<PAGE> 1
SCHEDULE 14A INFORMATION
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:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
</TABLE>
BACK YARD BURGERS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
BACK YARD BURGERS, INC.
2768 Colony Park Drive
Memphis, Tennessee 38118
(901) 367-0888
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:
N/A
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
N/A
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
N/A
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
N/A
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form of Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------
(3) Filing Party:
---------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
BACK YARD BURGERS, INC.
2768 COLONY PARK DRIVE
MEMPHIS, TENNESSEE 38118
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1999
Dear Stockholder:
You are cordially invited to attend the annual meeting of the stockholders
of Back Yard Burgers, Inc., a Delaware corporation, to be held at Guesthouse Inn
& Suites, 4300 American Way, Memphis, Tennessee 38118 (The Memphis Room) on May
20, 1999, at 10:00 a.m., central time, for the following purposes:
1. To elect two Class II Directors for a 3 year term.
2. To ratify the selection of PricewaterhouseCoopers LLP as independent
public accountants for the company for 1999.
3. To transact such other business as may properly come before the
meeting or any postponements, continuations or adjournments thereof.
Only holders of record of shares of the company's common stock and
preferred stock at the close of business on March 26, 1999, are entitled to
notice of and to vote at the meeting and at any and all postponements,
continuations or adjournments thereof.
The company's Proxy Statement and Annual Report for the year ended
January 2, 1999 is being mailed to stockholders with this mailing.
By Order of the Board of Directors
Lattimore M. Michael
Chairman and Chief Executive Officer
Memphis, Tennessee
April 9, 1999
- --------------------------------------------------------------------------------
Your vote is important. You are requested to complete, sign, date and
return the proxy card in the return envelope provided. You retain the right to
revoke the proxy or to vote in person should you later decide to attend the
meeting.
- --------------------------------------------------------------------------------
<PAGE> 3
BACK YARD BURGERS, INC.
2768 COLONY PARK DRIVE
MEMPHIS, TENNESSEE 38118
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 20, 1999
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation
of proxies by the board of directors of Back Yard Burgers, Inc., a Delaware
corporation, to be used in voting at the annual meeting of stockholders of the
company to be held May 20, 1999, and at any and all postponements, continuations
or adjournments thereof. This Proxy Statement, the accompanying Form of Proxy
and the Notice of Annual Meeting are first being mailed or given to stockholders
of the company on or about April 9, 1999. The principal executive offices of the
company are located at 2768 Colony Park Drive, Memphis, Tennessee 38118.
Stockholders of the common stock and preferred stock, whose names
appeared of record on the books of the company at the close of business on the
record date, March 26, 1999, will be entitled to vote at the meeting and any
postponements, continuations or adjournments thereof. On the record date, there
were 4,600,397 shares of the company's common stock and 23,123 shares of the
company's preferred stock issued, outstanding and entitled to vote at the
meeting. Since April 5, 1995, 1,176,856 shares of the company's preferred stock
have been converted into common stock at the option of the stockholders in
accordance with their rights. The common stock and the preferred stock shall be
counted as a single class for purposes of calculating votes with respect to each
matter submitted at the meeting. Each share of common stock and preferred stock
is entitled to one vote on each matter submitted at the meeting.
The presence at the meeting, in person or by proxy, of the holders of a
majority of the shares of the company entitled to vote at the meeting will
constitute a quorum. Votes cast by proxy or in person will be tabulated by the
inspectors of election appointed by the board of directors (or the board) of the
company for the meeting. The affirmative vote of a majority of the shares of
common stock and preferred stock cast at the meeting by the holders of the
shares entitled to vote thereon, voting as a single class, is required to
approve the proposals to be considered at the meeting. Abstentions and votes
withheld in the absence of instructions from street name holders (broker
non-votes) are included in the determination of those shares present and voting
and may be voted in the discretion of brokers.
