DEF 14A: Definitive proxy statements

26

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934


FILED BY THE REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[ ] CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE
14A-B(E)(2))
[X] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO 240.14A-12




PIZZA INN, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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:
2) AGGREGATE NUMBER OF SECURITIES TO WHICH TRANSACTION APPLIES:
3) PER UNIT PRICE OR OTHER UNDERLYING VALUE OF TRANSACTION COMPUTED
PURSUANT TO EXCHANGE ACT RULE 0-11 (SET FOR THE AMOUNT ON WHICH THE FILING FEE
IS CALCULATED AND STATE HOW IT WAS DETERMINED):
4) PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
5) TOTAL FEE PAID:

[ ] FEE PAID PREVIOUSLY WITH PRELIMINARY MATERIALS.
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY EXCHANGE ACT RULE
0-11(A)(2) AND IDENTIFY THE FILING FOR WHICH THE OFFSETTING FEE WAS PAID
PREVIOUSLY. IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR
THE FORM OR SCHEDULE AND THE DATE OF ITS FILING.
1) AMOUNT PREVIOUSLY PAID:
2) FORM, SCHEDULE OR REGISTRATION STATEMENT NO.:
3) FILING PARTY:
4) DATE FILED:



PIZZA INN, INC.
3551 PLANO PARKWAY
THE COLONY, TEXAS 75056
(469) 384-5000

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD DECEMBER 14, 2005

To our Shareholders:

The 2005 Annual Meeting of Shareholders of Pizza Inn, Inc. (the "Company")
will be held at the Company's corporate offices, 3551 Plano Parkway, The Colony,
Texas 75056, on Wednesday, December 14, 2005, at 10:00 a.m., Dallas time, for
the following purposes:

1. To elect a board of directors to hold office until the next succeeding
annual meeting of shareholders or until their respective successors shall have
been elected and qualified;

2. To ratify the appointment of BDO Seidman, LLP as the Company's
independent registered public accounting firm for fiscal year 2006;

3. To transact such other business as may properly come before the meeting
or any postponement or adjournment thereof.

These items are more fully described in the proxy statement, which is part
of this notice. We have not received notice of other matters that may be
properly presented at the annual meeting. A copy of the Company's Annual Report
for the fiscal year ended June 26, 2005 is also enclosed. Except as expressly
incorporated by reference herein, such Annual Report does not constitute a part
of the materials used for the solicitation of proxies.

Please read the enclosed proxy statement carefully. Complete, date and sign the
proxy, and mail it in the stamped envelope enclosed for your convenience.

Only shareholders of record at the close of business on October 14, 2005 are
entitled to notice of, and to vote at, this meeting and any postponement or
adjournment thereof.

By Order of the Board of Directors,

/s/ Rod J. McDonald
Rod J. McDonald
The Colony, Texas Corporate Secretary
November 11, 2005

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE,
DATE, AND SIGN THE ENCLOSED PROXY, AND MAIL IT IN THE STAMPED ENVELOPE ENCLOSED
FOR YOUR CONVENIENCE. THE ENCLOSED PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS
USE.

YOUR VOTE IS IMPORTANT.

PIZZA INN, INC.
3551 PLANO PARKWAY
THE COLONY, TEXAS 75056
(469) 384-5000

PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD DECEMBER 14, 2005

Pizza Inn, Inc., a Missouri corporation (the "Company"), is soliciting
proxies to be voted at the Annual Meeting of Shareholders (the "Annual Meeting")
to be held at the Company's corporate offices, 3551 Plano Parkway, The Colony,
Texas 75056, on Wednesday, December 14, 2005, at 10:00 a.m., Dallas time, and at
any postponement or adjournment thereof. This Proxy Statement and the enclosed
form of proxy are first being sent or given to the Company's shareholders on or
about November 11, 2005.

If the proxy is signed and returned before the Annual Meeting, it will be
voted in accordance with the directions on the proxy or, if no directions are
made, by the proxies named therein in their discretion. A shareholder may revoke
a proxy at any time before it is voted by execution of a subsequent proxy,
voting the shares in person at the Annual Meeting or by giving written notice to
Pizza Inn, Inc., c/o Securities Transfer Corporation, 2591 Dallas Parkway, Suite
102, Frisco, Texas 75034 at any time prior to the close of the polls at the
Annual Meeting stating that the proxy has been revoked. If you hold shares
through a bank or brokerage firm, you must contact the bank or firm to revoke
any prior voting instructions. The Company must receive the notice or a new
proxy card before the vote is taken at the Annual Meeting.

OUTSTANDING CAPITAL STOCK

The record date for shareholders entitled to notice of, and to vote at, the
Annual Meeting is October 14, 2005. At the close of business on that date,
there were 10,108,494 outstanding shares of common stock, $.01 par value
("Common Stock"). No other class of securities of the Company is entitled to
notice of, or to vote at, the Annual Meeting.

ACTION TO BE TAKEN AT THE MEETING

The accompanying proxy, unless the shareholder otherwise specifies in the
proxy, will be voted:

1. FOR the election of the director nominees named herein, to hold office
until the next succeeding annual meeting of shareholders or until their
respective successors shall have been elected and qualified;

2. FOR the ratification of the appointment of BDO Seidman, LLP as the
Company's independent registered public accounting firm for fiscal year 2006;
and

3. In the discretion of the proxy holders, as to the transaction of such
other business as may properly come before the meeting or any postponement or
adjournment thereof.

The Board of Directors is not presently aware of any other business to be
brought before the Annual Meeting.

QUORUM AND VOTING

A majority of the outstanding shares entitled to vote at the Annual
Meeting, represented in person or by proxy, shall constitute a quorum at the
Annual Meeting. If a quorum is not present, in person or by proxy, the meeting
may be postponed or adjourned from time to time until a quorum is obtained.
Each outstanding share entitled to vote under the provisions of the Company's
Restated Articles of Incorporation shall be entitled to one vote on each matter
submitted to a vote at the Annual Meeting. Cumulative voting for the election
of directors is not permitted. Thus, a shareholder is not entitled to cumulate
his votes and cast them all for any single nominee or to spread his votes, so
cumulated, among more than one nominee. The election of each nominee as a
director requires the affirmative vote of the holders of record of a majority of
the outstanding shares entitled to vote on the election of directors and
represented in person or by proxy at the Annual Meeting at which a quorum is
present.

