SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /x/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
Schlotzsky's, Inc.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Schlotzsky's, Inc.
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
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previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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SCHLOTZSKY'S, INC.
203 COLORADO STREET
AUSTIN, TEXAS 78701
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 28, 1999
Dear Shareholder:
You are invited to attend the 1999 Annual Meeting of the Shareholders
of Schlotzsky's, Inc., a Texas corporation (the "Company") to be held at the
Four Seasons Hotel, 98 San Jacinto Boulevard, Austin, Texas on Friday, May 28,
1999, at 9:00 a.m., central daylight time. Following a report on the Company's
business operations, shareholders will act on the following:
1. The election of two directors to the Board of Directors to serve until
the 2002 Annual Meeting of Shareholders or until their respective
successors have been duly elected or appointed; and
2. The ratification and approval of the Board's selection of Grant
Thornton, LLP to serve as the Company's auditors for the 1999
fiscal year.
Your Board urges you to vote FOR the nominees to the Board and the
ratification of the selection of the Company's auditors. The enclosed Proxy
Statement includes information relating to these matters. Additionally,
shareholders may be asked to transact such other business as may properly come
before the meeting.
All shareholders of record as of the close of business on April 16,
1999 are entitled to notice of and to vote at the meeting. At least a majority
of the outstanding shares of the Company is required to be present at the
meeting or represented by proxy to constitute a quorum.
The Board of Directors and management sincerely desire your presence at
the meeting. Even if you expect to attend the meeting, you are requested to
sign, date and return the accompanying proxy. If you attend the meeting after
having returned the accompanying proxy, you may revoke your proxy, if you wish,
and vote in person.
By Order of the Board of Directors
JOHN C. WOOLEY
Chairman of the Board and President
Dated April 28, 1999
Austin, Texas
SCHLOTZSKY'S, INC.
203 COLORADO STREET
AUSTIN, TEXAS 78701
PROXY STATEMENT
INTRODUCTION
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Schlotzsky's, Inc. (the "Company") to be used at the Annual Meeting
of Shareholders to be held May 28, 1999, at 9:00 a.m. central daylight time, in
the Four Seasons Hotel, located at 98 San Jacinto Boulevard, Austin, Texas
78701, and any adjournments thereof. All shares represented by proxies will be
voted at the meeting in the manner directed thereon or, if no directions are
made, the shares represented by such proxies will be voted for the election of
the named directors as noted on the enclosed proxy, and for the ratification and
approval of the selection of auditors made by the Board of Directors. The Board
of Directors does not know of any other business to be brought before the
meeting, but it is intended that as to any such other matters, votes may be cast
pursuant to the proxies in accordance with the judgment of the person or persons
acting thereunder. Any shareholder giving a proxy may revoke it at any time
before it is voted by attending the Annual Meeting and voting their shares in
person or by giving written notice to Jeffrey J. Wooley, Secretary of the
Company, at 203 Colorado Street, Austin, Texas 78701, stating that the proxy has
been revoked.
This proxy statement is first being mailed to the shareholders of the
Company on or about April 28, 1999. It is contemplated that solicitation of
proxies will be by use of the mails only, but directors, officers and regular
employees of the Company may solicit the return of proxies in person, or by
telephone or telecopy. Such directors, officers and employees will not receive
additional remuneration, other than out-of-pocket expenses, with respect to
solicitation of proxies. Brokerage houses, nominees, fiduciaries and other
custodians will be requested to forward solicitation material to the beneficial
owners of shares to request authority for execution of the proxies and will be
reimbursed for their expenses. The Company will pay all costs of this
solicitation of proxies from its shareholders.
The close of business on April 16, 1999 has been fixed as the record
date for the determination of shareholders entitled to notice of and to vote at
the meeting. As of such date, there were 7,401,338 shares of Company common
stock, no par value ("Common Stock"), issued and outstanding and entitled to
vote at the meeting.
The presence in person or by proxy of a majority of the outstanding
shares of the Company's Common Stock will constitute a quorum at the meeting.
Each outstanding share of Company Common Stock is entitled to one vote on each
matter properly presented at the meeting and a majority vote of the shares
present in person or by proxy at the meeting will be required to approve each
matter, except in the election of directors for which a plurality of the votes
cast is required for election. Shares of Common Stock held by the Company or any
subsidiary of the Company will not be considered present or entitled to vote.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership, as of the close of business on April 16, 1999 (except as
otherwise indicated), of shares of Common Stock by each person or group (as that
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934) known
to the Company to be the beneficial owner of 5% or more of the outstanding
Common Stock, each current
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director of the Company, each named executive officer (as defined below), and
all current directors and executive officers of the Company as a group.
Except as otherwise indicated, the persons named in the table have sole
voting and investment power with respect to the shares of Common Stock shown
as beneficially owned by them. Beneficial ownership as reported in the table
has been determined in accordance with Rule 13d-3 promulgated under the
Securities Exchange Act of 1934 and represents the number of shares of Common
Stock for which a person, directly or indirectly, through any contract,
management, understanding, relationship or otherwise, has or shares voting
power, including the power to vote or direct the voting of such shares, or
investment power, including the power to dispose or to direct the disposition
of such shares, and includes shares which may be acquired within 60 days
after April 16, 1999. The percentages are based upon 7,401,338 shares
outstanding as of April 16, 1999.
SHARES BENEFICIALLY OWNED
NAME AND ADDRESS -------------------------
OF BENEFICIAL OWNER (1) NUMBER PERCENT
----------------------- ------ -------
Munder Capital Management 647,480 (1) 8.7%
SAFECO Corporation 593,500 (2) 8.0%
Greenfield Capital Partners B.V. ("Greenfield") 412,441 (3) 5.6%
Massachusetts Financial Services Company 392,200 (4) 5.3%
John C. Wooley 837,790 (5) 11.1%
Jeffrey J. Wooley 220,376 (6) 3.0%
Darrell W. Kolinek 36,769 (7) *
Monica Gill 9,767 (8) *
Floor Mouthaan 412,441 (9) 5.6%
Raymond A. Rodriguez 18,169 *
John L. Hill, Jr. 10,000 (10) *
Azie Taylor Morton 2,300 (11) *
All executive officers and directors as a group (eight
persons) 1,546,830 (12) 20.1%
- - --------------
* Less than 1%
(1) Based on review of Schedule 13G, and current as of December 31, 1998. The
address for Munder Capital Management is 480 Pierce Street, Suite 300,
P.O. Box 3043, Birmingham, MI 48012-3043.