If the accompanying proxy card is properly signed and returned to the
company and not revoked, it will be voted in accordance with the instructions
contained therein. Unless contrary instructions are given, the persons
designated as proxy holders on the proxy card will vote for the approval of all
of the proposals to be considered at the meeting, and as recommended by the
board with regard to all other matters or, if no such recommendation is given,
in their own discretion. Each stockholder may revoke a previously granted proxy
at any time before it is exercised by filing with the secretary of the company a
revoking instrument or a duly executed proxy bearing a later date. The powers of
the proxy holders will be suspended if the person executing the proxy attends
the annual meeting in person and so requests. Attendance at the annual meeting
will not, in itself, constitute a revocation of a previously granted proxy.
- --------------------------------------------------------------------------------
For a simplified "Question and Answer" presentation of certain
information described herein, please see back cover.
- --------------------------------------------------------------------------------
<PAGE> 4
PROPOSALS
1. RE-ELECTION OF DIRECTORS
Nominees for re-election this year are:
- W. Kurt Henke (director since 1993)
- William N. Griffith (director since 1989)
Each has consented to serve a three-year term. See page 3 for more
information.
PROXIES WILL BE VOTED FOR THE NOMINEES LISTED ABOVE, UNLESS OTHERWISE
INSTRUCTED. THE AFFIRMATIVE VOTE OF A PLURALITY OF THE SHARES OF COMMON STOCK
AND PREFERRED STOCK CAST AT THE MEETING BY THE HOLDERS OF THE SHARES ENTITLED TO
VOTE IS REQUIRED TO ELECT THE DIRECTORS.
2. RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS
The board of directors of the company has appointed the firm of
PricewaterhouseCoopers LLP, certified public accountants, as independent
accountants for the company for 1999 subject to ratification by the
stockholders. PricewaterhouseCoopers LLP, which has served as independent
accountants for the company since it consummated its initial public offering in
July 1993, has advised the company that neither the accounting firm nor any of
its members or associates has any direct financial interest in or any connection
with the company or any of its subsidiaries other than as independent public
accountants. Representatives of PricewaterhouseCoopers LLP are expected to be
present at the meeting and will be given the opportunity to make a statement if
they desire to do so and to respond to appropriate questions.
THE AFFIRMATIVE VOTE OF A MAJORITY OF THE SHARES OF COMMON STOCK AND
PREFERRED STOCK CAST AT THE MEETING IS REQUIRED TO APPROVE THE RATIFICATION OF
INDEPENDENT ACCOUNTANTS. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS
VOTE FOR THIS PROPOSAL.
2
<PAGE> 5
ELECTION OF DIRECTORS
General
Under the company's Second Amended and Restated Certificate of
Incorporation, members of the board of directors are to be elected by classes
with staggered terms of three years each. The board of directors presently
consists of six persons. The board of directors may consist of not less than
five nor more than twelve directors, whose membership shall be spread as evenly
as practicable among the three classes. At the 1999 annual meeting of
stockholders, two Class II Directors will be elected to a term expiring in 2002.
The board of directors has the authority under the by-laws of the
company to elect additional directors during the year to fill any vacant
positions until the next annual meeting of stockholders. The directors will
serve a term as indicated below, and until their successors are duly elected and
qualified.
It is expected that the nominees will serve, if elected, but if for any
unforeseen reason any such nominees should decline or be unable to serve, the
proxies will be voted to fill any such vacancy in accordance with the
discretionary authority of the persons named in the proxies.
The following table sets forth the name, age, position with the company
and/or principal occupation, and term of office as director for each nominee and
each current director:
DIRECTORS STANDING FOR RE-ELECTION ARE THE CLASS II DIRECTORS AS FOLLOWS:(1)
<TABLE>
<CAPTION>
Director Year Term
Name Age Principal Occupation During Past 5 Years Since Will Expire
- ---- --- ---------------------------------------- ----- -----------
<S> <C> <C> <C>
W. Kurt Henke 40 Mr. Henke has been an attorney with Henke, 1993 2002(2)
Heaton & Bufkin since 1992.
William N. Griffith 36 Mr. Griffith has been executive vice president 1989 2002(2)
and secretary/treasurer of the company since
1993. From 1989 to 1992, he was the
company's senior vice president of operations.
