UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant tounder Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ____)
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12ss ss 240.14a-11(c) of ss ss 240.14a-12
FAMILY STEAK HOUSES OF FLORIDA, INC.
(Name of Registrant as Specified in its Charter)
FAMILY STEAK HOUSES OF FLORIDA, INC.not applicable
(Name of Person(s) Filing Proxy Statement)Statement if other than the Registrant)
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FAMILY STEAK HOUSES OF FLORIDA, INC.
2113 Florida Boulevard
Neptune Beach, Florida 32266
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 2004 Annual
Shareholders' Meeting of Family Steak Houses of Florida, Inc. to
be held at the Sea Turtle Inn, One Ocean Boulevard, Atlantic
Beach, Florida 32233, on Thursday, June 6, 200217, 2004 at 10:00 a.m.
for the purpose of:
1. Electing Directors; and
2. Acting upon proposalsTo consider and vote on a proposal to amend the
Company's Articles of Incorporation: (a) to increase the number of authorized shares
of common stock from 4 million to 8 million shares; (b) to
eliminate the 75% approval requirement for certain
transactions with related corporations; and (c)Incorporation to change the
requisite shareholder vote to approve amendments to the
articles of incorporationCompany's name; and
to permit such amendments to be
adopted by shareholder consent;
3. Approving the 2002 Long-term Incentive Plan; and
4. Transacting such other business as may properly come
before the meeting.
The Board of Directors has fixed the close of business on
April 10, 200223, 2004 as the record date for determining shareholders
entitled to vote at the Meeting.meeting. Only shareholders of record at
the close of business on that date will be entitled to vote at
the Meeting.meeting.
The vote of every shareholder is important. Whether or not
you plan to attend the Meeting,meeting, please complete the enclosed
proxy and return it promptly so that your shares will be
represented. Sending in your proxy will not prevent you from
voting in person at the Meeting.meeting.
Glen F. Ceiley
Chairman of the Board
Date: May 1, 20023, 2004
FAMILY STEAK HOUSES OF FLORIDA, INC.
2113 Florida Boulevard
Neptune Beach, Florida 32266
-----------
PROXY STATEMENT
for
20022004 ANNUAL MEETING OF SHAREHOLDERS
General Information
The solicitation of the enclosed proxy is made by and on
behalf of the Board of Directors of Family Steak Houses of
Florida, Inc. (the "Company") to be used at the 20022004 Annual
Meeting of Shareholders, which will be held at the Sea Turtle
Inn, One Ocean Boulevard, Atlantic Beach, Florida, at 10:00 a.m.
on Thursday, June 6, 2002.17, 2004. The principal executive offices of
the Company are located at 2113 Florida Boulevard, Neptune Beach,
Florida 32266. The approximate mailing date of this Proxy
Statement is May 1, 2002.5, 2003.
The proxy may be revoked at any time before it is exercised
by giving notice of revocation to the Secretary of the Company.
The shares represented by proxies in the form solicited by the
Board of Directors will be voted at the meeting. Where a choice
is specified with respect to a matter to be voted upon, the
shares represented by the proxy will be voted in accordance with
such specification. If no choice is specified, such shares will
be voted as hereinafter stated in this Proxy Statement.
Record Date and Voting Securities
The Board of Directors has fixed the close of business on
April 10, 200223, 2004 as the record date for determination of
shareholders entitled to vote at the meeting. Holders of the
Company's Common Stock,common stock, par value $0.01 per share (the "Common
Stock") as of April 10, 200223, 2004 will be entitled to one vote for
each share held, with no shares having cumulative voting rights.
No other class of the Company's securities is entitled to vote at
the meeting. As of April 10, 2002,23, 2004, the Company had outstanding
3,271,2203,736,068 shares of Common Stock.
Voting Procedures
Under Florida law and the Amended and Restated Bylaws of the
Company (the "Bylaws"), a majority of shares of the Common Stock
entitled to vote, represented by person or proxy, constitutes a
quorum at a meeting of shareholders.
Under the Florida Business Corporation Act (the "FBCA"), directors are
elected by a plurality of the votes cast. Under the Company's Articles of
Incorporation, as amended and in effect as of the date of this Proxy Statement
(the "Current Articles"), the proposals to amend the Current Articles must be
approved at a shareholders' meeting by at least a majority of the shares
entitled to vote. The proposal to adopt the 2002 Long Term Incentive Plan will
be approved if the votes cast by the holders of the shares represented at the
meeting and entitled to vote on that proposal favoring the Plan adoption exceed
the votes opposing it. Any other matter which may be considered at the Annual
Meeting will be approved if the votes cast favoring the matter exceed the votes
opposing the matter, unless a greater number of affirmative votes or voting by
classes is required by Florida law or the Company's Articles of Incorporation.
Under Florida law, abstentions and shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners entitled to vote and the broker or nominee
does not have discretionary authority to vote on a particular matter) are
treated as shares of Common Stock that are present and entitled to vote for
purposes of determining the presence of a quorum. Shares voted as abstentions on
a matter are considered shares entitled to vote on that matter. In contrast,
shares represented by proxy which reflect a broker non-vote on a particular
proposal are treated as not present and not entitled to vote on that proposal
and therefore will not be considered when counting votes cast on the matter
(even though those shares are considered entitled to vote for quorum purposes
and may be entitled to vote on other matters). Accordingly, abstentions and
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broker non-votes will have no effect on the election of directors and the
proposal to approve the 2002 Long Term Incentive Plan. Abstentions will have the
effect of a vote against the proposals to amend the Current Articles while
broker non-votes will have no effect.
If less than a majority of the outstanding shares are
represented at the Annual Meeting, a majority of the shares so
represented may adjourn the Annual Meeting from time to time without further
notice.
Security Ownership of Certain Beneficial Owners and of
Management
The table set forth below presents certain information
regarding beneficial ownership of the Company's Common Stock (the
Company's only voting security), as of April 1, 2002,2004, by (i) each
shareholder known to the Company to own, or have the right to
acquire within sixty (60) days, more than five percent (5%) of
the Common Stock outstanding, (ii) each named executive officer
and director of the Company, and (iii) all officers and directors
of the Company as a group.
All
share amounts have been adjusted to reflect the results of a reverse stock split
effective March 4, 1998.
Amount of Common Stock
Beneficially Percent of
Name of Beneficial Owner Owned (1) Class (2)
------------------------ --------- ---------Beneficially Owned(1) Class(2)
Edward B. Alexander 22,850 .7%23,000 .6%
Stephen Catanzaro 11,651 .4%19,113 .5%
Glen F. Ceiley (3) 1,621,328 49.6%
Cerberus Partners, L.P. (4) 140,000 4.1%Ceiley(3) 2,251,735 60.3%
Jay Conzen 33,651 1.0%41,113 1.1%
William L. Means 8,651 .3%16, 113 .4%
All Executive Officers and
Director
NomineesDirectors as a Group (6 persons) 1,709,831 51.3%group 2,351,074 62.9%
(1) Included in such beneficial ownership are shares of Common Stock
which may be acquired immediately or within 60 days upon the exercise
of certain options; Edward B. Alexander, 22,85023,000 shares; Jay Conzen,
25,000 shares; and all executive officers and directors as a group,
59,55048,000 shares.
(2) The percentages represent the total of the shares listed in the adjacent
column divided by the issued and outstanding shares of Common Stock as of April
1, 2002,2004, plus any stock options or warrants exercisable by such person
within 60
days60days of April 1, 2002.2004.
(3) Based on information set forth by Mr. Ceiley in response to a questionnaire
from the Company on April 1, 2002,2004, Bisco Industries, Inc. ("Bisco") owns
1,259,2861,842,019 shares; Glen F. Ceiley, President and a director of Bisco, owns 41,14558,607
shares, individually; Zachary Ceiley, Mr. Ceiley's son, owns 1,300 shares; and
the Bisco Industries Profit Sharing and Savings Plan (the "Bisco Plan") owns
319,597349,809 shares. Mr. Ceiley has the sole power to vote and dispose of the shares
of Common Stock he owns individually and the power to vote and to dispose of the
shares owned by his son, Bisco and the Bisco Plan. The address for Mr. Ceiley
and Bisco is 1500 North Lakeview Avenue, Anaheim, CA 92807.
(4) Represents shares of Common Stock issuable upon the exercise of certain
stock purchase warrants issued October 1, 1988 and March 14, 1995, pursuant to
which the holders thereof have the right to purchase an aggregate of up to
140,000 shares for $2.00 per share. None of such shares are outstanding. The
address for Cerberus Partners, L.P. is 950 Third Avenue, New York, NY 10022.
Board of Directors and Standing Committees
The business of the Company is under the general management
of a Board of
3
Directors as provided by the Florida Business
Corporation Act. In accordance with the Bylaws of the Company,
which empower the Board of Directors to appoint such committees
as it deems necessary and appropriate, the Board of Directors has
appointed an Audit Committee and an Executive Compensation
Committee.
Audit Committee: The Audit Committee's basic functions are
to assist the Board of Directors in discharging its fiduciary
responsibilities to the shareholders and the investment community
in the preservation of the integrity of the financial information
published by the Company, to maintain free and open means of
communication between the Company's directors, independent
auditors and financial management, and to ensure the independence
of the independent auditors. The Board of Directors has adopted a
written charter for the Audit Committee which wasis attached as an
ExhibitAppendix to the proxy statement for last
year's annual meeting.this Proxy Statement. Currently, the members of the
Audit Committee are Directors Catanzaro, Conzen and Means. The
Audit Committee held one meeting during the fiscal year ending
January 2, 2002.December 31, 2003. All members of the Audit Committee attended
this meeting.
Jay ConzenAudit Committee Financial Expert: The Company does not
currently have an audit committee financial expert. The Company
believes that the members of the Board of Directors have
demonstrated that they are capable of analyzing and evaluating
the Company's financial statements and understanding internal
controls and procedures for financial reporting. In addition,
the Company believes that retaining a director who would qualify
as an audit committee financial expert would be costly and
burdensome and is not warranted in the only membercircumstances.
Audit Committee Pre-Approval Policies and Procedures: The
Audit Committee is required to pre-approve all auditing services
and permissible non-audit services, including related fees and
terms, to be performed for the Company by its independent
auditor, subject to the de minimus exceptions for non-audit
services described under the Securities Exchange Act of 1934,
which are approved by the Audit Committee who is not an
independent director as defined in Rule 4200prior to the completion
of the National Association of
Securities Dealers ("NASD") since he is currently serving as a full-time
consultant to the Company.
However, because of Mr. Conzen's substantial financial and audit related
experience, the Board has determined that his membership onaudit. In 2003, the Audit Committee is inpre-approved all
services performed for the best interestsCompany by the auditor.
Financial Code of Ethical Conduct: The Company has adopted a
financial code of ethics applicable to the Company's senior
executive and financial officers. You may receive, without
charge, a copy of the Company and its shareholders. Mr. Conzen has
over 25 yearsFinancial Code of financial experience, including 10 years with Ernst & Young
where he directed the audits of a variety of public and private companies,
including several restaurant chains. He also served as Chief Financial Officer
for 8 years of The Impact Group, Inc., a food broker, distributor and
manufacturer of various food products.Ethical Conduct by
contacting our Corporate Secretary at 2113 Florida Boulevard,
Neptune Beach, Florida 32266.