For the election of directors, votes withheld do not affect whether a
nominee has received sufficient votes to be elected. For the purpose of
determining whether the shareholders have approved matters other than the
election of directors, abstentions are treated as shares present or represented
and voting, so abstaining has the same effect as a negative vote. Shares held
by brokers who do not have discretionary authority to vote on a particular
matter and who have not received voting instructions from their customers are
not counted or deemed to be present or represented for the purpose of
determining whether shareholders have approved that matter, but they are counted
as present for the purpose of determining the existence of a quorum. Shares as
to which voting instructions are given as to at least one of the matters to be
voted on shall also be deemed to be so represented. If the proxy states how
shares will be voted in the absence of instructions by the shareholder, such
shares shall be deemed to be represented at the meeting.

The enclosed proxy, if properly executed and returned, will be voted as
directed or stated on the proxy or, in the absence of such direction, for the
election of the nominees as directors and each other matter on the proxy. If
any other matters properly come before the meeting, the enclosed proxy will be
voted by the proxy holders in accordance with their best judgment in their
discretion. The Board believes that all the nominees will be available to serve
as directors. If any nominee is unable to serve or for good cause will not
serve, the Board may recommend a substitute nominee or leave a vacancy and fill
the vacancy later. The shares represented by all valid proxies may be voted for
the election of a substitute if one is nominated.





[This space intentionally left blank]












PROPOSAL ONE:

ELECTION OF DIRECTORS

The Company's Restated Articles of Incorporation and Bylaws provide that
each director serves a one-year term, with all directors subject to annual
election. The Board has nominated each of the seven incumbent directors for
election at the Annual Meeting. If elected, each director nominee shall hold
office until the next annual meeting, or until his successor shall have been
elected and qualified. Each nominee has expressed his intention to serve the
entire term for which election is sought. If any nominee is unable to serve or
for good cause will not serve, the proxies may be voted (1) for the election of
another nominee to be designated by the Board, or (2) for the balance of the
nominees, leaving a vacancy.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE NOMINEE DIRECTORS.

Following is the biographical information, as of October 14, 2005, of the
nominee directors and the year in which each director was first elected.


NOMINEES

Bobby L. Clairday, 61, is an Area Developer of Pizza Inn restaurants and he
is President, a Director and sole shareholder of Clairday Food Services, Inc.
and Advance Food Services, Inc., franchisees operating Pizza Inn restaurants in
Arkansas. From 1990 until his election as a Director of the Company in January
1993, Mr. Clairday was an ex-officio member of the Board of Directors, serving
as a representative of the Company's franchisees. He has served as the
President of the Pizza Inn Franchisee Association and as a member of various
committees and associations affiliated with the Pizza Inn restaurant system.
Mr. Clairday has been a franchisee of the Company for over twenty years and a
director for over nine years.

John D. Harkey, Jr., 45, is Chairman of the Board and Chief Executive
Officer of Consolidated Restaurant Companies, Inc. and has been manager of the
investment firm Cracken, Harkey, Street & Hartnett since 1997. From 1992 to
1998, Mr. Harkey was a partner with the law firm Cracken & Harkey, LLP. Mr.
Harkey was founder and managing director of Capstone Capital Corporation and
Capstone Partners, Inc. from 1989 until 1992. He is also a director of Total
Entertainment Restaurant Corporation, Leap Wireless International, Inc., and
Loral Space & Communications, Inc. Mr. Harkey was elected to the board in June
2005.

Robert B. Page, 45, is a franchisee of Shoney's, Inc., a family dining
restaurant chain. From November 2000 until September 2002, Mr. Page was Chief
Operations Officer of Gordon Biersch Brewery Restaurant Inc., a group of casual
dining restaurants. From 1993 through 2000 he worked for Romacorp, Inc., which
owns Tony Roma's, a chain of casual dining restaurants, where he was Chief
Executive Officer and a board member from 1998 through 2000, and President and
Chief Operations Officer from 1993 through 1998. Mr. Page was elected a director
of the Company in February 2004, and was appointed as the Company's Acting Chief
Executive Officer in January 2005, a position he held until March 2005.

Ramon D. Phillips, 72, is the former Chairman of the Board, President, and
Chief Executive Officer of Hallmark Financial Services, Inc., a financial
services company. He served as Chairman, President, and Chief Executive Officer
of Hallmark from 1989 through 2000, and as Chairman through August 2001. Prior
to Hallmark, Mr. Phillips had over fifteen years experience in the franchise
restaurant industry, serving as Controller for Kentucky Fried Chicken, Inc.
(1969-1974) and as Executive Vice President and Chief Financial Officer for
Pizza Inn, Inc. (1974-1989). He was elected a director of the Company in 1990
and served through 2002. He served as an advisory director in 2002 and was
re-elected as a director in February 2004.

Steven J. Pully, 45, is the President of Newcastle Capital Management,
L.P., the general partner of Newcastle Partners, L.P. Mr. Pully is also Chief
Executive Officer and a director of New Century Equity Holdings Corp., Chairman
of the Board of Whitehall Jewelers, Inc., and was Chief Executive Officer of
Pinnacle Frames and Accents, Inc. from January 2003 through June 2004. Prior to
joining Newcastle Capital Management, L.P. in late 2001, from May 2000 to
December 2001, he was a managing director in the mergers and acquisitions
department of Banc of America Securities, Inc. and from January 1997 to May 2000
he was a member of the investment banking department of Bear Stearns where he
became a senior managing director in 1999. Prior to becoming an investment
banker, Mr. Pully practiced securities and corporate law at the law firm of
Baker & Botts. Mr. Pully is a CPA, a CFA and a member of the Texas Bar. Mr.
Pully was appointed a director in December 2002.

Mark E. Schwarz, 45, is the Chairman, Chief Executive Officer and Portfolio
Manager of Newcastle Capital Management, L.P., a private investment management
firm he founded in 1993 that is the general partner of Newcastle Partners, L.P.
Mr. Schwarz was appointed Chairman of the Board of the Company in February 2004.
Mr. Schwarz is also Chairman of the Board and Chief Executive Officer of
Hallmark Financial Services, Inc., Chairman of the Board of Bell Industries,
Inc. and New Century Equity Holdings Corp., and a director of Nashua
Corporation, S L Industries, Inc. and Web Financial Corporation. Mr. Schwarz
was appointed a director in December 2002.