(2) Based on review of Schedule 13G, and current as of January 31, 1999.
Includes 493,000 shares held by SAFECO Common Stock Trust ("SCST"), and
100,500 shares held by SAFECO Resource Series Trust. Each trust is a
registered investment company under the Investment Company Act of 1990.
The investment advisor to both trusts is SAFECO Asset Management Company
("SAMC"), which is a subsidiary of SAFECO Corporation. SAMC and SAFECO
Corporation disclaim beneficial ownership of these shares. The address
for SAFECO Corporation is SAFECO Plaza, Seattle, WA 98185.
(3) Includes 362,441 shares held by NethCorp Investments VI B.V.
("NethCorp"), for which Greenfield is the managing general partner, and
50,000 shares held by CapCorp Investments N.V., an affiliate of
Greenfield ("CapCorp"). The business address for Greenfield is
Janskerkhof--12 3512, B.L. Utrecht, The Netherlands.
(4) Based on review of Schedule 13G, and current as of January 31, 1999. The
address for Massachusetts Financial Services Company is 500 Boylston
Street, Boston, MA 02116.
(5) Includes 146,876 shares purchasable from the Company by John Wooley and
11,252 shares for which Mr. Wooley disclaims beneficial ownership
purchasable by his wife, in her capacity as an employee of the Company,
within 60 days after April 16, 1999 pursuant to options granted by the
Company. Also includes 1,142 shares held by a trust (the "Wooley Trust")
for the benefit of John
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Wooley and Jeffrey Wooley, for which John Wooley is a trustee. 7,813
shares held by John Wooley, Jeffrey Wooley or the Wooley trust are
subject to currently exercisable options in favor of an unrelated third
party.
(6) Includes 64,585 shares purchasable from the Company within 60 days after
April 16, 1999 pursuant to options granted. Also includes 1,142 shares
held by the Wooley Trust, for which Jeffrey Wooley is a trustee.
(7) Includes 36,042 shares purchasable from the Company within 60 days after
April 16, 1999 pursuant to options granted. 10,938 of such shares subject
to options are owned by Mr. Kolinek's wife, in her capacity as an
employee of the Company.
(8) Includes 9,625 shares purchasable from the Company within 60 days after
April 16, 1999 pursuant to options granted.
(9) Includes 362,441 shares held by NethCorp, and 50,000 shares held by
CapCorp. Mr. Mouthaan is the managing director of Greenfield, which is
the managing general partner of NethCorp and an affiliate of CapCorp. Mr.
Mouthaan disclaims beneficial ownership of all such shares. The business
address for Mr. Mouthaan is Janskerkhof--12 3512, B.L. Utrecht, The
Netherlands.
(10) Includes 10,000 shares purchasable from the Company within 60 days after
April 16, 1999 pursuant to options granted.
(11) Includes 2,300 shares purchasable from the Company within 60 days after
April 16, 1999 pursuant to options granted.
(12) Shares deemed to be beneficially owned by more than one officer or
director have only been counted once in determining total shares
beneficially owned by the officers and directors as a group. Includes
280,680 shares purchasable from the Company within 60 days after April
16, 1999 pursuant to options granted.
A majority of the shares beneficially owned by John Wooley and Jeffrey
Wooley, excluding the shares purchasable from the Company upon the exercise of
stock options, are pledged to secure personal indebtedness or are subject to
outstanding options granted to various third parties. A change in control of the
Company may result if a significant number of these shares are transferred upon
foreclosure resulting from the inability of the shareholders to repay the debts
secured by these pledges.
(PROPOSAL 1)
ELECTION OF DIRECTORS
At a Board of Directors Meeting in December 1998, the bylaws of the
Company were amended to provide for a Board of Directors consisting of seven
members (rather than nine), divided into two groups of two directors each and
one group of three directors, each group serving three-year staggered terms. In
order to balance the size of the groups, Jeffrey J. Wooley was reappointed to a
two member group whose terms expire at the 1999 Shareholders Meeting. On April
1, 1999, John M. Rosillo, a director of the Company since 1994, resigned to
focus his attention on international business and venture capital matters.
Accordingly, there are currently six directors serving on the Company's Board of
Directors. Of the four remaining positions, the terms of office of two will
expire in 2000 and the terms of office of the other two will expire in 2001.
It is the intention of the persons named in the enclosed proxy to vote
such proxy in the manner directed, but if no direction is indicated, the shares
represented by such proxies will be voted for the election of Raymond A.
Rodriguez and Jeffrey J. Wooley to terms of office expiring in 2002. The nominee
for each director position receiving a plurality of the votes cast in person or
by proxy at the meeting shall be elected. Should any nominee become unavailable
for election, discretionary authority is
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conferred to vote for a substitute. Management of the Company has no reason to
believe that any such person will be unavailable for election.
DIRECTORS AND EXECUTIVE OFFICERS
Officers are elected by and serve at the discretion of the Board of
Directors. The directors of the Company are divided into three classes,
designated as Class A, Class B and Class C. Raymond A. Rodriguez and Jeffrey J.
Wooley are currently the Class A directors and are standing for election at this
annual shareholders meeting. Floor Mouthaan and John L. Hill, Jr. are currently
Class B directors and will stand for election at the 2000 shareholders meeting.
John C. Wooley and Azie Taylor Morton are currently Class C directors and will
stand for election at the 2001 annual shareholders meeting. There is currently
one vacant position on the Board of Directors in the group of Class B directors.
