UNIQUE CASUAL RESTAURANTS, INC.
One Corporate Place
55 Ferncroft Road
Danvers, Massachusetts
(978) 774-6606
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On December 9, 1997
The Annual Meeting of Stockholders of Unique Casual Restaurants, Inc.
(the "Company") will be held at the Tara Hotel, 50 Ferncroft Road, Danvers,
Massachusetts on Tuesday, December 9, 1997, at 10:00 a.m., local time, for the
following purposes:
1. To elect two Class I Directors of the Company; and
2. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Only stockholders of record at the close of business on November 5,
1997 are entitled to notice of, and to vote at, the meeting or any adjournment
thereof.
We hope you will be represented at the meeting by signing and returning
the enclosed proxy card in the accompanying envelope as promptly as possible,
whether or not you expect to be present in person. The vote of every stockholder
is important and the Board of Directors of the Company appreciates the
cooperation of stockholders in promptly returning proxies in order to help limit
expenses incidental to proxy solicitation.
By Order of the Board of Directors
CHARLES W. REDEPENNING, JR.
Secretary
Danvers, Massachusetts
November 7, 1997
<PAGE>
UNIQUE CASUAL RESTAURANTS, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
December 9, 1997
The enclosed proxy is solicited by the Board of Directors of Unique
Casual Restaurants, Inc., a Delaware corporation (the "Company), from the
holders of shares of the Company's common stock, par value $.01 per share
("Common Stock"), to be voted at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held at the Tara Hotel, 50 Ferncroft Road, Danvers,
Massachusetts on Tuesday, December 9, 1997 at 10:00 a.m., local time, and at any
adjournment thereof. This Proxy Statement and the enclosed Form of Proxy will be
mailed to the Company's stockholders on or about November 10, 1997.
The Company's principal executive office is located at One Corporate
Place, 55 Ferncroft Road, Danvers, Massachusetts 01923-4001. The Company's
telephone number at its principal executive office is (978) 774-6606.
The Company was formed in May 1997 in connection with a series of
transactions effected by the Company's former holding company, DAKA
International, Inc.("DAKA"), whereby (a) DAKA distributed to its shareholders
all of the shares of capital stock of the Company to accomplish the spin-off of
DAKA's restaurant businesses, consisting of the Fuddruckers and Champps
Americana restaurant chains, DAKA's Specialty Concepts segment, including The
Great Bagel & Coffee Company, and certain other assets and liabilities of DAKA,
and (b) DAKA's foodservice business was sold to a U.S. subsidiary of Compass
Group PLC through a tender offer for all outstanding shares of capital stock of
DAKA and a subsequent merger. The transactions described in clauses (a) and (b)
are collectively referred to herein as the "Spin-Off Transaction" and are
described in detail in the Company's registration statement on Form 10, as
amended, filed with the Securities and Exchange Commission under the Securities
Exchange Act of 1934 (the "Form 10"). Definitive binding agreements with respect
to the Spin-Off Transaction were signed on May 27, 1997 and the Spin-Off
Transaction was completed on July 17, 1997. Although the Spin-Off Transaction
was not completed until after the end of DAKA's fiscal year ended June 29, 1997,
unless otherwise noted for purposes of this Proxy Statement it is assumed that
the Company was in existence as stated above in the form in which it emerged
from the Spin-Off Transaction throughout the fiscal year ended June 29, 1997.
However, insofar as the Company is in most respects the successor to DAKA, in
compliance with applicable law and the regulations of the Securities and
Exchange Commission, this proxy statement discloses a variety of one-time events
and transactions which either relate to the business of DAKA during the fiscal
year ended June 29, 1997 or are a direct consequence of the Spin-Off
Transaction, such as the payment of severance to officers of DAKA whose
employment was terminated upon the completion of the Spin-Off Transaction and
the roll-over of outstanding employee stock options to acquire shares of common
stock of DAKA into options to acquire shares of Common Stock.
Disclosures in this Proxy Statement with respect to the compensation
paid to directors and executive officers of the Company include compensation
paid to them during the fiscal year ended June 29, 1997 and, if applicable,
during prior periods by DAKA.
VOTING AND PROXIES
Only holders of shares of Common Stock of record at the close of
business on November 5, 1997 are entitled to notice of and to vote at the Annual
Meeting or any adjournments thereof. On such date, the Company had outstanding
11,503,070 shares of Common Stock, each of which is entitled to one vote on
each matter submitted to a vote of stockholders.
