<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement
Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.____)
Check the appropriate box:
[x ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to SECTION 240.14a-11(c) or SECTION
240.14a-12
LINDA'S FLAME ROASTED CHICKEN INCORPORATED
(Name of Registrant as Specified In Its Charter)
____________________________________________________
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-
6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction
applies:____________________
2) Aggregate number of securities to which transaction
applies:____________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was
determined):__________________________________________
4) Proposed maximum aggregate value of
transaction:____________________________
5) Total fee
paid:__________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: ____________________________________________
2) Form, Schedule or Registration Statement
No.:_______________________________
3) Filing Party:_______________________________________________________
4) Date Filed:_________________________________________________________
<PAGE>
P R E L I M I N A R Y C O P Y
LINDA'S FLAME ROASTED CHICKEN INCORPORATED
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
To Our Stockholders:
On behalf of the Board of Directors, I cordially invite you
to attend the Annual Meeting of Stockholders of Linda's Flame
Roasted Chicken Incorporated (the "Company") to be held on
Wednesday, June 26, 1996, at 10:00 o'clock a.m. (local time) at
The Grand Summit Hotel, 570 Springfield Avenue, Summit, NJ
07901.
In addition to electing directors, you are being asked to
approve an amendment to the Company's Certificate of
Incorporation to change the name of the Company, approve the
Company's 1995 Stock Option Plan and ratify the appointment of
auditors. The attached Notice of Annual Meeting and Proxy
Statement describe the business to be transacted at the Annual
Meeting. For the reasons set forth in the Proxy Statement, your
Board of Directors unanimously recommends that you vote FOR each
of the four matters proposed for stockholder action.
In order to ensure that your shares are represented at the
meeting, I urge you to promptly date, sign and mail the enclosed
proxy using the enclosed addressed envelope, which needs no
postage if mailed in the United States.
Very truly yours,
Richard Goldberger
Chairman of the Board
Dated: May [28], 1996
<PAGE>
P R E L I M I N A R Y C O P Y
LINDA'S FLAME ROASTED CHICKEN INCORPORATED
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 26, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders of Linda's Flame Roasted Chicken Incorporated (the
"Company") will be held on Wednesday, June 26, 1996, at 10:00
o'clock a.m. (local time) at The Grand Summit Hotel, 570
Springfield Avenue, Summit, NJ 07901 for the purpose of
considering and voting upon:
1. The election of seven directors.
2. The approval of an amendment to the Company's
Certificate of Incorporation that would change the name
of the Company to Linda's Diversified Holdings Inc.
3. The approval of the Company's 1995 Stock Option Plan.
4. The ratification of the appointment of auditors.
5. Such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on May
23, 1996 will be entitled to notice of and to vote at the
meeting. In accordance with Delaware law, a list of stockholders
entitled to vote at the Annual Meeting is open to examination by
any stockholder, for any purpose germane to the meeting, during
ordinary business hours at the Company's offices at 11 Commerce
Drive, Cranford, New Jersey 07016 from June 16-25, 1996 and will
also be available for inspection throughout the meeting by any
stockholder who is present.
By Order of the Board of
Directors,
Stuart Fuchsman
Secretary
Dated: May [28], 1996
IMPORTANT
Regardless of whether you expect to attend the meeting,
please mark, sign, date and return the enclosed proxy using the
enclosed addressed envelope, which needs no postage if mailed
within the United States.
<PAGE>
P R E L I M I N A R Y C O P Y
PROXY STATEMENT
LINDA'S FLAME ROASTED CHICKEN INCORPORATED
11 COMMERCE DRIVE
CRANFORD, NEW JERSEY 07016
ANNUAL MEETING OF STOCKHOLDERS
This proxy statement is furnished to stockholders of Linda's
Flame Roasted Chicken Incorporated (the "Company") in connection
with the Annual Meeting of Stockholders ("Annual Meeting") of the
Company to be held on Wednesday, June 26, 1996, at 10:00 o'clock
a.m. (local time) at The Grand Summit Hotel, 570 Springfield
Avenue, Summit, NJ 07901 and at any adjournment thereof. The
Board of Directors of the Company (the "Board of Directors" or
the "Board") is soliciting proxies to be voted at the Annual
Meeting.
This Proxy Statement and Notice of Meeting are first being
sent or delivered to stockholders on or about May [28], 1996.
VOTING RIGHTS AND VOTES REQUIRED
If the proxy is signed properly by the stockholder and is
not revoked, it will be voted at the meeting. If a stockholder
specifies how the proxy is to be voted, the proxy will be voted
in accordance with such specification. Otherwise the proxy will
be voted FOR the election of the nominees for Director and FOR
the other three matters listed in the accompanying Notice of
Annual Meeting of Stockholders.
The proxy may be revoked by the stockholder at any time
prior to its use by the Company by voting in person at the Annual
Meeting, by executing a later proxy, or by submitting a written
notice of revocation to the Secretary of the Company at the
Company's office or at the Annual Meeting.
Only stockholders of record at the close of business on May
23, 1996 are entitled to notice of and to vote at the Annual
Meeting. At the close of business on May 23, 1996, [2,065,000]
shares of the Company's Class A Common Stock and [800,000] shares
of the Company's Class B Common Stock (respectively, "Class A
Common Stock" and "Class B Common Stock" and collectively,
"Common Stock") were outstanding and eligible to vote at the
Annual Meeting. Each share of Class A Common Stock is entitled
to one vote and each share of Class B Common Stock is entitled to
six votes on all matters submitted to a vote of stockholders.
The Class A and Class B Common Stock will vote together as a
single class on all matters on which stockholders may vote at the
Annual Meeting. Accordingly, the total number of votes that can
be cast by shares of Class A Common Stock and Class B Common
Stock entitled to vote at the meeting is [6,865,000].
Presence at the Annual Meeting, in person or by proxy, of
the holders of shares of Common Stock having the power to cast a
majority of all votes that can be cast by all outstanding shares
of Common Stock as of the record date will constitute a quorum.
Shares of stock represented by a properly signed and returned
proxy will be treated as present at the Annual Meeting for
purposes of determining a quorum, whether or not the proxy is
marked as casting a vote or abstaining. Likewise, where the
record holder has indicated on the proxy card or has otherwise
notified the Company that
<PAGE>
such holder does not have power to vote shares represented by
the proxy (a "broker non-vote"), the shares will be treated
as present at the Annual Meeting for purposes of determining a quorum.
In the election of Directors, votes may be cast in favor or
withheld. Votes that are withheld will be excluded entirely
from the vote count and will have no effect. The required vote
on the election of Directors will be a plurality of the votes
cast.
Other than with respect to the election of Directors, each
other matter voted on at the Annual Meeting requires the approval
of the majority of the total votes represented by shares of stock
present and entitled to vote thereon. Therefore, abstentions as
to particular proposals will have the same effect as votes
against such proposals. Broker non-votes will be treated as
shares not entitled to vote and will not be included in the
calculation of the number of votes constituting a majority.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of May
23, 1996 pertaining to the beneficial ownership of the Common
Stock, by (i) persons known to the Company to own 5% or more of
the outstanding Common Stock, (ii) each director and nominee for
election as a director, (iii) each executive officer named in the
Summary Compensation Table below and (iv) directors and executive
officers of the Company as a group. Each such person has sole
voting and investment power with respect to his or her shares,
subject, as to 450,000 shares of Class B Common Stock, to the
escrow described below under "Escrow Shares." This information
has been obtained from the Company's records, or from information
furnished by the person named to the Company.
