SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, For Use of the
[ ] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
DENAMERICA CORP.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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DENAMERICA CORP.
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
JUNE 29, 1999
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The Annual Meeting of Shareholders of DenAmerica, a Georgia corporation
(the "Company"), will be held at 10:00 a.m. on Tuesday, June 29, 1999, at The
Scottsdale Plaza Resort, 7200 N. Scottsdale Road, Scottsdale, Arizona for the
following purposes:
1. To elect directors to serve until the next annual meeting of
shareholders or until their successors are elected and qualified.
2. To approve a proposal to amend the Company's Restated Articles of
Incorporation, as amended, to change the name of the Company to "Phoenix
Restaurant Group, Inc."
3. To ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company for the fiscal year ending December 29,
1999.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on May 21, 1999
are entitled to notice of and to vote at the meeting.
All shareholders are cordially invited to attend the meeting in person.
To assure your representation at the meeting, however, you are urged to mark,
sign, date, and return the enclosed proxy as promptly as possible in the
postage-prepaid envelope enclosed for that purpose. Any shareholder of record
attending the meeting may vote in person even if he or she previously has
returned a proxy.
Sincerely,
William J. Howard
Secretary
Scottsdale, Arizona
May __, 1999
<PAGE>
DENAMERICA CORP.
7373 NORTH SCOTTSDALE ROAD
SUITE D-120
SCOTTSDALE, ARIZONA 85253
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PROXY STATEMENT
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VOTING AND OTHER MATTERS
GENERAL
The enclosed proxy is solicited on behalf of DenAmerica Corp., a
Georgia corporation (the "Company"), by the Company's board of directors (the
"Board of Directors") for use at the Annual Meeting of Shareholders to be held
Tuesday, June 29, 1999 at 10:00 a.m. (the "Meeting"), or at any adjournment
thereof, for the purposes set forth in this Proxy Statement and in the
accompanying Notice of Annual Meeting of Shareholders. The Meeting will be held
at The Scottsdale Plaza Resort, 7200 N. Scottsdale Road, Scottsdale, Arizona.
These proxy solicitation materials were first mailed on or about May
__, 1999 to all shareholders entitled to vote at the Meeting.
VOTING SECURITIES AND VOTING RIGHTS
Shareholders of record at the close of business on May 21, 1999 (the
"Record Date") are entitled to notice of and to vote at the Meeting. On the
Record Date, there were issued and outstanding 13,485,277 shares of the
Company's common stock, par value $.10 per share (the "Common Stock").
The presence, in person or by proxy, of the holders of a majority of
the total number of shares of Common Stock outstanding constitutes a quorum for
the transaction of business at the Meeting. Each shareholder voting at the
Meeting, either in person or by proxy, may cast one vote per share of Common
Stock held on all matters to be voted on at the Meeting. Assuming that a quorum
is present, (a) the affirmative vote of a plurality of the shares of Common
Stock of the Company present in person or represented by proxy at the Meeting
and entitled to vote is required for the election of directors; (b) the
affirmative vote of a majority of the issued and outstanding shares of the
Company's Common Stock is required to approve the proposal to amend the
Company's Restated Articles of Incorporation, as amended, to change the name of
the Company to "Phoenix Restaurant Group, Inc.;" and (c) the affirmative vote of
a majority of the shares of Common Stock present in person or represented by
proxy at the Meeting and entitled to vote is required for ratification of the
appointment of Deloitte & Touche LLP as the independent auditors of the Company
for the fiscal year ending December 29, 1999.
Votes cast by proxy or in person at the Meeting will be tabulated by
the election inspectors appointed for the Meeting, who will determine whether a
quorum is present. The election inspectors will treat abstentions as shares that
are present and entitled to vote for purposes of determining the presence of a
quorum but as unvoted for purposes of determining the approval of any matter
submitted to the shareholders for a vote. If a broker indicates on the proxy
that it does not have discretionary authority as to certain shares to vote on a
particular matter, those shares will not be considered as present and entitled
to vote with respect to that matter.
VOTING OF PROXIES
When a proxy is properly executed and returned, the shares it
represents will be voted at the Meeting as directed. If no specification is
indicated, the shares will be voted (1) "for" the election of the director
nominees set forth in this Proxy Statement, (2) "for" approval of the proposal
to amend the Company's Restated Articles of Incorporation, as amended, to change
the name of the Company to "Phoenix Restaurant Group, Inc.," and (3) "for" the
ratification of the appointment of Deloitte & Touche LLP as the independent
auditors of the Company for the fiscal year ending December 29, 1999.
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REVOCABILITY OF PROXIES
Any person giving a proxy may revoke the proxy at any time before its
use by delivering to the Company written notice of revocation or a duly executed
proxy bearing a later date, or by attending the Meeting and voting in person.
SOLICITATION
The cost of this solicitation will be borne by the Company. In
addition, the Company may reimburse brokerage firms and other persons
representing beneficial owners of shares for expenses incurred in forwarding
solicitation materials to such beneficial owners. Proxies also may be solicited
by certain of the Company's directors and officers, personally or by telephone
or telegram, without additional compensation.
ANNUAL REPORT AND OTHER MATTERS
The 1998 Annual Report to Shareholders, which was mailed to
shareholders with or preceding this Proxy Statement, contains financial and
other information about the activities of the Company, but is not incorporated
into this Proxy Statement and is not to be considered a part of these proxy
soliciting materials. The information contained in the "Board of Directors
Report on Executive Compensation" and "Performance Graph" below shall not be
deemed "filed" with the Securities and Exchange Commission (the "SEC") or
subject to Regulations 14A or 14C or to the liabilities of Section 18 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
THE COMPANY WILL PROVIDE UPON WRITTEN REQUEST, WITHOUT CHARGE TO EACH
SHAREHOLDER OF RECORD AS OF THE RECORD DATE, A COPY OF THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 30, 1998 AS FILED WITH
THE SEC. ANY EXHIBITS LISTED IN THE FORM 10-K REPORT ALSO WILL BE FURNISHED UPON
REQUEST AT THE ACTUAL EXPENSE INCURRED BY THE COMPANY IN FURNISHING SUCH
EXHIBIT. ANY SUCH REQUESTS SHOULD BE DIRECTED TO THE COMPANY'S SECRETARY AT THE
COMPANY'S EXECUTIVE OFFICES SET FORTH IN THIS PROXY STATEMENT.
ELECTION OF DIRECTORS
NOMINEES
The Company's Restated Articles and Amended and Restated Bylaws provide
that the number of directors shall be fixed from time to time by resolution of
the Board of Directors. All directors are elected at each annual meeting of the
Company's shareholders and hold office until the Company's next annual meeting
of shareholders or until their successors are elected and qualified or until
their earlier resignation or removal.