Executive Compensation Committee: The Executive Compensation
Committee administers the Company's stock option plans and is
responsible for granting stock options to officers and managerial
employees of the Company. It is also responsible for establishing
the salary and annual bonuses paid to executive officers of the
Company. The current members of the Executive Compensation
Committee are Directors Catanzaro, Ceiley and Means. The Executive
Compensation Committee held one meeting during fiscal year 2002.2003.
All members of the Committee attended this meeting.
Board Meetings: The Board of Directors held four meetings
during fiscal year 2002.2003. Each member of the Board attended all
four meetings. The Company does not have a policy with regard to
directors' attendance at annual meetings of shareholders. None
of the directors attended our 2003 Annual Meeting of
Shareholders.
Nominating Committee: The Board of Directors does not have a
Nominating Committee. Given the size of the Company and its
resources, the Board believes that this is appropriate. Each
director participates in the consideration of director nominees.
The Board believes that having such a committee would not enhance
the nomination process. The Company does not have a formal
policy regarding the consideration of any director candidates
recommended by shareholders or specific minimum qualifications
for director nominees.
Communications to Board of Directors: The Board of Directors
has established a process for shareholders to communicate with
members of the Board of Directors. If you would like to contact
the Board you can do so by forwarding your concern, question or
complaint to the Company's Corporate Secretary at 2113 Florida
Boulevard, Neptune Beach, Florida 32266.
Compensation Committee Interlocks and Insider Participation
Mr. Ceiley serves as the Company's principalchief executive officer for purposes
of signing the Company's filings with the SEC.officer.
He does not receive any compensation for his service as principalchief
executive officer.
Director Compensation
None of the director nominees were employees of the Company
during the fiscal year ended January 2, 2002.December 31, 2003. Mr. Conzen currently servesserved
as a full-time paid consultant to the Company.Company in 2002 and through
April 2003. In order to attract and retain highly qualified
independent
directors through an investment interest in the Company's future
success, the Company enacted, in l985, a non-qualified Stock
Option Plan for Non-Employee Directors (the "Directors' Plan").
Each director eligible under the Directors' Plan annually receives an
option,
which was used to purchase 1,800 shares of Common Stock. Typically, options are granted
on the first business day of each calendar year, at an option exercise price per
share equivalent to a price such that the aggregate fair market value on the
date of grant for all shares subjectcompensate directors until January 2002. Due
to the options exceeds the aggregate option
exercise price by the amountexpiration of $l0,000. In the event the market price of the
Company's stock is insufficient to provide a benefit of $10,000, the Company has
historically granted additional options outside the Directors' Plan in an amount
4
sufficient to confer a net benefit of $10,000 per director. Options granted
under the Director's Plan are immediately exercisable and expire five years from
the date of grant.
On January 2, 2002 options were granted to each of the four Directors for
the purchase of 1,800 shares at a purchase price of $.01 per share. Since the
price of the stock was $1.00 on January 2, 2002, the Company
granted to each
director an option to purchase an additional 3,251 shares at a purchase price of
$.01 and paid $5,000$10,000 cash to each director so that the total value of cash and
options amounted to $10,000in 2003 as compensation for
each director.
Directorstheir services.
In addition, directors who are not employees of the Company
receive a fee of $500 for each Board of DirectorsDirectors' meeting
attended. No fees are awarded to directors for attendance at
meetings of the Audit or Executive Compensation Committees of the
Board of Directors.
Certain Relationships and Related Transactions
During part of 1999 and all of fiscal year 2000 and beginning again
infrom October 2001 to April 2003, Mr. Conzen has beenwas a member of the
Company's Office of the President, which iswas the three-persontwo-person body
responsible for management forof the Company. As a full-time
consultant, Mr. Conzen receivesreceived $12,500 plus expenses per month
for these services. Mr. Conzen was paid a total of $55,868$58,667 plus
expenses for consulting services during 2001.2003. In addition, in
November 1999 the Board of Directors granted Mr. Conzen an option
to purchase 25,000 shares of the Company's Common Stock at an
exercise price of $2.00 per share as an incentive to maximize the
Company's profitability. The price of the Company's stock on the
date of this grant was $1.13.
Matters to be Acted Upon
PROPOSAL 1: ELECTION OF DIRECTORS
The Boardfollowing provides certain information with respect to
each of Directors recommends thatour directors all of whom are nominated for election at
the shareholders vote for the
election of the four (4) nominees listed below2004 Annual Meeting to serve as directors foruntil the terms outlined below2005
Annual Meeting and until their successors are elected and
qualified. Mr. Catanzaro and Mr. Means were elected by the
shareholders at the 1999 annual
meeting.Annual Meeting. Mr. Ceiley and Mr.
Conzen were appointed to the Board in February 1998 and elected
by the shareholders at the 1998 annual meeting.Annual Meeting. Should any one or
more of the nominees become unavailable to accept nomination for
election as a director, the enclosed proxy will be voted for such
other person or persons as the Board of Directors may recommend,
unless the Board reduces the number of directors.
Name Business Experience and Age
- --------------------------------------------------------------------------------
Stephen Catanzaro Chief Financial Officer of V&M Restoration,
Inc., a restoration company from September
2002 to February 2004. Chief Financial
Officer of Bisco, a distributor of fasteners
and electronic
components, from September 1995 to March
2002. Age 49.51.
Glen F. Ceiley Mr. Ceiley serves as chief executive officer
of the Company. He has also been the
President and Chief Executive Officer of
Bisco.Bisco since 1973. Mr. Ceiley is also a
director of Data I/O Corporation, a publicly-heldpublicly-
held company engaged in the manufacturing of
electronic equipment. Age 55.58.
Jay Conzen President of Old Fashion Kitchen, Inc. since
April 2003. Principal of Jay Conzen
Investments (investment advisor) sincefrom October
1992.1992 to April 2003. Consultant to the
Company from August 1999 until January 2001
and from October 2001 to present.April 2003. Age 55.57.
William L. Means Vice President of Corporate Development of
Bisco since November 1997. Director of
Management Information Systems at Bisco from
1989 to 1997. Age 59.61.
Vote Required
Under the Florida Business Corporation Act, directors are
elected by a plurality of the votes cast. Therefore, abstentions
and broker non-votes have no effect under Florida law.
The Board of Directors recommends a vote FOR the election of
each of the nominees.
Executive Officers
The following person, other than Mr. Ceiley, was an executive
officer of the Company as of December 31, 2003:
Edward B. Alexander President of the Company since April 2003.
He was Executive Vice President from
September 1999 to April 2003, and was Chief
Financial Officer of the Company from 1990 to
April 2003. In addition, Mr. Alexander
served on the Company's Board of Directors
from May 1996 to July 1999. Certified Public
Accountant since 1982. Age 45.
Significant Employee
Stephen C. Travis Director of Finance of the Company since May
2003. Controller of the Company from April
2002 to May 2003. Director of Finance for
International Transport Logistics, Inc. from
March 2001 to March 2002. Controller of
Florida Rock Industries, Inc. from June 1999
to March 2001 and Vice President of Finance
and Administration prior to June 1999.
Certified Public Accountant since 1984. Age 48.
There are no family relationships between any of the
nominees and executive officers of the Company.
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SECTION 16(a) Beneficial Ownership Reporting ComplianceBENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires certain officers of the
Company and its directors, and persons who beneficially own more
than ten percent of any registered class of the Company's equity
securities, to file reports of ownership in such securities and
changes in ownership in such securities with the Securities and
Exchange Commission and the Company.
Based solely on a review of the reports and written
representations provided to the Company by the above referenced
persons, the Company believes that during 20012003 all filing
requirements applicable to its reporting officers, directors and
greater than ten percent beneficial owners were timely satisfied,
except that Mr. Ceiley filed two late reports involving 12 transactions.satisfied.
REPORT OF THE AUDIT COMMITTEE
The Audit Committee has reviewed the audited financial
statements of the Company for the year ended January 2, 2002,December 31, 2003,
and has met with management and Deloitte & Touche LLP, the
Company's independent auditors, to discuss the audited financial
statements.
The Audit Committee received from Deloitte & Touche LLP
written disclosures regarding their independence and the letter
required by Independence Standards Board Standard No. 1, and has
discussed with Deloitte & Touche LLP their independence. In
connection with its review, the Audit Committee has also
discussed with Deloitte & Touche LLP the matters required to be
discussed by Statement ofU.S. Auditing Standard No. 61.Standards Section 380 - Communications
with Audit Committees.
Based on its review and discussions with management and
Deloitte & Touche LLP, the Audit Committee recommended to the
Board of Directors that the audited financial statements be
included in the Company's Annual Report to Shareholders for the
year ended January 2, 2002.December 31, 2003.
Respectfully Submitted,
Jay Conzen, Chairman
Steve Catanzaro
William Means
6
Audit Fees
The aggregate fees billed by Deloitte & Touche LLP
("Deloitte") for professional services rendered for the audit
of the Company's annual financial statements for the fiscal yearyears
ended December 31, 2003 and January 2, 20021, 2003 and for the reviews
of the financial statements included in the Company's Quarterly
Reports on Form 10-Q for thatthose fiscal yearyears were $46,900.
Financial Information Systems Design$71,500 and
Implementation$57,500, respectively.
Audit-Related Fees
There were noThe aggregate fees billed by Deloitte for professional
services rendered for information technology services relating to financial information systems
design and implementationaudit-related fees for the fiscal yearyears
ended December 31, 2003 and January 2, 2002.1, 2003 were $8,000 and
$6,100, respectively. These fees were billed for the performance
of an audit of the Company's Employee Benefit (401k) Plan.
Tax Fees
The aggregate fees billed by Deloitte for professional
services rendered for tax services for the fiscal years ended
December 31, 2003 and January 1, 2003 were $9,500 and $11,990,
respectively.
All Other Fees
The aggregate fees billed by Deloitte for services rendered
to the Company, other than the services described above, under "Audit Fees" and "Financial
Information Systems Design and Implementation Fees", for the
fiscal yearyears ended December 31, 2003 and January 2, 20021, 2003 were
$22,307.$1,000 and $4,210, respectively.
The Audit Committee has considered whether the provision of
non-audit services is compatible with maintaining the principal
accountant's independence.
REPORT OF THE EXECUTIVE COMPENSATION COMMITTEE
The Executive Compensation Committee (the "Committee"),
currently consisting of Directors Catanzaro, Ceiley and Means, uses the
following objectives as guidelines for its executive compensation
decisions: to provide a compensation package that will attract,
motivate and retain qualified executives; to ensure a
compensation mix that focuses executive behavior on the
fulfillment of annual and long-term business objectives; and to
create a sense of ownership in the Company that causes executive
decisions to be aligned with the best interests of the Company's
shareholders.