The current directors and executive officers of the Company are:
PRESENT TERM YEAR FIRST
NAME; POSITION WITH THE COMPANY AGE EXPIRES ELECTED
- - ------------------------------- --- ------------ ----------
John C. Wooley(1) 50 2001 1981
Chairman of the Board and President
Monica Gill 34 N/A N/A
Executive Vice President, Chief Financial Officer
Jeffrey J. Wooley(1) 53 1999 1981
Senior Vice President, Secretary, and Director
Darrell W. Kolinek 47 N/A N/A
Senior Vice President, Franchise Services
John L. Hill, Jr.(2)(3) 75 2000 1996
Director
Azie Taylor Morton(2)(3) 63 2001 1996
Director
Floor Mouthaan(2)(3) 52 2000 1994
Director
Raymond A. Rodriguez 41 1999 1994
Director
- - ----------------------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
JOHN C. WOOLEY has served as Chairman of the Board and President of the
Company since 1981. From 1974 to 1981 he participated in various real estate
development and investment activities. Mr. Wooley earned a BBA in accounting in
1970 and a JD in 1974, both from the University of Texas at Austin.
MONICA GILL joined the Company in 1994. She served as controller until
June 1997, when she assumed the position of acting Chief Financial Officer, and
was formally appointed to that position in August 1997. In October, 1998, Ms.
Gill was appointed Executive Vice President. Prior to joining the Company, she
was employed by Hines Interests, a real estate development company in Houston,
Texas. Ms. Gill is a certified public accountant and holds a BA degree in
Business Administration from Stephen F. Austin State University.
4
JEFFREY J. WOOLEY has served as Vice President and Secretary of the
Company since 1981. Mr. Wooley also served as General Counsel of the Company
from 1981 through 1997. Prior to 1981, Mr. Wooley was engaged in the private
practice of law in Colorado and Texas. Mr. Wooley received a BA degree from Rice
University in 1968 and a JD from The University of Texas at Austin in 1972.
Jeffrey Wooley and John Wooley are brothers.
DARRELL W. KOLINEK joined the Company in May 1980 as operations
supervisor. He was a franchise consultant from December 1987 to December 1990
when he became Director of Franchise Services. Mr. Kolinek was appointed Vice
President of Franchise Services in January 1995 and was promoted to Senior Vice
President of Franchise Services in July 1995. His title was changed to Senior
Vice President of Franchise Relations in 1998. Mr. Kolinek attended Southwest
Texas State University.
JOHN L. HILL, JR. has been a name partner in the Houston-based law
firm of Liddell, Sapp, Zivley, Hill & LaBoon L.L.P. since 1988. In 1999, this
law firm merged with another and the consolidated law firm's name is Locke
Liddell & Sapp, LLP. Mr. Hill has served as the Secretary of State of the State
of Texas, Attorney General of Texas and Chief Justice of the Supreme Court of
Texas.
AZIE TAYLOR MORTON has been the president of Exeter Capital Asset
Management Company, an Austin-based money management firm, since January 1993.
From 1989 to December 1992, Ms. Morton was the Director of Resource Coordination
for Reading is Fundamental, a non-profit organization based in Washington, D.C.
that makes reading materials available for children. Ms. Morton has served as
Treasurer of the United States and Commissioner of the Virginia Department of
Labor and Industry.
FLOOR MOUTHAAN has been the managing partner of Greenfield, the
managing general partner of NethCorp, since April 1995. Mr. Mouthaan was the
chief executive officer of Noro (Nederland) B.V., an international venture
capital fund located in Zeist, The Netherlands, from July 1988 to March 1995.
RAYMOND A. RODRIGUEZ has been President of RAR Service Group, Inc., a
financial services firm located in Glenview, Illinois, since June 1985. Mr.
Rodriguez is an officer and principal shareholder of Barmar Enterprises, Inc.,
an area developer for the Company in the Chicago, Illinois area since June,
1992, and is an owner of a Schlotzsky's Deli restaurant in Chicago, Illinois
since February 1993 and another in Glenview, Illinois since June 1995, and a
third in Gurnee, Illinois, which opened in January 1998.
BOARD COMMITTEES
The Board of Directors has standing Executive, Audit and Compensation
Committees.
The Audit Committee annually recommends to the Board of Directors the
appointment of independent certified accountants as auditors for the Company,
reviews the scope and fees of the annual audit and any special audit and reviews
the results with the auditors, reviews accounting practices and policies of the
Company with the auditors, reviews the adequacy of the accounting and financial
controls of the Company and submits recommendations to the Board of Directors
regarding oversight and compliance with accounting principles and legal
requirements. The Audit Committee is composed of Floor Mouthaan, Azie Taylor
Morton and John L. Hill, Jr.
The Compensation Committee reviews and makes recommendations to the
Board of Directors regarding the compensation of executive officers and the
overall compensation policies of the Company and administers the Company's 1993
Stock Option Plan. The Compensation Committee is composed of John L. Hill, Jr.,
Azie Taylor Morton and Floor Mouthaan.
5
The Executive Committee has authority to take any action which can be
taken by the entire Board of Directors, except actions reserved to other
committees or which may be taken only by the full Board of Directors under law
or pursuant to the Company's bylaws. The Executive Committee is composed of John
Wooley and Jeffrey Wooley.
The Board of Directors held seven meetings in person during the
fiscal year ended December 31, 1998 and took action by unanimous consent two
times. The Executive Committee did not meet in 1998, but took action by
unanimous consent sixteen times. The Audit Committee met four times during
the fiscal year ended December 31, 1998. The Compensation Committee met four
times during the fiscal year ended December 31, 1998 and took action by
unanimous consent two times. Each of the incumbent directors attended no
fewer than 75% of the meetings of the Board of Directors, and the meetings of
the committees on which such director served, held during 1998.
COMPENSATION OF EXECUTIVE OFFICERS AND OTHER INFORMATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information with respect to the
compensation paid by the Company for services rendered during the fiscal years
ended December 31, 1996, 1997 and 1998 to the Company's chief executive officer
and each other executive officer as of the end of the fiscal year ended December
31, 1998 who received compensation in excess of $100,000 for such fiscal year
(collectively, the "named executive officers").