A board of six directors is to be elected at the Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for each of the nominees named below. All of the nominees currently are
directors of the Company. In the event that any such nominee is unable or
declines to serve as a director at the time of the Meeting, the proxies will be
voted for any nominee designated by the current Board of Directors to fill the
vacancy. It is not expected that any nominee will be unable or will decline to
serve as a director.
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The following table sets forth certain information regarding the
nominees for directors of the Company:
NAME AGE POSITION
---- --- --------
Jack M. Lloyd............... 49 Chairman of the Board, President, and Chief
Executive Officer
William J. Howard........... 54 Executive Vice President, Secretary, and
Director
William G. Cox.............. 50 Chief Operating Officer and Director
Todd S. Brown............... 42 Senior Vice President, Chief Financial Officer,
Treasurer, and Director
Fred W. Martin.............. 68 Director
Robert H. Manschot.......... 55 Director
JACK M. LLOYD has served as Chairman of the Board of the Company since
July 9, 1996 and as President, Chief Executive Officer, and a director of the
Company since March 29, 1996. Mr. Lloyd served as Chairman of the Board and
Chief Executive Officer of Denwest Restaurant Corp. ("DRC") from 1987 until the
March 1996 merger of DRC and the Company (the "Merger") and served as President
of DRC from 1987 until November 1994. Mr. Lloyd engaged in commercial and
residential real estate development and property management as President of
First Federated Investment Corporation during the early and mid-1980s. Mr. Lloyd
also currently serves as a director of Action Performance Companies, Inc. and
Star Buffet, Inc., which are publicly held companies.
WILLIAM J. HOWARD has served as Executive Vice President of the Company
since July 9, 1996 and as Secretary and a director of the Company since March
29, 1996. Mr. Howard served as a Vice President of the Company from March 29,
1996 until July 3, 1996. Mr. Howard served as President of DRC from November
1994 until the Merger in March 1996 and as a director of DRC from 1990 until
March 1996. Mr. Howard served as Vice President of DRC from 1990 until November
1994 and as Chief Financial Officer of DRC from 1990 until August 1994. Prior to
joining DRC, Mr. Howard held numerous senior management positions with Citicorp
and Citibank, including Senior Vice President and Senior Credit Officer with
Citicorp Mortgage, Inc.
WILLIAM G. COX has served as Chief Operating Officer and a director of
the Company since March 29, 1996. Mr. Cox served as Vice President - Operations
for Denny's, Inc., the franchisor of Denny's restaurants, from June 1993 until
November 1995, with responsibility for approximately 590 company-owned and
franchised Denny's restaurants located throughout the United States. Mr. Cox
served as a Senior Vice President of the parent of Denny's Inc., and as Chief
Operating Officer of the "Quincy's" restaurant chain from May 1992 to June 1993.
Mr. Cox served as Vice President of Eastern Operations of Denny's, Inc. from
March 1991 to May 1992 and as a Regional Manager and Division Leader for
Denny's, Inc. from 1981 to March 1991. Mr. Cox joined Denny's, Inc. as a
Manager-in-Training in September 1977 and had advanced to the position of
Regional Manager by 1981.
TODD S. BROWN has served as Senior Vice President, Chief Financial
Officer, Treasurer, and a director of the Company since March 29, 1996. Mr.
Brown served as Vice President, Chief Financial Officer, and a Director of DRC
from September 1994 until the Merger in March 1996. Mr. Brown was employed by
Deloitte & Touche LLP from 1980 to September 1994. Mr. Brown is a Certified
Public Accountant in the state of Arizona.
FRED W. MARTIN has served as a director of the Company since March 29,
1996. Mr. Martin served as a director of DRC from November 1994 until the Merger
in March 1996. Mr. Martin served as Western Regional Director of Franchise
Development with Denny's, Inc. from 1985 to 1994, during which time he approved
and developed 400 franchise and company locations for Denny's, Inc. throughout
the western United States. Mr. Martin served as Western Real Estate
Representative with Denny's, Inc. from 1979 until 1985.
ROBERT H. MANSCHOT has served as a director of the Company since
January 1999. Mr. Manschot currently serves as the Managing Director and
Chairman of Manschot Investment Group L.L.C., an investment fund that is in the
business of identifying and investing in companies that have significant
potential for growth. Mr. Manschot also serves as Chairman of Seceurop Security
Services Group in the United Kingdom and engages in business consulting services
and venture capital activities as Chairman and Chief Executive Officer of RHEM
International Enterprises, Inc. Mr. Manschot served as President and Chief
Executive Officer of Rural/Metro
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Corporation ("Rural/Metro"), a publicly held provider of ambulance and fire
protection services, from October 1988 until March 1995. Mr. Manschot joined
Rural/Metro in October 1987 as Executive Vice President, Chief Operating
Officer, and a member of its Board of Directors. Mr. Manschot was with the Hay
Group, an international consulting firm, from 1978 until October 1987, serving
as Vice President and a partner from 1984, where he led strategic consulting
practices in Europe, Asia, and the western United States. Prior to joining the
Hay Group, Mr. Manschot spent 10 years with several leading international hotel
chains in senior operating positions in Europe, the Middle East, Africa, and the
United States. Mr. Manschot currently serves as a director of Samoth Capital
Corporation, and Action Performance Companies, Inc., which are publicly traded
companies, and as a director of Silicon Entertainment, Inc., Thomas Pride
Development, Inc., First Wave, Inc., Motorsports Promotions, Inc., and Sports
Southwest, Inc., all of which are privately held companies.
The former shareholders of DRC collectively own a sufficient number of
shares of the Company's Common Stock to elect all of the members of the Board of
Directors at the Meeting. There is no agreement or understanding, however,
between or among the Company, the former shareholders of DRC, or any of the
persons who constitute the Company's Board of Directors as to their serving on
the Company's Board of Directors in the future.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Company's bylaws authorize the Board of Directors to appoint among
its members one or more committees composed of one or more directors. The Board
of Directors has appointed an Audit Committee, a Compensation Committee, a 1992
Stock Option Plan Committee, and a 1995 Directors' Stock Option Plan Committee.