The Company's compensation package in 20012003 for its executive
officers consisted of base salary only. The Committee determined
salary levels for the Company's executive officers.
General Compensation Policies
In general, base salary levels are set at the minimum levels
believed by the Company's executive officers to be sufficient to
attract and retain qualified executives when considered with the
other components of the Company's compensation structure.
The Committee adjusts salary levels for executive officers
based on achievement of specific annual performance goals,
including personal, departmental and overall Company goals
depending upon each officer's specific job responsibilities. The
Committee also uses its subjective judgment, based upon such
criteria as the executive's knowledge of and importance to the
Company's business, willingness and ability to accomplish the
tasks for which he or she was responsible, professional growth
and potential, the Company's operating earnings and an evaluation
of individual performance, in making salary decisions.
Compensation paid to executive officers in prior years is also
taken into account. No particular weighting is applied to these
factors.
The Committee may determine that the Company's financial
performance and individual achievements merit the payment of
annual bonuses. In recent years, no bonuses have been awarded to
any officers of the Company.
The Committee determines stock option grants to the
executive officers. The Committee determines annual stock option
grants to other employees based on recommendations of the
Office of the President. Stock options are intended to encourage key employees
to remain employed by the Company by providing them with a long
term interest in the Company's overall performance as reflected
by the market price of the Company's Common Stock. No stock
option grants were made in 2001.
7
2003.
The Committee will consider any federal income tax
limitations on the deductibility of executive compensation in
reaching compensation decisions and will seek shareholder
approval where such approval will eliminate any limitations on
deductibility.
CEO Compensation
Mr. Ceiley serves as principalchief executive officer of the Company for
purposes of signing reports filed with the Securities & Exchange Commission (the
"SEC").Company.
He is not employed by the Company and is not paid for his service
as principalchief executive officer.
The Board of Directors has establishedFrom January through April 2003, the Company's day-to-day
executive management was performed by an Office of the President, to
perform the day-to-day executive management of the Company,
made up of executive officer Edward B. Alexander and director Conzen, who rejoined the Office of the
President in October 2001.Jay
Conzen. Mr. Conzen's compensation of $12,500 per month was
established based on the following factors, with no particular
weighting: the Committee's subjective valuation of Mr. Conzen's
service to the Company, the fact that he would not receive any
regular employee benefits, such as health and life insurance from
the Company, the full-time effort required, the amount of time
Mr. Conzen would be required to spend away from his home in
California, the salaries paid to other members of the Office of
the President, the monthly fee paid by the Company for Mr.
Conzen's service in 1999 and 2000 and the consulting fees generally
earned by Mr. Conzen.
In April 2003, Mr. Conzen left the Company as a consultant,
and the Office of the President was disbanded. At that time, Mr.
Alexander was appointed president and chief operating officer of
the Company. The salary and compensation package of Mr. Alexander was
established by the committee based on considerations discussed
above in the section entitled "General Compensation Policies."
Respectfully Submitted,
Steven Catanzaro
Glen F. Ceiley
William Means
8
EXECUTIVE PAY
The summary compensation table below sets forth a summary of
the compensation earned by the Company's named executive officers
during fiscal years 1999, 20002001, 2002 and 2001.2003.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- ----------------------
Securities
Salary Other AnnualName and Principal Underlying All Other
Name and Principal Position Year Salary ($) Options Compensation($)(1)
Compensation(2) Options(3) Compensations($)(4)- -------------------------- ---- ------ --------------- ----------------------- ------------- -------------------
- --------------------------------
Glen F. Ceiley (5) 2001(2) 2003 $-0- $-0- 1,800 $-0-
2000 -0- -0- 1,800 -0-$-0-
Principal Executive 2002 -0- 5,051 -0-
Officer 1999 -0-2001 -0- 1,800 -0-
Jay Conzen (6) 2001(3) 2003 $-0- $-0- 1,800 $55,868-0- $46,667
Office of the President 20002002 -0- 5,051 150,000
2001 -0- 1,800 150,000
1999 -0- -0- 25,000 62,50047,200
Edward B. Alexander (4) 2003 $125,559 -0- $1,554
President 2002 116,203 -0- 1,509
Chief Operating 2001 $116,203 $4,425 -0- $1,428
Executive Vice President 2000 115,615 4,577 400 1,354
Chief Financial1,428
Officer 1999 101,730 -0- 3,500 251,937
Office of President
Explanation of Columns:
(1) Salary: Total base salary paid during the year.
(2) Other Annual Compensation: Specific forms of cash and non-cash
compensation paid, awarded or earned not properly categorized as salary
or bonus and designated as Other Annual Compensation under the rules
and regulations of the SEC. The value of all personal benefits and
perquisites received by the named executives was less than the required
reporting threshold, except for an automobile allowance of $4,425 paid
to Mr. Alexander in 2001.
(3) Securities Underlying Options: Number of shares of Common Stock
underlying grants of options made during the year.
(4) All Other Compensation: All other compensation that does not fall under
any of the aforementioned categories. Amounts shown for Mr. Alexander
include a change in control payment of $250,000 in 1999 and
contributions to the Company's 401(k) Plan to match a portion of his
deferred contributions in 2001, 2000 and 1999. The amounts shown for
Mr. Conzen represent consulting fees paid.
(5) Mr. Ceiley serves as principal executive officer for purposes of
signing the Company's filings with the SEC. He is not compensated for
his service as principal executive officer.
(6) Mr. Conzen is an independent consultant to the Company, not an
employee. He is paid consulting fees, rather than a salary.
9Explanation of Columns:
(1) All Other Compensation: All other compensation that does not fall under any
of the aforementioned categories. Amounts shown are contributions to the
Company's 401(k) Plan on behalf of Mr. Alexander to match a portion of his
deferred contributions in 2003, 2002 and 2001. All amounts shown for Mr.
Conzen represent consulting fees paid.
(2) Mr. Ceiley serves as principal executive officer for purposes of signing
the Company's filings with the SEC. He is not compensated for his service
as principal executive officer.
(3) Mr. Conzen was an independent consultant to the Company, not an employee.
He was paid consulting fees, rather than a salary.
(4) Mr. Alexander is an employee-at-will of the Company and does not have an
employment contract.
Option Grants
There were no options to purchase the Company's Common Stock
granted to the named executive officers in 2001.2003.
Option Exercises And Year-End Option Value
The following table sets forth information concerning the
number and value of unexercised options to purchase the Company's
Common Stock held by the named executives at fiscal year end.
Aggregated Option Exercises in Last Fiscal
Year, and Year-End Option Value
Shares Number of Securities Value of Unexercised
Acquired on Underlying Unexercised In-the-Money Options
Exercise inIn-The-Money Option
Options at Fiscal Year at Fiscal Year-End
2001(#) Year-EndEnd (#) ($)(1)
------------------------ --------------------------------------------- --------------------
Shares
Acquired On
Exercise in Value Exercisable/ Exercisable/
2003 (#) Realized ($) Unexercisable Unexercisable
------------- -------------- ------------------------ ----------------------------------- ------------ -------------------- -------------------
Edward B. Alexander --- --- 22,850/2,0500 $0 23,000/100 $0/0
Glen F. Ceiley 1,800 $1,3320 $0 0/0 $0/0
Jay Conzen 1,800 $1,332 25,000/0 $0/$0 25,000/0
(1) Market value of underlying securities at year end ($1.00 at January 2, 2002,$0/0
(1) Market value of underlying securities at year end ($.80 at December 31,
2003, the last trading day of the Company's fiscal year), minus the various
exercise prices.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
The SEC requires a five-year comparison of stock price
performance of the Company with both a broad equity market index
and a published industry index or peer group. The Company's
total return compared with the NASDAQ market indexMarket Index and the Media
General Restaurant Index is shown on the following graph.
The Media
General Restaurant Index includes 113 publicly-held restaurant companies.
This graph assumes that $100 was invested on January 1, 19971998
and all dividends were reinvested in the Company's Common Stock
and the other indices. Each of the indexes is weighted on a
market capitalization basis at the time of each reported data
point.
- -----------------------------------------------------------------------------------------------------------(Graph Omitted)
12/30/1998 12/29/1999 1/3/2001 1/2/2002 1/1/2003 12/31/2003
01/01/97 12/31/97 12/30/98 12/29/99 01/03/01 01/02/02
- -----------------------------------------------------------------------------------------------------------
FAMILY STEAK HOUSES OF FLORIDA 100.00 95.01 30.00 32.00 24.00 32.00
- -----------------------------------------------------------------------------------------------------------$100.00 106.61 79.96 106.61 52.24 85.29
MG GROUP INDEX 100.00 102.87 140.09 133.30 126.69 128.48
- -----------------------------------------------------------------------------------------------------------$100.00 176.37 110.86 88.37 61.64 92.68
NASDAQ MARKET INDEX 100.00 122.32 172.52 304.29 191.25 152.46
- -----------------------------------------------------------------------------------------------------------$100.00 95.12 90.58 92.24 74.06 102.27
10PROPOSAL 2: APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION
TO EFFECT NAME CHANGE
The Company seeks shareholder approval to amend its Articles
of Incorporation to change its name from Family Steak Houses of
Florida, Inc. to RIM of Florida, Inc. The primary
reason for the proposed name change is to better clarify the
Company's identity as a result of its agreement to terminate its
franchise agreement.
The Company's business has primarily been owning and
operating Ryan's Family Steak House restaurants (for purposes of
this Proposal 2, "Ryan's"). In December 2003, the Company
entered into an agreement to terminate its Ryan's franchise
agreement by June 2005 which requires the Company to convert its
restaurants to a new name and logo beginning in the first quarter
of 2004. The Company has begun converting its restaurants to one
of two new family-buffet dining concepts known as either
"Whistle Junction" or "Florida Buffet." The Company's
business plan includes operating restaurants under both the
Whistle Junction and the Florida Buffet names. The format of
these new dining concepts is no longer the traditional steak
house, as our existing company name implies. Accordingly, the
Company believes that a change in the Company's name is in line
with the Company's transformation and will better reflect the
Company's new business plan.
Vote Required
This name change requires that the Company's Articles of
Incorporation be amended. Approval of the proposal to amend the
Articles of Incorporation to change the Company's name to
RIM of Florida, Inc., will require the affirmative
vote of the holders of a majority of the outstanding shares of
the Company's Common Stock on April 23, 2004. Therefore,
abstentions and broker non-votes will have the same effect as
votes against the proposal.
The Board of Directors unanimously recommends a vote FOR
the proposal to amend the Company's Articles of Incorporation
to change the Company's name to RIM of Florida,
Inc.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Audit Committee has not yet recommended to the Board of
Directors an accounting firm to be engaged as independent auditor
for the Company for 2002.2004 but will do so at a later date. The firm of
Deloitte & Touche LLP, served as the independent accountantsaccountant for
the Company for the fiscal year ending January 2, 2002.December 31, 2003. That
firm has served as the auditor for the Company since 1991.
Representatives of Deloitte & Touche are expected to be present
at the annual meeting of shareholders where they will have an
opportunity to make a statement if they desire to do so and will
be available to respond to appropriate questions.