</TABLE>
- ---------------
(1) Joe Colonnetta, who served on the Board since 1996, resigned on
September 11, 1998 due to other professional commitments and obligations. Mr.
Griffith previously served as a Class III Director, but has consented to stand
for re-election as a Class II Director so the membership among classes will be
spread as evenly as practicable.
(2) Assumes election at the 1999 annual meeting of stockholders of the
Class II Directors.
3
<PAGE> 6
CONTINUING DIRECTORS INCLUDE THE CLASS I AND III DIRECTORS AS FOLLOWS:
<TABLE>
<CAPTION>
Director Year Term
Name Age Principal Occupation During Past 5 Years Since Will Expire
- ---- --- ---------------------------------------- ----- -----------
<S> <C> <C> <C> <C>
William B. Raiford, III 38 Mr. Raiford has been an attorney with, Merkel 1993 2001
& Cocke, P.A. since 1989.
Stephen J. King(1) 47 Mr. King, who is a CPA and consultant, was 1995 2001
chief financial officer of the company
from July 1993 to March 1999. From 1988
to 1993, he was the comptroller for
Southland Racing Corporation. Prior to
1988, he practiced accounting at Price
Waterhouse.
Lattimore M. Michael 55 Mr. Michael has been chairman and chief 1987 2000
executive officer of the company since 1993.
From 1987 to 1992, he was the company's
president and chief executive officer.
Joseph L. Weiss 39 Mr. Weiss has been president and chief 1989 2000
operating officer of the company since 1993.
From 1989 to 1993, he was the company's
secretary/treasurer.
</TABLE>
MEETINGS
Since the beginning of the company's fiscal year on January 4, 1998,
the board of directors has held seven meetings. Other than Joe Colonnetta, who
resigned from the board in 1998, each board member attended 75% or more of the
total number of meetings of the board held during the period that he served.
The board of directors has an audit committee whose members are Messrs.
Raiford and Griffith. Prior to his resignation, Mr. Colonnetta was also a member
of the audit committee. The audit committee makes recommendations regarding the
selection of independent public accountants, reviews the scope and results of
the audit conducted by the independent public accountants, reviews the adequacy
of the company's accounting, financial and operating controls, and supervises
special investigations, if any. The audit committee held one meeting in 1998,
which was attended by the three members.
The board of directors has a compensation committee whose members are
Messrs. Henke, Raiford and Weiss. The compensation committee reviews and
approves annual salaries and bonuses for all corporate officers and management
personnel and reviews and recommends to the board of directors the terms and
conditions of the employee benefit plans and/or changes thereto. The
compensation committee held one meeting in 1998, which was attended by the three
members.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
U.S. securities laws require the company's officers and directors, and
persons who own more than ten percent of a registered class of the common stock,
to file reports of beneficial ownership and changes in beneficial ownership with
the SEC and to furnish copies of all filed forms to the company. Based solely on
its review of the copies of such forms and written representations from
reporting persons, the company believes that all such filings required in 1998
were made in a timely fashion.
- --------
(1) Mr. King resigned as chief financial officer of the company
effective March 19, 1999. Such resignation was on good terms and Mr. King
continues to serve the company as an outside consultant and director.
4
<PAGE> 7
PRINCIPAL STOCKHOLDERS
The following sets forth certain information with respect to the
beneficial ownership of the company's common stock as of March 1, 1999 by (1)
each person or entity known to the company to be the beneficial owner of more
than 5% of each class of the company's voting shares, (2) each of the company's
directors and executive officers named in the Summary Compensation Table and (3)
all of the company's directors and executive officers as a group.