The Audit Committee reviews the annual financial statements, any significant
accounting issues, and the scope of the audit with the Company's independent
auditors and is available to discuss with the auditors any other audit related
matters that may arise during the year. The Compensation Committee reviews and
acts on matters relating to compensation levels and benefit plans for key
executives of the Company. The 1992 Stock Option Plan Committee and the 1995
Directors' Stock Option Plan Committee administer the Company's 1992 Stock
Option Plan and 1995 Directors' Stock Option Plan, respectively. During fiscal
1998, John M. Holliman and C. Alan MacDonald, former directors of the Company,
constituted the Audit Committee; Messrs. Holliman, MacDonald, and Fred W. Martin
constituted the Compensation and 1992 Stock Option Plan Committees; and Messrs.
Lloyd and Howard constituted the 1995 Directors' Stock Option Plan Committee.
The Board of Directors of the Company held a total of six meetings
during the fiscal year ended December 30, 1998. The Company's Audit Committee
held two formal meetings during the fiscal year ended December 30, 1998 and the
Company's Compensation Committee held _____ formal meetings during the fiscal
year ended December 30, 1998. The 1992 Stock Option Plan Committee and the 1995
Stock Option Plan Committee did not meet during fiscal 1998. No director
attended fewer than 75% of the aggregate of (a) the total number of meetings of
the Board of Directors during the period in which such person served as a
director, and (b) the total number of meetings held by all Committees of the
Board on which such director was a member and during the period in which such
person served on such committee.
DIRECTOR COMPENSATION AND OTHER INFORMATION
Employees of the Company do not receive compensation for serving as
members of the Company's Board of Directors. The Company pays each independent
director an annual fee in the amount of $10,000 and reimburses each independent
director for travel and related expenses incurred in connection with attendance
at board and committee meetings. The terms of the Company's 1995 Directors'
Stock Option Plan (the "1995 Plan") provide that each non-employee director will
receive an automatic grant of options to acquire 10,000 shares of the Company's
Common Stock on the date of his or her first appointment or election to the
Board of Directors. The 1995 Plan also provides for the automatic grant of
options to purchase 10,000 shares of the Company's Common Stock to non-employee
directors at the time of his or her re-election to the Board of Directors at an
annual meeting of shareholders. Accordingly, each of Messrs. Martin and Manschot
will receive an automatic grant of options to purchase 10,000 shares of Common
Stock at the time of their re-election to the Board of Directors at the Meeting.
See "Executive Compensation - 1995 Directors' Stock Option Plan." Because there
were no options granted under the 1995 Plan during fiscal 1998, in July 1998 the
Board authorized the grant
4
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of 10,000 options under the 1996 Stock Option Plan to each of the non-employee
directors serving on the Board at that time.
EXECUTIVE COMPENSATION
SUMMARY OF CASH AND OTHER COMPENSATION
The following table sets forth information concerning the compensation
of the Company's Chief Executive Officer and each of the four other most highly
compensated executive officers whose cash salary and bonuses exceeded $100,000
during the fiscal year ended December 30, 1998 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION AWARDS
------------
SECURITIES
FISCAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY$(1) BONUS($) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- ---------- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Jack M. Lloyd, Chairman of the 1998 $520,000 -- -- --
Board, President, and Chief 1997 520,000 -- -- --
Executive Officer(2) 1996 375,200 -- -- --
William J. Howard, Executive 1998 $260,000 -- -- --
Vice President and Secretary (2) 1997 260,000 -- -- --
1996 187,600 -- -- --
William G. Cox, Chief Operating 1998 $220,000 $50,000 -- --
Officer 1997 220,000 -- -- --
1996 221,795(3) -- 300,000 $15,921
Robert J. Gentz, Executive Vice 1998 $175,000 $50,000 -- --
President 1997 166,027(4) -- 100,000 --
Todd S. Brown, Senior Vice 1998 $160,000 $50,000 -- --
President, Chief Financial 1997 127,372 -- -- --
Officer, and Treasurer(2) 1996 115,700 75,000 124,800 --
</TABLE>
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(1) Each of the Named Executive Officers received certain perquisites, the
value of which did not exceed 10% of their salary during fiscal 1998.
(2) Each of Messrs. Lloyd, Howard, and Brown became executive officers of the
Company upon consummation of the Merger on March 29, 1996. Amounts shown
for fiscal 1996 include payments to each such person for services as an
executive officer of DRC prior to the Merger.
(3) Represents amounts accrued or paid beginning on March 29, 1996, the date of
Mr. Cox's employment with the Company.
(4) Represents amounts accrued or paid beginning on January 6, 1997, the date
of Mr. Gentz' employment with the Company.
OPTIONS GRANTS
The Company did not grant any stock options to the Named Executive
Officers during the fiscal year ended December 30, 1998.
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OPTION HOLDINGS
The following table sets forth information concerning the number and
value of all options held at December 30, 1998, by the Named Executive Officers.
None of the Named Executive Officers exercised any options during fiscal 1998.
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END ($)(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Jack M. Lloyd............... -- -- N/A N/A
William J. Howard........... -- -- N/A N/A
William G. Cox.............. 180,000 120,000 $0 $0
Robert J. Gentz............. 50,000 50,000 $0 $0
Todd S. Brown............... 74,880 49,920 $0 $0
</TABLE>
- ----------
(1) The exercise prices of all options held by the Named Executive Officers
were greater than the closing price of the Company's Common Stock of $1.13
per share on December 30, 1998.
401(k) PLAN
In April 1998, the Company established a defined contribution plan (the
"401(k) Plan") that qualifies as a cash or deferred profit sharing plan under
Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code"). Under the 401(k) Plan, participating employees may
defer from 1% to 15% of their pre-tax compensation, subject to the maximum
dollar amount allowed under the Internal Revenue Code. In addition, the 401(k)
Plan provides that the Company may make discretionary contributions to
participating employees in such amounts as may be determined by the Company's
Board of Directors. Highly compensated employees of the Company, including
executive officers, are not eligible to participate in the 401(k) Plan.
EMPLOYMENT AGREEMENTS
GENERAL
The Company currently is a party to employment agreements with each of
William G. Cox, Robert J. Gentz, and Todd S. Brown. In addition to the
provisions of the individual employment agreements as described below, the
employment agreements generally require the Company to provide each person with
certain medical and life insurance benefits; to reimburse them for all travel,
entertainment, and other ordinary and necessary expenses incurred in connection
with the Company's business and their duties under their respective employment
agreements; and to provide such other fringe benefits that the Company makes
generally available to all of its employees on a non-discriminatory basis. The
employment agreements with Messrs. and Cox, Gentz, and Brown require the Company
to provide each such officer with an automobile for use in connection with the
Company's business. In addition, in the event of a "change of control" of the
Company, as defined in the employment agreements, the Company will be required
to pay each of Messrs. Cox, Gentz, and Brown a lump sum equal to their
respective fixed salaries for the greater of one year or the balance of the
then-current term of employment under the applicable agreement, and all of
Messrs. Cox's, Gentz's, and Brown's unvested stock options, if any, will
immediately vest and become exercisable in full. The agreements also contain
provisions that prohibit the respective officer from (i) competing with the
business of the Company, (ii) taking certain actions intended to solicit other
persons to terminate their business relationship with the Company or to
terminate his or her employment relationship with the Company, and (iii) making
unauthorized use or disclosure of the Company's trade names, fictitious names,
or confidential information.