PROPOSAL 2: PROPOSALS TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION
PROPOSAL 2A: INCREASE THE AUTHORIZED NUMBER OF COMMON SHARES
By resolutions adopted at a meeting of the Board of Directors held on March
14, 2002, the Board of Directors has recommended to the shareholders that the
Company's Articles of Incorporation be amended to increase the number of
authorized shares of the Common Stock from 4 million shares to 8 million.
The Board of Directors believes that increasing the number of authorized
shares is essential to ensure that the Company will continue to have an adequate
number of shares of Common Stock available for future issuance.
As of April 1, 2002 the Company had 3,271,220 shares of Common Stock
outstanding. As of April 1, 2002, an additional 67,185 shares were available for
future grants under the Company's Long Term Incentive Plan and the Non-Employee
Director Plan. Under these plans, the Company has outstanding options to
purchase 183,840 shares of Common Stock. In addition, warrants to purchase
140,000 shares of Common Stock are outstanding. This means the Company would
only have 337,755 shares of Common Stock available for other future use without
increasing the number of authorized shares.
The Company estimates the cost of opening new restaurants in 2002 will be
approximately $2.8 million per restaurant and believes that it may need funding
in addition to borrowings and operating cash flow to develop new stores and to
remodel existing restaurants. The sale of Common Stock and preferred shares
which may be convertible into Common Stock would be one means of raising
additional capital for the opening of new restaurants and the remodeling of
existing outlets.
If the shareholders approve the increase in authorized shares, the Company
would be able to issue stock for any valid corporate purpose that the Board of
Directors from time to time deems necessary or advisable, including, without
limitation, funding construction of new restaurants, remodeling existing stores,
providing operating capital, supporting loans, financing acquisitions and other
transactions, converting outstanding and future options, warrants and other
convertible securities, and declaring stock splits and stock dividends. The
availability of additional shares of Common Stock for issuance will provide
management with greater flexibility in taking any of these actions without the
expense and delay of obtaining shareholder approval other than as required by
state law or Nasdaq requirements for the particular transaction.
While the Board will authorize the issuance of additional shares of Common
Stock based on its judgment as to the Company's and the shareholders' best
interests, future issuances could have a dilutive effect on existing
shareholders. Holders of Common Stock are not now, and will not be, entitled to
preemptive rights to purchase shares of any authorized capital stock if
additional shares are issued later. The proposed amendment is not intended to
have an anti-takeover effect. However, authorized but unissued shares could be
used in defending the Company from unsolicited attempts to acquire control of
the Company through the placement of additional shares with selected
shareholders or adoption of a shareholder rights plan. The existence of a
significant number of authorized but unissued shares could discourage a
potential purchaser from making an unsolicited offer to purchase control of the
Company.
11
The Board of Directors believes it is in the Company's best interests for
the shareholders to adopt this amendment in order to provide the Company with as
much flexibility as possible to issue additional shares for proper corporate
purposes as outlined above.
PROPOSAL 2B: ELIMINATE THE 75% VOTE REQUIREMENT FOR TRANSACTIONS WITH RELATED
CORPORATIONS.
The Article V of the Current Articles contains provisions requiring holders
of 75% of the outstanding shares to approve certain transactions with a "related
corporation." This provision defines a related corporation as a corporation and
its affiliates that individually or in the aggregate are directly or indirectly
the beneficial owner of more than 10% of the total voting power of the Company's
outstanding shares. The transactions which may not be consummated without 75%
approval (defined as "Business Combinations" in Article V) include mergers or
consolidations with the related corporation, sales or exchanges of all or a
substantial part of the Company's assets with the related corporation, or the
issuance of the Company's securities in exchange for any properties, assets or
securities of the related corporation.
The 75% vote is not required under Article V if certain conditions were
met. These conditions include that (a) the transaction was approved by a 75%
vote of the directors who were directors before the acquisition of ownership by
the related corporation and (b) all of the following conditions are met: (i)
each shareholder receives consideration in the transaction that is no less than
the highest price paid by the related corporation determined as set forth in
this provision, (ii) the Company has not failed to pay or changed the rate of
dividends or provided any loans, guarantees, or financial or tax advantages to
the related corporation after the related corporation became a more than 10%
owner, and (iii) the Company provides a proxy or information statement to all
shareholders describing the proposed transaction with the related corporation.
This anti-takeover provision was included in the original Articles of
Incorporation adopted in 1986. The Florida legislature adopted a slightly
different "affiliated transaction" statute in 1987, which is set forth in
Section 607.0901 of the FBCA. This statute requires approval of 66% of the
voting shares for a corporation to engage in transactions with a more than 10%
shareholder. The transactions that are subject to the 66% vote under the Florida
affiliated transaction statute are substantially similar to the transactions
that would be subject to the 75% vote under the Current Articles.
The Board of Directors recommends the deletion of Article V from the
Current Articles. Both Article V and the affiliated transaction statute are
intended to provide protection from unsolicited takeover attempts. The Board of
Directors believes that the provisions of the Florida statute provide adequate
protection. Being subject to both Article V and the Florida affiliated
transaction statute creates uncertainty about the vote required and procedures
for approval of transactions should the Company ever wish to engage in a
transaction with a more than 10% shareholder. Accordingly, the Board of
Directors recommends that the shareholders approve Proposal 2B regarding the
elimination of the 75% vote requirement for transactions with related
corporations.
PROPOSAL 2C: ALTER PROVISIONS REGARDING THE AMENDMENT OF THE COMPANY'S ARTICLES.
The Current Articles provide that the Articles may only be amended at a
shareholders' meeting and further require that the amendment be approved by
holders of a majority of the stock entitled to vote. Under Florida law, in the
absence of these provisions, a corporation can generally amend its articles at
the recommendation of the Board of Directors (a) by a consent signed by holders
of a majority of the outstanding shares and (b) at a shareholders' meeting at
which a quorum is present if the votes in favor of the amendment exceed the
votes cast opposing the amendment. If this Proposal 2C is adopted, the Company
would be able to adopt amendments to its Articles as so permitted under Florida
law.
The proposed text of Article IX would read as follows:
12
ARTICLE IX
Amendment
---------
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribed by the laws of the State of Florida, and all rights
conferred upon shareholders herein are granted subject to this reservation.
Adoption of this revised language will provide the Company with the
flexibility to have amendments adopted by shareholder consent and at
shareholders' meetings if the votes in favor of the amendment exceed the votes
against. The Board of Directors believes that it is in the Company's best
interest to allow shareholders to adopt amendments to the articles of
incorporation by consent, thereby avoiding the diversion of management time and
expense of a shareholders' meeting. Furthermore, the Board has concluded that
the standard provisions of the FBCA on the requisite vote and other requirements
for the adoption of an amendment to a corporation's articles of incorporation
are sufficient, rendering the higher approval requirement of the Current
Articles unnecessary. As a result, the Board of Directors recommends that the
shareholders approve Proposal 2C to adopt the revision to Article IX as set
forth above in order to modify the requirements for amendment of the Company's
Articles.
Interests of Directors in the Proposals Related to the Amendment of the Articles
of Incorporation.
Mr. Ceiley and his affiliates, including Bisco, are more than 10%
shareholders of the Company and thus, may be defined as a "related corporation"
under Article V of the Current Articles. As a result, Mr. Ceiley, Bisco and
their affiliates have a personal interest in the adoption of Proposal 2B. Mr.
Ceiley has served on the Company's Board of Directors since 1997 and, other than
purchasing Common Stock directly from the Company, has not proposed or engaged
in any transactions with the Company. Mr. Ceiley, Bisco and their affiliates
have no present intention to engage in any transactions with the Company that
would constitute a "Business Combination" under Article V of the Current
Articles, but reserve the right to do so in the future.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF EACH OF THE PROPOSALS
RELATED TO THE AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION.
13
PROPOSAL 3: 2002 LONG-TERM INCENTIVE PLAN
The Board of Directors believes that the continued success of the Company
depends on its ability to attract, retain and motivate key employees. The
Company's existing 1995 Long Term Incentive Stock Option Plan no longer has a
sufficient number of shares available for grant to achieve these goals.
Accordingly, the Executive Compensation Committee ("the Committee") of the Board
of Directors and the full Board of Directors have reviewed the Company's
long-term compensation program for key employees and recommends that the
shareholders approve the adoption of the 2002 Long Term Incentive Plan (the
"Plan"). The full text of the Plan is attached to this Proxy Statement as
Appendix A.
The Plan provides for grants of tax-qualified incentive stock options to
purchase Common Stock, non-qualified stock options to purchase Common Stock and
restricted Common Stock to employees of the Company and/or its subsidiaries. The
adoption of the Plan contemplates the continuation of any existing incentive
compensation plan(s) of the Company and in no way limits or is limited by the
operation, administration or amendment of such plan(s). The market value of the
Common Stock as of April 1, 2002 was $0.91 per share.
The Plan will be administered by the Committee. Subject to the terms of the
Plan and the approval of the Board of Directors, awards under the Plan shall be
made to such recipients and upon such terms as the Committee shall determine in
its discretion from time to time. The Company presently has approximately 1400
employees eligible to participate under the Plan. However, the Company's past
practice has been to grant options only to officers, corporate employees and
restaurant general managers, of which there are approximately 50 persons. No
options or restricted stock have been granted under the Plan to any
non-employees directors, named executive officers or employees.
Each option granted under the Plan requires an individual stock option
agreement (a "Stock Option Agreement") executed by the Company and each
participant. A Stock Option Agreement shall contain provisions including: (a)
the number of shares a participant may acquire according to the option granted
and the exercise price per share; (b) any conditions affecting the exercise of
the option granted; (c) the procedure for exercising the option granted; (d) a
clear designation of whether the exercise of the option granted is subject to
vesting; (e) representations and warranties by the participant regarding
acquisition of the shares for investment purposes; and (f) such provisions as
the Committee, upon advice of counsel to the Company, deems necessary or
appropriate to comply with the requirements of applicable laws. Any
discrepancies or inconsistencies between the terms of the Plan and any term or
provision contained in a Stock Option Agreement will be interpreted by the
Committee.
The Plan provides that the exercise price for options will be at least 100%
of the closing bid price of the Common Stock on the date of grant. An option may
be exercised in whole or in part after completion of such periods of service or
achievement of such conditions as are prescribed by the Committee when granting
the option. If no period is specified, then the option shall become fully
exercisable with respect to twenty-five percent (25%) of the shares subject to
the option on each of the first four annual anniversaries of the date of grant
of the option. An option may also become exercisable upon the occurrence of a
change in control of the Company. If a change in control of the Company occurs,
the option shall be exercisable immediately upon the date of such change in
control. No option may be exercised after ten years from the date of grant or
such shorter period as specified by the Committee at the time of grant.
