compensation income equal to any cash received and the fair market
value of any Common Stock received. A participant who receives shares of Common
Stock, and who is subject to the provisions of Section 16(b) of the Exchange Act
will recognize income based upon the fair market value of the Common Stock six
months after the date of receipt thereof, unless he or she makes an election
under Section 83(b) of the Code. This income is subject to income and
employment tax withholding. The Company is entitled to an income tax deduction
corresponding to the ordinary income recognized by the participant.
Performance Shares. A participant who receives an award of Performance
Shares will not recognize any taxable income for Federal income tax purposes
upon receipt of the award. Any cash or shares of Common Stock received pursuant
to the award will be treated as compensation income received by the participant
generally in the year in which the participant receives such cash or shares of
Common Stock. If Performance Shares are expressed in dollars but paid in whole
or in part in shares of Common Stock and the participant is subject to Section
16(b) of the Exchange Act on the date of receipt of such shares, the participant
generally will not recognize compensation income until the expiration of six
months from the date of receipt, unless the participant makes an election under
Section 83(b) of the Code to recognize compensation income on the date of
receipt. In each case, the amount of compensation income will equal the amount
of cash and the fair market value of the shares of Common Stock on the date
compensation income is recognized. The Company or one of its subsidiaries
generally will be
17
<PAGE>
entitled to a deduction for compensation paid in the same amount treated as
compensation income to the participant.
New Plan Benefits
The Company has not determined when, or to what extent, it will make grants
or awards under the 2000 Omnibus Plan. The following table sets forth the
benefits which would have been received by or allocated to the persons or groups
of persons identified below during the Company's fiscal year ended June 30,
2000, assuming that the 2000 Omnibus Plan had then been in effect, and further
assuming that the awards and grants made under the 1995 Plan during that fiscal
year had instead been made under the 2000 Omnibus Plan. Only grants of
Nonstatutory Options were made during Fiscal 2000.
Blimpie International Inc. 2000 Omnibus Stock Incentive Plan
Nonstatutory Option Grants
--------------------------
Name and Position Dollar Value Number of Units
Anthony P. Conza, CEO - -
David L. Siegel, COO - -
Charles G. Leaness, Exec VP - -
Patrick Pompeo, Exec VP - -
Joseph W. Morgan, Sr. VP - (1) 125,000
All Executives as a group - (1) 125,000
All Non-Executive Directors
as a group - -
All Non-Executive Officer
Employees as a group - (1) 5,000
(1) Based upon the $1.47 fair market value of the common stock calculated as of
October 12, 2000 and an exercise price of $2.69.
PROPOSAL NUMBER 3: SELECTION OF AUDITORS
At the Annual Meeting, the Company's shareholders will be asked to ratify
the Board of Directors' selection of the firm of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending June 30, 2001. Said
firm has served as the Company's independent auditors since 1999. It is not
expected that a representative of Ernst & Young LLP will be present at the
meeting.
Vote Required for Approval
The affirmative vote of the holders of at least a majority of the
outstanding shares of Common Stock represented in person or by proxy at the
Annual Meeting is required for approval of this proposal.
The Board of Directors recommends a vote FOR such proposal.
OTHER MATTERS
Discretionary Authority To Vote Proxy
Management does not know of any other matters to be considered at the
Annual Meeting. If any other matters do properly come before the Annual Meeting,
the proxy will be voted in respect thereof in
18
<PAGE>
accordance with the best judgment of the persons authorized therein, and the
discretionary authority to do so is included in the proxy.
Annual Report
The Annual Report of the Company for the fiscal year ended June 30, 2000,
including financial statements, accompanies this proxy statement. However, no
action is proposed to be taken at the Annual Meeting with respect to the Annual
Report, and it is not to be considered as constituting any part of the proxy
soliciting materials.
Submission Of Shareholder Proposals
Any shareholder who intends to present a proposal at the Annual Meeting of
shareholders to be held in 2001 for inclusion in the Proxy Statement and form of
proxy relating to that meeting is advised that the proposal must be received by
the Company at its principal executive offices no later than July 6, 2001. The
Company will not be required to include in its proxy statement or form of proxy
a shareholder's proposal which is received after that date or which otherwise
fails to meet requirements for shareholder proposals established by regulations
of the Securities and Exchange Commission.
SHAREHOLDERS MAY OBTAIN WITHOUT CHARGE A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED JUNE 30, 2000 BY SENDING A REQUEST TO: INVESTOR
RELATIONS DEPARTMENT, BLIMPIE INTERNATIONAL, INC., 1775 THE EXCHANGE, SUITE 600,
ATLANTA, GA 30339
New York, New York
Dated: November 10, 2000
19
<PAGE>
BLIMPIE INTERNATIONAL, INC.
2000 OMNIBUS STOCK INCENTIVE PLAN
---------------------------------
ARTICLE I
DEFINITIONS
-----------
1.01. Agreement means a written agreement between the Company and a Participant
---------
or any written instrument issued by the Company to a Participant (including any
amendment or supplement thereto) specifying the terms and conditions of an award
of Restricted Shares or Performance Shares or a grant of an Option or SAR made
to such Participant.
1.02. Board means the Board of Directors of the Company.
-----
1.03. Code means the Internal Revenue Code of 1986, as amended.
----
1.04. Committee means the Compensation Committee of the Board, consisting
---------
solely of not less than two non-employee directors who have been appointed to
administer the Plan.
1.05. Common Stock means the Company's common stock, $.01 par value.
------------
1.06. Company means Blimpie International, Inc.
-------
1.07. Corresponding SAR means a SAR that is granted in relation to a particular
-----------------
Option and that can be exercised only upon the surrender to the Company,
unexercised, of that portion of the Option to which the SAR relates.