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WILLIAM G. COX
In December 1995, the Company entered into an employment agreement with
William G. Cox, which became effective upon consummation of the Merger.
Effective January 1, 1998, Mr. Cox and the Company amended the original
employment agreement. Pursuant to his agreement with the Company, Mr. Cox serves
as the Chief Operating Officer of the Company at a base salary of $220,000 per
year. The agreement also provides that Mr. Cox will be eligible to receive an
annual bonus of up to 50% of his annual base salary pursuant to a bonus pool
plan to be established by and administered in the sole discretion of the
Company. Pursuant to the agreement, the Company granted to Mr. Cox options to
purchase 300,000 shares of the Company's Common Stock. Mr. Cox's agreement, as
amended, continues until December 31, 2000 and will renew automatically from
year to year thereafter, unless and until either party terminates by giving the
other party written notice not less than 60 days prior to the end of the
then-current term. The Company may terminate the agreement only for cause, as
defined in the agreement.
ROBERT J. GENTZ
In January 1997, the Company entered into an employment agreement with
Robert J. Gentz pursuant to which Mr. Gentz serves as Executive Vice President
of the Company. The employment agreement provides for a base salary of $175,000
per year. In addition, the agreement provides that Mr. Gentz will be eligible to
receive an annual bonus of up to $50,000 per year based upon standards to be
agreed upon between the Company and Mr. Gentz. Pursuant to the agreement, the
Company reimbursed Mr. Gentz for certain relocation expenses and granted to Mr.
Gentz options to purchase 100,000 shares of the Company's Common Stock. Mr.
Gentz' agreement provides for an initial employment term of three years, subject
to extension for additional one-year periods under mutually agreeable terms and
conditions.
TODD S. BROWN
In December 1997, the Company entered into an employment agreement with
Todd S. Brown pursuant to which Mr. Brown serves as Senior Vice President,
Treasurer, and Chief Financial Officer of the Company. The employment agreement
provides for a base salary of $160,000, $175,000, and $190,000 in calendar 1998,
1999, and 2000, respectively. In addition, the agreement provides that Mr. Brown
will be eligible to receive an annual bonus in an amount to be determined by the
Company's Board of Directors, in its sole discretion. Mr. Brown's employment
agreement continues until December 31, 2000 and will renew automatically from
year to year thereafter, unless and until either party terminates by giving the
other party written notice not less than 60 days prior to the end of the
then-current term. In the event that the Company terminates Mr. Brown's
employment without cause, Mr. Brown will continue to receive his base salary for
a period of 12 months following the date of such termination.
STOCK OPTION PLANS
1996 STOCK OPTION PLAN
On December 10, 1996, the Company's Board of Directors adopted the
Company's 1996 Stock Option Plan (the "1996 Plan"). The Company's shareholders
approved the 1996 Plan on June 26, 1997. A total of 500,000 shares of the
Company's Common Stock has been reserved for issuance under the 1996 Plan. The
1996 Plan is intended to promote the interests of the Company by encouraging key
persons associated with the Company to acquire, or otherwise increase, their
proprietary interest in the Company and an increased personal interest in its
continued success and progress. The 1996 Plan provides for the grant of options
to acquire Common Stock of the Company ("Options"), the direct grant of Common
Stock ("Stock Awards"), the grant of stock appreciation rights ("SARs"), and the
grant of other cash awards ("Cash Awards") (Stock Awards, SARs, and Cash Awards
are collectively referred to herein as "Awards"). If any Option or SAR
terminates or expires without having been exercised in full, stock not issued
under such Option or SAR will again be available for the purposes of the 1996
Plan. As of the Record Date, the Company has granted Options to acquire a total
of 20,000 shares of Common Stock under the 1996 Plan, no options granted under
the 1996 Plan have been exercised, and 480,000 shares remain available for
issuance under the 1996 Plan. The 1996 Plan will remain in effect until December
9, 2006.
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Options and Awards may be granted pursuant to the 1996 Plan only to
persons ("Eligible Persons") who at the time of grant are either (a) key
personnel (including officers and directors) of the Company, or (b) consultants
or independent contractors who provide valuable services to the Company. Options
granted pursuant to the 1996 Plan may be incentive stock options or
non-qualified stock options. Options that are incentive stock options may be
granted only to key personnel of the Company who are also employees of the
Company. To the extent that granted Options are incentive stock options, the
terms and conditions of those Options must be consistent with the qualification
requirements set forth in the Internal Revenue Code. The maximum number of
shares of stock with respect to which Options or Awards may be granted to any
employee during the term of the 1996 Plan may not exceed 50 percent of the
shares of Common Stock covered by the 1996 Plan.
The exercise price of any Option intended to be an incentive stock
option may not be less than 100 percent of the fair market value of the Common
Stock at the time of the grant (110 percent if the Option is granted to a person
who at the time the Option is granted owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company).
Options may be granted for terms of up to 10 years and will vest and become
exercisable in whole or in one or more installments as may be determined at the
time the Options are granted. To exercise an Option, the optionholder will be
required to deliver to the Company full payment of the exercise price for the
shares as to which the Option is being exercised. Generally, Options can be
exercised by delivery of cash, check, or shares of Common Stock of the Company.
SARs will entitle the recipient to receive a payment equal to the
appreciation in market value of a stated number of shares of Common Stock from
the price on the date the SAR was granted or became effective to the market
value of the Common Stock on the date the SARs are exercised or surrendered.
Stock Awards will entitle the recipient to receive shares of the Company's
Common Stock directly. Cash Awards will entitle the recipient to receive direct
payments of cash depending on the market value or the appreciation of the Common
Stock or other securities of the Company. The plan administrators may determine
such other terms, conditions, or limitations, if any, on any Awards granted
pursuant to the 1996 Plan.