<TABLE>
<CAPTION>
Amount & Nature of
Beneficial Ownership of
Name and Address (1) common stock(2)(3) Percent of Class
- ---------------------- --------------------- ----------------
<S> <C> <C>
Lattimore M. Michael 476,182 10.30%
Joseph L. Weiss 531,437 (4) 11.49%
William N. Griffith 78,725 (5) 1.68%
W. Kurt Henke 5,500 (5) *
Stephen J. King 36,825 (5) *
William B. Raiford, III 5,500 (5) *
Barnett Chiz 249,950 (6) 5.41%
Lawrence Chiz 249,950 (6) 5.41%
All Officers & Directors 1,181,624 25.52%
(9 persons)
</TABLE>
- --------------------
*Less than 1%
(1) The address of each of Messrs. Michael, Weiss, Griffith, McDermott, and
Reid is c/o Back Yard Burgers, Inc., 2768 Colony Park Drive, Memphis,
Tennessee 38118. The address of Mr. King is 1875 Spaulding Circle,
Superior, Colorado 80027. The address of Mr. Raiford is 30 Delta
Avenue, Clarksdale, Mississippi 38614. The address of Mr. Henke is 408
Hopson Street, Lyon, Mississippi 38645. The address of Mr. Barnett Chiz
and Mr. Lawrence Chiz is P. O. Box 466, Shaw, Mississippi 38773.
(2) Unless otherwise noted, the company believes that all persons named in
the table have sole voting and investment power with respect to the
shares of common stock. None of said persons set forth above owns any
shares of preferred stock.
(3) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days upon the exercise of options.
Each beneficial owner's percentage ownership is determined by assuming
that options that are held by such person (but not those held by any
other person) and which are exercisable within 60 days from March 1,
1999, have been exercised (includes shares exercisable pursuant to
incentive stock options that have been granted to certain executive
officers of the company as of March 1, 1999).
(4) Mr. Weiss' wife owns 16,660 shares of common stock, each of Mr. Weiss'
two minor children own 9,640 shares of common stock, and Mr. Weiss'
father owns 20,000 of the 531,437 shares of common stock reflected in
the table.
(5) The number shown reflects that portion of stock options granted
pursuant to the company's Incentive Stock Option Plan of 1993 and the
1995 Incentive Award Plan which are exercisable as of and within 60
days after March 1, 1999, except that (i) with respect to Mr. Griffith,
such amount includes 19,413 shares of common stock held directly by Mr.
Griffith and (ii) with respect to Mr. King, such amount includes 3,125
shares of common stock held directly by Mr. King.
(6) Mr. Barnett Chiz and Mr. Lawrence Chiz are brothers.
5
<PAGE> 8
OTHER EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
OTHER EXECUTIVE OFFICERS
In addition to the executive officers listed above under "Election of
Directors," the following persons also serve as executive officers of the
company:
Michael C. McDermott, Age 52 -- Mr. McDermott has been executive vice
president -- company operations since September 1996. From April 1996 to
September 1996, he was an operating partner for Wyatt's Cafeterias. From August
1995 to November 1995, he was an owner/operator of Hudson's Grills. From 1992 to
1995, he was a regional manager for Country Harvest Buffet, Inc.
Michael G. Webb, Age 30 -- Mr. Webb has been chief financial officer
since March 1999. From 1995 to 1999, he was the controller for Shepherd Tissue,
Inc. From 1993 to 1995 he was a senior financial analyst for The Promus
Companies. Prior to 1993, Mr. Webb was an auditor for KPMG Peat Marwick.
Stephen C. Reid, Age 40 -- Mr. Reid has been vice president -- research
and development since 1998.
COMPENSATION OF DIRECTORS
Directors who are not officers of the company receive a $500 fee for
each board meeting attended.