<TABLE>
<CAPTION>
Number of Shares of Percentage Ownership Percent of Voting
Name of Beneficial Common Stock of all Common Stock Power of all Common
Owner (1) Beneficially Owned (2) Outstanding Stock Common
- - ------------------ ---------------------- ------------------- ---------------------
<S> <C> <C> <C>
Peter Weissbrod 198,375(3)(4)(5) 6.69 9.91
Stuart Fuchsman 203,375(3)(4)(6) 6.85 9.98
Linda Weissbrod 118,375(3)(4)(7) 4.10 8.86
Richard Goldberger -0-(8) -0- -0-
Mildred Goldberger 221,750(3)(4)(9) 7.67 17.50
Lewis Levine 98,375(3)(4) 3.44 8.60
Wendy Fuchsman 98,375(3)(4) 3.44 8.60
Caryl Levine 98,375(3)(4) 3.44 8.60
William Ozzard 40,000(10) 1.38 *
Marc Roberts 90,000(11) 3.05 1.29
Ivan Szathmary 34,000(12) 1.18 *
All officers and
directors as a group
(7 persons) 664,125(3)(4) 20.67 29.67
- - -------------------------
*Less than 1%
(1) The address of each named stockholder is c/o the Company, 11
Commerce Drive, Cranford, New Jersey 07067.
</TABLE>
-2-
<PAGE>
(2) All shares owned are Class B Common Stock unless otherwise
indicated.
(3) Includes the holder's pro rata portion of the Escrow Shares. See
"Escrow Shares."
(4) The shares owned by each of Mr. and Mrs. Weissbrod, Mr. and Mrs.
Fuchsman and Mr. and Mrs. Levine do not include the shares or
warrants owned by their respective spouses, beneficial ownership of
which is disclaimed by each of them. Mrs. Weissbrod, Mrs. Fuchsman
and Mrs. Levine are sisters and the adult daughters of Mr. and Mrs.
Goldberger.
(5) Includes 100,000 shares of Class A Common Stock issuable upon the
exercise of outstanding options.
(6) Includes 30,000 shares of Class A Common Stock issuable upon the
exercise of outstanding options and 75,000 shares of Class A Common
Stock underlying Class A Warrants.
(7) Includes 20,000 shares of Class A Common Stock issuable upon the
exercise of outstanding options.
(8) Does not include the 196,750 shares of Class B Common Stock, and
25,000 shares of Class A Common Stock underlying outstanding Class A
Warrants owned by Mr. Goldberger's wife, Mildred Goldberger,
beneficial ownership of which is disclaimed by Mr. Goldberger.
(9) Includes 25,000 shares of Class A Common Stock underlying Class A
Warrants. See "Certain Relationships and Related Transactions."
(10) Consists of 10,000 issued shares of Class A Common Stock and 30,000
shares of Class A Common Stock underlying outstanding options and
warrants.
(11) Consists of 90,000 shares of Class A Common Stock underlying outstanding
options and warrants.
(12) Consists of 11,000 issued shares of Class A Common Stock and 23,000
shares of Class A Common Stock underlying outstanding options and
warrants.
(13) The percent of ownership and voting power of all outstanding Common
Stock held by the group and their spouses listed in the table is 36.86%
and 70.76%, respectively.
-3-
<PAGE>
ESCROW SHARES
The present holders of the Company's 800,000 outstanding
shares of Class B Common Stock have placed an aggregate of
450,000 of their shares into escrow (the "Escrow Shares"). Such
stockholders continue to vote the Escrow Shares; however, the
Escrow Shares are not assignable or transferable. The Escrow
Shares will be released to the holders on a pro rata basis, if,
and only if, at least one of the following conditions is met:
(i) The Company's income before provision for income
taxes and exclusive of any extraordinary earnings or charges
including, but not limited to, charges to income resulting
from the release of Escrow Shares (all as audited by the
Company's independent public accountants) (the "Minimum
Pretax Income") is at least $4,000,000 for the fiscal year
ending December 31, 1996.
(ii) The Minimum Pretax Income is at least $5,000,000
for the fiscal year ending December 31, 1997.
(iii) The Bid Price (as defined in the escrow agreement)
of the Class A Common Stock averages in excess of $12.50 per
share for 30 consecutive business days at any time during
the 18 month period commencing on May 25, 1994.
(iv) The Bid Price of the Class A Common Stock averages
in excess of $17.50 per share for 30 consecutive business
days during the 18 month period commencing 18 months from
May 25, 1994.
(v) The Company is acquired by or merged into another
entity for which stockholders of the Company receive per
share consideration equal to or greater than the levels set
forth in (iv) and (v) above.
ELECTION OF DIRECTORS
The Company's Board of Directors has nominated seven persons
to be elected at the Annual Meeting to serve as directors of the
Company until the next annual meeting of stockholders and until
their respective successors shall have been elected and shall
have qualified. All of the nominees currently serve as directors
of the Company. It is the intention to the persons named in the
proxy to vote FOR the election of the persons named below. If
any nominee is unable or unwilling to serve, which the Board does
not anticipate, the persons named in the proxy will vote for
another person in accordance with their judgment.
-4-
<PAGE>
The following information is supplied with respect to each
person nominated and recommended to be elected by the Board of
Directors and each executive officer of the Company and is based
upon the records of the Company and information furnished to it
by such persons. Reference is made to "Security Ownership of
Certain Beneficial Owners" for information pertaining to stock
ownership by the nominees.
<TABLE>
<CAPTION>
Name Age Positions with the Company
- - -------------------- ----- ---------------------------
<S> <C> <C>
Peter Weissbrod (1) 39 President, Chief Executive
Officer and Director
Stuart Fuchsman (1) 38 Vice President, Chief
Operating Officer and
Director
Richard Goldberger (1)(2) 66 Chairman of the Board of
Directors
Lewis Levine (2) 43 Director
Marc Roberts 36 Director
William Ozzard 80 Director
Ivan Szathmary 59 Director
- - ------------------------
(1) Member of Executive Committee
(2) Member of Audit Committee
</TABLE>
Peter Weissbrod is the founder of the Company and has served
as its President, Chief Executive Officer and a director since
the Company's inception in February 1991. Mr. Weissbrod is also
the President of National Home Guaranty, Inc. ("NHG"), the
Company's recently-formed subsidiary that is engaged in providing
federally-guaranteed financing for homeowners and lead-generation
services for contractors with respect to home improvement
services in the low- to- moderate income housing markets. From
February 1990 to December 1990, he served as a consultant to
Charlie Brown's/Office Restaurant Group, a division of Restaurant
Associate Industries, Inc. ("Charlie Brown's"). From May 1986 to
February 1990, Mr. Weissbrod served as Vice President of Real
Estate of Charlie Brown's, where his responsibilities included
real estate leasing, site selection and construction of new
stores as well as remodelling existing facilities.
Stuart Fuchsman has served as Vice President, Chief
Operating Officer and a director of the Company since November
1992. From August 1986 to October 1992, he served as Project
Manager of Central Jersey Management Group, a real estate
developer in New Jersey. His responsibilities included
supervising the construction of single family homes, including
monitoring subcontractors activities and project costs.
Richard Goldberger has served as the Chairman of the Board
of Directors since the Company's inception in February 1991. Mr.