Pursuant to the Company's By-laws, the presence, in person or by proxy,
of at least a majority of the total number of outstanding shares of capital
stock of the Company issued and outstanding and entitled to vote is necessary to
constitute a quorum for the transaction of business at the Company's Annual
Meeting. Abstentions, votes withheld with respect to director nominees and
"broker non-votes" (i.e. shares represented at the Annual Meeting held by
brokers or nominees with respect to which instructions have not been received
from beneficial owners or persons entitled to vote such shares and with respect
to which the broker or nominee does not have discretionary voting power to vote
such shares) shall be treated as shares that are present and entitled to vote
for purposes of determining whether a quorum is present. With respect to the
election of directors, the Company's By-laws provide that such election shall be
determined by a plurality of the votes of the shares present in person or
represented by proxy at the meeting and entitled to vote on the election of
directors.
The Board of Directors recommends that all stockholders vote FOR the
election to the Board of Directors of the nominees named in this proxy
statement. Properly executed proxies will be voted in accordance with the
directions indicated thereon. If no direction is indicated thereon, the shares
will be voted: (1) FOR the election to the Board of Directors of the nominees
named in this proxy statement; and (2) in the discretion of the persons named as
proxies, upon such other matters as may properly come before the Annual Meeting.
<PAGE>
Any stockholder giving a proxy has the power to revoke such proxy at
any time before it is voted by appearing and voting in person at the Annual
Meeting, by delivering a later-dated proxy, or by delivering to the Secretary of
the Company a written revocation of such proxy prior to the exercise of such
proxy.
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table sets forth certain information, as of October 20,
1997, with respect to each person known by the Company to be the beneficial
owner of more than 5% of any class of the voting stock of the Company, each
director of the Company, executive officers included in the Summary Compensation
Table below, and all directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Common Stock
------------
Amount and
Nature of
Name and Address of Beneficial Percent
Beneficial Owner Ownership(1) Of Class
- ---------------- ------------ --------
<S> <C> <C>
William H. Baumhauer.............................................. 224,973(2) 2.0%
Allen R. Maxwell.................................................. 399,231(3) 3.5
Dean P. Vlahos.................................................... 401,000 3.5
E.L. Cox.......................................................... 8,968(4) *
Erline Belton..................................................... 4,380(5) *
Alan D. Schwartz.................................................. 8,880(6) *
Joseph W. O'Donnell............................................... 3,780(7) *
David G. Parker................................................... ___ *
Earl Benson....................................................... ___ *
K.C. Moylan....................................................... 3,440 *
Timothy R. Barakett(8)............................................ 966,100(9) 8.4
Douglas A. Hirsch(10)............................................. 719,800(11) 6.3
Barrow, Hanley, Mewhinney & Strauss, Inc.(12)..................... 579,600(13) 5.0
All directors and executive
officers as a group (10) persons................................ 1,081,871(14) 9.2%
</TABLE>
- -------------------
* Less than 1%
(1) Beneficial share ownership is determined pursuant to Rule 13d-3 promulgated
under the Securities Exchange Act of 1934, as amended. Accordingly, a
beneficial owner of a security includes any person who, directly or
indirectly, through any contract, arrangement, understanding, relationship
or otherwise has or shares the power to vote such security or the power to
dispose of such security. The amounts set forth in the table as
beneficially owned include shares owned, if any, by spouses and relatives
living in the same home as to which beneficial ownership may be disclaimed.
The amounts set forth in the table as beneficially owned include shares of
Common Stock which directors and executive officers have the right to
acquire pursuant to previously granted options exercisable within 60 days
of October 20, 1997.
(2) Includes 187,000 shares of Common Stock issuable upon exercise of options.
(3) Includes 35,000 shares of Common Stock issuable upon exercise of options.
(4) Includes 7,000 shares of Common Stock issuable upon exercise of options.
(5) Includes 4,000 shares of Common Stock issuable upon exercise of options.
(6) Includes 8,500 shares of Common Stock issuable upon exercise of options.
(7) Includes 1,500 shares of Common Stock issuable upon exercise of options.
(8) The address of the beneficial owner is 590 Madison Avenue, 32nd Floor, New
York, NY 10022.
(9) This information is based on a Schedule 13D/A, dated July 11, 1997, filed
by Timothy R. Barakett with the Securities and Exchange Commission.