AMENDED AND RESTATED 1992 STOCK OPTION PLAN
A total of 1,000,000 shares of the Company's Common Stock have been
reserved for issuance under the Company's Amended and Restated 1992 Stock Option
Plan (the "1992 Plan"). The 1992 Plan limits the persons eligible to receive
options to directors, consultants, and key employees, including officers, of the
Company or a subsidiary of the Company and "key persons" who are not employees
but have provided valuable services, have incurred financial risk on behalf of
the Company, or have extended credit to the Company or its subsidiaries. The
1992 Plan provides that options granted to employees may be incentive stock
options or non-qualified options pursuant to the Internal Revenue Code. Key
persons who are not employees are eligible to receive only non-qualified
options. As of the Record Date, there were outstanding options to acquire a
total of 661,500 shares of Common Stock under the 1992 Plan, 217,833 shares of
Common Stock have been issued under the 1992 Plan, and 120,667 shares remain
available for issuance under the 1992 Plan. The 1992 Plan terminates on April 1,
2002.
Incentive stock options may not have an exercise price less than the
fair market value of the Common Stock on the grant date, except that, in the
case of an incentive stock option granted to any participant who owns more than
10% of the Company's outstanding voting shares, the exercise price must be at
least 110% of the fair market value of the Common Stock on the date of grant and
the term of the option may be no longer than five years. Options that are not
incentive stock options may not have an exercise price less than the greater of
the minimum price required by applicable state law, by the Company's Restated
Articles of Incorporation, or the par value of the Common Stock. Options granted
under the 1992 Plan generally may be exercised by delivery of any combination of
cash, shares of Common Stock, or by delivering to the Company a promissory note
upon such terms and conditions as the Board of Directors may determine.
1995 DIRECTORS STOCK OPTION PLAN
A total of 300,000 shares of Common Stock have been reserved for
issuance under the Company's 1995 Directors Stock Option Plan (the "1995 Plan").
The purpose of the 1995 Plan is to promote the interests of the Company and its
shareholders by strengthening the Company's ability to attract and retain the
services of
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experienced and knowledgeable non-employee directors and by encouraging such
directors to acquire an increased proprietary interest in the Company. As of the
Record Date, there were outstanding options to acquire a total of 23,068 shares
of Common Stock under the 1995 Plan, no shares of Common Stock have been issued
under the 1995 Plan, and 276,932 shares remain available for issuance under the
1995 Plan. The 1995 Plan terminates on January 16, 2005.
Options to purchase 10,000 shares of Common Stock are automatically
granted to each non-employee director of the Company on the date of his or her
initial election to the Board of Directors or re-election at an annual meeting
of the Company's shareholders. Directors who are first elected or appointed to
the Board of Directors on a date other than an annual meeting date are
automatically granted options to purchase the number of shares of Common Stock
equal to the product of 10,000 multiplied by a fraction, the numerator of which
is the number of days during the period beginning on such grant date and ending
on the date of the next annual meeting, and the denominator of which is 365. If
no meeting is scheduled at a time a director is first elected or appointed to
the Board of Directors, the date of the next annual meeting is deemed to be the
120th day of the fiscal year next following the interim grant date. The exercise
price of each option is the fair market value of the Company's Common Stock on
the business day preceding the date of grant, and the term of each option may
not exceed ten years. One-half of the options granted vest and become
exercisable after the first year of continuous service as a director following
the automatic grant date, and the remainder vest and become exercisable after
two years of continuous service on the Board of Directors.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
C. Alan MacDonald, John M. Holliman, III (former directors of the
Company), and Fred W. Martin served as members of the Compensation Committee of
the Board of Directors during fiscal 1998. None of such individuals had any
contractual or other relationships with the Company during fiscal 1998 except as
directors.
INDEMNIFICATION AND LIMITATION OF PERSONAL LIABILITY OF DIRECTORS
The Company's Amended and Restated Bylaws require the Company to
indemnify its directors and officers against liabilities that they may incur
while serving in such capacities, to the full extent permitted and in the manner
required by the Georgia Business Corporation Code (the "GBCC"). Pursuant to
these provisions, the Company will indemnify its directors and officers against
any losses incurred in connection with any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director or
officer of the Company or served with another corporation, partnership, joint
venture, trust or other enterprise at the request of the Company. In addition,
the Company will provide advances for expenses incurred in defending any such
action, suit or proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such advances if it is ultimately determined
that he or she is not entitled to indemnification by the Company. The Company
has entered into indemnification agreements with certain of its directors and
executive officers pursuant to the foregoing provisions of its Amended and
Restated Bylaws.
As permitted by the GBCC, the Company's Restated Articles contain
provisions that eliminate the personal liability of directors for monetary
damages to the Company or its shareholders for breach of their fiduciary duties
as directors. In accordance with the GBCC, these provisions do not limit the
liability of a director for (a) any appropriation of a business opportunity of
the Company in violation of the director's duty, (b) acts or omissions that
involve intentional misconduct or a knowing violation of law, (c) any dividend
payment, stock repurchase, stock redemption or distribution in liquidation that
is prohibited under Georgia law, or (d) any merger from which the director
derived an improper personal benefit. These provisions do not limit or eliminate
the rights of the Company or any shareholder to seek an injunction or any other
non-monetary relief in the event of a breach of a director's fiduciary duty. In
addition, these provisions apply only to claims against a director arising out
of his or her role as a director and do not relieve a director from liability
for violations of statutory law, such as certain liabilities imposed on a
director under the federal securities laws.
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BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
A Compensation Committee of the Board of Directors (the "Committee")
consisting exclusively of independent, non-employee directors generally is
responsible for reviewing and recommending for approval by the Board the
Company's compensation practices, executive salary levels, and variable
compensation programs, both cash-based and equity-based. The Committee generally
reviews base salary levels for executive officers of the Company at or about the
start of each fiscal year and approves actual bonuses, if any, at the end of
each fiscal year based upon Company and individual performance. During fiscal
1998, C. Alan MacDonald, John M. Holliman, III (former directors of the
Company), and Fred W. Martin served as members of the Compensation Committee.
The Board currently anticipates that it will appoint Messrs. Martin and Manschot
to serve as members of the Committee during fiscal 1999.
PHILOSOPHY
The Company's executive compensation program seeks to provide a level
of compensation that is competitive with similar companies in the restaurant
industry. The Committee reviewed comparative data of other restaurant companies
in order to assess the competitiveness of the Company's executive compensation
program as compared with similar restaurant companies. Actual total compensation
levels may differ from competitive levels in surveyed companies as a result of
annual and long-term Company performance, as well as individual performance. The
Committee uses its discretion to set executive compensation when, in its
judgment, external, internal, or an individual's circumstances warrant.
COMPENSATION PROGRAM
The primary components of the Company's executive compensation program
consist of base salary, annual discretionary bonuses, and stock option grants.