Goldberger is also a consultant to NHG. Since October 1989, he
has also served as the President and General Partner of Mid-
Investment Company, a diversified real estate company owned by
him and members of his family. From February 1953 to September
1989, Mr. Goldberger was the Chief Executive Officer of Garden
State Brickface & Stucco Company, a construction and home
improvement company with operations in twelve states,
which he founded and which was owned by him and members of his family.
Since 1990, he has also served as a director of United Jersey
Bank Central N.A.
-5-
<PAGE>
Lewis Levine has served as Vice President, Treasurer and a
director of the Company since February 1991. Since March 1992,
he has also served as the President of New England Brickmaster
Windows and Exteriors, Inc., a firm owned by his wife and Mildred
Goldberger. From April 1979 to March 1992, Mr. Levine served as
President of New England Brickmaster, Inc., a firm owned by him,
Richard Goldberger and other members of Mr. Goldberger's family
and which was liquidated in March 1992.
Marc Roberts has served as the President of Marc Roberts
Boxing, Inc., a company of which he is sole shareholder and which
is involved in the management of professional fighters. Mr.
Roberts has served as a director of the Company since June 1994.
Since September 1988, he has also served as the President of
Northwoods Associates, a company of which he is sole shareholder
and which is engaged in the development of residential real
estate projects. From January 1990 to November of 1990, Mr.
Roberts served as the President and Chief Executive Officer of
Triple Threat Enterprises, Inc., a publicly-held company that
managed professional fighters. Mr. Roberts is a part owner of
various restaurant ventures, one of which has the exclusive
license to develop Checkers restaurants in Essex County, New
Jersey. While it is possible that Checkers restaurants (which
feature hamburgers and frankfurters) may compete with the
Company, including for sites for new restaurants, the Company
does not believe that such competition will be significant
because of the differences of menus and the demographic criteria
for site selection. Nonetheless, Mr. Roberts will not
participate in board discussions concerning possible locations of
Linda's Chicken restaurants in Essex County, New Jersey.
William Ozzard has served as a director of the Company since
December 1994. Since 1970, he has been the Senior and Managing
Partner of the law firm of Ozzard Wharton.
Ivan Szathmary was appointed to the Board in July 1995.
Since 1979, Mr. Szathmary has been a Senior Vice President of the
Great Atlantic and Pacific Tea Co., Inc.
Richard Goldberger is the father-in-law of each of Messrs.
Weissbrod, Fuchsman and Levine. Linda Weissbrod is the wife of
Peter Weissbrod and the daughter of Mr. Goldberger.
OTHER KEY PERSONNEL. The following individuals, who are not
executive officers or Directors of the Company, make significant
contributions to the business of the Company:
Linda Weissbrod, age 39, has served as Director of Marketing
of the Company since October 1991 and served as a Vice-President
of the Company until 1994. From April 1990 until August 1991,
she served as the President of Handwriting Research Corp., a firm
she founded, of which she was the sole shareholder and which
specialized in analyzing handwriting samples of potential
employees of various employers.
Frank Cocco, age 65, joined NHG in March 1996 as Senior Vice
President and serves as NHG's chief lending officer. For more
than 40 years, Mr. Cocco has been employed by United Jersey Bank
(Commercial Trust Company) in various capacities, most recently,
for more than five years, as Vice President-Deputy Manager of
Loan Operations Center, with responsibility for reducing the non-
performing loan portfolio of the bank.
Angelo Maione, age 54, joined NHG in January 1996, as a
senior lending officer. For more than 10 years, Mr. Maione was
employed at United Jersey Bank in various capacities, including
as
-6-
<PAGE>
Deputy Portfolio Manager for the Home Equity Lending Unit and
as Manager of the Loan and Customer Service Unit at United Jersey
Bank Central, N.A.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During 1995, the Board of Directors held six meetings.
The Executive Committee held no meetings during 1995. The
Executive Committee has all the power and authority of the Board
of Directors in the management and affairs of the Company between
meetings of the Board of Directors, to the extent permitted by
law.
The Audit Committee held one meeting during 1995. The Audit
Committee recommends the appointment of independent auditors for
the Company, reviews internal audit reports on various aspects of
the Company's operations and consults with the Company's auditors
on matters relating to internal financial controls and
procedures.
The Company does not have a Nominating or Compensation
Committee of the Board of Directors.
DIRECTORS' COMPENSATION
The Company pays all outside directors $100 for each Board
or committee meeting attended. Outside directors may also be
reimbursed for expenses incurred by them in their capacity as a
member of the Board or any committee. Between May 1994 and July
1995, the Company granted options to each of its three outside
directors to purchase 10,000 shares of Class A Common Stock at
prices per share not less than the fair market value of the Class
A Common Stock on the date of grant. The options are exercisable
for three years commencing one year from the date of grant.
-7-
<PAGE>
Executive Compensation
The following table sets forth the compensation paid by the
Company for the past three fiscal years to Mr. Peter Weissbrod,
its Chief Executive Officer and President. No other executive
officer's annual compensation exceeded $100,000 for the fiscal
year ended December 31, 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Long Term
Compensation All Other Compensation
Name and Principal Position Year Salary Compensation Stock Options (#)
- - --------------------------- ---- ------------ ------------ -----------------
<S> <C> <C> <C> <C>
Peter Weissbrod
President and CEO 1995 $100,000 - 100,000
1994 $92,000 - -
1993 $81,800 $8,245(1) -
- - -----------------------------
(1) Includes the cost of health insurance (family coverage) of approximately
$6,200.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information concerning the
stock option grants made to Mr. Weissbrod for the fiscal year
ended December 31, 1995. No stock appreciation rights were
granted to him during such year.
<TABLE>
<CAPTION>
Number of Percent of
Securities Total
Underlying Options Market
Options Granted to Exercise or Price on
Granted Employees in Base Price Date of Expiration
Name (#)(1) Fiscal Year ($/Sh) Grant Date
- - ------------- --------- ------------ ------------ --------- -----------
<S> <C> <C> <C> <C> <C>
Peter Weissbrod 100,000 49.9% $3.75 $5.375 9/2005
- - ---------------------
(1) Options are immediately exercisable and are to purchase shares of Class A
Common Stock. See "Approval of 1995 Stock Option Plan."
</TABLE>
-8-
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table sets for information for the fiscal year ended
December 31, 1995, concerning option exercises by Peter Weissbrod and the
value of unexercised options held by him. No stock appreciation rights were
exercised or were outstanding during such year.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options at December 31, 1995 In-the-Money Options at
(#) December 31, 1995 ($)(1)
---------------------------- ---------------------------
Shares
Acquired on Value
Name Exercise(#) Realized Exercisable Unexercisable Exercisable Unexercisable
------ ------------- -------- ------------ ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter Weissbrod 0 $0 100,000 0 $50,000 0
- - --------------------
(1) Based on the closing price of the Class A Common Stock at fiscal year-
end of $4.25 per share, less the exercise price payable for such shares.
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has employment agreements with Peter Weissbrod,
its Chief Executive Officer and President, and Stuart Fuchsman,
as its Vice-President and Chief Operating Officer. The
agreements are for three year terms which commenced on May 25,
1994. Effective January 1, 1996, the Board approved a 10%
increase in the salaries of Messrs. Weissbrod and Fuchsman to
$110,000 and $99,000, respectively. The agreements permit
Messrs. Weissbrod and Fuchsman to participate in employee benefit
plans and contain confidentiality and non-competition provisions.