1.08. Date of Exercise means (i) with respect to an Option, the date that the
----------------
Option price is received by, and (ii) with respect to a SAR, the date that the
notice of exercise is received by, the Company.
1.09. Fair Market Value of the Common Stock shall be the mean between the
-----------------
following prices, as applicable, for the date as of which fair market value is
to be determined, as quoted in The Wall Street Journal (or in such other
reliable publication as the Committee, in its discretion, may determine to rely
upon): (a) if the Common Stock is listed on the New York Stock Exchange, the
highest and lowest sales prices per share of the Common Stock as quoted in the
NYSE-Composite Transactions listing for such date, (b) if the Common Stock is
not listed on such exchange, the highest and lowest sales prices per share of
Common Stock for such date on (or on any composite index including) the
principal United States securities exchange registered under the Exchange Act on
which the Common Stock is listed, or (c) if the Common Stock is not listed on
any such exchange, the highest and lowest sales prices per share of the Common
Stock for such date on the Nasdaq Stock Market or any successor thereto
("Nasdaq"). If there are no such sale price quotations for the date as of which
fair market value is to be determined, but there
<PAGE>
are such sale price quotations within a reasonable period both before and after
such date, then fair market value shall be determined by taking a weighted
average of the means between the highest and lowest sales prices per share of
the Common Stock as so quoted on the nearest date before and the nearest date
after the date as of which fair market value is to be determined. The average
should be weighted inversely by the respective numbers of trading days between
the selling dates and the date as of which fair market value is to be
determined. If there are no such sale price quotations on or within a reasonable
period both before and after the date as of which fair market value is to be
determined, then fair market value of the Common Stock shall be the mean between
the bona fide bid and asked prices per share of Common Stock as so quoted for
such date on Nasdaq, or if none, the weighted average of the means between such
bona fide bid and asked prices on the nearest trading date before and the
nearest trading date after the date as of which fair market value is to be
determined, if both such dates are within a reasonable period. The average is to
be determined in the manner described above in this paragraph. If the fair
market value of the Common Stock cannot be determined on the basis previously
set forth in this paragraph on the date as of which fair market value is to be
determined, the Committee shall in good faith determine the fair market value of
the Common Stock on such date. Fair market value shall be determined without
regard to any restriction other than a restriction which, by its terms, will
never lapse.
1.10 Incentive Stock Option shall have the meaning given to it by Section 422
--------- ------------
of the Code.
1.11. Initial Value means, with respect to a SAR, the Fair Market Value of one
-------------
share of Common Stock on the date of grant, as set forth in an Agreement.
1.12 Involuntary Termination means a Termination of Employment for a reason
-----------------------
other than death, Retirement, Total Disability or voluntary resignation.
1.13 Nonstatutory Option means any Option granted by the Company pursuant to
-------------------
this Plan which is not an Incentive Stock Option.
1.14. Option means any stock option that entitles the holder to purchase from
------
the Company a stated number of shares of Common Stock at the price set forth in
an Agreement.
1.15. Participant means an employee of the Company, or of a Subsidiary,
-----------
including an employee who is a member of the Board, or a non-employee director,
and any other person who satisfies the requirements of Article IV and is
selected by the Committee or by the Board to receive a Restricted Share or
Performance Share award, an Option, a SAR, or a combination thereof.
1.16 Performance Period means an accounting period of the Company or a
------------------
Subsidiary of not less than one year, as determined by the Committee in its
discretion.
1.17. Performance Share means an award, expressed in dollars or shares of
-----------------
Common Stock, granted to a Participant with respect to a Performance Period.
Awards of Performance Shares
2
<PAGE>
expressed in dollars may be established as fixed dollar amounts, as a percentage
of salary, as a percentage of a pool based on earnings of the Company, a
Subsidiary or Subsidiaries or any branch, department or other portion thereof or
in any other manner determined by the Committee in its discretion, provided that
the amount thereof shall be capable of being determined as a fixed dollar amount
as of the close of the Performance Period.
1.18 Performance Target means that level of performance established by the
------------------
Committee which must be met in order for an award of Performance Shares to be
fully earned. The Performance Target may be expressed in terms of earnings per
share, return on assets, asset growth, ratio of capital to assets or such other
level or levels of accomplishment by the Company, a Subsidiary or Subsidiaries,
any branch, department or other portion thereof or the Participant individually
as may be established or revised from time to time by the Committee.
1.19. Plan means the Blimpie International, Inc. 2000 Omnibus Stock Incentive
----
Plan.
1.20. Restricted Shares means shares of Common Stock awarded to a Participant
-----------------
under Article VII. Shares of Common Stock shall cease to be Restricted Shares
when, in accordance with the terms of the applicable Agreement, they become
transferable and free of substantial risks of forfeiture.
1.21. Retirement means a Termination of Employment by reason of a Participant's
----------
cessation of employment (or, in the case of a non-employee director, the
cessation of his or her tenure as such), other than by reason of a Total
Disability or Termination for Cause.
1.22. SAR means a stock appreciation right that entitles the holder to receive,
---
with respect to each share of Common Stock encompassed by the exercise of such
SAR, the amount determined by the Committee and specified in an Agreement. In
the absence of such a determination, the holder shall be entitled to receive,
with respect to each share of Common Stock encompassed by the exercise of such
SAR, the excess of the Fair Market Value on the Date of Exercise over the
Initial Value. References to "SARs" include both Corresponding SARs and SARs
granted independently of Options, unless the context requires otherwise.
1.23. Subsidiary means any "subsidiary corporation" as such term is defined in
----------
Code section 424.