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows the compensation for each of the last three
years of the company's chief executive officer and other executive officers
whose compensation exceeded $100,000:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
------------------- ------------
Securities
Salary Underlying All Other
Name Year ($)(1) Bonus ($) Options/SARS (#) Compensation ($)(2)
---- ---- ------ --------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Lattimore M. Michael, 1998 119,997 43,500 -- 6,834
Chairman and Chief 1997 114,556 47,500 -- 6,850
Executive Officer 1996 111,674 18,000 -- --
Joseph L. Weiss, 1998 125,472 -- -- 6,672
President and Chief 1997 122,317 4,000 -- 4,588
Operating Officer 1996 117,180 18,000 -- --
William N. Griffith, 1998 88,410 14,204 8,000 3,955
Executive Vice 1997 84,812 14,204 8,000 2,895
President and 1996 80,416 14,204 8,000 --
Secretary/Treasurer
</TABLE>
- --------------------
(1) The amounts indicated include indirect compensation to Mr. Michael for
use of a company automobile, and direct compensation to Messrs. Weiss
and Griffith in the form of an automobile allowance, although such
amounts are less than $50,000 or 10% of their respective total annual
salaries and bonuses for each respective year.
(2) The amounts indicated represent life and/or disability insurance
premiums paid on behalf of such persons.
6
<PAGE> 9
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to
Options/SARs Employees in Exercise or Base
Name granted (#) Fiscal YR (%) Price ($/Sh) Expiration Date
---- ----------- ------------- ------------ ---------------
<S> <C> <C> <C> <C>
Lattimore M. Michael -- -- -- --
Joseph L. Weiss -- -- -- --
William N. Griffith 8,000 10.8% $2.25 3-1-08
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Unexercised
Securities Underlying Value of Unexercised In-the-
Shares Options/SARs Money Options/SARs at
Acquired at FY-End FY-End (1)
on Value ------------------------- ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
Lattimore M. Michael -- -- -- -- -- --
Joseph L. Weiss -- -- -- -- -- --
William N. Griffith -- -- 59,312 -- 4,480 --
</TABLE>
- --------------------
(1) The dollar amount shown represents the product of the number of shares
purchasable upon exercise of the related options times the difference
of the average of the high and low sales prices reported on January 2,
1999 ($1.97) and the weighted average purchase price per share payable
upon such exercise ($1.67).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Weiss, the company's president and chief operating officer, was a
member of the company's compensation committee during 1998. As a member of the
compensation committee, Mr. Weiss participated in deliberations with other
committee members concerning compensation of officers and non-management
personnel.
EMPLOYMENT AGREEMENTS
Michael Employment Agreement - The company entered into a five-year
employment agreement dated April 15, 1993 with Lattimore M. Michael. The
agreement is automatically extended for an additional one-year period at the end
of each year under the agreement, unless terminated pursuant to its provisions.
Pursuant to the employment agreement, Mr. Michael is employed as the chairman
and chief executive officer of the company. Pursuant to the terms of Mr.
Michael's employment agreement, his current annual base salary is $122,850. In
addition to the base salary, the agreement provides for certain bonuses based
upon certain pre-tax profit goals as set by the compensation committee. Mr.
Michael was also eligible to receive a fixed cash bonus of $43,500 per year
payable in a lump sum at the end of each of 1996, 1997 and 1998.
7
<PAGE> 10
In the event of the termination of Mr. Michael's employment by the
company during the term of the employment agreement, Mr. Michael shall be
entitled to (i) his base salary through the last day of the month in which the
date of termination occurs, at the annual rate in effect at the date of
termination, to the extent unpaid prior to such date of termination; and (ii)
any fixed bonus described above which shall have been earned prior to the date
of termination to the extent unpaid prior to such date, except no such bonus
payment shall be made if Mr. Michael is terminated for cause. The employment
agreement contains a non-competition provision which prohibits Mr. Michael,
during the period of his employment and for a period of one year after
termination of employment, from engaging in any business, directly or
indirectly, in competition with the company anywhere within a 150 mile radius of
the City of Memphis, Tennessee and anywhere within a 50 mile radius of any
company-operated or franchised restaurant located in the United States.
Weiss Employment Agreement - On June 25, 1993, the company entered into
a five-year employment agreement with Joseph L. Weiss. The agreement is
automatically extended for an additional one-year period at the end of each year
under the agreement, unless terminated pursuant to its provisions. Pursuant to
the employment agreement, Mr. Weiss is employed as the president and chief
operating officer of the company. Pursuant to the terms of Mr. Weiss' employment
agreement, his current annual base salary is $122,850. In addition to the base
salary, the agreement provides for certain bonuses based upon certain pre-tax
profit goals as set by the compensation committee. The termination and
non-competition provisions set forth in Mr. Weiss' agreement are consistent with
those found in Mr. Michael's agreement, as described above.