After a participant ceases being an employee of the Company for any reason,
other than death, disability or retirement (for the purposes of this section, a
"Termination"), the unexercisable portion of an option shall immediately
terminate and the unexercised portion of any outstanding options held by the
participant shall terminate after three months have elapsed from the date of
Termination. Upon the Termination of a participant's employment by reason of
death, retirement or disability, any outstanding options may be exercised by the
participant or the participant's legal representative within twelve months of
such Termination. However, in the event of a Termination by reason of death,
disability or retirement, the Committee may extend the exercise period of an
option up to sixty months from the date of such Termination, provided that the
term of the option shall not exceed ten years from the date of grant.
14
A participant may designate, by written notice to the Company, one or more
persons who shall acquire the right to exercise the option upon the
participant's death.
In addition to options, a participant may receive shares of restricted
Common Stock under a restricted stock agreement (a "Restricted Stock
Agreement"). A Restricted Stock Agreement shall specify the number of shares
granted and the conditions and terms of the grant. The shares received are
restricted and may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated. These restrictions shall remain in place until (a)
the completion of such periods of service or achievement of such conditions
established in the applicable Restricted Stock Agreement between the Company and
the participant, (b) death, disability or retirement of the participant or (c) a
change in the control of the Company. If the participant ceases to serve as an
employee of the Company for reasons other than death, disability or retirement
prior to the lapsing of the restrictions, the shares of restricted stock granted
to the participant shall be forfeited to the Company.
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, rights offer, liquidation, dissolution, merger,
consolidation, spin-off or sale of assets, or any other change in or affecting
the corporate structure or capitalization of the Company, the Board may make
such adjustments as the Committee may recommend in the number and kind of shares
authorized by the Plan and the number, exercise price and kind of shares covered
by grants to prevent substantial dilution or enlargement of the Plan or grants
under it. The Board may also terminate or amend the Plan as it deems appropriate
without shareholder approval, except if required by the Internal Revenue Code of
1986, as amended (the "Code"), shareholder approval will be obtained for
amendments that increase the total number of shares of common stock issuable
under the Plan, materially modify the eligibility requirements for participants
or materially increase the benefits to participants under the Plan. The Board
may unilaterally amend the Plan and grants made under it without shareholder
approval as it deems appropriate to cause incentive stock options to meet the
requirements of the Code and its regulations. No rights or obligations under any
outstanding grants may be altered or impaired without the participant's consent,
unless the change is required to comply with Code or Rule 16b-3 of the Exchange
Act.
Participants shall have no rights as shareholders unless certificates for
shares of Common Stock are issued to them. The Company may deduct from any
distribution of Common Stock to any participant an amount equal to the federal,
state and local income taxes and other amounts required by law. No incentive
stock options shall be transferable except by will or the laws of descent and
distribution or a qualified domestic relations order. Nonqualified stock options
are transferable only by will or by the laws of descent and distribution and, to
the extent specifically provided in the Stock Option Agreement, to the
Participant's children, and grandchildren or to trusts or business entities
involving the Participant's children and grandchildren. Until all restrictions
on Restricted Stock have lapsed, the shares of Restricted Stock may not be sold,
pledged or transferred.
The aggregate number of shares of Common Stock, including shares reserved
for issuance pursuant to the exercise of options, which may be granted or issued
under the terms of the Plan, may not exceed 200,000 shares. Whenever any
outstanding grant or portion thereof expires, is canceled or forfeited or is
otherwise terminated for any reason without having been exercised, the Common
Stock allocable to such grant may again be the subject of further grants.
TAX ASPECTS UNDER THE INTERNAL REVENUE CODE
The following is a summary of the principal Federal income tax consequences
of grants of stock options and restricted Common Stock under the Plan. It does
not comprehensively describe all Federal consequences under the Plan, nor does
it describe state or local tax consequences.
Non-Qualified Options. Certain options offered under the Plan are
non-qualified options ("Non-Qualified Options") as defined by Section 421 of the
Code. With respect to Non-Qualified Options under the Plan, no income is
realized by the optionee at the time the option is granted so long as the option
at the date of grant does not have a readily ascertainable fair market value.
15
Upon exercise of an option, ordinary income is generally realized by the
optionee in an amount equal to the difference between the option price and the
fair market value of the shares on the date of exercise, and the Company
receives a tax deduction for the same amount. Upon disposition of stock acquired
through the exercise of options, appreciation or depreciation after the date of
exercise is generally treated as either short-term or long-term capital gain or
loss depending on how long the shares have been held. Special rules will apply
where all or a portion of the exercise price of the Non-Qualified Option is paid
by tendering sharing of Common Stock.
Qualified Incentive Stock Options. Certain options offered under the Plan
are qualified incentive stock options ("Incentive Stock Options") as defined by
Section 422 of the Code. With respect to Incentive Stock Options under the Plan,
no income is realized by the optionee at the time the option is granted or
exercised. The optionee has a taxable event only at the later sale or
distribution of the option stock, using the original option price as the basis
to determine gain. If the optionee does not dispose of the option within two
years from the date the option was granted and holds the stock at least one year
from the date the stock was transferred to the optionee, any gain that results
from its sale will be taxed as capital gain. If, however, the optionee fails to
meet such holding periods, the optionee will recognize as ordinary income the
difference between the fair market value on the date of exercise (or if less,
the date of disposition) and the option price at the time of the disqualifying
transfer. Upon such income recognition, the Company may deduct the amount
recognized as a compensation expense. Any difference between the fair market
value on the date of exercise and amounts subsequently received upon sale of the
option shares will be taxed as capital gain or loss.
Restricted Common Stock. A recipient of restricted Common Stock generally
will be subject to tax at ordinary income rates on the fair market value of the
Common Stock at the time that the Common Stock is transferable and is no longer
subject to forfeiture, less any amount paid for such Common Stock. The Company
generally will receive a tax deduction equal to the amount includable as
ordinary income to the recipient. If restricted Common Stock is received in
connection with another award under the Plan, the income and the deduction, if
any, associated with such award may be deferred in accordance with the rules
described above for restricted Common Stock.
Dividends. Dividends, if any, paid on restricted Common Stock, to the
extent includable in a participant's income under the Plan, will be taxed at
ordinary income rates. The Company will be entitled to a deduction for dividends
paid on restricted Common Stock to the extent that an election under Section
83(b) of the Code has not been filed. The Company's debt agreements prohibit the
payment of dividends and the Company does not contemplate the payment of
dividends at any time in the foreseeable future.
Payments in Respect of a Change of Control. The Plan provides for
acceleration of exercisability of awards and related shares in the event of a
change of control of the Company. Such acceleration of awards may cause the
consideration involved to be treated in whole or in part as "parachute payments"
under the Code. Acceleration of benefits under other Company benefits plans and
other contracts with employees in the event of a change of control may be
aggregated with benefits accelerated under the Plan for "parachute payment"
purposes. Any such "parachute payments" may be non-deductible to the Company in
whole or in part under Section 2806 of the Code, and the recipient may be
subject to a 20% excise tax on all or part of such payments under Section 4999
of the Code (in addition to other taxes ordinarily payable).
Limitations on the Company's Deduction. Pursuant to Section 162(m) of the
Code, the Company's deduction of Common Stock awards other than options under
the Plan may be limited to the extent that a "covered employee" (as defined in
Section 162(m) of the Code) receives compensation in excess of $1,000,000 in
such taxable year of the Company (other than performance-based compensation and
other exceptions under Section 162(m) of the Code).
The Board of Directors recommends that shareholders vote FOR this resolution.
OTHER MATTERS
The Board of Directors is not aware of any other matters to
come before the meeting. If any other business should come before
the meeting, the persons named on the enclosed proxy will have
discretionary authority to vote such proxy in accordance with
their best judgment.
16
Shareholder ProposalsAny other matter which may be considered at the Annual Meeting
will be approved if the votes cast favoring the matter exceed the
votes opposing the matter, unless a greater number of affirmative
votes or voting by classes is required by Florida law or the
Company's Articles of Incorporation. Therefore, abstentions and
broker non-votes have no effect under Florida law.
SHAREHOLDER PROPOSALS
Proposals of shareholders to be presented at the 20032005 Annual
Meeting of Shareholders must be received by the Company
(addressed to the attention of the Secretary) not later than
December 31, 200229, 2004 to be considered for inclusion in the Company's
proxy materials relating to that meeting. To be submitted at the
meeting, any such proposal must be a proper subject for
shareholder action under the laws of the State of Florida, and
must otherwise conform to applicable regulations of the
Commission.
Excluding shareholder proposals to be included in the
Company's proxy materials, a shareholder is required to comply
with the Company's Bylaws with respect to any proposal to be
brought before an annual meeting. The Bylaws generally require
that each written proposal be delivered to or mailed to and received
by the Secretary of the Company at its principal executive office
not less than sixty (60) days nor more than ninety (90) days
prior to the anniversary date of the prior year's annual meeting,Annual Meeting,
among other conditions. The notice must include certain
additional information as specified in the Bylaws.
The Company may solicit proxies in connection with next
year's Annual Meeting which confer discretionary authority to
vote on any shareholder proposals of which the Company does not
receive notice by March 15, 2003.2005. Proposals should be sent to the
Company's headquarters to the attention of the Corporate
Secretary.
Solicitation of ProxiesSOLICITATION OF PROXIES
This proxy is solicited by the Board of Directors of the
Company. The cost of soliciting proxies will be borne by the
Company. Following the original mailing of the proxy solicitation
material, regular employees of the Company may solicit proxies by
mail, telephone, facsimile and other electronic means. The
Company may request brokerage houses and other nominees or
fiduciaries to forward copies of its proxy material and Annual
Report to beneficial owners of stock held in their names, and the
Company will reimburse them for reasonable out-of-pocket expenses
incurred with respect to such action.
DELIVERY TO SHAREHOLDERS SHARING ADDRESS
Only one proxy statementProxy Statement and Annual Report has been
delivered to multiple shareholders sharing an address unless the
Company has received contrary instructions from one or more of
the shareholders. The Company will promptly deliver upon written
or oral request a separate copy of this proxy statementProxy Statement or the
Annual Report to a shareholder at a shared address to which a
single copy was sent. Shareholders residing at a shared address
who would like to request an additional copy of the proxy statementProxy
Statement or Annual Report now or with respect to future mailings
(or to request to receive only one copy of the proxy statementProxy Statement or
Annual Report if multiple copies are being received) may write or
call the Company's Corporate Secretary at 2113 Florida Boulevard,
Neptune Beach, FL 32266, (904) 249-4197.
By Order of the Board of Directors
Glen F. Ceiley
Chairman of the Board
Date: May 1, 2002
173, 2004
APPENDIXAppendix A
FAMILY STEAK HOUSES OF FLORIDA, INC.