BASE SALARY
The Committee reviews salaries recommended by the Chief Executive
Officer for executive officers other than the Chief Executive Officer. In
formulating these recommendations, the Chief Executive Officer considers the
overall performance of the Company and conducts an informal evaluation of
individual officer performance. Final decisions on any adjustments to the base
salary for executives, other than the Chief Executive Officer, are made by the
Committee in conjunction with the Chief Executive Officer. The Committee's
evaluation of the recommendations by the Chief Executive Officer considers the
same factors outlined above and is subjective with no particular weight assigned
to any one factor. The Company paid base salaries to William G. Cox, Robert J.
Gentz, and Todd S. Brown during 1998 in accordance with the employment
agreements described under "Executive Compensation - Employment Agreements." The
Company has not increased base salaries for its other executive officers since
1996.
ANNUAL DISCRETIONARY BONUSES
The annual discretionary bonuses are designed to provide incentive
compensation to key officers and employees who contribute substantially to the
success of the Company. Discretionary bonuses are intended to maintain a strong
link between overall Company performance and enhanced value by rewarding results
that exceed industry averages. Discretionary bonuses may be awarded to selected
officers and employees from a pool based on a subjective percentage of the
Company's net income for the fiscal year. In determining the amount of
discretionary bonuses that may be awarded, if any, the Committee evaluates the
overall performance of the Company to date, taking into consideration
achievement of sales, net income, and other performance criteria, as well as
individual responsibility, performance, efficiency of effort, strength of
leadership, and compensation level. The Committee's evaluation of these factors
is subjective, with no particular weight being assigned to any one factor. For
fiscal 1998, the Company paid discretionary bonuses to certain of its officers,
including bonuses of $50,000 to each of Messrs. Cox, Gentz, and Brown, as a
result of their individual contributions to the Company and the other factors
described above.
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STOCK OPTION GRANTS
The Company grants stock options periodically to executive officers and
other key employees to provide additional incentive to work to maximize
long-term total return to shareholders. Although the Board is the Plan
Administrator of the 1992 Plan, it has delegated its authority to the 1992 Plan
Committee. The members of the Compensation Committee serve as members of the
1992 Plan Committee, which is the committee that grants options to officers of
the Company. In general, stock options are granted to senior level and key
employees at the onset of employment. If in the opinion of the Board or the 1992
Plan Committee the outstanding service of an existing employee merits an
increase in the number of options held, however, the Board or the 1992 Plan
Committee may grant additional stock options to that employee. The Company did
not grant any options to employees during fiscal 1998.
BENEFITS
The Company provides various employee benefit programs to its executive
officers, including medical and life insurance benefits and short- and long-term
disability insurance. These programs are generally available to all employees of
the Company.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Committee considers the factors outlined above in evaluating the
base salary and other compensation of Jack M. Lloyd, the Company's Chief
Executive Officer. The Committee's evaluation of Mr. Lloyd's base salary is
subjective, with no particular weight assigned to any one factor. In April 1996,
the Committee established Mr. Lloyd's base salary at $520,000 per year. During
1998, the Committee believed that this base salary continued to be competitive
with that paid to chief executive officers of comparable companies. The
Committee determined that the Company's performance did not warrant the payment
of a discretionary bonus to Mr. Lloyd for 1998.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation in excess of $1 million paid to
each of any publicly held corporation's chief executive officer and four other
most highly compensated executive officers. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
met. The Company currently intends to structure the performance-based portion of
the compensation of its executive officers in a manner that complies with
Section 162(m).
This report has been furnished by the members of the Board of Directors
of the Company.
Jack M. Lloyd, Chairman
William J. Howard
William G. Cox
Todd S. Brown
Fred W. Martin
Robert H. Manschot
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
officers, and persons that own more than 10 percent of a registered class of the
Company's equity securities to file reports of ownership and changes in
ownership with the SEC. SEC regulations require officers, directors, and greater
than 10 percent shareholders to furnish the Company with copies of all Section
16(a) forms they file. Based solely upon the Company's review of the copies of
such forms received by it during the fiscal year ended December 30, 1998 and
written representations that no other reports were required, the Company
believes that each person who, at any time
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during such fiscal year, was a director, officer, or beneficial owner of more
than 10 percent of the Company's Common Stock complied with all Section 16(a)
filing requirements during such fiscal year.
COMPANY PERFORMANCE GRAPH
The following line graph compares cumulative total returns, assuming
reinvestment of dividends, for the period from October 18, 1994 to December 30,
1998 for (i) the Company's Common Stock; (ii) the Standard and Poor's SmallCap
600 Index; and (iii) the Dow Jones Restaurants Index (the "Restaurant Index").
The graph assumes an investment of $100 in the Company's Common Stock on October
18, 1994, the date on which the Company's Common Stock became registered under
Section 12 of the Exchange Act as a result of its initial public offering, and
an investment of $100 in the Small Cap Index and the Restaurant Index on
September 30, 1994. The calculation of cumulative return for the Company's
Common Stock does not include reinvestment of dividends because the Company did
not pay dividends during the measurement period. The performance shown is not
necessarily indicative of future performance.
CUMULATIVE TOTAL RETURN
---------------------------------------------------------
10/18/94 12/28/94 12/27/95 1/1/97 12/31/97 12/30/98
-------- -------- -------- ------ -------- --------
DENAMERICA CORP. 100 73 113 63 39 23
S & P SMALLCAP 600 100 98 127 154 193 198
DOW JONES RESTAURANTS 100 107 152 155 161 243
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with the financing of the acquisition of Black-eyed Pea
Restaurants, Inc. ("BEP") in 1996, LH Leasing Company, Inc. ("LH Leasing"), a
corporation owned by Jack M. Lloyd and William J. Howard, purchased from the
Company for cash in the amount of $14.25 million the equipment located at 62
Black-eyed Pea restaurants leased by BEP, or Texas BEP, L.P. ("Texas BEP"), a
limited partnership in which BEP is the general partner and in which a wholly
owned subsidiary of BEP is the limited partner. Concurrently with the sale of
the equipment to LH Leasing, LH Leasing leased the equipment to the Company and
the Company subleased the equipment to BEP or Texas BEP. The equipment lease has
a term of five years and grants the Company an option to purchase the equipment
at its fair market value upon the expiration of the lease. The terms of the
subleases between the Company and each of BEP and Texas BEP are consistent with
the terms set forth in the equipment lease between the Company and LH Leasing.
Messrs. Lloyd and Howard formed LH Leasing as an accommodation to the Company to
enable it to satisfy the requirements of the Company's senior lenders. Messrs.
Lloyd and Howard received no material compensation for the transactions
involving the Company and LH Leasing.