Griffith Employment Agreement - On June 6, 1993, the company entered
into a five-year employment agreement with William N. Griffith. The agreement is
automatically extended for an additional one-year period at the end of each year
under the agreement, unless terminated pursuant to its terms. Mr. Griffith
serves as executive vice president and secretary/treasurer of the company.
Pursuant to the terms of the agreement, his current annual base salary is
$84,357. In addition to the base salary payments, the agreement provides for
certain bonuses based upon certain pre-tax profit goals as set by the
compensation committee. The termination and non-competition provisions set forth
in Mr. Griffith's agreement are consistent with those found in Mr. Michael's
agreement, as described above.
COMPENSATION PURSUANT TO PLANS
Stock Purchase Plan - The board of directors of the company and its
stockholders adopted the company's Stock Purchase Plan in May 1995. As of March
1, 1999, 48,417 shares had been purchased under the Stock Purchase Plan. Any
eligible employee may become a participant in the Stock Purchase Plan by filing
with the company a stock purchase agreement prior to any offering date on which
an offering under the Stock Purchase Plan commences. Payment for shares of
common stock purchased under the Stock Purchase Plan is made by authorized
payroll deductions from a participant's compensation or by supplemental
payments. The purchase price of each share issued pursuant to the Stock Purchase
Plan is 85% of the average of the reported highest and lowest bid price of the
company's common stock on Nasdaq on the applicable purchase date. The Stock
Purchase Plan shall continue in effect through December 31, 2005, unless
terminated prior thereto by the board of directors.
1995 Incentive Award Plan - The board of directors of the company and
its stockholders adopted the 1995 Incentive Award Plan in May 1995. As of March
1, 1999, 159,135 options had been granted under the 1995 Incentive Award Plan.
This plan, among other things, provides for automatic grants of options to
non-employee directors on an annual basis. A description of the 1995 Incentive
Award Plan is set forth below.
Incentive stock options granted under the 1995 Incentive Award Plan are
exercisable for a period of not more than ten (10) years from the date of the
grant. The purchase price of each share issued pursuant to the exercise of an
incentive stock option granted under the 1995 Incentive Award Plan may not be
less than 100% of the fair market value per share on the date of the grant. The
purchase price of each share issued pursuant to the exercise of a non-qualified
stock option granted under the 1995 Incentive Award Plan shall be determined by
the compensation committee. The period during which the right to exercise an
option in whole or in part vests shall be set by the compensation committee. The
1995 Incentive Award Plan provides that outstanding options or performance
awards will become immediately exercisable in the event of a change of control
of the company.
8
<PAGE> 11
The compensation committee may grant non-qualified stock options to
employee directors, officers, employees and other persons and such options may
provide for the right to purchase shares at a specified price which may be less
than fair market value on the date of grant (but not less than par value), and
usually will become exercisable in installments after the grant date.
Incentive Stock Options are designed to comply with the provisions of
the Internal Revenue Code, and are subject to restrictions contained in the
Code, including a requirement that exercise prices are equal to at least 100% of
the fair market value of the shares on the grant date and a ten-year restriction
on the option term, but may be subsequently modified to disqualify them from
treatment as incentive stock options.
Restricted stock may be sold to participants at various prices (but not
below par value) and made subject to such restrictions as may be determined by
the compensation committee. In general, restricted stock may not be sold, or
otherwise transferred or hypothecated, until restrictions are removed or expire.
Performance awards may also be granted, the value of which may be limited to the
market value, book value or other measure of the common stock or other specific
performance criteria determined to be appropriate by the compensation committee.