Timothy P. Taft, 47, was appointed President and Chief Executive Officer in
March 2005. Prior to joining the Company, Mr. Taft served as President and
Chief Operating Officer of Whataburger, Inc. from October 2000 through October
2005. Prior to that, he served in various senior management positions with
Whataburger, Inc. beginning in 1994. Mr. Taft was elected to the board in June
2005.

Except as noted, each nominee has been engaged in the principal occupation
described during the past five years. There are no family relationships among
any of our directors or executive officers. Company stock ownership for each of
these individuals is shown under the heading "Security Ownership of Certain
Beneficial Owners, Directors and Executive Officers" and is based upon
information furnished by the respective individuals.

INFORMATION REGARDING THE BOARD AND ITS COMMITTEES

The business of the Company is managed under the direction of the Board of
Directors. Each director is expected to make reasonable efforts to attend board
meetings, meetings of committees of which such director is a member and the
Annual Meeting of Shareholders. The Board of Directors intends to comply with
the corporate governance guidelines set forth by The Nasdaq Stock Market
("Nasdaq") listing standards and Securities and Exchange Commission ("SEC")
rules adopted to implement provisions of the Sarbanes-Oxley Act of 2002 (the
"Sarbanes-Oxley Act") in order to assure that the Board will have the necessary
practices in place to review and evaluate the Company's business operations as
needed and to make decisions that are independent of the Company's management.
The Board has five standing committees: an Executive Committee, an Audit
Committee, a Compensation Committee, a Finance Committee and a Nominating and
Governance Committee. A sixth committee, the Strategic Planning Committee, was
created in April 2004 for the limited purpose discussed below and dissolved by
the Board on June 23, 2005. Current copies of the charters for certain Board
committees, including the Nominating and Governance Committee, are available to
security holders on the Company's website at http://www.pizzainn.com.
-----------------------

The Board met nine times during the last fiscal year. All directors
attended 75% or more of the Board meetings and meetings of the committees on
which they served and all seven directors attended the prior year's annual
meeting. Below is a table that provides membership and meeting information for
each of the Board committees during fiscal year 2005:

NOMINATING STRATEGIC
NAME EXECUTIVE AUDIT COMPENSATION FINANCE & GOVERNANCE PLANNING
- -------------------------------------------------------------------------------
Mr. Schwarz X*
Mr. Clairday
Mr. Page X X2 X2 X* X2 X**
Mr. Parker X1
Mr. Phillips X X* X X X X**
Mr. Powell X
Mr. Pully X* X X*
Mr. Taft

NUMBER OF
MEETINGS IN
FISCAL 2005 4 4 6 4 5 53
- ------------------------------------------------------------------------------
1 - Mr. Page replaced Mr. Parker as a member of the Executive Committee in
December 2004.
2 - Mr. Page resigned his membership on these committees effective as of his
appointment as Acting Chief Executive Officer on January 4, 2005. He was
reappointed to the Audit Committee on June 27, 2005.
3 - Includes meetings with the Company's management team. This Committee was
dissolved by the Board on June 23, 2005.
* Committee Chairman
** Committee Co-Chairman

Independent directors meet at least twice annually apart from other Board
members and management representatives. Each of the Company's current
directors, other than Mr. Clairday and Mr. Taft, qualify as "independent" in
accordance with published Nasdaq listing requirements. On January 4, 2005, the
Board appointed Mr. Page as Acting Chief Executive Officer of the Company. Mr.
Page served in that capacity until the appointment of Mr. Taft as President and
CEO on March 31, 2005. According to published Nasdaq listing requirements,
during his term as Acting CEO, Mr. Page did not qualify as an independent
director.

Below is a description of the functions performed by each committee of the
Board. Each of the committees has authority to engage legal counsel or other
experts or consultants as it deems appropriate to carry out its
responsibilities. The Board has determined that each member of each committee
meets the applicable laws and regulations regarding "independence" when
applicable and that each member is free of any relationship that would interfere
with his individual exercise of independent judgment.

Executive Committee. This committee will consider issues as directed by
--------------------
the Chairman of the Board. It also may exercise the authority of the Board
between Board meetings, except to the extent that the Board has delegated
authority to another committee or to other persons, and except as otherwise
limited by Missouri law.

Audit Committee. The Company has a separately designated standing audit
----------------
committee established in accordance with Section 3(a)(58)(A) of the Securities
Exchange Act of 1934. The responsibilities of this committee include reviewing
the financial reports and other financial information provided by the Company to
any governmental body or the public; the Company's systems of internal controls
regarding finance, accounting, legal compliance and ethics that management and
the Board have established; the Company's auditing, accounting and financial
reporting processes generally; and such other functions as the Board may from
time to time assign to the committee. In performing its duties, the committee
seeks to maintain an effective working relationship with the Board, the
independent accountant and management of the Company. The specific duties and
functions of the Audit Committee are set forth in the Audit Committee Charter.
The Charter is reviewed annually and updated as necessary to reflect changes in
regulatory requirements, authoritative guidelines, and evolving practices. A
copy of the Audit Committee Charter is attached as an exhibit to this proxy
statement.

Compensation Committee. The primary responsibilities of this committee are
----------------------
to (a) review and recommend to the Board the compensation of the Chief Executive
Officer and other officers of the Company, (b) review executive bonus plan
allocations, (c) oversee and advise the Board on the adoption of policies that
govern the Company's compensation programs, (d) oversee the Company's
administration of its equity-based compensation and other benefit plans, and (e)
approve grants of stock options to officers and employees of the Company under
its stock plans. The Compensation Committee's role includes producing the
report on executive compensation required by SEC rules and regulations. The
specific duties and functions of the Compensation Committee are set forth in its
charter. This charter is reviewed annually and updated as necessary to reflect
changes in regulatory requirements, authoritative guidelines and evolving
practices.