The Company has the right to terminate either agreement for
cause (as defined therein) or as a result of the employee's death
or permanent disability. Except in the case of termination by
the Company for cause or voluntary termination by the employee,
upon early termination of an agreement, the employee is entitled
to receive his salary plus fringe benefits for a period of up to
24 months from the date of termination and any bonuses to which
he is entitled prorated through the date of termination.
STOCK OPTION PLANS
In February 1994, the Board of Directors and the
stockholders of the Company adopted and approved the 1994
Company's Stock Option Plan (the "1994 Plan"). The 1994 Plan
provides for the grant of incentive stock options ("ISOs") within
the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), and non-qualified stock options
("NQSOs") to certain employees of the Company. The 1994 Plan
further provides for the grant of NQSOs to directors, agents of,
and consultants to, the Company, whether or not employees of the
Company. The purpose of the 1994 Plan is to attract and retain
employees, agents, consultants and directors. Options granted
under the 1994 Plan may not be exercisable for terms in excess of
10 years from the date of grant. In addition, no options may be
granted under the 1994 Plan later than 10 years after the 1994
Plan's effective date of February 17, 1994. A maximum of 130,000
shares of Class A Common Stock may be issued under the 1994 Plan,
of which 73,500 have been granted as of March 15, 1996.
-9-
<PAGE>
In September 1995, the Board of Directors adopted and
approved the Company's 1995 Stock Option Plan (the "1995 Plan"),
the terms of which are summarized below under "Approval of 1995
Stock Option Plan."
AMENDMENT TO CERTIFICATE OF INCORPORATION TO CHANGE THE NAME OF
THE COMPANY
The Board of Directors is proposing an amendment to the
certificate of incorporation to change the name of the Company to
Linda's Diversified Holdings Inc.
As part of the Company's strategy to stem continuing losses
from its restaurant business, in 1995, the Company decided to
diversify its business by entering into the business of providing
federally-guaranteed financing for homeowners and lead-generation
services for contractors with respect to home improvement
services in the low- to-moderate income housing markets. In this
connection, the Company formed a new wholly-owned subsidiary,
NHG, and advanced $500,000 to NHG in order to satisfy minimum
lending requirements for originators on federally-guaranteed
loans.
In the second quarter of 1996, the Company completed a
private offering of 800,000 shares of Class A Common Stock and
800,000 redeemable Class C Warrants in which it received net
proceeds of approximately $1,700,000, of which $500,000 was used
to repay the advance made by the Company and the balance will be
used to fund NHG's business.
In view of this strategic development, the Board of
Directors has determined it would in the best interest of the
Company and its stockholders to change its name.
APPROVAL OF 1995 STOCK OPTION PLAN
The 1995 Plan authorizes the grant of options to purchase up
to an aggregate of 600,000 shares of Class A Common Stock to key
employees, including officers, directors, advisors and
independent consultants to the Company or to any of its
subsidiaries. Options granted to employee directors, officers
and other employees may be designated as incentive stock options
("ISOs"). The Board of Directors believes the 1995 Plan is
desirable to attract and retain executives and other key
employees of outstanding ability and recommends that the 1995
Plan be approved by the Company's stockholders. A copy of the
1995 Plan is attached hereto as Exhibit A.
The 1995 Plan is administered by the Board of Directors,
which may empower a committee of two or more Directors to
administer the plan. If such committee is appointed, it may
exercise all of the powers of the Board in relation to the 1995
Plan. The Board is generally empowered to interpret the 1995
Plan, to prescribe rules and regulations relating thereto, to
determine the terms of the option agreements, to amend them with
the consent of the optionee, to determine to whom options are to
be granted, and to determine the number of shares subject to each
option and the exercise price thereof. The per share exercise
price for ISOs granted under the 1995 Plan may not be less than
100% of the fair market value of a share of Class A Common Stock
on the date the option is granted (110% of fair market value on
the date of grant of an ISO if the optionee owns more than 10% of
the total combined voting power of all classes of the Company's
stock), for non-qualified stock options ("NQSOs") the per share
exercise price may not be less than 65% of fair market value of a
share of Class A Common Stock on the date the option is granted.
At the discretion of the Board of Directors, the Company may loan
to the optionee some or all of the purchase price of the shares
to be acquired upon exercise of an option granted under the plan
as an incentive to the optionee becoming a new employee of the
Company.
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Options may be exercisable for a term determined by the
Board which may not be greater than 10 years from the date of
grant. Generally, options may be exercised only while the
original grantee has a relationship with the Company which
confers eligibility to be granted options or within 90 days after
termination of such relationship with the Company, or up to six
months after death or total and permanent disability. In the
event of the termination of such relationship between the
original grantee and the Company for cause (as defined in the
1995 Plan), all options granted to that original optionee
terminate immediately. In the event of certain basic changes in
the Company, including a change in control of the Company (as
defined in the 1995 Plan), in the discretion of the Board, each
option may become fully and immediately exercisable. ISOs are
not transferable other than by will or the laws of descent and
distribution. NQSOs may be transferred to the optionee's spouse
or lineal descendants, subject to certain restrictions. Options
may be exercised during the holder's lifetime only by the holder,
his or her guardian or legal representative.
Options granted pursuant to the 1995 Plan may be designated
as ISOs, with the attendant tax benefits provided under Sections
421 and 422 of the Code, as amended. Accordingly, the 1995 Plan
provides that the aggregate fair market value (determined at the
time an ISO is granted) of the Common Stock subject to ISOs
exercisable for the first time by an employee during any calendar
year (under all plans of the Company and its subsidiaries) may
not exceed $100,000.
The Board may modify, suspend or terminate the 1995 Plan;
provided, however, that certain material modifications affecting
the plan must be approved by the stockholders, and any change in
the plan that may adversely affect an optionee's rights under an
option previously granted under the plan requires the consent of
the optionee.
Since the date of adoption by the Company's Board of
Directors, the Company has granted NQSOs under the 1995 Plan to
Peter Weissbrod, the Company's President, Stuart Fuchsman, the
Company's Vice President and Chief Operating Officer, and Linda
Weissbrod, the Company's Director of Marketing, to purchase
100,000, 30,000 and 20,000 shares, respectively, at an exercise
price of $3.75 per share, which was approximately 70% of the
market value of Class A Common Stock on the date of the grant.
These options expire in September 2005. No other stock options
have been granted under the 1995 Plan. The market value of Class
A Common Stock underlying the options which may be issued under
the 1995 Plan is approximately $3,150,000 as of May 7, 1996.
Regulations recently adopted by the Securities and Exchange
Commission require disclosure of benefits to be realized under a
plan by the directors, executive officers of the Company, and
certain other categories of optionees, if such benefits are
determinable. Although it is likely that other grants, which may
be substantial, will be made to the Company's executive officers
and others during the life of the 1995 Plan, it is impossible to
determine the amount or terms of such future grants.
TAX CONSEQUENCES
Based on management's understanding of current federal
income tax laws, the federal income tax consequences with respect
to the grant and exercise of stock options under the 1995 Plan
are as follows:
Optionees will not be taxed upon the grant of an option. At
the time of exercise of an option other than an ISO, the optionee
generally will realize ordinary income in an amount equal to the
excess of the fair market value of the shares over the option
price. The Company generally will be entitled to a tax deduction
in the same amount, and the shares so acquired will have a basis
to the optionee equal to their fair market value. Upon the sale
of a share so acquired, any gain or loss will
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result in a capital gain or loss measured by the difference between
the optionee's basis and the amount realized on such sale, provided the share
is a capital asset in the hands of the holder.