Non-qualified options are granted automatically to each non-employee
director 10 days after each annual meeting of stockholders. Each option covers
2,500 shares of common stock and has an exercise price equal to the fair market
value of the common stock on the date of grant. The exercise period of each
option commences six months after the date of grant of the option and ends five
years after such grant date, provided that an option will terminate upon the
termination of the holder's service as a director of the company, subject to
certain grace periods if such termination of service occurs after the option has
vested. The compensation committee has no authority, discretion or power with
respect to participants, exercise price, number of shares or option period or to
alter any terms or conditions insofar as such non-employee director options are
concerned.
Notwithstanding the summary description above, the board has
unanimously adopted a policy which provides that the compensation committee
shall not be authorized to grant any non-qualified stock option awards, sell any
restricted stock, or otherwise provide for any other types of awards under the
1995 Incentive Award Plan that would attribute any value to the shares less than
(1) 100% of the fair market value of the shares on the grant date without first
making a good faith determination that the specific grant in question is
materially important to the company's ability to attract and/or retain a
"well-qualified person" as an employee of the company (provided that, except as
otherwise set forth below, such awards shall not be granted at less than 85% of
the fair market value of the Shares on the date of grant) or (2) 85% of the fair
market value of the shares on the grant date without first making a good faith
determination that the specific grant in question is materially important to the
company's ability to attract and/or retain a "key employee" and having further
obtained not less than a two-thirds majority approval of the disinterested
members of the board.
1993 Stock Option Plan - The board of directors of the company and its
stockholders adopted the 1993 Stock Option Plan in April 1993. Under the 1993
Stock Option Plan, the company may grant to eligible salaried individuals,
incentive stock options, as defined in Section 422(b) of the Code. As of March
1, 1999, the company had granted to certain executive officers and employees
incentive stock options to purchase 137,991 of the 176,969 shares available for
issuance under the 1993 Stock Option Plan. As of 1999, the company is no longer
granting stock options under this plan. All options under the 1993 Stock Option
Plan were granted at an exercise price equal to the fair market value of the
common stock on the date of grant and are subject to a five-year level vesting
schedule, at the rate of 20% per year.
CERTAIN TRANSACTIONS
From time to time in the ordinary course of business, the company does
business with and/or engages in certain transactions between itself and certain
affiliated parties. Management of the company believes that such dealings and
transactions are immaterial in nature and have been on terms no less favorable
to the company than those that could have been obtained from unaffiliated
parties.
9
<PAGE> 12
PROXY SOLICITATION
The expense of the Board's solicitation of proxies will be borne by the
company. In addition to the use of the mails, proxies may be solicited by
personal interview, by telephone or telegraph. Banks, brokerage houses, and
other institutions, nominees and fiduciaries will be requested to forward the
soliciting materials to beneficial owners of the common stock and the preferred
stock and to obtain authorizations for the execution of proxies; and if they in
turn so request, the company will reimburse such banks, brokerage houses and
other institutions, nominees and fiduciaries for their expenses in forwarding
such materials. Directors, officers and regular employees of the company and its
subsidiaries may also solicit proxies without additional remuneration therefor.
Stockholders are urged to sign the accompanying proxy, solicited on
behalf of the board of directors of the company, and return it at once in the
envelope provided for that purpose. Proxies will be voted in accordance with the
stockholders' directions. If no directions are given, the proxies will be voted
FOR all proposals. A stockholder giving a proxy has the power to revoke it any
time prior to its exercise by executing another proxy bearing a later date, by
written notice to the company's secretary or by oral or written statement at the
meeting.
STOCKHOLDER PROPOSALS
Proposals by stockholders intended to be presented at the company's
annual meeting in 2000 must be received by the company no later than December
11, 1999 in order to be included in the Proxy Statement relating to such annual
meeting.
OTHER MATTERS
The board of directors does not know of any matters which may be
presented at the meeting other than those specifically set forth in the Notice
of Annual Meeting. If any other matter should come properly before the meeting
or any postponements, continuations or adjournments thereof, the holders of the
proxies will vote in accordance with their best judgment with respect to such
matter.