Finance Committee. The primary responsibilities of this committee are to
------------------
(a) monitor present and future capital requirements and opportunities pertaining
to the Company's business and (b) review and provide guidance to the Board and
management about all proposals concerning major financial policies of the
Company. The Finance Committee's role includes designating officers and
employees who can execute documents and act on behalf of the Company in the
ordinary course of business under previously approved banking, borrowing, and
other financing arrangements.

Nominating and Governance Committee. The primary responsibilities of this
------------------------------------
committee are to (a) recommend the slate of director nominees for election to
the Board, (b) identify and recommend candidates to fill vacancies occurring
between annual shareholder meetings, and (c) review, evaluate and recommend
changes to the Company's corporate governance practices. The Nominating and
Governance Committee's role includes periodic review of the compensation paid to
non-employee directors for annual retainers and meeting fees and making
recommendations to the Board for any adjustments. The specific responsibilities
and functions of the Nominating and Governance Committee are set forth in its
Charter.

From time to time the Nominating and Governance Committee reviews the Board
to assess the skills and characteristics required of Board members in the
context of the current composition of the Board. This assessment includes
issues of diversity in numerous factors, understanding of and achievements in
the restaurant industry, board service, business, finance, marketing and
community involvement. These factors, and any other qualifications considered
useful by the Nominating and Governance Committee, are reviewed in the context
of an assessment of the perceived needs of the Board at a particular point. As
a result, the priorities and emphasis of the Nominating and Governance Committee
and of the Board may change from time to time to take into account changes in
business and other trends, and the portfolio of skills and experience of current
and prospective Board members. Therefore, while focused on the achievement and
the ability of potential candidates to make a positive contribution with respect
to such factors, the Nominating and Governance Committee has not established
specific minimum criteria or qualifications that a nominee must possess.

Consideration of new Board nominee candidates typically involves a series
of internal discussions, review of information concerning candidates and
interviews with selected candidates. In general, candidates for nomination to
the Board are suggested by Board members or by employees. In 2005, the Company
did not employ a search firm or pay fees to other third parties in connection
with seeking or evaluating Board nominee candidates. The Nominating and
Governance Committee will consider director candidates recommended by
shareholders. The Nominating and Governance Committee evaluates candidates
proposed by shareholders using the same criteria as for other candidates. The
name of any recommended candidate for director, together with a brief
biographical sketch, a document indicating the candidate's willingness to serve
if elected and evidence of the nominating person's ownership of Company stock
should be sent to the Corporate Secretary of the Company using one of the
methods set forth in "Communications from Shareholders to the Board," below. The
Company has not received any shareholder director nominations.

Strategic Planning Committee. This committee was constituted on April 21,
-----------------------------
2004 specifically to work with the Company's senior management to create and
implement a strategic plan for the Company. The Strategic Planning Committee
and Company management assembled and analyzed data pertaining to the Company's
business plan, competitive environment and objectives and other factors relevant
to the Company's concepts, products and services, ultimately preparing and
recommending plans, timetables, strategies, options and procedures for the
Company's long-term growth and success. The Strategic Planning Committee was
dissolved by the Board on June 23, 2005; however, it is subject to reformation
from time to time as the Board may deem necessary.

Communications from Shareholders to the Board

The Board recommends that shareholders initiate any communications with the
Board in writing and send them in care of the Corporate Secretary. Shareholders
can send communications by e-mail to corporate_secretary@pizzainn.com, by fax to
--------------------------------
(469) 384-5061 or by mail to Corporate Secretary, Pizza Inn, Inc., 3551 Plano
Parkway, The Colony, TX 75056. This centralized process assists the Board in
reviewing and responding appropriately to shareholder communications. The names
of specific intended Board members should be noted in the communication. The
Board has instructed the Corporate Secretary to forward such correspondence only
to the intended recipients; however, the Board has also instructed the Corporate
Secretary, prior to forwarding any correspondence, to review such correspondence
and, in his discretion, not to forward certain items if they are deemed of a
commercial or frivolous nature or otherwise inappropriate for the Board's
consideration. In such cases, that correspondence may be forwarded elsewhere in
the Company for review and possible response.

Code of Ethics

The Company has adopted a code of ethics that applies to the Company's
principal executive officer, principal financial officer, principal accounting
officer or controller or persons performing similar functions. The Company has
posted the text of such code of ethics on the Company's website at
http://www.pizzainn.com.
----------

Director Compensation

During fiscal year 2005, each non-employee director received as
compensation for serving on the Board and committees of the Board:

- - An annual retainer of $17,000;

An annual retainer of $6,000 for the Chairman of the Board; and

A per meeting fee of $1,000 for Board meetings and $250 fee for committee
meetings.

While Acting CEO of the Company, Mr. Page received no compensation for
serving as a director, except that he, like all Company directors, was eligible
to receive reimbursement of any expenses incurred in attending Board and
committee meetings. Mr. Parker received the standard director's compensation
effective as of December 14, 2004, the day after his last day of employment by
the Company, through the 2004 Annual Meeting of shareholders on June 23, 2005
when he did not stand for re-election. Previously, Mr. Parker was not paid for
serving as a member of the Board. As an employee of the Company, Mr. Taft
receives no compensation for his service as a director.

Members of the Strategic Planning Committee received a per diem fee of $500
for each day they were directly engaged in the discharge of committee
responsibilities. As of the date of this proxy statement, the Company is
withholding Board fees otherwise due to Mr. Clairday and offsetting those
amounts against the Advance Foods Debt (defined below in "Certain Relationships
and Related Transactions"), and the Company is actively pursuing with Mr.
Clairday alternative methods to pay the Company in full.

In addition to annual and meeting fees, each non-employee director is
eligible to receive stock option awards under the 2005 Non-Employee Directors
Stock Option Award Plan (the "2005 Directors Plan"). Under the 2005 Directors
Plan, eligible directors receive, as of the first day of the Company's fiscal
year, options for Common Stock equal to twice the number of shares of Common
Stock purchased during the preceding fiscal year or purchased by exercise of
previously granted options during the first ten days of the current fiscal year.
On the first day of the first fiscal year immediately following the day on which
a non-employee director first became eligible to participate in the 2005
Directors Plan, that director would receive options to acquire two shares of
Common Stock for each share of Common Stock owned by such director on the first
day of the fiscal year. Stock options granted under the 2005 Directors Plan
have an exercise price equal to the market price of the Common Stock on the date
of grant and are first exercisable one year after grant. Each eligible director
will be entitled to options for no more than 40,000 shares per fiscal year under
the terms of the 2005 Directors Plan.