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------- ------------
NAME OTHER SECURITIES
AND ANNUAL UNDER- ALL OTHER
PRINCIPAL COMPEN- LYING COMPEN-
POSITION YEAR SALARY BONUS SATION OPTIONS(#) SATION
- - ------------------------- ---- ------ ----- ------- ------------ ---------
John C. Wooley 1998 $183,034 $16,667 0 300,000 0
Chairman of the Board 1997 150,000 0 0 0 0
and President 1996 130,000 0 0 0 0
Jeffrey J. Wooley 1998 $138,177 0 0 100,000 0
Senior VP and Secretary 1997 120,000 0 0 0 0
1996 110,000 0 0 0 0
Monica Gill 1998 $103,883 0 0 0 0
Executive VP and CFO
Darrell Kolinek 1998 $121,840 0 0 0 0
Senior VP
INFORMATION REGARDING STOCK OPTIONS
The following stock options were granted in 1998 to the executive
officers included in the Summary Compensation Table. The Company has not granted
any stock appreciation rights.
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NO. OF % OF TOTAL
SECURITIES OPTIONS POTENTIAL REALIZABLE VALUE AT
UNDERLYING GRANTED TO EXERCISE OR ASSUMED ANNUAL RATES OF STOCK
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION PRICE APPRECIATION FOR OPTION
NAME GRANTED 1998 ($/SHARE)* DATE TERM
---- ------- ---- --------- ---- ----
5% 10%
-- ---
John C. Wooley 50,000 8.05 $17.69375 2/12/08 $ 556,375 $1,409,964
150,000 24.15 22.095 2/27/08 1,736,928 5,282,061
100,000 16.10 23.93625 2/27/08 1,157,952 3,814,822
Jeffrey J. Wooley 25,000 4.03 17.69375 2/12/08 278,188 704,982
41,666 6.71 22.095 2/27/08 482,472 1,467,216
33,334 5.37 23.93625 2/27/08 385,992 1,271,633
- - -----------
* The fair market value of the Company's common stock (calculated
according to the 1993 Stock Option Plan) on February 12, 1998 was
$17.69375 and on February 27, 1998 was $18.4125. The closing price
per share of common stock on December 31, 1998 was $9.875.
Set forth in the following table is summary information regarding the
number of all unexercised options as of the end of 1998 for each of the
executive officers included in the Summary Compensation Table:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS IN-THE-MONEY OPTIONS AT
AT FISCAL YEAR-END(#) FISCAL YEAR-END($)
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- - ---- ---------------------------- ----------------------------
John C. Wooley 46,875/300,000 0/0
Jeffrey J. Wooley 31,250/100,000 0/0
Monica Gill 9,625/15,375 $4,829/$1,266
Darrell Kolinek 25,104/3,334 $23,438/0
- - -----------
(1) The closing price per share of common stock on December 31, 1998
was $9.875.
No executive officer of the Company exercised options in fiscal 1998.
1993 STOCK OPTION PLAN
Under the 1993 Plan, options covering shares of Common Stock are
granted to employees and directors of, and consultants to, the Company. The
options are intended to qualify either as incentive stock options ("ISO's")
pursuant to Section 422 of the Code, or will constitute nonqualified stock
options ("NQSOs"). Options may be granted at any time prior to December 23,
2003. A maximum of 1,450,000 shares of Common Stock (subject to adjustment to
prevent dilution) are available for issuance under the Amended Plan. As of
December 31, 1998, options to purchase 1,208,323 shares of Common Stock had been
granted pursuant to the 1993 Plan and had not expired, and 123,514 shares had
been issued upon exercise of options granted pursuant to the 1993 Plan.
The 1993 Plan may be administered by the Board of Directors, or the
Board of Directors may delegate its authority to a committee (either, the
"Administrator"). The Board of Directors has currently
7
delegated its authority to the Compensation Committee, which is currently
comprised of three non-employee directors. The 1993 Plan provides that the
Administrator has full and final authority to select the employees, directors
and consultants to whom awards are granted, the number of shares of Common
Stock with respect to each option awarded, the exercise price or prices of
each option, the vesting and exercise periods of each option, whether an
option may be exercised as to less than all of the Common Stock subject to
the option, and such other terms and conditions of each option, if any, that
are not inconsistent with the provisions of the Amended Plan.
Eligibility to participate in the 1993 Plan is limited to employees and
directors of, and consultants to, the Company and its subsidiaries as determined
by the Administrator. The maximum number of shares of Common Stock that can be
granted to any individual executive officer of the Company in any fiscal year is
300,000 shares. Under the 1993 Plan, the exercise price of options will not be
less than 50% of the fair market value of the Common Stock on the date of grant;
provided that, as to options granted to executive officers and all ISOs, the
exercise price will not be less than fair market value of the Common Stock on
the date of grant (and not less than 110% of the fair market value in the case
of an incentive stock option granted to an optionee owning 10% of the Common
Stock of the Company). Options granted to employees, directors or consultants
may not be exercisable after the expiration of ten years from the date of grant
(or five years in the case of incentive stock options granted to an optionee
owning 10% of the Common Stock of the Company) or such earlier date determined
by the Administrator.
STOCK PURCHASE PLAN
Under the Stock Purchase Plan, eligible employees may purchase Common
Stock of the Company at a discount from the market price through a program of
voluntary, regular payroll deductions. The Stock Purchase Plan is administered
by a committee of non-eligible directors (the "Compensation Committee")
designated by the Board of Directors. The Compensation Committee has appointed
an administrator who is responsible for the implementation of the Stock Purchase
Plan, including the allocation of funds and Common Stock purchased thereunder,
and record keeping.
A total of 250,000 shares of Common Stock have been authorized and
reserved for issuance under the Stock Purchase Plan. The shares of Common Stock
authorized for sale under the Stock Purchase Plan may be purchased by the
Company in the open market, or may be authorized and unissued shares, treasury
shares, or any combination thereof.
Employees of the Company and its subsidiaries, including members of the
Board of Directors who are employees, and whose customary employment is more
than 20 hours per week and five months in a calendar year and who have at least
six months of service are eligible to participate in the Stock Purchase Plan.