At the time of exercise of an ISO, the optionee will realize
no income, and the Company will not be entitled to any deduction.
Upon the sale of a share acquired pursuant to the exercise of an
ISO, any gain or loss will generally result in a capital gain or
capital loss (measured by the difference between the amount
realized on such sale and the exercise price), currently taxed at
a maximum rate of 28%, provided the share sold is a capital asset
in the hands of the holder. However, if at the time of the sale
or other disposition of such share, the optionee held the share
for less than one year after its issuance to him or less than two
years after the grant of the option, a portion (or all) of any
gain will be taxed at ordinary income rates at the time of the
disposition in an amount equal to the excess of the fair market
value of the shares on the date of exercise (or if less, the
amount realized upon disposition) over the option price.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
Rothstein, Kass & Company, P.C. have been the principal
accountants of the Company during 1995 and have been selected as
the Company's principal accountants for the current calendar
year. A representative of Rothstein, Kass & Company, P.C. will
be present at the Annual Meeting, with an opportunity to make a
statement if he desires to do so, and will be available to
respond to appropriate questions.
If, prior to the Company's next annual meeting of
stockholders, such firm shall decline to act or otherwise becomes
incapable of acting, or if its engagement shall be otherwise
discontinued by the Board of Directors, the Board will appoint
other independent auditors whose appointment for any period
subsequent to the next annual meeting will be subject to
stockholder approval at such meeting.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder desiring to submit a proposal for action at
the next annual meeting of stockholders which the stockholder
desires to be presented in the Company's Proxy Statement with
respect to such meeting should submit such proposal to the
Company at its principal place of business no later than January
[27], 1997.
OTHER MATTERS
The Board of Directors did not know, within a reasonably
time before the commencement of this solicitation, of any other
business to be presented at the Annual Meeting constituting a
proper subject for action by the stockholders, other than as set
forth in this Proxy Statement. However, if any such matter
should properly come before the meeting, the persons named in the
enclosed proxy intend to vote such proxy in accordance with their
best judgment.
The proxies named in the enclosed form of proxy card and
their substitutes, if any, will vote the shares represented by
the proxy, if the proxy appears to be valid on its face and,
where a choice is specified on the proxy card, the shares will be
voted in accordance with each specification so made.
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In addition to soliciting proxies by mail, the Company may
make requests for proxies by telephone, telegraph or messenger or
by personal solicitation by officers, directors, or employees of
the Company, or by any one or more of the foregoing means. The
Company will also reimburse brokerage firms and other nominees
for their actual out-of-pocket expenses in forwarding proxy
material to beneficial owners of the Company's shares. All
expenses in connection with such solicitation will be paid by the
Company.
By Order of the Board of Directors,
Stuart Fuchsman
Secretary
Dated: May [28], 1996
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EXHIBIT A
LINDA'S FLAME ROASTED CHICKEN INCORPORATED
1995 STOCK OPTION PLAN
1. PURPOSE OF THE STOCK OPTION PLAN
Linda's Flame Roasted Chicken Incorporated (the
"Corporation") desires to attract and retain the best available
talent and to encourage the highest level of performance. The
Stock Option Plan (the "Stock Option Plan") is intended to
contribute significantly to the attainment of these objectives,
by (i) providing long-term incentives and rewards to all key
employees of the Corporation (including officers and directors
who are key employees of the Corporation and also including key
employees of any subsidiary of the Corporation which may include
officers or directors of any subsidiary of the Corporation who
are also key employees of said subsidiary), and to non-employee
directors, advisors and independent consultants to the
Corporation or to any of its subsidiaries (together, "Eligible
Individuals"), who are contributing or in a position to
contribute to the long-term success and growth of the Corporation
or of any subsidiary, (ii) assisting the Corporation and any
subsidiary in attracting and retaining Eligible Individuals with
experience and ability and (iii) associating more closely the
interests of such Eligible Individuals with those of the
Corporation's stockholders.
2. SCOPE AND DURATION OF THE STOCK OPTION PLAN
Under the Stock Option Plan, options ("Options") to purchase
Class A common stock, par value $0.001 per share ("Common
Stock"), may be granted to Eligible Individuals. Options granted
to employees (including officers and directors who are employees)
of the Corporation or a subsidiary corporation thereof, may, at
the time of grant, be designated by the Corporation's Board of
Directors as incentive stock options ("ISOs"), with the attendant
tax benefits as provided for under Sections 421 and 422 of the
Internal Revenue Code of 1986, as amended (the "Code") (options
not designated as ISOs are referred to as Non-Qualified Stock
Options or "NQSOs"). The aggregate number of shares of Common
Stock reserved for grant from time to time under the Stock Option
Plan is 600,000 shares of Common Stock which shares of Common
Stock may be authorized but unissued shares of Common or shares
of Common Stock which shall have been or which may be reacquired
by the Corporation, as the Board of Directors of the Corporation
shall from time to time determine. Such aggregate numbers shall
be subject to adjustment as provided in Paragraph 11. If an
Option shall expire or terminate for any reason without having
been exercised in full, the shares of Common Stock represented by
the portion thereof not so exercised or surrendered shall (unless
<PAGE>
the Stock Option Plan shall have been terminated) become
available for other options under the Stock Option Plan. Subject
to Paragraph 13, no Option shall be granted under the Stock
Option Plan after September 14, 2005. The grant of an Option
and/or a Right is sometimes referred to herein as an Award
thereof.
3. ADMINISTRATION OF THE STOCK OPTION PLAN
This Stock Option Plan will be administered by the Board of
Directors of the Corporation (the "Board of Directors").
The Board of Directors shall have authority in its
discretion, subject to and not inconsistent with the express
provisions of the Stock Option Plan, to direct the grant of
Options, to determine the purchase price of the Common Stock
covered by each Option, the Eligible Individuals to whom, and the
time or times at which, Options shall be granted and, subject to
the limits set forth in paragraph 4 hereof, the number of shares
of Common Stock to be covered by each Option; to designate
Options as ISOs; to interpret the Stock Option Plan; to determine
the time or times at which Options may be exercised; to
prescribe, amend and rescind rules and regulations relating to
the Stock Option Plan, including, without limitation, such rules
and regulations as it shall deem advisable so that transactions
involving Options may qualify for exemption under such rules and
regulations as the Securities and Exchange Commission may
promulgate from time to time exempting transactions from Section
16(b) of the Securities Exchange Act of 1934; to determine the
terms and provisions of and to cause the Corporation to enter
into, agreements with Eligible Individuals in connection with
Options (Awards) granted under the Stock Option Plan (the
"Agreements"), which Agreements may vary from one another as the
Board of Directors shall deem appropriate; and to make all other
determinations it may deem necessary or advisable for the
administration of the Stock Option Plan.