1.24 Termination of Employment means with respect to (a) Participants who are
-------------------------
employees of the Company or a Subsidiary, the time when the employee-employer
relationship between the Participant and the Company ceases to exist for any
reason including, but not limited to termination by resignation, discharge,
death, Total Disability or Retirement; and (b) Participants who are non-employee
directors, the time when the Participant ceases to be a director by reason of
his or her resignation, failure to stand for re-election or dismissal.
1.25 Termination for Cause means an Involuntary Termination of a Participant:
---------------------
(a) if the Participant has a written employment agreement with the Company or
any Subsidiary, "for
3
<PAGE>
cause" as that or a similar term is defined in the employment agreement; or (b)
if the Participant does not have a written employment agreement with the Company
or any Subsidiary, by reason of (i) the Participant's dishonesty or misconduct
(including substance abuse) in the performance of his or her duties; or (ii) a
wilful failure by the Participant to perform his or her assigned duties which
adversely affects the Company; of (iii) the conviction of the Participant of a
felony or other criminal act. All determinations of whether or not a Termination
for Employment is "for cause" will be made by the Committee in its sole and
absolute discretion.
1.26 Total Disability means the inability of a Participant to engage in any
----------------
substantial gainful activity by reason of a medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less than 12 months.
All determinations as to the date and extent of disability of a Participant will
be made by the Committee in its sole and absolute discretion.
1.27 Non-Employee Director means a director who:
---------------------
(a) is not currently an officer of the Company or a parent or subsidiary
of the Company, or otherwise currently employed by the Company or a parent or
subsidiary of the Company;
(b) does not receive compensation, either directly or indirectly, for
services rendered as a consultant or in any capacity other than as a director,
except for an amount which does not exceed the dollar amount for which
disclosure would be required pursuant to any provision of Regulations S-K
promulgated by the Commission;
(c) does not possess an interest in any other transaction for which
disclosure would be required by any provision of said Regulation S-K; and
(d) is not engaged in a business relationship for which disclosure would
be required by any provision of said Regulation S-K.
1.28 1995 Plan means the Blimpie International, Inc. 1995 Omnibus Stock
---------
Incentive Plan, as amended.
ARTICLE II
PURPOSES
--------
The Plan is intended to assist the Company in recruiting and retaining
employees and directors with ability and initiative by enabling them to
participate in its future success and to associate their interests with those of
the Company and its shareholders. The Plan is intended to permit the award of
Restricted Shares, the award of Performance Shares, the grant of SARs, and the
grant of both Incentive Stock Options and Nonstatutory Options. The proceeds
received by the Company from the sale of Common Stock pursuant to this Plan
shall be used for general corporate purposes.
4
<PAGE>
ARTICLE III
ADMINISTRATION
--------------
Except as provided in this Article III, the Plan shall be administered by
the Committee. The Committee shall have authority to award Restricted Shares
and Performance Shares and to grant Options and SARs upon such terms (not
inconsistent with the provisions of this Plan) as the Committee may consider
appropriate. Such terms may include conditions (in addition to those contained
in this Plan) on the exercisability of all or any part of an Option or SAR or on
the transferability or forfeitability of Restricted Shares. Notwithstanding any
such conditions, the Committee may, in its discretion, accelerate the time at
which any Option or SAR may be exercised or the time at which Restricted Shares
may become transferable or nonforfeitable. In addition the Committee shall have
complete authority to interpret all provisions of this Plan; to prescribe the
form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Committee shall not be
construed as limiting any power or authority of the Committee. Any decision
made, or action taken, by the Committee or in connection with the administration
of this Plan shall be final and conclusive. No member of the Committee shall be
liable for any act done in good faith with respect to this Plan or any
Agreement, or Option, SAR, Restricted Share award or Performance Share award.
All expenses of administering this Plan shall be borne by the Company.
The Committee, in its discretion, may delegate to one or more officers of
the Company all or part of the Committee's authority and duties with respect to
Participants who are not subject to the reporting and other provisions of
Section 16 of the Securities Exchange Act of 1934, as in effect from time to
time (the "Exchange Act"). In the event of such delegation, and as to matters
encompassed by the delegation, references in the Plan to the Committee shall be
interpreted as a reference to the Committee's delegate or delegates. The
Committee may revoke or amend the terms of a delegation at any time, but such
action shall not invalidate any prior actions of the Committee's delegate or
delegates that were consistent with the terms of the Plan.
In addition to, and not in substitution or replacement of, the powers and
authority conferred upon the Committee pursuant to this Plan, the Board shall
also be entitled to award Restricted Shares or Performance Shares and/or to
grant one or more Options, SARs, or Options and SARs to any eligible
Participant, and when it makes such awards and/or grants, all of the provisions
of this Plan which pertain to the Committee shall be construed as though the
word "Board" appeared in place of the word "Committee," and the Board shall
have, and shall be entitled to exercise, all of the powers and authority
conferred upon the Committee when making, amending, modifying canceling,
settling or rescinding any of such awards and/or grants.
5
<PAGE>
ARTICLE IV
ELIGIBILITY
-----------
4.01. General. Any employee of the Company or of any Subsidiary (including any
-------
corporation that becomes a Subsidiary after the adoption of this Plan) is
eligible to participate in this Plan if the Committee, in its sole discretion,
determines that such person has contributed or can be expected to contribute to
the profits or growth of the Company or a Subsidiary. Any such employee may be
awarded Restricted Shares or Performance Shares or may be granted one or more
Options, SARs, or Options and SARs. A director of the Company who is an
employee of the Company or a Subsidiary, and a non-employee director of the
Company or a Subsidiary, may be awarded Restricted Shares and Performance Shares
and may be granted Options or SARs under this Plan. Further, the Committee may
from time to time in its sole discretion award Restricted Shares and Performance
Shares and may grant Options or SARs to non-employees or non-key employees in
conjunction with mergers and acquisition transactions.