ADDITIONAL INFORMATION AVAILABLE
The company will provide, without charge, to any person receiving a
copy of this Proxy Statement, upon written request of such person, a copy of the
company's Annual Report on Form 10-KSB for the fiscal year ended January 2,
1999, including the financial statements thereto. Such requests should be
addressed to Michael G. Webb, Chief Financial Officer, Back Yard Burgers, Inc.,
2768 Colony Park Drive, Memphis, Tennessee 38118.
By Order of the Board of Directors
William N. Griffith
Secretary/Treasurer
April 9, 1999
10
<PAGE> 13
BACK YARD BURGERS, INC.
ANNUAL MEETING OF STOCKHOLDERS
MAY 20, 1999
QUESTIONS AND ANSWERS
Q: WHAT AM I VOTING ON?
A: (1) Re-election of W. Kurt Henke and William N. Griffith as directors,
and (2) ratification of PricewaterhouseCoopers LLP as independent
accountants.
Q: WHO IS ENTITLED TO VOTE?
A: Shareholders as of the close of business on March 26, 1999. Each share
of common stock and preferred stock is entitled to one vote.
Q: HOW DO I VOTE?
A: You may vote by completing and mailing your proxy card or attending the
meeting in person. (See page one for more details.)
Q: HOW DOES DISCRETIONARY AUTHORITY APPLY?
A: If you sign your proxy card, but do not make any selections, you give
authority to each of Lattimore M. Michael and Joseph L. Weiss to vote
on the two proposals and any other matter that may properly come before
the meeting.
Q: IS MY VOTE CONFIDENTIAL?
A: Yes. Only the inspector and certain employees will have access to your
proxy card. All comments will remain confidential, unless you ask that
your name be disclosed.
Q: WHAT PERCENTAGE OF STOCK DO THE DIRECTORS AND OFFICERS OWN?
A: Approximately 25.52% of our common stock as of March 1, 1999. (See page
five for more details.)
Q: WHO WILL COUNT THE VOTES?
A: Union Planters Bank will tabulate the votes; and Michael G. Webb, our
chief financial officer, will act as inspector of election.
<PAGE> 14
APPENDIX A
PROXY BACK YARD BURGERS, INC.
The undersigned hereby appoints Lattimore M. Michael and Joseph L. Weiss,
and each of them, as proxies for the undersigned, each with full power of
appointment and substitution, and hereby authorizes them to represent and to
vote, as designated below, all shares of the $.01 par value common stock and/or
the $.01 par value preferred stock of Back Yard Burgers, Inc. which the
undersigned is entitled to vote at the annual meeting of the stockholders to be
held at Guesthouse Inn & Suites, 4300 American Way, Memphis, Tennessee 38118
(The Memphis Room) on May 20, 1999, at 10:00 a.m., central time, or at any and
all postponements, continuations or adjournments thereof. This proxy, when
properly executed, will be voted in the manner directed by the stockholder.
1. Proposal to elect two Class II directors for a three year term.
<TABLE>
<S> <C>
For all nominees listed below: Withhold authority to vote for the nominees listed
(except as marked to the contrary below). [ ] below. [ ]
</TABLE>
<TABLE>
<CAPTION>
FOR WITHHOLD AUTHORITY
<S> <C> <C>
W. Kurt Henke [ ] [ ]
William N. Griffith [ ] [ ]
</TABLE>
2. Proposal to ratify the selection of the accounting firm of
PricewaterhouseCoopers LLP as independent accountants for the company for
1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. In the discretion of the proxy holders regarding other business which
properly come before the Meeting or at any and all postponements,
continuations or adjournments thereof.
THIS PROXY WHICH IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY, WILL BE VOTED FOR THE ABOVE PROPOSALS, UNLESS OTHERWISE DIRECTED.
NOTE: Please date Proxy and sign as name
appears hereon. When shares are held by
joint tenants, both should sign. If signer
is a corporation, please sign full
corporate name by authorized officer.
Dated:
------------------------------------
Sign here:
--------------------------------
(Please sign exactly as name appears
hereon. Administrators, executors,
trustees, etc. should so indicate when
signing.)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY.