The Board of Directors may by resolution, but need not,
empower a committee (the "Committee") of two or more directors,
all of whom shall be disinterested persons (as hereinafter
defined), to administer the Stock Option Plan and may similarly
withdraw such power from the Committee. Members of the Committee
shall serve at the pleasure of the Board of Directors. The
Committee shall have and may exercise all of the powers of the
Board of Directors under the Stock Option Plan, other than the
power to appoint a director to committee membership. A majority
of the Committee shall constitute a quorum, and acts of a
majority of the members present at any meeting at which a quorum
is present shall be deemed the acts of the Committee. The
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Committee may also act by instrument signed by a majority of the
members of the Committee.
Every action, decision, interpretation or determination by
the Board of Directors with respect to the application or
administration of this Stock Option Plan shall be final and
binding upon the Corporation and each person holding any Option
granted under this Stock Option Plan.
4. ELIGIBILITY: FACTORS TO BE CONSIDERED IN GRANTING
OPTIONS AND DESIGNATING ISOS (AWARDS).
(a) Options may be granted only to (i) key employees
(including officers and directors who are employees) of the
Corporation or any subsidiary corporation thereof on the date of
grant (Options so granted may be designated as ISOs) and (ii)
directors or officers of the Corporation or a subsidiary
corporation thereof on the date of grant, without regard to
whether they are employees, and (iii) consultants or advisers to
or agents or independent representatives of the Corporation or a
subsidiary thereof. In determining the persons to whom Options
(Awards) shall be granted and the number of shares of Common
Stock to be covered by each Award, the Board of Directors shall
take into account the nature of the duties of the respective
persons, their present and potential contributions to the
Corporation's (including subsidiaries) successful operation and
such other facts as the Board of Directors in its discretion
shall deem relevant. Subject to the provisions of Paragraph 2,
an Eligible Individual may receive Options (Awards) on more than
one occasion under the Stock Option Plan. No person shall be
eligible for an Option grant if he shall have filed with the
Secretary of the Corporation an instrument waiving such
eligibility; provided that any such waiver may be revoked by
filing with the Secretary of the Corporation an instrument of
revocation, which revocation will be effective upon such filing.
(b) In the case of each ISO granted to an employee, the
aggregate fair market value (determined at the time the ISO is
granted) of the Common Stock with respect to which the ISO is
exercisable for the first time by such employee during any
calendar year (under all plans of the Corporation and any
subsidiary corporation thereof) may not exceed $100,000.
5. OPTION PRICE.
(a) The purchase price per share of the Common Stock
covered by each Option shall be established by the Board of
Directors, but, in no event shall it be less than the fair market
value of a share of the Common Stock on the date the Option is
granted with respect to an ISO or 65% of the fair market value on
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the date the option is granted with respect to Options other than
ISOs. If, at the time an Option is granted, the Common Stock is
publicly traded such fair market value shall be the closing price
(or the mean of the latest bid and asked prices) of a share of
Common Stock on such date as reported in The Wall Street Journal
(or a publication or reporting service deemed equivalent to The
Wall Street Journal for such purpose by the Board of Directors)
for the over-the-counter market or for any national securities
exchange or other securities market which at the time the Common
Stock is included in the stock price quotations of such
publication. If, at the time an Option is granted, the Common
Stock is not publicly traded, the Board of Directors shall make a
good faith attempt to determine such fair market value.
(b) In the case of an employee, who, at the time an ISO is
granted, owns stock possessing more than 10% of the total
combined voting power of all classes of the stock of the employer
corporation or of its parent or a subsidiary corporation thereof
(a "10% Holder"), the purchase price of the Common Stock covered
by an ISO shall in no event be less than 110% of the fair market
value of the Common Stock at the time the ISO is granted.
6. TERMS OF OPTIONS.
The term of each Option shall be fixed by the Board of
Directors, but in no event shall it be less than 1 year or more
than 10 years from the date of grant, subject to earlier
termination as provided in Paragraphs 9 and 10. The term of an
ISO granted to a 10% Holder shall be no more than 5 years from
the date of grant.
7. EXERCISE OF OPTIONS.
(a) Subject to the provisions of the Stock Option Plan, an
Option granted to an employee under the Stock Option Plan shall
become fully exercisable at the earlier of (A) employee's actual
retirement date, unless such retirement is without the consent of
the Board of Directors and is prior to the employee's normal
retirement date as determined under any qualified retirement plan
maintained by the Corporation at such time or, if no such plan is
then in effect, age 65 (but in no event prior to the first
anniversary of the date of grant), or (B) at such time or times
as the Board of Directors in its sole discretion shall determine
at the time of the granting of the Option, except that in no
event shall any such Option be exercisable later than 10 years
after this grant. Notwithstanding anything in this Stock Option
Plan to the contrary, NQSOs may be exercised in such manner and
at such time or times as the Board of Directors in its sole
discretion shall determine, except that in no event shall any
such Option be exercisable later than 10 years after this grant.
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<PAGE>
(b) An Option may be exercised as to any or all full shares
of Common Stock as to which the Option is then exercisable.
(c) The purchase price of the shares of Common Stock as to
which an Option is exercised shall be paid in full in cash at the
time of exercise; provided that, if permitted by the related
Option Agreement or by the Board of Directors, the purchase price
may be paid, in whole or in part, by surrender or delivery to the
Corporation of securities of the Corporation having a fair market
value on the date of the exercise equal to the portion of the
purchase price being so paid. Fair market value shall be
determined as provided in Paragraph 5 for the determination of
such value on the date of the grant.
(d) Except as provided in Paragraphs 9 and 10, except as
the Board of Directors may determine in its absolute discretion,
and as set forth in the grantees' relevant Option Agreement, no
Option may be exercised unless the original grantee thereof is
then an Eligible Individual, and unless the original grantee has
remained in the continuous employ, or been a director, officer,
consultant, adviser, agent or independent representative of the
Corporation or any such subsidiary corporation or any combination
thereof for one year from the date of its grant.
(e) The Option holder shall have the rights of a
stockholder with respect to shares of Common Stock covered by an
Option only upon becoming the holder of record of such shares of
Common Stock.
(f) Notwithstanding any other provision of this Stock
Option Plan, the Corporation shall not be required to issue or
deliver any share of stock upon the exercise of an Option prior
to the admission of such share to listing on any stock exchange
or automated quotation system on which the Corporation's Common
Stock may then be listed.
8. NONTRANSFERABILITY OF OPTIONS.
No Options granted under the Stock Option Plan shall be
transferable other than by will or by the laws of descent and
distribution, except that NQSOs may be transferred to or for the
benefit of (by trust) the spouse or lineal descendants of a
grantee while such grantee is entitled to exercise the Options,
subject to restrictions on transfer imposed by federal and state
securities laws, and if prior thereto the transferee agrees to be
bound by the terms of the Stock Option Plan and the Options, as
the case may be ("Permitted Transferee"). Options may be
exercised, during the lifetime of the holder, only by the holder,
or by his guardian or legal representative.
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<PAGE>
9. TERMINATION OF RELATIONSHIP TO THE CORPORATION.
(a) In the event that any original grantee shall cease to
be an Eligible Individual of the Corporation (or any subsidiary
thereof), except as set forth in Paragraph 10, such Option may
(subject to the provisions of the Stock Option Plan) be exercised
(to the extent that the original grantee was entitled to exercise
such Option at the termination of his employment or service as a
director, officer, consultant, adviser, agent or independent
representative, as the case may be) at any time within 90 days
after such termination, but not more than 10 years (five years in
the case of a 10% Holder in the case of an ISO) after the date on
which such Option was granted or the expiration of the Option, if
earlier. In its sole and absolute discretion, the Board of
Directors may extend such 90-day time period with respect to a
particular optionee and amend the grantees relevant Option
Agreement accordingly.