Employees who own five percent (5%) or more of the Company's outstanding Common
Stock may not purchase stock under the Stock Purchase Plan. All officers, other
than John C. Wooley, Jeffrey J. Wooley and Susan D. Vincent (who were ineligible
because the number of shares deemed beneficially owned by them was in excess of
five percent), are eligible to participate in the Stock Purchase Plan.
Under the Stock Purchase Plan, the eligible employees may purchase,
through regular payroll deductions, shares of Common Stock at a purchase price
equal to eighty-five percent (85%) of the lower of the fair market value of a
share of Common Stock on the first day of an option period or the last day of an
option period. Each option period is six calendar months. Under the Stock
Purchase Plan, the fair market value of a share of Common Stock will be equal to
the closing price of a share of Common Stock on the date in question.
8
Participants may contribute up to a maximum of fifteen percent (15%) of
their base compensation for the purchase of shares pursuant to the Stock
Purchase Plan. Payroll deductions will be accumulated and will be used to
purchase shares of Common Stock at the end of the option period. A participant
may revise or suspend payroll deductions during an option period or withdraw
from participation in the Stock Purchase Plan at any time. No participant may
purchase more than 1,000 shares during any option period, or $25,000 of Common
Stock in any calendar year, measured using the fair market value of a share of
Common Stock at the time each option is granted.
LONG-TERM INCENTIVE PROGRAM
The Company has no long-term incentive programs.
PENSION PLAN
The Company has no defined benefit or actuarial plan.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of, or consultants to, the
Company receive a retainer of $1,000 per month, $1,000 for each meeting of the
Board of Directors and $1,000 per committee meeting attended. Directors'
expenses for attending meetings currently are not reimbursed by the Company.
DIRECTORS STOCK OPTION PLAN
Effective July 1995, the Company adopted a stock option plan (the
"Directors Stock Option Plan") pursuant to which options to purchase 10,000
shares of Common Stock are automatically granted to each of up to three
non-employee directors appointed or elected to the Board of Directors for the
first time after the effective date of the Directors Stock Option Plan. The
options are granted at fair market value based upon trading prices during a
specified period prior to the date of grant. All options granted are
nonqualified stock options under the Internal Revenue Code of 1986, as amended.
In February 1996, John L. Hill, Jr. and Azie Taylor Morton received options to
purchase Common Stock under the Directors Stock Option Plan for the exercise
price of $10.2375 and $10.25, respectively. Each non-employee director elected
to the Board of Directors for the first time will receive options to purchase
Common Stock under the Directors Stock Option Plan with an exercise price to be
determined.
Options granted under the Directors Stock Option Plan vest in three
equal annual increments, with the first third vesting on the date of grant, and
will expire ten years after the date of grant. The Directors Stock Option Plan
is administered by the Board or a committee consisting of at least two directors
who are not eligible to receive options under the Directors Stock Option Plan,
but option grants and terms are nondiscretionary. The exercise price for these
options may be paid in cash or by shares of Common Stock at their fair market
value at the time of exercise.
EMPLOYMENT AGREEMENTS
Effective February 16, 1998, the Company entered into new
employment agreements with John C. Wooley and Jeffrey J. Wooley, replacing
employment agreements which expired in December 1997. The new employment
agreements provide for: (i) three-year terms, renewable for one year periods
thereafter; (ii) annual base salaries of $200,000 increasing to $250,000 by
2000 for John Wooley, and
9
$160,000 increasing to $185,000 by 2000 for Jeffrey Wooley; and (iii) payment
of the salary for the balance of the term if terminated without cause. In
addition, cash incentive plans were adopted for 1998, establishing
performance criteria which, if met, would result in bonuses ranging from 8%
to 100% of their annual salaries, depending on whether certain threshold
performance criteria were met. John Wooley earned $16,667 pursuant to his
bonus plan during 1998. It is contemplated that a new bonus plan will be
adopted for 1999. John Wooley and Jeffrey Wooley are bound by contractual
confidentiality and noncompete provisions which extend 24 months beyond the
termination of their employment with the Company for any reason.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Under Section 16(a) of the Securities Exchange Act of 1934, directors,
certain officers, and beneficial owners of 10% or more of the Company's Common
Stock are required from time to time to file with the Securities and Exchange
Commission (the "Commission") reports on Forms 3, 4 or 5, relating principally
to transactions in Company securities by such persons. Based solely upon a
review of Forms 3 and 4 and amendments thereto furnished to the Company during
its fiscal year 1996 and thereafter, Forms 5 and amendments thereto furnished to
the Company with respect to its fiscal year 1998, and any written
representations received by the Company from a director, officer or beneficial
owner of more than 10% of the Common Stock ("reporting persons") that no Form 5
is required, the Company believes that the following reporting persons did not
file on a timely basis the following reports required by Section 16(a) of the
Securities Exchange Act of 1934 during the Company's fiscal year 1998: John M.
Rosillo, a director of the Company who resigned on April 1, 1999, did not file
Form 4 on a timely basis, in connection with fourteen sales of the Company's
Common Stock during September 1998. Such transactions were subsequently reported
on Form 5.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company serves as a member of the
Compensation Committee or as a director of any other entity, an executive
officer of which serves on the Compensation Committee or is a director of the
Company.
REPORT OF THE COMPENSATION COMMITTEE ON ANNUAL COMPENSATION
Although the Compensation Committee of the Board of the Directors (the
"Committee") was formed in January 1995, prior to the Company's initial public
offering, decisions concerning compensation were made by the entire board with
the interested parties abstaining. Beginning with fiscal year 1996, the
Committee, which is currently made up of three outside directors, has been
responsible for reviewing salaries and benefits of the executive officers of the
Company, outlining their job descriptions, establishing guidelines for
performance and making recommendations to the full Board of Directors regarding
compensation for the executive officers.
Historically, compensation for executive officers has been based upon
the following criteria: level of responsibility at the Company; individual
performance and commitment to the Company; level of experience; the amount of
compensation paid to executive officers of comparable companies; the amount of
time and effort required by that position (both generally and for the fiscal
year); contributions (or the lack thereof) to the profitability of the Company;
assessment of risks associated with losing the benefit of their services; and,
number of years of service with the Company. The Committee expects that these
will continue to be the principal criteria for making their evaluation of
executive officer compensation.