In fiscal year 2005 stock options for 25,000 shares were granted to Mr.
Schwarz and stock options for 17,858 shares were granted to Mr. Pully pursuant
to the 2005 Directors Plan, all at an exercise price of $2.85 per share. See
"Equity Compensation Plan Information" below.

EXECUTIVE OFFICERS

The following table sets forth certain information, as of October 14, 2005,
regarding the Company's executive officers:
EXECUTIVE
OFFICER
NAME AGE POSITION SINCE
---- --- -------- -----

Timothy P. Taft 47 President and Chief Executive Officer 2005
Ward T. Olgreen 46 Senior Vice President of Franchise
Operations and Concept Development 1995
Shawn M. Preator 36 Chief Financial Officer 1999
Rod J. McDonald 44 Corporate Secretary and General Counsel 2004
Danny K. Meisenheimer 45 Vice President of Marketing
Jack A. Odachowski 55 Vice President of Supply Chain Management 2005




BIOGRAPHIES OF NON-DIRECTOR EXECUTIVE OFFICERS

Ward T. Olgreen was appointed Senior Vice President of Franchise Operations
and Concept Development in December 2002. He was appointed Vice President of
Concept Development in February 1999 and Senior Vice President of Concept
Development in July 2000. He joined the Company in September 1991 and served in
a variety of operational positions until his appointment in January 1995 as Vice
President of International Operations and Brand R&D.

Shawn M. Preator was appointed Chief Financial Officer in October 2002. Mr.
Preator was appointed Vice President in June 2000. He was elected Controller,
Treasurer and Assistant Secretary in April 1999. Previously, Mr. Preator had
been Assistant Controller for the Company since July 1998. Prior to joining the
Company, Mr. Preator was a Senior Financial Analyst at LSG/Sky Chefs, Inc., an
international airline caterer, from September 1996 to July 1998. Prior to
September 1996, Mr. Preator worked for the accounting firm Ernst & Young LLP in
its audit department. Mr. Preator is a CPA.


Rod J. McDonald was appointed Corporate Secretary and General Counsel in
August 2004. Mr. McDonald joined the Company in September 1997 and served as
Assistant General Counsel of the Company until his appointment as General
Counsel. Prior to joining the Company, he was Vice President and Assistant
General Counsel for TCBY Enterprises, Inc. He served as Acting Chief Executive
Officer of the Company in December 2004 and January 2005.

Danny K. Meisenheimer was appointed Vice President of Marketing in January
2003 after joining the Company in December 2002. Prior to joining the Company,
Mr. Meisenheimer served as Vice President of Marketing for Furr's Restaurant
Group, Inc. since 1995. Mr. Meisenheimer joined the Marketing Department of
Furr's in 1991.

Jack A. Odachowski was appointed Vice President of Supply Chain Management
in September 2005. Prior to joining the Company, he served as Vice President of
Purchasing and Distribution for RTM Restaurant Group from 2000 through August
2005. Previously, Mr. Odachowski was Vice President of International Purchasing
and Distribution for Wendy's International, Inc.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, DIRECTORS
AND EXECUTIVE OFFICERS

The following table sets forth certain information known to the Company, as
of October 14, 2005, with respect to the beneficial ownership of Common Stock
by: (a) each person known to the Company to be a beneficial owner of more than
five percent of the outstanding Common Stock; (b) each director, nominee
director and executive officer named in the section entitled "Summary
Compensation Table;"and (c) all directors and executive officers as a group (13
persons). Except as otherwise indicated, and subject to applicable community
property laws, each of the persons named in the table below is believed by the
Company to possess sole voting and investment power with respect to the shares
of Common Stock beneficially owned by such person. Information as to the
beneficial ownership of Common Stock by directors and executive officers of the
Company has been furnished by the respective directors and executive officers.



NAME SHARES PERCENT
AND ADDRESS OF BENEFICIALLY OF CLASS
BENEFICIAL OWNER OWNED --------
---------------- -----

Newcastle Partners, L.P.(a)
Newcastle Capital Management, L.P.
Newcastle Capital Group, L.L.C.
300 Crescent Court, Ste. 1110
Dallas, TX 75201 3,811,245 37.80%

Ronald W. Parker (b)
7108 Round Hill Road
McKinney, TX 75070 851,821 8.44%

Mark E. Schwarz (a)(c) 3,861,245 38.18%
Robert B. Page 0 0%
Bobby L. Clairday (d) 48,900 Less than 1%
Ramon D. Phillips (e) 11,590 Less than 1%
Steven J. Pully (a)(c) 26,787 Less than 1%
John D. Harkey, Jr. 10,000 Less than 1%
Timothy P. Taft (c) 105,450 1.04%
Ward T. Olgreen (c) 124,985 1.23%
Shawn M. Preator (c) 50,849 Less than 1%
Danny K. Meisenheimer 922 Less than 1%
Rod J. McDonald (c) 21,877 Less than 1%
B. Keith Clark (f) 4,000 Less than 1%

All Such Directors and
Executive Officers as a Group 4,294,410 41.45%


(a) Newcastle Capital Management, L.P. is the general partner of Newcastle
Partners, L.P., Newcastle Capital Group, L.L.C. is the general partner of
Newcastle Capital Management, L.P., and Mr. Schwarz is the managing member of
Newcastle Capital Group, L.L.C. Accordingly, each of Newcastle Capital
Management, L.P., Newcastle Capital Group, L.L.C. and Mark E. Schwarz may be
deemed to beneficially own the shares of Common Stock beneficially owned by
Newcastle Partners, L.P. In addition, Newcastle Partners, L.P., Newcastle
Capital Management, L.P., Newcastle Capital Group, L.L.C., Mr. Schwarz and Mr.
Pully are members of a Section 13d reporting group and may be deemed to
beneficially own shares of Common Stock owned by the other members of the group.
Newcastle Partners, L.P., Mr. Schwarz and Mr. Pully also directly own shares of
Common Stock. Mr. Pully disclaims beneficial ownership of the shares of Common
Stock beneficially owned by Newcastle Partners, L.P. Mr. Schwarz directly owns
20,000 shares of Common Stock, including options to acquire 30,000 shares.