Notwithstanding the foregoing, if the position of an
original grantee shall be terminated by the Corporation or any
subsidiary thereof for cause or if the original grantee
terminates his employment or position voluntarily and without the
consent of the Corporation or any subsidiary corporation thereof,
as the case may be (which consent shall be presumed in the case
of normal retirement), the Options granted to such person,
whether held by such person or by a Permitted Transferee, shall,
to the extent not theretofore exercised, forthwith terminate
immediately upon such termination. The holder of any ISO may not
exercise such Option unless at all times during the period
beginning with the date of grant of the ISO and ending on the day
90 days before the date of exercise he is an employee of the
Corporation granting such Option, a subsidiary thereof, or a
corporation or a subsidiary corporation issuing or assuming a
stock option in a transaction to which Section 425(a) of the Code
applies.
(b) Other than as provided in Paragraph 9(a), Options
granted under the Stock Option Plan shall not be affected by any
change of duties or position so long as the holder remains an
Eligible Individual.
(c) Any Option Agreement may contain such provisions, as
the Board of Directors shall approve, with reference to the
determination of the date of employment or other position or when
a relationship terminates for purposes of the Stock Option Plan
and the effect of leaves of absence, which provisions may vary
from one another.
<PAGE>
(d) Nothing in the Stock Option Plan or in any Option
granted pursuant to the Stock Option Plan shall confer upon any
Eligible Individual or other person any right to continue in the
employ of the Corporation or any subsidiary corporation thereof
(or the right to be retained by, or have any continued
relationship with the Corporation or any subsidiary corporation
thereof), or affect the right of the Corporation or any such
subsidiary corporation, as the case me be, to terminate his
employment, retention or relationship at any time. The grant of
any Option pursuant to the Stock Option Plan shall be entirely in
the discretion of the Board of Directors and nothing in the Stock
Option Plan shall be construed to confer on any Eligible
Individual any right to received any Option under the Stock
Option Plan.
10. DEATH OR DISABILITY OF HOLDER.
(a) Except as may be determined by the Board of Directors
and as set forth in the grantees relevant Option Agreement, if a
person to whom an Option has been granted under the Stock Option
Plan shall die (and the conditions in subparagraph (b) below are
met) or become permanently and totally disabled (as such term is
defined below) while serving as an Eligible Individual and if the
Option was otherwise exercisable immediately prior to the
happening of such event then the period for exercise provided in
Paragraph 9 shall be extended to six months after the date of
death of the original grantee, or in the case of the permanent
and total disability of the original grantee, to six months after
the date of permanent and total disability of the original
grantee, but, in either case, not more than 10 years (five years
in the case of a 10% Holder in the case of an ISO) after the date
such Option was granted, or the expiration of the Option, if
earlier, as shall be prescribed in the original grantee's Option
Agreement, an Option may be exercised as set forth herein in the
event of the original grantee's death, by a Permitted Transferee
or by the person or persons to whom the holder's rights under the
Option pass by will or applicable law, or if no such person has
such right, by his executors or administrators; or in the event
of the original grantee's permanent and total disability, by the
holder or his guardian.
(b) In the case of death of a person to whom an Option was
originally granted, the provisions of subparagraph (a) apply if
such person dies (i) while in the employ of the Corporation or a
subsidiary corporation thereof or while serving as an Eligible
Individual of the Corporation or a subsidiary corporation thereof
or (ii) within 90 days after the termination of such position
other than termination for cause, or voluntarily on the original
grantee's part and without the consent of the Corporation or a
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subsidiary corporation thereof, which consent shall be presumed
in the case of normal retirement.
(c) The term "permanent and total disability" as used above
shall have the meaning set forth in Section 22(e)(3) of the Code.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Notwithstanding any other provision of the Stock Option
Plan, each Agreement may contain such provisions as the Board of
Directors shall determine to be appropriate for the adjustment of
the number and class of shares of Common Stock covered by such
Option, the Option prices and the number of shares of Common
Stock as to which Options shall be exercisable at any time, in
the event of changes in the outstanding Common Stock of the
Corporation by reason of stock dividends, split-ups, split-downs,
reverse splits, recapitalizations, mergers, consolidations,
combinations or exchanges of shares, spin-offs, reorganizations,
liquidations and the like. In the event of any such change in
the outstanding Common Stock of the Corporation, the aggregate
number of shares of Common Stock as to which Options may be
granted under the Stock Option Plan to any Eligible Individual
shall be appropriately adjusted by the Board of Directors, whose
determination shall be conclusive. In the event of (i) the
dissolution, liquidation, merger or consolidation of the
Corporation or a sale of all or substantially all of the assets
of the Corporation, or (ii) the disposition by the Corporation of
substantially all of the assets or stock of a subsidiary of which
the original grantee is then an employee, officer or director,
consultant, adviser, agent or independent representative, or
(iii) a change in control (as hereinafter defined) of the
Corporation has occurred or is about to occur, then, if the Board
of Directors shall so determine, each Option under the Stock
Option Plan, if such event shall occur with respect to the
Corporation, or each Option granted to an employee, officer,
director, consultant, adviser, agent or independent
representative of a subsidiary respecting which such event shall
occur, shall (x) become immediately and fully exercisable or (y)
terminate simultaneously with the happening of such event, and
the Corporation shall pay the optionee in lieu thereof an amount
equal to (a) the excess of the fair market value over the
exercise price of one share on the date on which such event
occurs, multiplied by (b) the number of shares subject to the
Option, without regard to whether the Option is then otherwise
exercisable.
12. EFFECTIVENESS OF THE STOCK OPTION PLAN.
Options may be granted under the Stock Option Plan at any
time or from time to time after its adoption by the Board of
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Directors. The exercise of the Options shall also be expressly
subject to the condition that at the time of exercise a
registration statement under the Securities Act of 1933, as
amended (the "Act") shall be effective, or other provision
satisfactory to the Board of Directors shall have been made
without violation of the Act, and such other qualification under
any state or federal law, rule or regulation as the Corporation
shall determine to be necessary or advisable shall have been
effected. If the shares of Common Stock issuable upon exercise
of an Option are not registered under the Act, and if the Board
of Directors shall deem it advisable, the Optionee may be
required to represent and agree in writing (i) that any shares of
Common Stock acquired pursuant to the Stock Option Plan will not
be sold except pursuant to an effective registration statement
under the Act or an exemption from the registration provisions of
the Act and (ii) that such Optionee will be acquiring such shares
of Common Stock for his own account and not with a view to the
distribution thereof and (iii) that the holder accepts such
restrictions on transfer of such shares, including, without
limitation, the affixing to any certificate representing such
shares of an appropriate legend restricting transfer as the
Corporation may reasonably impose.