4.02. Grants. The Committee will designate individuals to whom Restricted
------
Shares and Performance Shares are to be awarded and to whom Options and SARs are
to be granted and will specify the number of shares of Common Stock subject to
each award or grant. An Option may be granted with or without a related SAR.
The Committee may grant Incentive Stock Options and Nonstatutory Options to the
same Participant, but not in tandem. A SAR may be granted with or without a
related Option. All Restricted Shares and Performance Shares awarded, and all
Options and SARs granted, under this Plan shall be evidenced by Agreements which
shall be subject to the applicable provisions of this Plan and to such other
provisions as the Committee may adopt. No Participant may be granted Incentive
Stock Options or related SARs (under all Incentive Stock Option plans of the
Company and its Subsidiaries) which are first exercisable in any year for Common
Stock having an aggregate Fair Market Value (determined as of the date an Option
is granted) exceeding $100,000.
ARTICLE V
COMMON STOCK SUBJECT TO PLAN
----------------------------
5.01. Source of Shares. Upon the award of Restricted Shares and when a
----------------
Performance Share is earned, the Company may issue authorized but unissued
shares of Common Stock. Upon the exercise of an Option or SAR, the Company may
deliver to the Participant (or the Participant's broker if the Participant so
directs), authorized but unissued Common Stock.
5.02. Maximum Number of Shares. The maximum aggregate number of shares of
------------------------
Common Stock that may be issued pursuant to the exercise of Options and SARs and
the award of Restricted Shares and the settlement of Performance Shares under
this Plan is 500,000, subject to increases and adjustments as provided in this
Article V and Article IX.
6
<PAGE>
5.03. Replenishment. The maximum number of shares authorized for issuance
-------------
under this Plan pursuant to Section 5.02 shall be increased each year by 8% (the
"Replenishment Percentage") of the amount, if any, by which the total number of
shares of Common Stock outstanding as of the last day of the Company's fiscal
year exceeds the total number of shares of Common Stock outstanding as of the
first day of such fiscal year. Provided, however, that in no event shall the
total number of shares authorized for issuance under this Plan exceed 8% of the
authorized and outstanding shares of Common Stock as of the time of any
replenishment adjustment. The issuance of shares of Common Stock under this
Plan and the application of Article IX shall be disregarded for purposes of
applying the preceding sentence. This Section 5.03 shall first apply with
respect to the fiscal year of the Company beginning on July 1, 2001.
5.04 Forfeitures, etc. If an Option or SAR is terminated, in whole or in part
-----------------
for any reason other than its exercise, the number of shares of Common Stock
allocated to the Option or SAR or portion thereof may be reallocated to other
Options, SARs granted, or Restricted Shares and Performance Share awards to be
granted under this Plan. Any Restricted Shares that are forfeited or
Performance Shares that are unearned may be reallocated to other Options or
SARs granted, or Restricted Shares awarded, under this Plan.
5.05 Reserved but Unissued 1995 Plan Shares. If an option or SAR granted under
--------------------------------------
the 1995 Plan is terminated, in whole or in part for any reason other than its
exercise, or any restricted shares or performance shares awarded under the 1995
Plan are forfeited or unearned for any reason, the maximum number of shares
authorized for issuance under this Plan pursuant to Section 5.02 shall be
increased by the number of shares of Common Stock which had been reserved for
issuance pursuant to such terminated 1995 Plan option or SAR grant, or forfeited
1995 Plan restricted share or performance share award.
ARTICLE VI
OPTIONS AND STOCK APPRECIATION RIGHTS
-------------------------------------
6.01 Nonstatutory Options. The Committee may grant Nonstatutory Options under
--------------------
this Plan. Such Nonstatutory Stock Options must comply with all applicable
requirements of this Plan except for those which pertain solely to Incentive
Stock Options.
6.02 Incentive Stock Options. The Committee may grant Incentive Stock Options
-----------------------
under this Plan which shall comply with all of the restrictions and limitations
set forth in Section 422 of the Code. To the extent that any Option does not
qualify as an Incentive Stock Option, it shall constitute a Nonstatutory Stock
Option.
6.03 Vesting of Options. The Participant's Agreement shall specify the date or
------------------
dates on which the Participant may begin to exercise all or a portion of his
Option. Subsequent to such dates or dates, the Option shall be deemed "vested."
Notwithstanding the terms of any Agreement, the
7
<PAGE>
Committee at any time may accelerate such date or dates and otherwise waive or
amend any conditions of the grant.
6.04 Grant and Exercise of SARs. SARs may be granted to Participants by the
--------------------------
Committee independently of any Option granted pursuant to this Article or as a
Corresponding SAR. In the case of a Corresponding SAR granted in tandem with a
Nonstatutory Option, such SAR may be exercised either at or after the time of
the exercise of such Nonstatutory Option. In the case of a Corresponding SAR
granted in tandem with an Incentive Stock Option, such SAR may be exercised only
at the time of the exercise of such Incentive Stock Option.
A Corresponding SAR, shall terminate and no longer be exercisable upon the
termination or exercise of related Option. However, if a Corresponding SAR is
granted with respect to less than the full number of shares covered by a related
Option, such SAR shall terminate only if and to the extent that the number of
shares covered by the exercise or termination of the related Option exceeds the
number of shares not covered by such SAR.
6.05 Exercise of Options and SARs Conditioned on Continuous Employment.
------------------------------------------------------------------
Except as otherwise provided in this Plan or by the Compensation Committee, no
Participant may exercise an Option or SAR unless at the time of exercise he or
she has been continuously in the employ of the Company or a Subsidiary since the
date of grant thereof.