In order to finance its sale and lease transaction with the Company, LH
Leasing borrowed cash in the amount of $14.25 million from Franchise Finance
Corporation of America ("FFCA"). Messrs. Lloyd and Howard jointly and severally
guaranteed the repayment of the loan. In addition, Messrs. Lloyd and Howard
pledged their stock in LH Leasing to FFCA as additional collateral for the loan.
In addition to the loan from FFCA to LH Leasing as described above,
Jack M. Lloyd and William J. Howard each have personally guaranteed certain of
the Company's indebtedness and other obligations under leases and franchise
agreements.
Jack M. Lloyd and William J. Howard hold $11,196,000 and $5,598,000 in
principal amount of the Company's Series B Notes, respectively. Mr. Lloyd and
Mr. Howard have deferred interest due on the Series B Notes as of each of
September 30, 1997, March 31, 1998, September 30, 1998, and March 31, 1999. As
of March 31, 1999, the Company was in technical default of certain financial
covenants in the Series B Notes, owed Mr. Lloyd deferred interest totaling
approximately $3,207,000, and owed Mr. Howard deferred interest totaling
approximately $1,604,000. The Company currently has commitments for new
financings in amounts that it believes will enable it to cure the financial
covenant defaults under the Series B Notes.
The Company has made various advances to Jack M. Lloyd. Such advances
totaled approximately $378,000 as of December 31, 1997 and approximately
$800,000 as of December 30, 1998.
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SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS,
DIRECTORS AND OFFICERS
The following table sets forth certain information regarding the shares
of the Company's Common Stock beneficially owned as of the Record Date by (i)
each of the Company's directors, director nominees, and executive officers; (ii)
all directors and executive officers of the Company as a group; and (iii) each
person known by the Company to be the beneficial owner of 5% or more of the
Company's Common Stock.
NUMBER PERCENTAGE
NAME AND ADDRESS OF BENEFICIAL HOLDER(1) OF SHARES(2) OWNERSHIP(2)
- ---------------------------------------- ------------ ------------
DIRECTORS AND EXECUTIVE OFFICERS
- --------------------------------
Jack M. Lloyd 3,469,727(3) 25.2%
William J. Howard 1,700,363(4) 12.5%
William G. Cox 241,000(5) 1.8%
Robert J. Gentz 75,000(6) *
Todd S. Brown 102,640(7) *
Fred W. Martin 36,000(8) *
Robert H. Manschot 10,000(9) *
All directors and executive officers
as a group (seven persons) 5,634,730 39.2%
NON-MANAGEMENT 5% SHAREHOLDER
BancBoston Ventures, Inc.(10) 2,124,352 15.8%
- ----------
* Less than 1.0% of the outstanding shares of Common Stock.
(1) Except as otherwise indicated, each person named in the table has sole
voting and investment power with respect to all Common Stock beneficially
owned by him, subject to applicable community property law. Except as
otherwise indicated, each of such persons may be reached through the
Company at 7373 N. Scottsdale Road, Suite D-120, Scottsdale, Arizona 85253.
(2) The numbers and percentages shown include the shares of Common Stock
actually owned as of May 21, 1999 and the shares of Common Stock which the
person or group had the right to acquire within 60 days of such date. In
calculating the percentage of ownership, all shares of Common Stock which
the identified person or group had the right to acquire within 60 days of
May 21, 1999 upon the exercise of options or warrants are deemed to be
outstanding for the purpose of computing the percentage of the shares of
Common Stock owned by such person or group, but are not deemed to be
outstanding for the purpose of computing the percentage of the shares of
Common Stock owned by any other person.
(3) Represents 3,176,504 shares of Common Stock and 293,223 shares issuable
upon exercise of Series B Warrants.
(4) Represents 1,553,752 shares of Common Stock and 146,611 shares issuable
upon exercise of Series B Warrants.
(5) Represents 1,000 shares of Common Stock and 240,000 shares of Common Stock
issuable upon the exercise of vested options.
(6) Represents 75,000 shares of Common Stock issuable upon exercise of vested
options. Mr. Gentz serves as the Company's Executive Vice President.
(7) Represents 2,800 shares of Common Stock and 99,840 shares issuable upon the
exercise of vested options.
(8) Represents 6,000 shares of Common Stock held by Mr. Martin and his spouse
and 30,000 shares issuable upon the exercise of vested options.
(9) Represents 10,000 shares of Common Stock issuable upon the exercise of
vested options.
(10) The address of BancBoston Ventures, Inc. is c/o BancBoston Capital, Inc.,
100 Federal Street, Boston, Massachusetts 02110.
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PROPOSAL TO AMEND THE RESTATED ARTICLES OF INCORPORATION,
AS AMENDED, TO CHANGE THE NAME OF THE COMPANY
On May 12, 1999, the Board of Directors unanimously adopted a
resolution authorizing an amendment to the Company's Restated Articles of
Incorporation, as amended (the "Restated Articles"), to change the name of the
Company to "Phoenix Restaurant Group, Inc." The Board of Directors unanimously
recommends that the shareholders of the Company vote "FOR" the proposal to
change the Company's name. If the shareholders approve the proposal, Article I
of the Restated Articles will be amended in its entirety to read as follows:
"ARTICLE I
The name of the corporation is: PHOENIX RESTAURANT GROUP, INC."
REASONS FOR AND EFFECT OF THE PROPOSAL TO CHANGE THE COMPANY'S NAME
The Board of Directors believes that it is in the best interest of the
Company and its shareholders to change the Company's name to more accurately
reflect the Company's status as the operator of multiple restaurant concepts.
The Company adopted its current name of "DenAmerica Corp." at a time when its
primary business focus was concentrated on developing and acquiring Denny's
restaurants and converting other company-owned restaurants to the Denny's
concept. In 1996, the Company acquired the Black-eyed Pea restaurant chain and
during 1997 and 1998, the Company developed and implemented its current business
strategy of emphasizing the Black-eyed Pea restaurant concept and de-emphasizing
the Denny's restaurant concept. The Company currently operates 103 Black-eyed
Pea restaurants and 100 Denny's restaurants. The Company also continually
evaluates opportunities to acquire other restaurant concepts as a whole or to
acquire individual restaurants operating under other concepts. Accordingly, the
Board determined that the name "DenAmerica Corp." too narrowly described the
nature of the Company's current business in the minds of investors and the
general public. The Board therefore adopted the proposal to change the Company's
name to "Phoenix Restaurant Group, Inc." so as to more accurately reflect the
Company's current status as a group of complementary restaurant concepts
operated through a centralized management and administrative structure. The
Board believes that "Phoenix Restaurant Group, Inc." reflects the Company's
current business strategy and focus and will provide a more accurate perception
of that strategy and focus to the public.