(b) Mr. Parker was President and Chief Executive Officer of the Company
until December 13, 2004.

(c) Includes vested options and options vesting within 60 days of October
14, 2005 under the Company's stock option plans, as follows: 30,000 shares for
Mr. Schwarz; 17,858 shares for Mr. Pully; 50,000 shares for Mr. Taft; 52,000
shares for Mr. Olgreen; 41,000 shares for Mr. Preator; and 19,000 shares for Mr.
McDonald.

(d) Mr. Clairday shares voting and investment power for 18,200 shares with
his wife.

(e) Mr. Phillips shares voting and investment power for 5,333 shares with
the other shareholders of Wholesale Software International, Inc.

(f) Mr. Clark was Senior Vice President, Secretary and General Counsel of
the Company until July 7, 2004.



AUDIT COMMITTEE REPORT

The Audit Committee of the Board is responsible for providing independent,
objective oversight of the Company's accounting functions and internal controls.
The Audit Committee is currently composed of three independent directors and
acts under a written charter approved and adopted by the Board on April 15,
2003. The Audit Committee reviews its Charter on an annual basis. Each of the
members is independent as defined by Nasdaq's listing standards and as required
by the Sarbanes-Oxley Act. After a full review and analysis, the Board
positively reaffirmed that each member is independent within the meaning of Rule
4200(a)(14) of the listing standards of the Nasdaq and the rules and regulations
of the SEC, as such requirements are defined as of the mailing date of this
proxy statement. The Board annually reviews the Nasdaq listing standards'
definition of independence for audit committee members and makes an annual
determination of the independence of Audit Committee members.

On January 18, 2005, the Company notified Nasdaq that, due to one vacancy
on the Audit Committee that resulted from the resignation of Robert B. Page as a
member, the Company failed to comply with the audit committee composition
requirements under Marketplace Rule 4350(d)(2)(A), and would be relying on the
cure period provided under Marketplace Rule 4350(d)(4). As previously
disclosed, Mr. Page resigned in connection with and effective as of his
appointment on January 4, 2004 as the Acting Chief Executive Officer of the
Company.

On January 18, 2005, the Company received notice from Nasdaq that,
consistent with Marketplace Rule 4350(d)(4), the Company would be provided a
cure period until the earlier of the Company's next annual shareholders meeting
or January 4, 2006 in order to regain compliance with the audit committee
requirements and that the Company would be included in a list of non-compliant
Nasdaq companies at www.nasdaq.com on or after January 25, 2005. Following the
election of directors at the 2004 Annual Meeting, the Board appointed Mr.
Phillips, Mr. Harkey and Mr. Page to the Audit Committee to regain compliance
with Nasdaq audit committee requirements. The Company believes that each of
these individuals is independent within the meaning of Rule 4200(a)(14) of the
Nasdaq listing standards and the rules and regulations of the SEC.

The Board of Directors has determined that at least one member of the Audit
Committee, Mr. Phillips, is an "audit committee financial expert," as defined by
SEC rules and regulations. This designation results from a disclosure
requirement of the SEC related to Mr. Phillips' experience and understanding
with respect to certain accounting and auditing matters. The SEC believes this
designation does not impose upon Mr. Phillips any duty, obligation or liability
that is greater than is generally imposed on him as a member of the Audit
Committee and the Board, and that his designation as an audit committee
financial expert pursuant to this SEC requirement does not affect the duty,
obligation or liability of any other member of the Audit Committee or the Board.
For an overview of Mr. Phillips' relevant experience, see the section entitled
"Continuing Directors" above.

The Audit Committee reviewed and discussed the Company's audited financial
statements with management. It also discussed with BDO Seidman, LLP the matters
required to be discussed by Statement on Auditing Standards No. 61,
"Communications with Audit Committees", as amended by Statement on Auditing
Standards No. 90. In addition, BDO Seidman, LLP also provided to the Audit
Committee the written disclosures and the letter required by Independence
Standards Board Standard No. 1, "Independence Discussions with Audit
Committees," and the Committee discussed with BDO Seidman, LLP that firm's
independence.

The Audit Committee is responsible for recommending to the Board that the
Company's financial statements be included in the Company's annual report.
Management is responsible for the preparation, presentation, and integrity of
the Company's financial statements, accounting and financial reporting
principles, internal controls and procedures designed to ensure compliance with
accounting standards, applicable laws, and regulations. The Company's
independent auditor, BDO Seidman, LLP, is responsible for performing an
independent audit of the consolidated financial statements and expressing an
opinion on the conformity of those financial statements to generally accepted
accounting principles.

Based on the discussions with BDO Seidman, LLP concerning the audit, the
financial statement review, and other such matters deemed relevant and
appropriate by the Audit Committee, the Audit Committee recommended to the Board
that the audited financial statements be included in the Company's 2005 Annual
Report on Form 10-K for the fiscal year ended June 26, 2005, for filing with the
Securities and Exchange Commission.

In accordance with the rules of the SEC, the foregoing information, which
is required by paragraphs (a) and (b) of Regulation S-K Item 306, shall not be
deemed to be "soliciting material", or to be "filed" with the SEC or subject to
the SEC's Regulation 14A, other than as provided in that Item, or to the
liabilities of Section 18 of the Securities Exchange Act of 1934, as amended,
except to the extent that the Company specifically requests that the information
be treated as soliciting material or specifically incorporates it by reference
into a document filed under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended.

Submitted by the Audit Committee: Ramon D. Phillips, Chairman
John D. Harkey, Jr.
Robert B. Page


PROPOSAL TWO:

RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS

The Audit Committee has selected BDO Seidman, LLP, independent registered
accounting firm, as the independent auditors of the Company for fiscal year
2006. BDO Seidman, LLP has been the Company's independent registered accounting
firm since fiscal year 2004. As a matter of good corporate governance the Audit
Committee has determined to submit its selection to shareholders for
ratification. In the event that this selection of auditors is not ratified by a
majority of the shares of Common Stock present or represented at the Annual
Meeting, the Audit Committee will review its future selection of auditors. Even
if the selection is ratified, the Audit Committee in its discretion may select a
different registered public accounting firm at any time during the year if it
determines that such a change would be in the best interests of the Company and
our shareholders.