10
In 1995, in conjunction with the initial public offering, the Board
(with John Wooley and Jeffrey Wooley abstaining), determined to enter into an
employment agreement with John Wooley. (See "--Employment Agreements").
Accordingly, subject to discretionary bonuses, compensation for John Wooley was
fixed through December 1997.
The Compensation Committee sought advice from independent compensation
consultants with respect to compensation packages for 1998 for the top two
executive officers, John Wooley and Jeffrey Wooley. The Committee believes
executive officers are properly motivated by a compensation structure which
gives them the opportunity to earn above average total compensation based on
cash incentives for accomplishing targeted performance criteria, and stock-based
incentives for highly successful stock performance. Accordingly, the Committee's
philosophy with respect to these officers, as discussed with the compensation
consultants was to: (i) emphasize incentive compensation with cash and
stock-based opportunities; (ii) de-emphasize fixed cash compensation, by seeking
salary levels slightly below the average of a recommended peer group. The
consultants were asked to make recommendations consistent with this philosophy
which would incentivize the executives with (a) total annual cash compensation
(including annual cash-based incentives) at a meaningful level above historical
levels, but slightly below the average for their peer group, and (b) above
average stock-based compensation for successful stock performance.
The Committee believes that it substantially accomplished its
objectives with the three-year employment agreements entered into effective
February 1998, and February 1998 stock option grants, each summarized as
follows:
EMPLOYMENT AGREEMENTS
(i) Three-year terms, renewable for one year periods thereafter;
(ii) annual base salaries of $200,000 increasing to $250,000 by 2000
for John Wooley, and $160,000 increasing to $185,000 by 2000 for
Jeffrey Wooley; and (iii) payment of the salary for the balance of
the term if terminated without cause. In addition, cash incentive
plans were adopted for 1998, establishing performance criteria which,
if met, would result in bonuses ranging from 8% to 100% of their
annual salaries, depending on whether certain threshold performance
criteria were met.
STOCK OPTIONS
NAME # OF OPTIONS VESTING EXERCISE PRICE
---- ------------ ------- --------------
John C. Wooley 50,000 1/3 per year $17.69375
150,000 1/3 per year $22.095
100,000 1/3 per year $23.93625
Jeffrey J. Wooley 25,000 1/3 per year $17.69375
41,666 1/3 per year $22.095
33,334 1/3 per year $23.93625
In making these grants, the Committee considered the Company's practices and
the practices of similarly situated companies, with respect to stock option
grants for the years 1994 through 1997. The grants reflect their attempt to
address their belief that the compensation packages for John Wooley and
Jeffrey Wooley
11
for those years were well below the median of those received by their
counterparts at comparable companies. In addition, the Committee decided to
make these grants adequate for fiscal years 1998 and 1999, consistent with
their understanding of the stock option grant practices of many public
companies. Accordingly, it is not contemplated that additional stock option
grants would be made to John Wooley or Jeffrey Wooley until at least the year
2000.
The following compares John Wooley's compensation for the last two
fiscal years with the Company's performance for the same periods.
JOHN WOOLEY'S ANNUAL COMPANY'S RESULTS OF SYSTEMWIDE
YEAR COMPENSATION SALARY OPERATIONS SALES*
-------- ------------------------- ------------------------- --------------
1997 $150,000 $4,449,000 $270
1998 $199,700** $6,206,000 $349
- - --------------------
* In millions of dollars.
** Includes $16,667 earned pursuant to Mr. Wooley's
1998 Cash Incentive Plan.
The Compensation Committee intends to continue to evaluate the
performance of the Company in light of management's efforts and to recommend
to the Board of Directors appropriate adjustments in compensation as the
situation warrants, and may continue to seek advice from time to time from
independent compensation consultants with respect to executive officer
compensation.
Submitted by the Compensation Committee:
John L. Hill, Jr.
Azie Taylor Morton
Floor Mouthaan
12
FIVE-YEAR CUMULATIVE TOTAL RETURN CHART
The graph below compares total shareholder returns for the Company over
the entire period of time that the Company has been public to the end of fiscal
1998 to the Standard & Poor's Restaurants Index and the NASDAQ Market Index.
Each of the three measures of cumulative total return assumes reinvestment of
dividends. The stock performance shown on the graph below is not necessarily
indicative of future price performance.
Schlotzskys Inc (BUNZ)
CUMULATIVE TOTAL RETURN
--------------------------------------
12/15/95 12/95 12/96 12/97 12/98
SCHLOTZSKY'S, INC. 100 93 91 133 90
NASDAQ STOCK MARKET (U.S.) 100 99 122 150 211
S & P RESTAURANTS 100 101 100 107 168
13
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
John C. Wooley and Jeffrey J. Wooley have personally guaranteed
obligations of the Company to various lenders and equipment lessors. The Company
has agreed to indemnify each of them against liabilities, costs and expenses
they may incur under such guarantees. The approximate total amount of these
obligations was $3,383,000 at December 31, 1998. John Wooley has also pledged a
personal life insurance policy to secure certain Company indebtedness.
In January 1993, John Wooley and Jeffrey Wooley signed promissory notes
to the Company for $320,000 and $77,000, respectively, to evidence obligations
owed to predecessor entities. These notes have been restructured several times,
most recently in February, 1998. The restructured notes have a five year term
from January 1996, with quarterly payments of interest and principal and an
interest rate of 7.5%. The largest aggregate amounts of such indebtedness,
including accrued interest, from January 1, 1998 through December 31, 1998 were
the outstanding balances of December 31, 1998 of approximately $116,000 for John
Wooley and $236,000 for Jeffrey Wooley. The restructured terms of these notes
were ratified by the Board of Directors in January 1996.