6.06 Terms and Conditions of Stock Appreciation Rights. SARs shall be subject
-------------------------------------------------
to such terms and conditions as shall be determined from time to time by the
Committee and embodied in the Agreements and in procedures established by the
Committee. The Committee at any time may accelerate the exercisability of any
SAR and otherwise waive or amend any conditions of the grant of a SAR.
6.07. Maximum Option or Stock Appreciation Right Period. The maximum period in
-------------------------------------------------
which an Option or SAR may be exercised shall be determined by the Committee on
the date of grant except that no Option that is an Incentive Stock Option and
any Corresponding SAR that relates to such Option shall be exercisable after the
expiration of ten years from the date the Option or SAR was granted. The terms
of any Option or SAR may provide that it is exercisable for a period less than
such maximum period.
6.08 Option Exercise Price. The price per share for Common Stock purchased on
---------------------
the exercise of an Option shall not be less than 100% of the Fair Market Value
of the Common Stock on the date the Option is granted.
6.09. Payment of Option Exercise Price. Unless otherwise provided by the
--------------------------------
Agreement, payment of the Option exercise price shall be made in cash or a cash
equivalent acceptable to the Committee. If the Agreement so provides, payment
of all or part of the exercise price may be made by surrendering shares of
Common Stock to the Company. If Common Stock is used to pay all or part of the
exercise price, the shares surrendered must have a Fair Market Value
8
<PAGE>
(determined as of the day preceding the Date of Exercise) that is not less than
such price or part thereof.
6.10. Determination of Payment of Cash and/or Common Stock Upon Exercise of
---------------------------------------------------------------------
SAR. At the Committee's discretion, the amount payable as a result of the
exercise of a SAR may be settled in cash, Common Stock, or a combination of cash
and common Stock. A Fractional share shall not be deliverable upon the exercise
of a SAR but a cash payment will be made in lieu thereof.
6.11 Reload Options. The Committee shall have the authority to specify at the
--------------
time of grant that a Participant shall be granted another Option (a "Reload
Option") in the event such Participant exercises all or part of a Nonstatutory
Option (an "Original Option") by surrendering in accordance with Section 6.08
hereof already owned shares of Common Stock in full or partial payment of the
exercise price under such Original Option, subject to the availability of shares
of Common Stock under the Plan at the time of exercise. Each Reload Option
shall cover a number of shares of Common Stock equal to the number of shares of
Common Stock surrendered in payment of the exercise price, shall have an
exercise price per share of Common Stock equal to the Fair Market Value of the
Common Stock on the date of grant of such Reload Option and shall expire on the
stated expiration date of the Original Option. A Reload Option shall be
exercisable at any time and from time to time from and after the date of grant
of such Reload Option (or, as the Committee, in its sole discretion, shall
determine at the time of grant, at such time or times as shall be specified in
the Reload Option); provided, however, that a Reload Option granted to a
Participant subject to the provisions of Section 16(b) of the Exchange Act shall
not be exercisable during the first six months from the date of grant of such
Reload Option. The first such Reload Option may provide for the grant, when
exercised, of one subsequent Reload Option to the extent and upon such terms and
conditions, consistent with this Section 6.11, as the Committee, in its sole
discretion, shall specify at or after the time of grant of such Reload Option.
A Reload Option shall contain such other terms and conditions which may include
a restriction on the transferability of the number of shares of Common Stock
received upon exercise of the Original Option reduced by a number of shares
equal in value to the tax liability incurred upon exercise as the Committee, in
its sole discretion, may deem desirable which may be set forth in the Agreement
evidencing the Reload Option.
6.12. Nontransferability. Any Option or SAR granted under this Plan shall be
------------------
nontransferable except by will or by the laws of descent and distribution. In
the event of any such transfer, the Option and any Corresponding SAR that
relates to such Option must be transferred to the same person or persons or
entity or entities. During the lifetime of a Participant to whom an Option or
SAR is granted, the Option or SAR may be exercised only by the Participant. No
right or interest of a Participant in any Option or SAR shall be liable for, or
subject to, any lien, obligation, or liability of such Participant.
6.13 Cancellation and New Grant of Options. The Committee shall have the
-------------------------------------
authority to effect, at any time, and from time to time, with the consent of the
affected Participants, the cancellation of any or all outstanding Options under
the Plan and the grant in substitution therefor of new Options under the Plan
covering the same or different numbers of shares of
9
<PAGE>
Common Stock having an Option exercise price per share which may be lower or
higher than the exercise price per share of the canceled Options.
6.14. Shareholder Rights. No Participant shall have any rights as a
------------------
shareholder with respect to shares subject to an Option or SAR until the Date of
Exercise of such Option or SAR.
6.15 Retirement of Holder of Options or Stock Appreciation Rights. If there
------------------------------------------------------------
is a Termination of Employment of a Participant to whom an Option and/or SAR has
been granted due to Retirement, each Incentive Stock Option held by the retired
Participant, whether or not then vested, may be exercised until the earlier of
(a) the end of the three month period immediately following the date of such
Termination of Employment; or (b) the expiration of the term specified in the
Option or SAR. In the case of a Nonstatutory Option, there shall be substituted
the words, "the end of the twelve month period" for the words "the end of the
three month period" in the immediately preceding sentence.
6.16 Total Disability of Holder of Options or Stock Appreciation Rights. If
------------------------------------------------------------------
there is a Termination of Employment of a Participant to whom an Option and/or a
SAR has been granted by reason of his or her Total Disability, each Option
and/or SAR held by the Participant, whether or not then vested, may be exercised
until the earlier of: (a) the end of the twelve month period immediately
following the date of such Termination of Employment; or (b) the expiration of
the term specified in the Option or SAR.