2002 LONG TERM INCENTIVE PLAN
I. GENERAL
1.1 PurposeAUDIT COMMITTEE CHARTER
ADOPTED BY THE BOARD OF DIRECTORS
MAY 10, 2000
ROLE AND INDEPENDENCE
The audit committee of the Plan
The purposeboard of directors assists the
board in fulfilling its responsibility for the safeguarding of
assets and oversight to the quality and integrity of the
2002 Long-Term Incentive Plan (the "Plan")accounting, auditing and reporting practices of Family
Steak Housesthe company and
such other duties as directed by the board. The membership of
Florida, Inc. (the "Company") is to provide an incentive,the committee shall consist of at least three directors who are
generally knowledgeable in financial and auditing matters,
including at least one member with accounting or related
financial management expertise. Each member shall be free of any
relationship that, in the form of a proprietary shareholder interest in the Company, to employeesopinion of the Company and/or its subsidiaries,board, would interfere
with their individual exercise of independent judgment. The
committee is expected to increase their interest inmaintain free and open communication
(including private executive sessions at least annually) with the
Company's
welfare,independent accountants, and to assist the Company and its subsidiaries in attracting and
retaining employees.
1.2 Administrationmanagement of the Plan
The Plancompany. In
discharging this oversight role, the committee is empowered to
investigate any matter brought to its attention, with full power
to retain outside counsel or other experts for this purpose.
This charter shall be administered byreviewed and updated annually.
RESPONSIBILITIES
The audit committee's primary responsibilities include:
- Primary input into the Executive Compensation Committee or
its successor (the "Committee")recommendation to the board for
the selection and retention of the Board of Directorsindependent
accountant who audits the financial statements of the
Company (the
"Board") which shall consist solely of two or more directors meetingcompany. In so doing, the definition of Non-Employee Director under Rule 16b-3committee will discuss and
consider the auditor's written affirmation that the
auditor is in fact independent, will discuss the nature
of the Securities Exchange
Actaudit process, receive and review all reports
and will provide to the independent accountant full
access to the committee (and the board) to report on
any and all appropriate matters.
- Review of 1934, as amended (the "Exchange Act").
The Committee shall have fullfinancial statements (including quarterly
reports) with management and final authority in its discretion,the independent auditor.
It is anticipated that these discussions will include
quality of earnings, discussions of significant items
subject to the provisionsestimate, consideration of the Plan: (a) to determine individuals to whomsuitability
of accounting principle, review of highly judgmental
areas, audit adjustments whether or not recorded and
the time or times at which options or restricted stock shall be granted and
exercised and the number of shares and exercise price, if any, of the common
stock, $.01 par value, of the Company ("Common Stock"), covered by each option
or grant of restricted stock; (b) to determine the terms of the option or
restricted stock agreements, which need not be identical, including, without
limitation, terms covering vesting, exercise dates, if any, and exercise prices,
if any; (c) to decide all questions of fact arising in the application of the
Plan; and (d) to administer and interpret the Plan in all respects. All
determinations made by the Committee shall be final and conclusive.
The Committee shall meet once each fiscal year, and at such additional
times as it may determine or as is requested by the chief executive officer of
the Company, to designate the eligible employees, if any, to be granted awards
under the Plan and the type and amount of such awards and the time when awards
will be granted. No such designation by the Committee shall be effective as a
grant of an award under the Plan until approved by the Board; provided, however,
that the Board may empower the Committee to grant such awards without approval
by the Board. A majority of the members of the Committee shall constitute a
quorum, and all actions of the Committee shall be taken by a majority of the
members present. Any action may be taken by a written instrument signed by all
of the members, and any action so taken shall be fully effective as if it had
been taken at a meeting. All awards granted under the Plan shall be on the terms
and subject to the conditions hereinafter provided.
1.3 Eligible Participants
Employees of the Company and the Company's subsidiaries shall be eligible
to participate in the Plan (any employee receiving an award under this Plan
hereinafter referred to as a "Participant"). The terms "subsidiary" or
"subsidiaries" shall mean any corporation now existing or hereafter organized or
acquired (other than the Company) in an unbroken chain of corporations beginning
with the Company, if, at the time of option grant, each of the corporations
(including the Company) other than the last corporation in the unbroken chain
owns stock possessing 80% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.
1.4 Grants Under the Plan
Grants under the Plan may be in the form of incentive stock options (as
described in Article II) ("Incentive Stock Options"), non-qualified stock
options (as described in Section III) ("Nonstatutory Stock Options") and/or
restricted stock (as described in Section IV) ("Restricted Stock"), or any
combination thereof.
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1.5 Other Compensation Programs
The adoption of the Plan contemplates the continuation of any existing
incentive compensation plan(s) of the Company and in no way limits or is limited
by the operation, administration or amendment of any such plan(s). The existence
and terms of the Plan shall not limit the authority of the Board in compensating
employees of the Company in
such other forms and amounts as it may determine
from time to time.
1.6 Limitations on Grants
The aggregate number of shares of Common Stock, including shares reserved
for issuance pursuant to the exercise of options, that may be granted or issued
under the terms of the Plan may not exceed 200,000 shares. No more than 100,000
shares may be allocated to grants hereunder to any individual participant during
any single calendar year, including any option which is cancelled or repriced
during a calendar year. Whenever any outstanding grant or portion thereof
expires, is canceled or forfeited or is otherwise terminated for any reason
without having been exercised or vested or without payment having been made in
respect of the entire grant, the Common Stock allocable to the expired,
forfeited, canceled or otherwise terminated portion of the grant may again be
the subject of further grants hereunder.
Notwithstanding the foregoing, the number of shares of Common Stock
available for grants at any time under the Plan shall be reduced to such lesser
amountinquiries as may be required pursuantappropriate.
- Discussion with management and the auditors of the
quality and adequacy of the company's internal
controls.
- Discussion with management of the status of pending
litigation, taxation matters and other areas of
oversight to the methods of calculation necessary so
that the exemptions provided pursuant to Rule 16b-3 under the Exchange Act will
continue to be available for transactions involving all currentlegal and future
grants. In addition, during the period that any grants remain outstanding under
the Plan, the Committee may make good faith adjustments with respect to the
number of shares of Common Stock attributable to such grants for purposes of
calculating the maximum number of shares of Common Stock available for the
granting of future grants under the Plan, provided that following such
adjustments the exemptions provided pursuant to Rule 16b-3 under the Exchange
Act will continue to be available for transactions involving all current and
future grants.
1.7 Definitions
The following definitions shall apply to the Plan:
(a) "Disability" shall have the meaning provided in the Company's
applicable disability plan or, in the absence of such a definition, when a
Participant becomes totally disabled (as determined by a physician mutually
acceptable to the Participant and the Company) before attaining his or her 65th
birthday and if such total disability continues for more than three months.
Disability does not include any condition which is intentionally self-inflicted
or caused by illegal acts of the Participant.
(b) "Fair Market Value" means the closing bid price of the shares of Common
Stock on such date on the principal national securities exchange or automated
quotation system of a registered securities association on which such shares of
Common Stock are listed or admitted to trading. If the shares of Common Stock on
such date are not listed or admitted to trading, the Fair Market Value shall be
the value established by the Board in good faith on such basis as it deems
reasonable and appropriate and in the case of an Incentive Stock Option, in
accordance with Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
(c) "Retirement" shall have the meaning provided in the Company's
applicable retirement plan or, in the absence of such a definition, the first
day of the month following the month in which the Participant attains his or her
65th birthday.
(d) "Termination" shall mean, unless otherwise limited herein, when a
Participant ceases being an employee of the Company or any subsidiary for any
reason, including, without limitation, Retirement, discharge, layoff or any
other voluntary or involuntary termination of a Participant's employment.
Transfer of employment within the Company or among the Company and any
subsidiaries shall not be deemed a Termination.
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II. INCENTIVE STOCK OPTIONS
2.1 Terms and Conditions
Subject to the following provisions of this Article II, all Incentive Stock
Options shall be in such form and upon such terms and conditions as the
Committee, in its discretion, may from time to time determine.
2.2 Qualified Stock Options
Incentive Stock Options shall, at the time of grant, be in such form and
upon such terms and conditionscompliance area as may be
required in order that such options
will constitute incentive stock options within the meaning of Section 422 of the
Code. To the extent that the Fair Market Value of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by any
individual during any calendar year (pursuant to the Plan and all other plans of
the Company) exceeds $100,000, such options shall be treated as Nonstatutory
Stock Options.
2.3 Option Price
The option price per share shall be at least one hundred percent (100%) of
the Fair Market Value of the Common Stockappropriate.
- Reporting on the date the Incentive Stock Option
is granted.
2.4 Term of Option
Any Incentive Stock Option granted under the Plan may be exercised no later
than ten (10) years from the date of grant or such shorter period of time as
designated by the Committee at the time of grant. Subject to Sections 2.7, 2.8
and 5.13 hereof and the stock option agreement governing the grant of the
Incentive Stock Options under the Plan, which may contemplate vesting of
exercise rights, options may be exercised in whole or in one or more parts
throughout such term. All rights to exercise an Incentive Stock Option shall
expire at the end of the designated term.
2.5 Payment
Payment for shares for which an option is exercised shall be made in full
to the Company in such manner and at such time or times as shall be provided by
the Committee at the time of grant in either (i) cash or its equivalent or
(ii) by tendering shares of Common Stock owned by the Participant for at least
six (6) months having a Fair Market Value equal to the exercise price or (iii)
by a combination of (i) and (ii). The proceeds from such payment shall be added
to the general funds of the Company and shall be used for general corporate
purposes.
2.6 Exercise of Option
Subject to Section 5.13, Incentive Stock Options shall be exercisable in
whole or in part after completion of such periods of service as the Committee
shall specify when granting the options; provided, however, that in the absence
of any Committee specification to the contrary, and subject to Sections 2.7 and
2.8, twenty-five percent (25%) of the shares subject to the Incentive Stock
Option shall have been earned and the Incentive Stock Option shall become
exercisable with respect to such shares on each of the first four annual
anniversaries of the date of grant of the Incentive Stock Option. In no event,
however, and notwithstanding Sections 2.7 and 2.8, shall an Incentive Stock
Option be exercised after the expiration of ten (10) years from the date of
grant.
2.7 Termination of Employment
A Participant's Incentive Stock Options shall expire three months after the
Termination of the Participant's employment for any reason other than death,
Disability or Retirement and shall be limited to the shares of Common Stock
which could have been purchased by the Participant at the date of Termination of
employment.
20
2.8 Termination of Employment by Reason of Death, Disability or Retirement
Upon the Termination of a Participant's employment by reason of death,
Disability or Retirement, Incentive Stock Options held at the Termination date
by such Participant shall be exercisable, irrespective of whether the options
were fully exercisable in accordance with Section 2.6 on that date. The
Participant's Incentive Stock Options shall expire unless exercised within one
year from the date of such Termination.
In the case of Termination of a Participant's employment by reason of early
retirement within the meaning of the Company's applicable retirement plan,
Incentive Stock Options which may be exercised shall be limited to the shares
which could have been purchased by the Participant at the date of such early
retirement, except that the Committee, in its discretion, may waive the vesting
requirements of Section 2.6. The Participant's Incentive Stock Options shall
expire unless exercised within one year from the date of such Termination.
The Committee may, at any time on or before the termination of the exercise
period of the Participant's Incentive Stock Options, extend the exercise period
if the Participant's employment is terminated for a reason specified in Section
2.8. If so extended, the term of the exercise period shall expire on the date
specified by the Committee, which date shall be no later than the date which is
sixty (60) months following the date of the Participant's Termination of
employment. If such extension could adversely affect the Participant's federal
income tax treatment of the Incentive Stock Option at the time of extension or
exercise, the extension shall only be made with the consent of the Participant.