In June 1992, Barmar Enterprises, Inc. ("Barmar"), a corporation
controlled by Raymond Rodriguez, a director of the Company, became an area
developer in territories in the Chicago area, and in March 1993, Fairfax
Restaurant Group, Inc., of which Mr. Rodriguez is a principal shareholder, was
granted a franchise pursuant to the Barmar area development agreement. In June
1995, Mr. Rodriguez and two other individuals were jointly granted a franchise
for an additional store, also in the Chicago area. During fiscal 1998, the
Company paid Barmar approximately $318,000 as its share of franchise fees and
royalties under its area development agreement with the Company. In addition, in
1999, the Company agreed to pay Barmar $1,250,000 to reduce the amount of
royalties payable to 1.25% from 2.5% out of the 6.0% that the Company receives
and to reduce Barmar's portion of franchise fees paid to one-third from
one-half. The franchisees with operating stores in which Mr. Rodriguez holds an
interest paid the Company approximately $53,000 in royalties during 1998. The
1999 transaction was approved by the disinterested members of the Board of
Directors during 1998, and the Company believes that the terms of the area
development agreement (as amended) with Barmar and the franchise agreements with
these franchisees are as favorable to the Company as those with other area
developers or franchisees.
In December 1995, the Company entered into a master license agreement
with Buxtehude, a shareholder of the Company, of which John M. Rosillo, a former
director of the Company, is managing director. Pursuant to the terms of the
agreement, Buxtehude paid the Company $150,000 in cash and $350,000 by
promissory note. This transaction was approved by the disinterested members of
the Board of Directors of the Company. The note, which is past due, bore
interest at 9% and was repayable in three installments, with the last
installment of $175,000 due on December 31, 1998. The largest aggregate amount
of such indebtedness since January 1, 1998 was $325,000. As of December 31,
1998, the balance of this obligation, including accrued interest, was $325,000.
REAL ESTATE TRANSACTIONS
In June 1993, the Company exercised an option to acquire a parking lot
near its headquarters in Austin, Texas, from a corporation owned by John Wooley
and Jeffrey Wooley. As consideration for the purchase, the Company cancelled
$159,000 of indebtedness and took the property subject to $583,000 in
outstanding debt under a nonrecourse note in the amount of $650,000 held by the
previous owner of the property. This note, together with the cancellation of
indebtedness, less principal reductions recognized from rental income on the
property, represents the total consideration paid for this property by the
corporation owned by John Wooley and Jeffrey Wooley. This transaction did not
result in any gain to the corporation owned by John Wooley and Jeffrey Wooley.
On December 31, 1993, the Company sold the
14
parking lot to the predecessor of Austin CBD 29, Inc. ("CBD 29") for
$900,000, representing a gain to the Company of approximately $159,000. The
Company received a promissory note from CBD 29 in the mount of $302,000 and
CBD 29 took the property subject to the nonrecourse note in the
then-outstanding principal amount of $576,000 and accrued taxes and interest
in the aggregate amount of $22,000. The $302,000 note, of which $205,000 was
repaid in 1995, bears interest at the rate of 9% per annum. The maturity of
this note was extended from its original maturity date of December 31, 1995
until December 31, 1998, and the largest aggregate amount outstanding during
1998 was $139,000, which was the amount outstanding when the note was repaid
in May 1998. Effective January 1, 1996, most of the assets and liabilities of
CBD 29 were transferred to and assumed by Third & Colorado 29, L.L.C. ("T&C
29"), a limited liability company owned by John Wooley and Jeffrey Wooley.
On December 31, 1993, the Company sold a tract of land in Austin, Texas
to WTM Development, Inc. ("WTM"), of which John Wooley and Jeffrey Wooley are
principal shareholders, for a promissory note in the amount of $350,000 secured
by the property, bearing interest at the rate of 9% per annum and maturing on
December 31, 1995. In 1994 and 1995, the Company made unsecured loans
aggregating $161,000 to WTM to allow WTM to meet obligations related to the
development of the property. These loans bore interest at the rate of 9% per
annum and were payable on demand. Effective December 13, 1995, the amounts owed
to the Company by WTM were restructured to provide for payments of interest only
until maturity in five years, for a reduced rate of interest of 8% per annum,
and for a commitment to make additional advances of up to $35,000. The largest
aggregate amount of such indebtedness since January 1, 1998, and the principal
balance of this obligation, including accrued interest, as of December 31, 1998,
was $676,000.
The Company and Third & Colorado 19, L.L.C. ("T&C 19"), a limited
liability company owned by John Wooley and Jeffrey Wooley, entered into a lease
agreement effective March 21, 1997, under which the Company leases from T&C 19
approximately 29,410 square feet of office space, and 11,948 square feet of
storage space, in Austin, Texas for the Company's corporate headquarters. Under
the terms of the lease, the Company pays annual net rental of $12.95 per square
foot for the office space and up to $2.50 per square foot for the storage space,
for a term of ten years beginning November 1997. This transaction was approved
by the disinterested members of the Board of Directors of the Company. In May
of 1998, T&C 29 and T&C 19 were merged into Third & Colorado, L.L.C., a
limited liability company owned by John Wooley and Jeffrey Wolley
MASTER LICENSE AND AREA DEVELOPMENT AGREEMENTS
In December 1994, the Company entered into a territorial agreement with
Bonner Carrington Corporation pursuant to which Bonner Carrington paid the
Company $22,000 in cash and $128,000 by a promissory note for the right to
obtain a master license for Germany. A master license agreement was entered into
by the Company and Bonner Carrington in March 1995. At that time, the master
license fee was increased by $100,000, which was added to the principal amount
of the note. The note, as modified in 1997, bears interest at 9% per annum, is
payable in ten annual installments of principal and interest beginning in
December 1998, and matures in December 2007. As of December 31, 1998, the
outstanding balance on this note was $227,000. The cash was paid to the Company
from the proceeds of one or more loans made to Bonner Carrington by CBD 29 or
its affiliates. Prior to September 1997, the Bonner Carrington note to the
Company was guaranteed by CBD 29 and CBD 29 or its affiliates may have had the
right to acquire the master license for Germany and certain other territories
held by Bonner Carrington if Bonner Carrington defaulted on its note to the
Company. The Company consented to the collateral assignment of the master
license by Bonner Carrington to CBD 29, but this collateral assignment was
terminated when the CBD 29 guaranty, which was assumed by T&C 29, was terminated
in September 1997. Bonner Carrington manages properties owned by CBD 29 and its
affiliates, including office space
15
leased by the Company in Austin, Texas. See "--Real Estate Transactions." In
1996, the Company made a minority investment in an affiliate of Bonner
Carrington which has several master license agreements in effect, and
guaranteed a loan in favor of the affiliate in the amount of $400,000. During
March, 1998, the Company obtained the right to reacquire the master license
territory for Brazil and Chile for $609,000 from Java Rim, a wholly-owned
subsidiary of Bonner Carrington, and paid $100,000 earnest money in
connection with this agreement.