6.17 Death of Holder of Options or Stock Appreciation Rights. If there is a
-------------------------------------------------------
Termination of Employment of a Participant to whom an Option or SAR has been
granted by reason of his or her death, or (b) the death of a former employee
within three months following the date of his or her Retirement (or, in the
case of a Non-statutory Option, within twelve months following the date of his
or her Retirement), or (c) the death of a former employee within twelve months
following the date of his or her Termination of Employment by reason of Total
Disability, then each Option and SAR held by the person at the time of his or
her death, whether or not then vested, may be exercised by the person or persons
to whom the Option or SAR shall pass by will or by the laws of descent and
distribution (but by no other persons) until the earlier of (i) the end of the
twelve month period immediately following the date of death (or such longer
period as is permitted by the Committee); and (ii) the expiration of the term
specified in the Option or SAR.
6.18 Termination of Employment for Cause: Voluntary Termination Prior to
--------------------------------------------------------------------
Retirement. If there is a Termination of Employment for Cause of a Participant
----------
to whom an Option or SAR has been granted under this Plan, or if a Participant
voluntarily terminates his or her employment prior to Retirement (other than by
reason of Total Disability), then all Options and SARs held by such Participant,
whether or not then vested, shall automatically be canceled at the time of such
Termination of Employment and shall be of no further force or effect thereafter.
This section shall not affect any Common Stock acquired by the Participant upon
exercise of Options or SARs prior to such Termination of Employment by the
Participant.
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ARTICLE VII
RESTRICTED SHARE AWARDS
-----------------------
7.01. Award. In accordance with the provisions of this Article VII, the
-----
Committee will designate each individual to whom an award of Restricted Shares
is to be made and will specify the number of shares of Common Stock covered by
the award.
7.02. Vesting. The Committee, on the date of the award, may prescribe that a
-------
Participant's rights in the Restricted Shares shall be forfeitable or otherwise
restricted for a period of time set forth in the Agreement. By way of example
and not of limitation, the restrictions may postpone transferability of the
shares or may provide that the shares will be forfeited if the Participant
separates from the service of the Company and its Subsidiaries before the
expiration of a stated term or if the Company and its Subsidiaries or the
Participant fail to achieve stated objectives.
7.03. Shareholder Rights; Escrow. Prior to their forfeiture in accordance with
--------------------------
the terms as the Agreement and while the shares are Restricted Shares, a
Participant will have all rights of a shareholder with respect to Restricted
Shares, including the right to receive dividends and vote the shares; provided,
however, that (a) a Participant may not sell, transfer, pledge, exchange,
hypothecate, or otherwise dispose of Restricted Shares, (b) the Company shall
retain custody of the certificates evidencing Restricted Shares and (c) the
Participant will deliver to the Company a stock power, endorsed in blank, with
respect to each award of Restricted Shares. The limitations set forth in the
preceding sentence shall not apply after the shares cease to be Restricted
Shares.
7.04 Restricted Share Agreement. Restricted Share awards shall be evidenced by
--------------------------
an Agreement in the form prescribed by the Committee which shall set forth such
terms, conditions and restrictions as the Committee in its discretion deems
appropriate. Restricted Share awards shall be effective only upon execution of
the applicable Agreement on behalf of the Company by the Chief Executive Officer
(if other than the President), the President or any Vice President, and by the
Participant.
ARTICLE VIII
PERFORMANCE SHARE AWARDS
------------------------
8.01 Award. The Committee may award Performance Shares which shall be earned
-----
by a Participant based on the level of performance over a specified period of
time by the Company, a Subsidiary or Subsidiaries, any branch, department or
other portion thereof or the Participant individually, as determined by the
Committee.
8.02 Procedure for Earning Award. A Participant shall earn awarded Performance
---------------------------
Shares in full by meeting the Performance Target for the Performance Period. If
the Minimum Target has not been attained at the end of the Performance Period,
no part of the Performance Share shall
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have been earned by the Participant. If the Minimum Target is attained but the
Performance Target is not attained, the portion of the Performance Share award
earned by the Participant shall be determined on the basis of a formula
established by the Committee.
8.03 Adjustments to Awards. At any time prior to the end of a Performance
---------------------
Period, the Committee may adjust downward (but not upward) the Performance
Target and/or the Minimum Target as a result of major events unforeseen at the
time of the Performance Share award, such as changes in the economy, the
industry, laws affecting the operations of the Company or a Subsidiary or any
other event the Committee determines would have a significant impact upon the
probability of attaining the previously established Performance Target.
8.04 Payment of Awards. Payment of earned Performance Shares shall be made to
-----------------
Participants following the close of the Performance Period as soon as
practicable after the time the amount payable is determined by the Committee.
Payment in respect of earned Performance Shares, whether expressed in dollars or
shares, may be made in cash, in shares of Common Stock, or partly in cash and
partly in shares of Common Stock, as determined by the Committee at the time of
payment. For this purpose, Performance Shares expressed in dollars shall be
converted to shares, and Performance Shares expressed in shares shall be
converted to dollars, based on the Fair Market Value of the Common Stock as of
the date the amount payable is determined by the Committee.
8.04 Effects of Termination of Employment. If prior to the close of the
------------------------------------
Performance Period the employment of a Participant who received an award of
Performance Shares is voluntarily terminated with the consent of the Company or
a Subsidiary or the Participant retires, or if the Participant dies during
employment, the Committee may in its absolute discretion determine to pay all or
any part of the Performance Share award based upon the extent to which the
Committee determines the Performance Target or Minimum Target has been achieved
as of the date of termination of employment, retirement or death, the period of
time remaining until the close of the Performance Period and/or such other
factors as the Committee may deem relevant. If the Committee in its discretion
determines that all or any part of the Performance Share award shall be paid,
payment shall be made to the Participant or his or her estate as promptly as
practicable following such determination and may be made in cash, in shares of
Common Stock, or partly in cash and partly in shares of Common Stock, as
determined by the Committee at the time of the payment. For this purpose,
Performance Shares expressed in dollars shall be converted to shares, and
Performance Shares expressed in shares shall be converted to dollars, based on
the Fair Market Value of the Common Stock as of the date the amount payable is
determined by the Committee.