For fiscal 2004, the Audit Committee selected BDO Seidman, LLP to replace
PricewaterhouseCoopers, LLP, which was the Company's independent auditor for the
fiscal year ending June 29, 2003. The decision to change accountants was made by
vote of the Audit Committee, and the dismissal of PricewaterhouseCoopers, LLP
became effective on October 8, 2003. During fiscal years 2002 and 2003, there
were no disagreements between the Company's senior management and
PricewaterhouseCoopers, LLP's senior audit personnel on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure such that would have caused PricewaterhouseCoopers, LLP to have made
reference to the subject matter of such disagreements in connection with its
audit report. The Company does not anticipate that a representative of
PricewaterhouseCoopers LLP will be present at the Annual Meeting, nor does it
anticipate that any such representative will be available to make a statement or
to answer questions.

A representative of BDO Seidman, LLP is expected to be present at the
Annual Meeting, to be available to respond to appropriate questions and to have
an opportunity to make a statement.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE
SELECTION OF BDO SEIDMAN, LLP AS THE COMPANY'S INDEPENDENT REGISTERED ACCOUNTING
FIRM FOR FISCAL YEAR 2006.

FEES PAID TO INDEPENDENT AUDITORS

The following table shows the fees the Company paid or accrued for audit
and other services provided by PricewaterhouseCoopers, LLP in fiscal 2004 and
2005 and BDO Seidman, LLP in fiscal 2004 and 2005.

PRICEWATERHOUSECOOPERS BDO SEIDMAN
2004 2005 2004 2005
- --------------------------------------------------------------------------------
Audit Fees -- -- $74,718 $82,980
Audit-Related Fees 12,500 6,500 3,050 21,350
Tax Fees 9,300 -- 950 7,575
All Other Fees -- -- -- --
----------------------------------------------------
Total $21,800 $6,500 $78,718 $ 111,905



Audit Fees. This category represents aggregate fees billed by BDO Seidman,
LLP for professional services rendered for the audit of the Company's annual
financial statements for the years ended June 27, 2004 and June 26, 2005,
respectively, and the reviews of the financial statements included in the
Company's Forms 10-Q for those years.

Audit-Related Fees. These fees consist of assurance and related services
that are reasonably related to the performance of the audit or review of the
Company's financial statements. This category includes fees related to the
performance of audits and attest services not required by statute or
regulations, audits of the Company's benefits plans and accounting consultations
regarding the application of generally accepted accounting principles to
proposed transactions. Fees paid to PricewaterhouseCoopers, LLP in fiscal 2005
were for providing consents for the use of the firm's reports relating to fiscal
year 2003 financial statements in the Company's Forms 10-K and 11-K. Fees paid
to PricewaterhouseCoopers, LLP in fiscal 2004 also include services related to
the transfer of audit-related materials from PricewaterhouseCoopers, LLP to BDO
Seidman, LLP.

Tax Fees. These fees consist of fees billed by PricewaterhouseCoopers LLP
for fiscal year 2004 for tax return preparation and foreign tax analysis, and
for a change in tax accounting method, and fees billed by BDO Seidman, LLP for
tax services during fiscal years 2004 and 2005.

All Other Fees. No fees falling within this category were paid to
PricewaterhouseCoopers, LLP or BDO Seidman, LLP during fiscal years 2004 and
2005.

In considering and authorizing these payments to the independent auditors
for services unrelated to performance of the audit of the Company's financial
statements, the Committee has determined that all such services undertaken by
the independent auditors are not inconsistent with the independent auditor's
performance of the audit and financial statement review functions and are
compatible with maintaining the independent auditor's independence.

Policy of the Audit Committee for Pre-Approval of Audit and Permissible
Non-Audit Services of the Independent Auditor

The Audit Committee is responsible for appointing, setting compensation
for, and overseeing the work of, the independent auditor. In accordance with
Audit Committee policy and the requirements of law, all services to be provided
by PricewaterhouseCoopers, LLP and BDO Seidman, LLP are pre-approved by the
Audit Committee. Pre-approval applies to audit services, audit-related
services, tax services and other services. In some cases, pre-approval is
provided by the full Audit Committee for up to a year, and relates to a
particular defined task or scope of work and is subject to a specific budget.
In other cases, the Chairman of the Audit Committee has the delegated authority
from the Audit Committee to pre-approve additional services, and such
pre-approvals are then communicated to the full Audit Committee. In fiscal
2005, 100% of all audit services and non-audit services performed by BDO
Seidman, LLP were pre-authorized by the Audit Committee.

SUMMARY COMPENSATION TABLE

The following table sets forth the annual compensation of the Chief
Executive Officer and the other four most highly compensated executive officers
of the Company for the fiscal years ended June 26, 2005, June 27, 2004 and June
29, 2003 (designated as years 2005, 2004 and 2003, respectively).




LONG-TERM
ANNUAL COMPENSATION COMPENSATION AWARDS
------------------- --------------------
SECURITIES UNDER-
NAME OTHER ANNUAL LYING OPTIONS
(AND PRINCIPAL POSITION) YEAR SALARY BONUS COMPENSATION (B) (# OF SHARES)
- ----------------------- ------ ------- ------- ------------ --------------
Ronald W. Parker (a) 2005 $266,539 $ 68,750 $ 45,198 --
(President and Chief 2004 550,000 275,000 176,084 --
Executive Officer) 2003 537,755 275,000 179,910 --

Rod J. McDonald (c) 2005 6,635 -- -- --
(Acting Chief Executive 2004 -- -- -- --
Officer) 2003 -- -- -- --

Robert B. Page (d) 2005 48,077 -- -- --
(Acting Chief Executive 2004 -- -- -- --
Officer) 2003 -- -- -- --

Timothy P. Taft (e) 2005 1 -- -- 500,000
(President and Chief 2004 -- -- -- --
Executive Officer) 2003 -- -- -- --

B. Keith Clark (f) 2005 6,635 -- 2,981 --
(Senior Vice President, 2004 195,000 26,500 5,961 --
Secretary and General 2003 186,035 53,325 2,993 --
Counsel)

Ward T. Olgreen 2005 168,000 33,600 6,731 --
(Senior Vice President 2004 168,000 33,600 7,539 --
of Franchise Operations 2003 160,904 34,700 3,769 --
and Concept Development)

Shawn M. Preator 2005 150,000 30,000 5,961 --
(Chief Financial Officer 2004 150,000 30,000 5,961 --
2003 139,650 42,750 3,042 --

Danny K. Meisenheimer 2005 136,102 15,000 -- --
(Vice President of 2004 136,102 27,000 -- --
Marketing) 2003(g) 65,244 13,000 -- --


(a) Mr. Parker was President and Chief Executive Officer of the Company
until December 13, 2004. Figures shown for fiscal 2005 are through December 13,
2004, Mr. Parker's last date of employment.