In December 1994, the Company granted a master license for Ontario,
Canada and other Canadian provinces to TexFran Associates, Ltd. ("TexFran"), for
$25,000 in cash and a $200,000 promissory note bearing interest at 6% per annum.
The cash paid to the Company by TexFran was loaned to TexFran by CBD 29 or its
affiliates and the TexFran note to the Company was guaranteed by CBD 29. CBD 29
had a right of first refusal to acquire the master license for Ontario, Canada
and the other Canadian provinces held by TexFran if TexFran wanted to sell or
relinquish the rights. TexFran also had a put option to sell its master license
to CBD 29. John Wooley and Jeffrey Wooley personally guaranteed CBD 29's
obligations under this put option. The Company consented to the right of first
refusal and the put option of the master license to CBD 29 which were
transferred to T&C 29. This right of first refusal and the guaranty of the
TexFran note were terminated in September 1997, and the balance of the note was
repaid in June 1998. The Company believes that the terms of the master license
were as favorable to the Company as those with other master licensees.
In March 1995, EuroAmerican Development, B.V. became the master
licensee of the Company for Belgium, the Netherlands and Luxembourg. In July
1996, NethCorp, a shareholder of the Company, assumed control of EuroAmerican
Development under terms not disclosed to the Company. Greenfield is the managing
general partner of NethCorp, and Floor Mouthaan, a director of the Company, is
the managing director of Greenfield. The Company was not involved in the
negotiations between EuroAmerican Development and NethCorp. The Company recorded
no developer revenue in fiscal 1998 from NethCorp under this master license
agreement. However, in April, 1998, the Company reacquired the territories from
NethCorp for $290,000 (in the form of $125,000 cash and the remainder through
cancellation of indebtedness). The master licensee arrangement with EuroAmerican
Development, B.V., as well as the reacquisition of the territories, were
approved by the disinterested members of the Board of Directors of the Company.
APPROVAL OF DISINTERESTED DIRECTORS
The foregoing transactions were entered into between related parties
and, except as otherwise noted, were not the result of arms-length negotiations.
Accordingly, certain of the terms of these transactions may be more or less
favorable to the Company than might have been obtained from unaffiliated third
parties. During fiscal 1998, the Company did not, and in the future will not,
enter into any transactions in which the directors, executive officers or
principal shareholders of the Company and their affiliates have a material
interest unless such transactions are approved by a majority of the
disinterested members of the Board of Directors and are on terms that are no
less favorable to the Company than those that the Company could obtain from
unaffiliated third parties.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
It is anticipated that the 2000 Annual Meeting of Shareholders of the
Company will be held on May 31, 2000. Proposals of shareholders intended to be
presented at the 2000 annual meeting must be received in writing by the Company
at its principal executive offices for inclusion in the Company's
16
proxy statement and form of proxy between November 28 and December 28, 1999.
The principal executive offices of the Company are located at 203 Colorado
Street, Austin, Texas 78701.
FINANCIAL STATEMENTS AND FORM 10-K
The Consolidated Financial Statements of the Company and its
subsidiaries, which include audited consolidated balance sheets as of
December 31, 1998 and 1997 and audited consolidated statements of operations
and cash flows for the years ended December 31, 1998, 1997 and 1996, are
included in the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998, as filed with the Securities and Exchange Commission
(the "Form 10-K"). The Company will furnish a copy of the Form 10-K without
charge to each person who was a beneficial owner of its securities on April
16, 1999, the record date for the Company's Annual Meeting of Shareholders,
and who wishes to receive a copy of the Form 10-K, upon the written request
of any such person. Requests for copies of such reports should be directed to
Monica Gill, 203 Colorado Street, Austin, Texas 78701.
OTHER MATTERS
The Board of Directors of the Company does not know of any other
matters to be acted upon at the meeting. However, if any other matter
properly comes before the meeting, the persons voting the proxies will vote
them in accordance with their best judgment.
April 28, 1999
17
PROXY PROXY
SCHLOTZSKY'S, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John C. Wooley and Monica Gill, or either
of them, as Proxies, each with full power of substitution, to represent and
to vote, as designated below, all shares of Common Stock of Schlotzsky's,
Inc. (the "Company") held of record by the undersigned on April 16, 1999, at
the Annual Meeting of Shareholders to be held on May 28, 1999, and any
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR THE LISTED NOMINEES AND FOR PROPOSAL 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE.
(Continued, and to be signed on reverse side)
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY / /
FOR the nominees WITHHOLD
listed below AUTHORITY to vote For Against Abstain
1. ELECTION OF DIRECTORS / / / / 2. Proposal to ratify and / / / / / /
(INSTRUCTION: To withhold authority approve selection of
to vote for any individual nominee Grant Thornton LLP as
strike a line through the nominee's auditors
name in the list below)
For Against Abstain
Raymond A. Rodriguez 3. In their discretion, / / / / / /
Jeffrey J. Wooley the Proxies are
authorized to vote upon
such business as may
properly come before the
meeting or any adjournment
thereof.
Please sign exactly as name appears on this proxy
card. When shares are held by joint tenants, both
should sign.
Dated _____________________________________, 1999
When signing as attorney, executor, administrator, trustee
or guardian, please give full title as such. If a corporation, Signature ______________________________________
please sign in full name by President or other authorized officer.
If partnership, please sign partnership name by authorized person. Signature if held jointly _______________________