If, prior to the close of a Performance Period, a Termination of
Employment of a Participant who received an award of Performance Shares occurs
for any reason other than voluntary termination with the consent of the Company
or a Subsidiary, Retirement or death, the Performance Shares of the Participant
shall be deemed not to have been earned, and no portion of such Performance
Shares may be paid. Whether Termination of Employment is a voluntary termination
with the consent of the Company or a Subsidiary shall be determined, in its
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<PAGE>
discretion, by the Committee. Any determination by the Committee on any matter
with respect to Performance Shares shall be final and binding on both the
Company and the Participant.
8.05 Performance Share Agreement. Performance Share awards shall be evidenced
---------------------------
by an Agreement in the form prescribed by the Committee which shall set forth
the amount or manner of determining the amount of the Performance Shares, the
Performance Period, the Performance Target and any Minimum Target and such other
terms and conditions as the Committee in its discretion deems appropriate.
Performance Share awards shall be effective only upon execution of the
applicable Performance Share Agreement on behalf of the Company by the Chief
Executive Officer (if other than the President), the President or any Vice
President, and by the Participant.
ARTICLE IX
ADJUSTMENTS
-----------
The maximum number of shares that may be issued pursuant to the exercise of
Options and SARs and the award of Restricted Shares and the settlement of
Performance Shares under this Plan and the Replenishment Percentage in Section
5.03 shall be proportionately adjusted, and the terms of outstanding Restricted
Share awards, Performance Share Awards, Options, and SARs shall be adjusted, as
the Committee shall determine to be equitably required in the event that (a) the
Company (i) effects one or more stock dividends, stock split-ups, subdivisions
or consolidations of shares or (ii) engages in a transaction to which Code
section 424 applies or (b) there occurs any other event which, in the judgment
of the Committee necessitates such action. Any determination made under this
Article IX by the Committee shall be final and conclusive.
The issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, outstanding
awards of Restricted Shares, Performance Shares, Options or SARs.
The Committee may award Restricted Shares and Performance Shares, may grant
Options, and may grant SARs in substitution for stock awards, stock options,
stock appreciation rights, or similar awards held by an individual who becomes
an employee of the Company or a Subsidiary in connection with a transaction
described in the first paragraph of this Article IX. Notwithstanding any
provision of the Plan (other than the limitations of Article V), the terms of
such substituted Restricted Share and Performance Share awards and Option or SAR
grants shall be as the Committee, in its discretion, determines is appropriate.
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ARTICLE X
COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
-----------------------------------------------------
No Option or SAR shall be exercisable, no Common Stock shall be issued, no
certificates for shares of Common Stock shall be delivered, and no payment shall
be made under this Plan except in compliance with all applicable federal and
state laws and regulations (including, without limitation, withholding tax
requirements) and the rules of all domestic stock exchanges on which shares may
be listed. The Company shall have the right to rely on an opinion of its
counsel as to such compliance. Any share certificate issued to evidence Common
Stock for which Restricted Shares are awarded, Performance Shares were earned or
for which an Option or SAR is exercised may bear such legends and statements as
the Committee may deem advisable to assure compliance with federal and state
laws and regulations. No Option or SAR shall be exercisable, no Common Stock
shall be issued, no certificate for shares shall be delivered, and no payment
shall be made under this Plan until the Company has obtained such consent or
approval as the Committee may deem advisable from regulatory bodies having
jurisdiction over such matters.
ARTICLE XI
GENERAL PROVISIONS
------------------
11.01. Effect on Employment. Neither the adoption of this Plan, its operation,
--------------------
nor any documents describing or referring to this Plan (or any part thereof)
shall confer upon any employee any right to continue in the employ of the
Company or a Subsidiary or in any way affect any right and power of the Company
or a Subsidiary to terminate the employment of any employee at any time with or
without assigning a reason therefor.
11.02. Unfunded Plan. The Plan, insofar as it provides for grants and awards,
-------------
shall be unfunded, and the Company shall not be required to segregate any assets
that may at any time be represented by grants or awards under this Plan. Any
liability of the Company to any person with respect to any grant under this Plan
shall be based solely upon any contractual obligations that may be created
pursuant to this Plan. No such obligation of the Company shall be deemed to be
secured by any pledge of, or other encumbrance on, any property of the Company
or any Subsidiary
11.03. Rules of Construction. Headings are given to the articles and sections
---------------------
of this Plan solely as a convenience to facilitate reference. The reference to
any statute, regulation, or other provision of law shall be construed to refer
to any amendment to or successor of such provision of law.
11.04. Employee Status. For purposes of determining the applicability of Code
---------------
section 422 (relating to Incentive Stock Options), or in the event that the
terms of any Option or SAR provide
14
<PAGE>
that it may be exercised or that awards of Restricted Shares or Performance
Shares may become vested or earned only during employment or within a specified
period of time after Termination of Employment, the Committee may decide to what
extent leaves of absence for governmental or military service, illness,
temporary disability, or other reasons shall not be deemed interruptions of
continuous employment.