In no event may the term of an Incentive Stock Option, including extensions,
exceed the term set forth in Section 2.4.
2.9 Special Rule for 10 Percent Shareholders
If, at the time an Incentive Stock Option is granted, a Participant owns
Common Stock representing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or any of its subsidiaries,
then the terms of the Incentive Stock Option shall specify that the option price
shall at the time of grant be at least one hundred-ten percent (110%) of the
Fair Market Value of the stock subject to the option and such option shall not
be exercisable after the expiration of five (5) years from the date such option
is granted.
2.10 Notice of Exercise
When exercisable pursuant to the terms of the governing incentive stock
option agreement, Incentive Stock Options granted under the Plan shall be
exercised by the Participant (or by other authorized persons in accordance with
Section 5.9) as to all or part of the shares subject to the option by delivering
written notice of exercise to the Company at its principal business office or
such other office as the Company may from time to time direct, (a) specifying
the number of shares to be purchased, (b) indicating the method of payment of
the exercise price or including a check payable to the Company in an amount
equalaudit committee activities to the full
exercise price of the number of shares being purchased,board and (c) containing such further provisions consistent with the provisions of the
Plan, as the Company may from time to time prescribe.
2.11 Notice of Disposition
If a Participant makes a disposition, within the meaning of Section 424(c)
of the Code and the regulations promulgated thereunder,issuance annually of a share or shares of
Common Stock issued to such Participant pursuantsummary report
(including appropriate oversight conclusions) suitable
for submission to the exercise of an Incentive
Stock Option within the two-year period commencing on the day after the date of
the grant or within the one-year period commencing on the day after the date of
transfer of such share or shares to the Participant pursuant to such exercise,
the Participant shall, within ten (10) days of such disposition, notify the
Company thereof in writing at the Company's principal executive office.
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III. NONSTATUTORY STOCK OPTIONS
3.1 Types of Options
Options granted under the Plan shall, at the time of grant, provide that
they will not be treated as an incentive stock option within the meaning of
Section 422 of the Code.
3.2 Terms and Conditions of Options
Subject to the following provisions, all Nonstatutory Stock Options granted
under the Plan shall be in such form and upon such terms and conditions as the
Committee, in its discretion, may from time to time determine, provided such
terms and conditions are clearly designated at the time of grant.
3.3 Exercise Price
The exercise price per share shall be at least one hundred percent (100%)
of the Fair Market Value of the Common Stock on the date such Nonstatutory Stock
Option is granted.
3.4 Term of Options
Any Nonstatutory Stock Option granted under the Plan may be exercised no
later than ten (10) years from the date of grant or such shorter period of time
as designated by the Committee at the time of grant. Subject to Sections 3.7,
3.8 and 5.13 hereof and the stock option agreement governing the grant of the
Nonstatutory Stock Options under the Plan, which may contemplate vesting of
exercise rights, options may be exercised in whole or in one or more parts
throughout such term. All rights to exercise an Nonstatutory Stock Option shall
expire at the end of the designated term.
3.5 Payment
Payment for shares for which an option is exercised shall be made in full
to the Company in such manner and at such time or times as shall be provided by
the Committee at the time of grant in either (i) cash or its equivalent or (ii)
by tendering shares of Common Stock owned by the Participant for at least six
(6) months having a Fair Market Value equal to the exercise price or (iii) by a
combination of (i) and (ii). The proceeds from such payment shall be added to
the general funds of the Company and shall be used for general corporate
purposes.
3.6 Exercise of Options
Subject to Section 5.13, Non-statutory Stock Options shall be exercisable
in whole or in part after completion of such periods of service or achievement
of such conditions as the Committee shall specify when granting the options;
provided however, thatshareholders in the absence of a Committee specification to the
contrary and subject to Sections 3.7 and 3.8, twenty-five percent (25%) of the
shares subject to the Nonstatutory Stock Option shall have been earned and the
Nonstatutory Stock Option shall become exercisable with respect to such shares
on each of the first fourcompany's
annual anniversaries of the date of grant of the
Nonstatutory Stock Option. In no event, however, and notwithstanding Sections
3.7 and 3.8, shall a Nonstatutory Stock Option be exercised after the expiration
of ten (10) years from the date of grant.
3.7 Termination of Employment
A Participant's Non-statutory Stock Options shall expire three months after
the Termination of the Participant's employment for any reason other than death,
Disability or Retirement and shall be limited to the shares of Common Stock
which could have been purchased by the Participant at the date of Termination of
employment.
22proxy statement.
3.8 Termination of Employment by Reason of Death, Disability or Retirement
Upon the Termination of a Participant's employment by reason of death,
Disability or Retirement, Non-statutory Stock Options held at the termination
date by such Participant shall be exercisable, irrespective of whether the
options were fully exercisable in accordance with Section 3.6 on that date. The
Participant's Non-statutory Stock Options shall expire unless exercised within
one year from the date of such Termination.
In the case of Termination of a Participant's employment by reason of early
retirement within the meaning of the Company's applicable retirement plan,
Non-statutory Stock Options which may be exercised shall be limited to the
shares which could have been purchased by the Participant at the date of such
early retirement, except that the Committee, in its discretion, may waive the
vesting requirements of Section 3.6. The Participant's Non-statutory Stock
Options shall expire unless exercised within one year from the date of such
Termination.
The Committee may, at any time on or before the termination of the exercise
period of the Participant's Non-statutory Stock Options, extend the exercise
period if the Participant's employment is terminated for a reason specified in
this Section 3.8. If so extended, the term of the exercise period shall expire
on the date specified by the Committee, which date shall be no later than the
date which is sixty (60) months following the date of the Participant's
Termination of employment. If such extension could adversely affect the
Participant's federal income tax treatment of the Nonstatutory Stock Option at
the time of extension or exercise, the extension shall only be made with the
consent of the Participant. In no event may the term of an Nonstatutory Stock
Option, including extensions, exceed the term set forth in Section 3.4.
3.9 Notice of Exercise
When exercisable pursuant to the terms of the governing stock option
agreement, Non-statutory Stock Options granted under the Plan shall be exercised
by the Participant (or by other authorized persons in accordance with Section
5.9) as to all or part of the shares subject to the option by delivering written
notice of exercise to the Company at its principal business office or such other
office as the Company may from time to time direct, (a) specifying the number of
shares to be purchased, (b) indicating the method of payment of the exercise
price or including a check payable to the Company in an amount equal to the full
exercise price of the number of shares being purchased, (c) including a Tax
Election, if applicable, in accordance with Section 5.8, and (d) containing such
further provisions consistent with the provisions of the Plan, as the Company
may from time to time prescribe.
3.10 Limitation of Exercise Periods
The Committee may limit the time periods within which a Nonstatutory Stock
Option may be exercised if a limitation on exercise is deemed necessary in order
to effect compliance with applicable law.
IV. RESTRICTED STOCK
4.1 Terms and Conditions of Awards
The Committee may grant shares of stock subject to the restrictions
described in Section 4.2 under a restricted stock agreement, without payment by
the Participant for such Restricted Stock. Such agreement shall specify the
number of shares granted and the conditions and terms of the grant. Restricted
Stock, with restrictions noted on the face of the certificates, shall be issued
in the name of the Participant granted the Restricted Stock and deposited with a
trust administered by the Committee (and subject to the claims of the Company's
creditors) during the restriction period.
4.2 Restrictions
Until the restrictions have lapsed in accordance with Section 4.3, the
shares of Restricted Stock granted hereunder may not be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated. The Committee may
impose such other restrictions on any shares of restricted stock as required by
law including, without limitation, restrictions under applicable federal or
state securities laws, and may place legends on the certificates representing
such Restricted Stock to provide appropriate notice of such restrictions.
23
4.3 Period of Restriction
Subject to Section 5.13, the restrictions set forth in Section 4.2 shall
lapse and such shares shall be freely transferable upon completion of such
periods of service or achievement of such conditions (the "Management
Objectives") as the Committee shall specify in an individual Restricted Stock
Agreement between the Company and the Participant when granting the shares of
Restricted Stock.
4.4 Termination of Employment
If a Participant's employment is terminated prior to the lapsing of the
restrictions in accordance with Section 4.3 as a result of death, Retirement or
Disability, restrictions on the shares of Restricted Stock granted to the
Participant shall immediately lapse on the date of such death, Disability or
Retirement. If any Participant's employment is terminated prior to the lapsing
of restrictions in accordance with Section 4.3 for any reason other than death,
Disability or Retirement, the shares of Restricted Stock granted to such
Participant as to which the restrictions have not lapsed shall be forfeited and
shall revert to the Company.
4.5 Rights as Shareholder
Prior to the lapsing of restrictions in accordance with Section 4.3,
Participants holding shares of Restricted Stock shall have all rights as a
shareholder including dividend rights and voting rights and shall have the right
to receive the dividends paid on the Common Stock at the same time and in the
same amount as other shareholders of the Company; provided, however, that any
dividends payable on Restricted Stock subject to Management Objectives other
than length of service shall be accumulated and become payable when the
Restricted Stock on which such dividends were paid shall be deemed to have been
earned in accordance with Section 4.3. If the Committee determines that the
Management Objectives other than length of service have not been achieved in
accordance with Section 4.3, dividends on any such unearned Restricted Stock
shall revert to the Company. If any dividend or distribution with respect to
Restricted Stock is paid in shares of Common Stock, such shares shall be subject
to the same restrictions on transferability as the shares of Restricted Stock
with respect to which they were paid.
V. GENERAL PROVISIONS
5.1 General Restrictions
Each grant under the Plan shall be subject to the requirement that if the
Committee shall determine, at any time, that (a) the listing, registration or
qualification of the shares of Common Stock subject or related thereto upon any
securities exchange or under any state or federal law, (b) the consent or
approval of any government regulatory body, or (c) an agreement by the
Participant with respect to the disposition of shares of Common Stock, is
necessary or desirable as a condition of, or in connection with, the granting or
the issuance or purchase of shares of Common Stock thereunder, such grant,
issuance or purchase may not be consummated in whole or in part unless such
listing, registration, qualification, consent, approval or agreement shall have
been effected or obtained free of any conditions not acceptable to the
Committee. Notwithstanding anything herein to the contrary, options shall always
be granted and exercised in such a manner as to conform to the provisions of
Rule 16b-3.
5.2 Adjustments for Certain Corporate Events
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, rights offer, liquidation, dissolution, merger,
consolidation, spin-off or sale of assets, or any other change in or affecting
the corporate structure or capitalization of the Company, the Board shall make
such adjustments as the Committee may recommend, and as the Board in its
discretion may deem appropriate, in the number and kind of shares authorized by
the Plan, in the number, exercise price or kind of shares covered by the grants
and in any outstanding grants under the Plan in order to prevent substantial
dilution or enlargement thereof.