13. TERMINATION AND AMENDMENT OF THE STOCK OPTION PLAN.
The Board of Directors of the Corporation may, at any time
prior to the termination of the Stock Option Plan, suspend,
terminate, modify or amend the Stock Option Plan; provided that
any increase in the aggregate number of shares of Common Stock
reserved for issue upon the exercise of Options, any increase in
the maximum number of shares of Common Stock for which Options
may be granted to any Eligible Individual during any period, any
reduction in the purchase price of the Common Stock covered by
any Option, any extension of the period during which Options may
be granted or exercised, or any material modification in the
requirements as to eligibility for participation in the Stock
Option Plan, shall, if the Stock Option Plan is submitted to and
approved by a majority of the stockholders of the Corporation, be
subject to the approval of stockholders, except that any such
increase, reduction or change that may result from adjustments
authorized by Paragraph 11 or adjustments based on revisions to
the Code or regulations promulgated thereunder (to the extent
permitted by such authorities) shall not require such stockholder
approval. No suspension, termination, modification or amendment
of the Stock Option Plan may, without the express written consent
of the Eligible Individual (or his Permitted Transferee) to whom
an Option shall theretofore have been granted, adversely affect
the rights of such Eligible Individual (or his Permitted
Transferee) under such Option.
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14. FINANCING FOR INVESTMENT IN STOCK OF THE CORPORATION.
The Board of Directors may cause the Corporation or any
subsidiary to give or arrange for financing, including direct
loans, secured or unsecured, or guaranties of loans by banks
which loans may be secured in whole or in part by assets of the
Corporation or any subsidiary, to any Eligible Individual under
the Stock Option Plan as an incentive to the optionee becoming a
new employee of the Corporation, who shall have been so employed
or so served for a period of at least six months at the end of
the fiscal year ended immediately prior to arranging such
financing; but the Board of Directors may, in any specific case,
authorize financing for an Eligible Individual who shall not have
served for such a period. Such financing shall be for the
purpose of providing funds for the purchase by the Eligible
Individual of shares of Common Stock pursuant to the exercise of
an Option and/or for payment of taxes incurred in connection with
such exercise, and/or for the purpose of otherwise purchasing or
carrying a stock investment in the Corporation. The maximum
amount of liability incurred by the Corporation and its
subsidiaries in connection with all such financing outstanding
shall be determined from time to time in the discretion of the
Board of Directors. Each loan shall bear interest at a rate not
less than that provided by the Code and other applicable law,
rules, and regulations in order to avoid the imputation of
interest at a higher rate. Each recipient of such financing
shall be personally liable for the full amount of all financing
extended to him. Such financing shall be based upon the judgment
of the Board of Directors that such financing may reasonably be
expected to benefit the Corporation, and that such financing as
may be granted shall be consistent with the Certificate of
Incorporation and By-laws of the Corporation or such subsidiary,
and applicable laws.
If any such financing is authorized by the Board of
Directors, such financing shall be administered by the Board of
Directors.
15. SEVERABILITY.
In the event that any one or more provisions of the Stock
Option Plan or any Agreement, or any action taken pursuant to the
Stock Option Plan or such Agreement, should, for any reason, be
unenforceable or invalid in any respect under the laws of the
United States, any state of the United States or any other
government, such unenforceability or invalidity shall not affect
any other provision of the Stock Option Plan or of such or any
other Agreement but in such particular jurisdiction and instance
the Stock Option Plan and the affected Agreement shall be
construed as if such unenforceable or invalid provision had not
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<PAGE>
been contained therein or if the action in question had not been
taken thereunder.
16. APPLICABLE LAW.
The Stock Option Plan shall be governed and interpreted,
construed and applied in accordance with the laws of the State of
Delaware.
17. WITHHOLDING.
A holder shall, upon notification of the amount due and
prior to or concurrently with delivery to such holder of a
certificate representing such shares of Common Stock, pay
promptly any amount necessary to satisfy applicable federal,
state, local or other tax requirements.
18. MISCELLANEOUS.
(1) The terms "parent," "subsidiary" and "subsidiary
corporation" shall have the meanings set forth in Sections 424
(e) and (f) of the Code, respectively.
(2) There term "disinterested person" shall mean a person
who is not at the time he exercises discretion in administering
the Stock Option Plan eligible and has not at any time within one
year prior thereto been eligible for selection as a person to
whom stock may be allocated or to whom stock options may be
granted pursuant to the Stock Option Plan or any other plan of
the Corporation or any of its affiliates entitling the
participants therein to acquire stock or stock options of the
Corporation or any of its affiliates.
(3) The term "terminated for cause" shall mean termination
by the Corporation (or a subsidiary thereof) of the employment of
or other relationship with, the original grantee by reason of the
grantee's (i) willful refusal to perform his obligations to the
Corporation (or a subsidiary thereof), or (ii) willful
misconduct, contrary to the interests of the Corporation (or a
subsidiary thereof), or (iii) commission of a serious criminal
act, whether denominated a felony, misdemeanor or otherwise. In
the event of any dispute whether a termination for cause has
occurred, the Board of Directors may by resolution resolve such
dispute and such resolution shall be final and conclusive on all
parties.
(4) The term "change in control" shall mean an event or
series of events that would be required to be described as a
change in control of the Corporation in a proxy or information
statement distributed by the Corporation pursuant to Section 14
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<PAGE>
of the Securities Exchange Act of 1934, as amended, in response
to item 6(e) of Schedule 14A promulgated thereunder, or any
substitute provision which may hereafter be promulgated
thereunder or otherwise adopted. The determination whether and
when a change in control has occurred or is about to occur shall
be made by the Board of Directors in office immediately prior to
the occurrence of the event or series of events constituting such
change in control.
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<PAGE>
LINDA'S FLAME ROASTED CHICKEN INCORPORATED
PROXY
ANNUAL MEETING OF STOCKHOLDERS
JUNE 26, 1996
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS AND UNLESS
OTHERWISE PROPERLY MARKED AND EXECUTED BY THE UNDERSIGNED STOCKHOLDER, THIS
PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4 AS RECOMMENDED BY THE BOARD OF
DIRECTORS.
The undersigned hereby appoints each of Peter Weissbrod and Stuart
Fuchsman, each with full power to act without the other, and with full power
of substitution, as the attorneys and proxies of the undersigned and hereby
authorizes them to represent and vote all the shares of Common Stock of
Linda's Flame Roasted Chicken Incorporated that the undersigned would be
entitled to vote if personally present at the Annual Meeting of Stockholders
to be held on Wednesday, June 26, 1996, at 10:00 a.m. (local time), or at any
adjournment thereof, upon such business as may properly come before the
meeting, including the items set forth below.
1. ELECTION OF SEVEN DIRECTORS.
FOR all nominees below (except as marked to the contrary
below) []
WITHHOLD AUTHORITY to vote for all nominees below []
NOMINEES: Peter Weissbrod, Stuart Fuchsman, Richard Goldberger, Lewis
Levine, Marc Roberts, William Ozzard and Ivan Szathmary
INSTRUCTION: To withhold authority to vote for any individual
nominee, write that nominee's name in the space
provided below.
2. TO APPROVE AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
THAT WOULD CHANGE THE NAME OF THE COMPANY TO LINDA'S DIVERSIFIED
HOLDINGS INC.
[] For [] Against [] Abstain
3. TO APPROVE THE 1995 STOCK OPTION PLAN.
[] For [] Against [] Abstain
4. TO RATIFY SELECTION OF ROTHSTEIN, KASS AND COMPANY, P.C. AS CERTIFIED
INDEPENDENT PUBLIC ACCOUNTANTS FOR THE 1996 CALENDAR YEAR.
[] For [] Against [] Abstain
Please sign exactly as name appears below. When shares are held by joint
tenants or tenants in common, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: __________________, 1996
_________________________________________________
Signature
_________________________________________________
Signature if held as joint
tenants or tenants in common
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