11.05 Tax Withholding. Each Participant shall, no later than the date as of
---------------
which the value of a grant of an Option or SAR, or an award of any Restricted
Shares or Performance Shares or other amount received thereunder first becomes
includable in the gross income of the Participant for Federal income tax
purposes, pay to the Company, or make arrangements satisfactory to the Committee
regarding payment of any Federal, state, or local taxes of any kind required by
law to be withheld with respect to such income. The Committee may permit
payment of such taxes to be made through the tender of cash or Common Stock, the
withholding of Common Stock or cash to be received through grants or awards of
any other arrangement satisfactory to the Committee. The Company and its
Subsidiaries shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.
11.06 Indemnification. No member of the Board or the Committee shall be liable
---------------
for any action or determination taken or made in good faith with respect to this
Plan nor shall any member of the Board or the Committee be liable for any
Agreement issued pursuant to this Plan or any grants or awards made under it.
Each member of the Board and the Committee shall be indemnified by the Company
against any losses incurred in such administration of the Plan, unless his or
her action constitutes serious and willful misconduct.
11.07 Other Compensation Plans. The adoption of the Plan shall not affect any
------------------------
other existing or future incentive or compensation plans for directors, officers
or employees of the Company or its Subsidiaries. Moreover, the adoption of this
Plan shall not preclude the Company or its Subsidiaries from: (a) establishing
any other forms for incentive or other compensation for directors, officers or
employees of the Company or its Subsidiaries; or (b) assuming any forms of
incentives or other compensation of any person or entity in connection with the
acquisition or the business or assets, in whole or in part, of any person or
entity.
11.08 Non-Contravention of Securities Laws. Notwithstanding anything to the
------------------------------------
contrary expressed in this Plan, any provisions hereof that vary from or
conflict with any applicable Federal or State securities laws (including any
regulations promulgated thereunder) shall be deemed to be modified to conform to
and comply with such laws.
11.09 Unenforceability of a Particular Provision. The unenforceability of any
------------------------------------------
particular provision of this document shall not affect the other provisions, and
the document shall be construed in all respects as if such unenforceable
provision were omitted.
15
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ARTICLE XII
AMENDMENT
---------
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if (i) the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan or (ii) the amendment changes the class
of individuals eligible to become Participants. No amendment shall, without a
Participant's consent, adversely affect any rights of such Participant under any
outstanding Restricted Share or Performance Share award or under any Option or
SAR outstanding at the time such amendment is made.
ARTICLE XIII
DURATION OF PLAN
----------------
No Restricted Shares or Performance Shares may be awarded and no Option or
SAR may be granted under this Plan after June 30, 2005. Restricted Share and
Performance Share awards and Option and SAR grants made before that date shall
remain valid in accordance with their terms.
Restricted Shares and Performance Shares may be awarded and Options and
SARs may be granted under this Plan upon its adoption by the Board, provided
that no Restricted Share or Performance Share award, or Option or SAR grant will
be effective unless this Plan is approved by a majority of the Company's
shareholders voting either in person or by proxy at a duly held shareholders'
meeting within twelve months of such adoption.
16
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BLIMPIE INTERNATIONAL, INC.
This Proxy is Solicited on Behalf of the Board of Directors of Blimpie
International, Inc.
The undersigned holder of the $.01 par value Common Stock (the "Common Shares")
of Blimpie International, Inc. (the "Company"), hereby acknowledges receipt of
the Notice of Annual Meeting of the Company and Proxy Statement attached
thereto, all relating to the Company's Annual Meeting of Shareholders (the
"Annual Meeting"), and does appoint Anthony P. Conza, David L. Siegel, Charles
G. Leaness and Patrick J. Pompeo, and each of them, the true and lawful attorney
or attorneys of the undersigned, with power of substitution, for and in the name
of the undersigned, to vote as proxies for the undersigned according to the
number of Common Shares the undersigned would be entitled to vote if then
personally present at the Annual Meeting to be held at the offices of Hall
Dickler Kent Goldstein & Wood, LLP, 909 Third Avenue, 27th Floor, on Monday,
December 11, 2000, at 9:00 A.M., or at any adjournment or adjournments thereof,
and thereat to vote all Common Shares of the Company held by the undersigned and
entitled to be voted thereat upon the following matters:
1. To elect as Directors to serve until the Annual Meeting to be held in 2001
for the fiscal year ending June 30, 2001, the Nominees listed below:
Anthony P. Conza (Chairman), David L. Siegel (Vice-Chairman), Charles G.
Leaness, Patrick J. Pompeo, Harry G. Chernoff and Alvin Katz.
FOR all the foregoing Nominees___________
WITHHOLD AUTHORITY to vote for the foregoing Nominees_______________
NOTE: To withhold authority to vote for any individual nominee, strike a line
through that nominee's name. Unless authority to vote for all of the foregoing
nominees is withheld, this Proxy will be deemed to confer authority to vote for
every nominee whose name is not struck.
2. To adopt the 2000 Omnibus Stock Incentive Plan
FOR_______ AGAINST_______ ABSTAIN_________
3. To ratify the selection of Ernst & Young LLP as the Company's independent
auditors for the fiscal year ending June 30, 2001.
FOR_______ AGAINST_______ ABSTAIN_________
4. To transact such other business as may properly come before the meeting.
This Proxy confers authority to vote "FOR" each of propositions 1, 2 and 3
listed above unless otherwise indicated. If any other business is transacted at
said meeting, this proxy shall be voted in accordance with the best judgment of
the proxies. The Board of Directors recommends a vote of "FOR" for each of the
listed propositions. This proxy is solicited on behalf of the Board of Directors
of Blimpie International, Inc. and may be revoked prior to its exercise.
NOTE: Signature(s) should follow exactly the name(s) on the stock certificate.
Executor, administrator, trustee or guardian should sign as such. If more than
one trustee, all should sign. ALL JOINT OWNERS MUST SIGN.
Dated:___________________________________
Signature of Shareholder_________________
Signature of Shareholder_________________