24
5.3 Amendments
The Board may terminate the Plan or may amend the Plan in such respects as
it shall deem advisable; provided that, if and to the extent required by the
Code, no change shall be made that increases the total number of shares of
Common Stock reserved for issuance pursuant to awards granted under the Plan
(except pursuant to Section 5.2), materially modifies the requirements as to
eligibility for participation in the Plan, or materially increases the benefits
accruing to Participants under the Plan, unless such change is authorized by the
shareholders of the Company. Notwithstanding the foregoing, the Board may
unilaterally amend the Plan and grants made hereunder as it deems appropriate to
cause Incentive Stock Options to meet the requirements of the Code and
regulations thereunder.
5.4 Grants Evidenced by Agreements
Each grant under the Plan shall be evidenced by an individual Incentive
Stock Option agreement, Nonstatutory Stock Option Agreement or Restricted Stock
Agreement, as applicable, which shall be executed by the Company and each
Participant. The agreement shall contain such terms and provisions, not
inconsistent with the terms of the Plan, as shall be determined by the
Committee, including, as applicable: (a) the number of shares a Participant may
acquire pursuant to the option granted and the exercise price per share or the
number of shares of Restricted Stock granted, as applicable; (b) any conditions
affecting the exercise of the option; (c) the procedure for exercising the
option granted; (d) a clear designation of whether the exercise of the option
granted thereby is subject to vesting; (e) a clear designation of the period of
restriction and conditions for vesting of Restricted Stock; (f) representations
and warranties of Participant regarding the acquisition of shares for investment
purposes; and (g) such provisions as the Committee, upon advice of counsel to
the Company, shall deem necessary or appropriate to comply with the requirements
of applicable laws. In the event there shall be any discrepancy or inconsistency
between the terms of the Plan and any term or provision contained in such an
agreement, the terms of the Plan, as interpreted by the Committee, shall govern.
5.5 Modification, Substitution or Cancellation of Grants
Subject to the terms of the Plan, the Committee may modify outstanding
grants under the Plan or accept the surrender of outstanding grants and make new
grants in substitution for them. Notwithstanding the foregoing, no modification
of any grant shall adversely alter or impair any rights or obligations of the
Participant without the Participant's consent; except that such consent will not
be required if such amendment is for the purpose of complying with Rule 16b-3 or
any requirement of the Code applicable to a grant hereunder. The Committee may,
in its sole discretion, in whole or in part, waive any restrictions or
conditions applicable to, or accelerate the vesting of, any grant under the
Plan.
5.6 Shares Subject to the Plan
Shares distributed pursuant to the Plan shall be made available from
authorized but unissued shares or from shares purchased or otherwise acquired,
in open market, in private transactions or otherwise, by the Company for use in
the Plan, as shall be determined from time to time by the Committee.
5.7 Rights of a Shareholder
Participants under the Plan, unless otherwise provided by the Plan, shall
have no rights as shareholders by reason thereof unless and until certificates
for shares of Common Stock are issued to them.
5.8 Withholding
The Company shall have the right to deduct from any distribution of Common
Stock to any Participant an amount equal to the federal, state and local income
taxes and other amounts as may be required by law to be withheld (the
"Withholding Taxes") with respect to any grant under the Plan. If a Participant
25
is to experience a taxable event in connection with the receipt of cash or
shares of Common Stock pursuant to an option exercise (a "Taxable Event"), the
Participant shall pay the Withholding Taxes to the Company prior to the issuance
of such shares of Common Stock. In satisfaction of the obligation to pay
Withholding Taxes to the Company, the Participant may make a written election
(the "Tax Election"), which may be accepted or rejected in the discretion of the
Committee, to have withheld a portion of the shares of Common Stock then
issuable to the Participant having an aggregate Fair Market Value on the day
immediately preceding the date of such issuance equal to the Withholding Taxes.
5.9 Non-assignability
Incentive Stock Options, by their terms, shall not be transferable except
by will or by the laws of descent and distribution and shall be exercisable,
during the Participant's lifetime, only by the Participant. Non-statutory Stock
Options shall not be transferable except by will or by the laws of descent and
distribution and, to the extent specifically provided in the Stock Option
Agreement, to (a) the Participant's children, step-children, grandchildren,
step-grandchildren (including relationships arising from legal adoptions)
("Immediate Family Members"); (b) a trust or trusts for the exclusive benefit of
any one or more of the Participant's Immediate Family Members; or (c) a
partnership, limited liability company or other entity, the only partners,
members or interest holders of which are among the Participant's Immediate
Family Members. Until all restrictions on Restricted Stock shall have lapsed,
the shares of Restricted Stock may not be sold, transferred, assigned or
otherwise disposed of and shall not be pledged or otherwise hypothecated.
5.10 Non-uniform Determinations
Determinations by the Committee under the Plan (including, without
limitation, determinations of the persons to receive grants, the form, amount
and timing of such grants, and the terms and provisions of such grants and the
agreements evidencing the same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive, grants under
the Plan, whether or not such persons are similarly situated.
5.11 No Guarantee of Employment
Neither grants under the Plan nor any action taken pursuant to the Plan
shall constitute or be evidence of any agreement or understanding, express or
implied, that the Company shall retain the Participant for any period of time or
at any particular rate of compensation or shall make any further grants to the
Participant at any time thereafter.
5.12 Effective Date; Duration
The Plan shall become effective upon approval by the shareholders of the
Company at the 2002 Annual Meeting. No grant may be given under the Plan after
June 6, 2012, but grants theretofore granted may extend beyond such date.
5.13 Change in Control
Notwithstanding anything herein to the contrary, if a Change in Control of
the Company occurs, then all Incentive Stock Options and Non-statutory Stock
Options shall become fully exercisable and all restrictions on grants of
Restricted Stock shall lapse as of the date such Change in Control occurred. For
the purposes of the Plan, a Change in Control of the Company shall be deemed to
have occurred upon the earliest of the following events:
(a) when the Company acquires actual knowledge that any person (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than
any person who was the beneficial owner of 25% or more of the Common Stock as of
the effective date of the Plan, becomes the beneficial owner (as defined in Rule
13d-3 of the Exchange Act) directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's
then-outstanding securities;
(b) upon the first purchase of Common Stock pursuant to a tender or
exchange offer (other than a tender or exchange offer made by the Company);
26
(c) upon the approval by the Company's shareholders of (i) a merger or
consolidation of the Company with or into another corporation (other than a
merger or consolidation in which the Company is the surviving corporation and
which does not result in any capital reorganization or reclassification or other
change in the Company's then-outstanding shares of Common Stock), (ii) a sale or
disposition of all or substantially all of the Company's assets or (iii) a plan
of liquidation or dissolution of the Company; or
(d) if the Board or any designated committee determines in its sole
discretion that any person (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than a person who exercised a controlling influence as
of the effective date of the Plan, directly or indirectly exercises a
controlling influence over the management or policies of the Company.
5.14 Merger, Reorganization, Exchange or Sale of Assets
If Company enters into an agreement providing for the merger of the Company
into another corporation, an exchange of shares with another corporation, the
reorganization of the Company or the sale of all or substantially all of the
Company's assets, each vested Incentive Stock Option, Non-statutory Stock Option
or shares of Restricted Stock shall either be assumed by the successor
corporation or, if not so assumed, the successor corporation shall substitute a
vested stock option or share of restricted stock for each outstanding vested
Incentive Stock Option, Non-statutory Stock Option or share of Restricted Stock
on substantially identical terms of outstanding grants under this Plan. For
purposes hereof, the term "reorganization" shall not include any
recapitalization of the Company's capital.
5.15 Governing Law.
The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of Florida.
27
Proxy Card
FAMILY STEAK HOUSES OF FLORIDA, INC.
2113 Florida Boulevard, Neptune Beach, Florida 32266
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appointed Williamappoints Patrick A. Garrett,Fekula, and Edward B.
Alexander (the "Proxy Agents"), and each of them individually, the attorneys,
agents, and proxies of the undersigned with full power of substitution, to
vote all of the shares of stock of Family Steak Houses of Florida, Inc. (the(the
"Company"), owned by the undersigned on April 10, 200223, 2004 at the 20022004 Annual
Meeting of Shareholders of the Company, to be held at 10:00 a.m. on June 6,
200217,
2004 and any adjournment thereof, with all powers that the undersigned would
possess if personally present, pursuant to the following directions:
(Continued and to be signed on the reverse side)
________________________________________________________________--------------------------------------------------------------------
FOLD AND DETACH HERE
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN Please mark here for
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF your vote as [x]Address Change or [ ]
NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED indicated inComments SEE REVERSE
FOR PROPOSALS 1, 2 3 and 4. this example3. SIDE
1. ELECTION OF DIRECTORS
Nominees:
01 Stephen Catanzaro,
02 Glen F. Ceiley
03 Jay Conzen, and
04 William L. Means
FOR all nominees listed WITHHOLD listedAUTHORITY
(except as AUTHORITY
marked to the to vote for all
contrary below)the contrary) nominees listed below
[ _ ] [ _ ]
Stephen Catanzaro, Glen F. Ceiley, Jay Conzen, and William L. Means
(To withhold authority to vote for any individual nominee, strike out that
nominee's name.)
2. PROPOSAL TO AMEND THE COMPANY'S ARTICLES OF INCORPORATION WITHHOLD AUTHORITY to amend the Company's Articles of Incorporation.
PROPOSAL 2A: INCREASE THE AUTHORIZED NUMBER OF COMMON SHARES.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 2B: ELIMINATE THE 75% VOTE REQUIREMENT FOR TRANSACTIONS WITH RELATED
CORPORATIONS.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PROPOSAL 2C: ALTER PROVISIONS REGARDING THE AMENDMENT OFTO CHANGE
THE COMPANY'S ARTICLES.NAME.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. ADOPTION OF 2002 LONG TERM INCENTIVE PLAN
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. OTHER MATTERS
FOR proxy holdersProxy Agents to vote in their discretion as to such other matters as may
properly come before this meeting.
AgainstAGAINST for proxy holdersProxy Agents to vote in their discretion as to such other matters
as may properly come before the meeting.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
---------------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR PROPOSALS 1, 2 3 AND 4
-----------------------------------------3.
----------------------------------------------
The undersigned hereby revokes any proxy heretofore given with respect to
said Stock and acknowledges receipt of the Notice of Annual Meeting and
Proxy Statement dated April 10, 2002.
________________________________________________________________
Signature (s)
________________________________________________________________
Signature (s)
________________________________________________________________May 3, 2004.
- ---------------------------------------
Signature(s)
- ---------------------------------------
Title of Capacity
- ---------------------------------------
Dated ______________________________________________________, 2002-------------------------, 2004
IMPORTANT: Please date this proxy and sign exactly as your name or names
appear
(s)appear(s) hereon. If the shares are held jointly, signatures should
include both names. Personal representatives, executors, guardians, and
others signing in a representative capacity should give full title.
PLEASE RETURN PROMPTLY IN THE ACCOMPANYING ENVELOPE.
________________________________________________________________- --------------------------------------------------------
FOLD AND DETACH HERE
________________________________________________________________