If the shareholders approve the proposal to change the Company's name
at the Meeting, the change of the Company's name will become effective
immediately upon filing of Articles of Amendment to the Restated Articles with
the Secretary of State of the state of Georgia. The Company anticipates that it
will file the Articles of Amendment as soon as practicable following shareholder
approval of the proposal to change the Company's name. In addition, if the
shareholders approve the name change, the Company intends to change the trading
symbol for the Company's Common Stock on the American Stock Exchange from "DEN"
to "PRG," effective as soon as practicable following the filing of the Articles
of Amendment with the Secretary of State of Georgia.
The change of the Company's name will not affect in any way the
validity or transferability of the Company's outstanding securities, the
certificates for the Company's securities, or the Company's capitalization or
corporate structure. Shareholders will not be required to surrender or exchange
certificates representing shares of Common Stock or options or warrants to
purchase shares of Common Stock for new certificates bearing the new corporate
name. Following the effective date of the change of the Company's name, the
Company will overprint all new stock certificates that it issues with the new
corporate name.
If, in the judgment of the Board of Directors, any circumstances exist that
would make the name change inadvisable, then, notwithstanding approval of the
proposed amendment by the shareholders, the Board may abandon the name change,
either before or after approval of the proposed amendment by the shareholders
and at any time prior to the filing of the Articles of Amendment. Under Georgia
law, shareholders will not be entitled to appraisal rights with respect to the
proposal to change the Company's name.
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RATIFICATION BY SHAREHOLDERS OF THE PROPOSED AMENDMENT TO THE RESTATED ARTICLES
The affirmative vote of the holders of a majority of the total number
of issued and outstanding shares of Common Stock is required to approve the
proposal to amend the Company's Restated Articles to change the name of the
Company to "Phoenix Restaurant Group, Inc." Upon approval by the Company's
shareholders, the proposed amendment will become effective upon filing of
Articles of Amendment with the Georgia Secretary of State, which will occur as
soon as practicable following the Meeting. If the proposed amendment is not
approved by the Company's shareholders at the Meeting, the Company's name will
remain "DenAmerica Corp."
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Deloitte & Touche LLP, independent
public accountants, to audit the consolidated financial statements of the
Company for the fiscal year ending December 29, 1999 and recommends that
shareholders vote in favor of the ratification of such appointment. In the event
of a negative vote on such ratification, the Board of Directors will reconsider
its selection. The Board of Directors anticipates that representatives of
Deloitte & Touche LLP will be present at the Meeting, will have the opportunity
to make a statement if they desire, and will be available to respond to
appropriate questions.
DEADLINE FOR RECEIPT OF PROPOSALS
Shareholder proposals that are intended to be presented by such
shareholders at the annual meeting of shareholders of the Company to be held
during calendar 2000 must be received by the Company no later than January __,
2000 in order to be included in the proxy statement and form of proxy relating
to such meeting. Pursuant to Rule 14a-4 under the Exchange Act, the Company
intends to retain discretionary authority to vote proxies with respect to
stockholder proposals for which the proponent does not seek inclusion of the
proposed matter in the Company's proxy statement for the annual meeting to be
held during calendar 2000, except in circumstances where (a) the Company
receives notice of the proposed matter no later than March __, 2000, and (b) the
proponent complies with the other requirements set forth in Rule 14a-4.
OTHER MATTERS
The Company knows of no other matters to be submitted to the Meeting.
If any other matters properly come before the Meeting, it is the intention of
the persons named in the enclosed proxy card to vote the shares they represent
as the Board of Directors may recommend.
Dated: May __, 1999
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DENAMERICA CORP.
1999 ANNUAL MEETING OF SHAREHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of DENAMERICA CORP., a Georgia corporation
(the "Company"), hereby acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement of the Company, each dated May __, 1999, and
hereby appoints Jack M. Lloyd and William J. Howard, and each of them, proxies
and attorneys-in-fact, with full power to each of substitution, on behalf and in
the name of the undersigned, to represent the undersigned at the 1999 Annual
Meeting of Shareholders of the Company, to be held on Tuesday, June 29, 1999, at
10:00 a.m., local time, at The Scottsdale Plaza Resort, 7200 N. Scottsdale Road,
Scottsdale, Arizona, and at any adjournment or adjournments thereof, and to vote
all shares of the Company's Common Stock that the undersigned would be entitled
to vote if then and there personally present, on the matters set forth on the
reverse side.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS; FOR APPROVAL OF THE
PROPOSAL TO AMEND THE COMPANY'S RESTATED ARTICLES OF INCORPORATION, AS AMENDED,
TO CHANGE THE NAME OF THE COMPANY; FOR THE RATIFICATION OF THE APPOINTMENT OF
DELOITTE & TOUCHE LLP AS THE INDEPENDENT AUDITORS OF THE COMPANY; AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
A majority of such attorneys-in-fact or substitutes as shall be present
and shall act at said meeting or any adjournment or adjournments thereof (or if
only one shall be present and act, then that one) shall have and may exercise
all of the powers of said attorneys-in-fact hereunder.
(CONTINUED, AND TO BE SIGNED AND DATED, ON THE REVERSE SIDE.)
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE
WITHHOLD
FOR all nominees AUTHORITY
listed at right (except to vote for all nominees
as indicated) listed at right NOMINEES:
1. ELECTION
OF [ ] [ ] Jack M. Lloyd
DIRECTORS: William J. Howard
William G. Cox
If you wish to withhold authority to vote for any Todd S. Brown
individual nominee, strike a line through that Fred W. Martin
nominee's name in the list at right. Robert H. Manschot
2. Proposal to amend the Company's Restated Articles of Incorporation, as
amended, to change the name of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the appointment of Deloitte & Touche LLP as the
independent auditors of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and upon such matters which may properly come before the meeting or any
adjournment or adjournments thereof.
SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
Signature_____________________ _____________________ Dated:_____________, 1999
Signature if held jointly
NOTE: (THIS PROXY SHOULD BE DATED, SIGNED BY THE SHAREHOLDER(S) EXACTLY AS
HIS OR HER NAME APPEARS HEREON, AND RETURNED PROMPTLY IN THE ENCLOSED
ENVELOPE. PERSONS SIGNING IN A FIDUCIARY CAPACITY SHOULD SO INDICATE.
IF SHARES ARE HELD BY JOINT TENANTS OR AS COMMUNITY PROPERTY, BOTH
SHAREHOLDERS SHOULD SIGN.)