(b) Includes for Mr. Parker, a payment of $37,500 for life and disability
insurance benefits, secondary medical benefits and supplemental retirement
benefits and payments of $150,000 and $165,266 for such benefits in 2004 and
2003, respectively.

(c) Mr. McDonald, Secretary and General Counsel of the Company, served as
Acting Chief Executive Officer in December 2004 and January 2005. Compensation
figures are for the period during which Mr. McDonald served as Acting Chief
Executive Officer.

(d) Mr. Page, one of the Company's non-employee directors, served as Acting
Chief Executive Officer from January 2005 through March 2005. Compensation
figures are for the period during which Mr. Page served as Acting Chief
Executive Officer.

(e) Mr. Taft was named President and Chief Executive Officer of the Company
on March 31, 2005. Mr. Taft's Employment Agreement with the Company, dated March
31, 2005, provides for a net salary of $1.00 for the first 12 months and for a
bonus in the first 12 months to be set by the Board. As of the end of fiscal
year 2005 no bonus payment had been made. He was granted options to purchase
500,000 shares of the Company's common stock pursuant to a Non-Qualified Stock
Option Agreement dated March 31, 2005. See "Executive Employment Contracts" and
"Equity Compensation Plan Information" below for more detail.

(f) Mr. Clark was Senior Vice President, Secretary and General Counsel of
the Company until July 7, 2004. Figures shown for fiscal 2005 are through July
7, 2004, Mr. Clark's last date of employment.

(g) Includes compensation for Mr. Meisenheimer from his employment date of
December 31, 2002.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information regarding stock options
exercised during fiscal year 2005 and unexercised stock options held at the end
of fiscal year 2005 by the Chief Executive Officer and the other four most
highly compensated executive officers of the Company. The closing bid price for
the Company's Common Stock, as reported by the National Association of
Securities Dealers Automated Quotation System, was $---2.75 on June 24, 2005,
the last trading day of the Company's fiscal year.

VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR END FISCAL YEAR
ACQUIRED ON (EXERCISABLE/ END (EXERCISABLE/
NAME EXERCISE (#) VALUE REALIZED UNEXERCISABLE)(#)UNEXERCISABLE)
--------- ------------- ------------- ---------------- --------------

Ronald W. Parker (a) -- -- -- (e) --
-- (u) --

Rod J. McDonald (b) -- -- 19,000 (e) $ 1,250
-- (u) --

Robert B. Page (c) -- -- -- (e) --
-- (u) --

Timothy P. Taft (d) -- -- 50,000 (e) $ 12,500
450,000 (u) $112,500

B. Keith Clark (e) 30,000 $22,800 -- (e) --
-- (u) --

Ward T. Olgreen -- -- 52,000 (e) $ 15,000
-- (u) --

Shawn M. Preator -- -- 41,000 (e) $ 15,000
-- (u) --

Danny K. Meisenheimer -- -- -- (e) --
-- (u) --

(e) Denotes exercisable options.
(u) Denotes unexercisable options.

(a) Mr. Parker was President and Chief Executive Officer of the Company until
December 13, 2004.
(b) Mr. McDonald, Secretary and General Counsel of the Company, served as Acting
Chief Executive Officer in December 2004 and January 2005.
(c) Mr. Page, one of the Company's non-employee directors, served as Acting
Chief Executive Officer from January 2005 through March 2005.
(d) Mr. Taft was appointed President and Chief Executive Officer of the
Company on March 31, 2005.
(e) Mr. Clark was Senior Vice President, Secretary and General Counsel of the
Company until July 7, 2004.





[This space intentionally left blank]







OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information regarding stock options granted
during fiscal year 2005, pursuant to the Company's 2005 Employee Stock Option
Award Plan or by individual non-plan option grants, to the Chief Executive
Officer and the other four most highly compensated executive officers of the
Company.



INDIVIDUAL GRANTS

POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
% OF TOTAL OPTIONS STOCK PRICE
OPTIONS GRANTED TO EXERCISE APPRECIATION FOR
EMPLOYEES IN PRICE EXPIRATION OPTION TERM
GRANTED # FISCAL YEAR ($/SHARE) DATE 5% 10%
--------- ------------- --------- ------ ---- ----
Ronald W. Parker (a) -- -- -- -- -- --

Rod J. McDonald (b) -- -- -- -- -- --

Robert B. Page (c ) -- -- -- -- -- --

Timothy P. Taft (d) 500,000 100% $2.50 03/31/15 $786,118 $1,992,178

B. Keith Clark (e) -- -- -- -- -- --

Ward T. Olgreen -- -- -- -- -- --

Shawn M. Preator -- -- -- -- -- --

Danny K. Meisenheimer -- -- -- -- -- --

(a) Mr. Parker was President and Chief Executive Officer of the Company
until December 13, 2004.

(b) Mr. McDonald, Secretary and General Counsel of the Company, served as Acting
Chief Executive Officer in December 2004 and January 2005.

(c) Mr. Page, one of the Company's non-employee directors, served as Acting
Chief Executive Officer from January 2005 through March 2005.

(d) Options granted pursuant to a Nonqualified Stock Option Agreement
entered into between Mr. Taft and the Company on March 31, 2005. See "Executive
Employment Contracts" and "Equity Compensation Plan Information" below.

(e) Mr. Clark was Senior Vice President, Secretary and General Counsel of
the Company until July 7, 2004.

EQUITY COMPENSATION PLAN INFORMATION

The following table sets forth information as of June 26, 2005 regarding
the Company's equity compensation plans.