(10) The address of the beneficial owner is c/o Seneca Capital Advisors LLC, 830
Third Avenue, 14th Floor, New York, NY 10022.
(11) Includes 569,800 shares beneficially owned by Seneca Capital Advisors LLC
and Seneca Capital Investments, LLC, of which Mr. Hirsch is a controlling
person. Includes 150,000 shares with respect to which Mr. Hirsch disclaims
beneficial ownership. This information is based on a Schedule 13D, dated
June 23, 1997, filed by Seneca Capital Advisors LLC on behalf of Douglas
Hirsch with the Securities and Exchange Commission.
(12) The address of the beneficial owner is 3232 McKinney Avenue, 15th Floor,
Dallas, TX 75204-2429.
(13) This information is based on a Schedule 13G, dated February 13, 1997, filed
by Barrow, Hanley, Mewhinney and Strauss, Inc. with the Securities and
Exchange Commission.
(14) Includes 264,000 shares of Common Stock issuable upon exercise of options.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors consists of seven members. The seven directors
are divided into three classes, with the directors of each class elected to
three-year terms. One class stands for election at each annual meeting of the
Company's stockholders. Two Class I directors will be elected at the Annual
Meeting to hold office for three years or until their respective successors are
elected and qualified. Three Class II and two Class III directors who are
currently in office have one year and two years remaining in their respective
terms. Unless otherwise specified in the enclosed proxy, the persons named in
the enclosed proxy intend to vote the shares represented by each properly
executed proxy FOR the election of the nominees named below. The Board of
Directors has no reason to believe that either nominee will be unable to serve
if elected. In the event either nominee shall become unavailable for election,
the persons named in the enclosed proxy will vote such shares for the election
of such other person as the Board of Directors may recommend.
Nominees for Class I Directors
The Board of Directors has nominated the following persons for election
as Class I directors for terms expiring in 2000:
E.L. Cox
Allen R. Maxwell
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF MR. COX
AND MR. MAXWELL TO THE BOARD OF DIRECTORS.
For more detailed information regarding Mr. Cox and Mr. Maxwell, see
"Directors and Committees--Incumbent Directors."
DIRECTORS AND COMMITTEES
Incumbent Directors
The following table sets forth certain information regarding current
members of the Board of Directors:
<TABLE>
<CAPTION>
Principal Director Expiration
Name Age Occupation Since of Term Class
<S> <C> <C> <C> <C> <C>
E. L. Cox.......................... 70 Chairman of the Board and September 1988 1997* I
Chief Executive Officer of
the Michigan Accident
Fund, Retired
Allen R. Maxwell................... 58 President and Chief Operating September 1988 1997* I
Officer of Daka, Inc. and
Chartwells, a division of
Compass Group PLC
Erline Belton...................... 52 President and Chief December 1993 1998 II
Executive Officer of
The Lyceum Group
Joseph W. O'Donnell................ 55 Partner, Osgood, August 1996 1998 II
O'Donnell & Walsh
Dean P. Vlahos..................... 46 President and Chief February 1996 1998 II
Executive Officer, Champps
Entertainment, Inc.
William H. Baumhauer 49 Chairman, President and September 1988 1999 III
Chief Executive Officer of the
Company and President of
Fuddruckers, Inc.
Alan D. Schwartz 47 Senior Managing Director September 1988 1999 III
of Corporate Finance for
Bear, Stearns & Co., Inc.
</TABLE>
- ----------------
* Nominee for re-election at the Annual Meeting.
<PAGE>
The name, age and principal occupation during the past five years and
other information concerning each director are set forth below:
E. L. Cox, 70, has served as a director of the Company since May, 1997.
Prior to the Spin-Off Transaction, Mr. Cox served as a director of DAKA since
September 1988 and as a director of Fuddruckers, Inc. from June 1988 until
November 1988. Mr. Cox served as Chairman and Chief Executive Officer of the
Michigan Accident Fund from February 1990 until his retirement in August 1995.
Prior thereto Mr. Cox served as Chairman and Chief Executive Officer of Michigan
Mutual/Amerisure Companies and its affiliated insurance companies from May 1981
through January 1990. Mr. Cox is also a member of the Board of Directors of
Comerica, Inc., a publicly-traded financial institution, and a director of
various trade associations in the insurance industry.
Allen R. Maxwell, 58, has served as a director of the Company since
May, 1997. Prior to the Spin-Off Transaction, Mr. Maxwell served as President
and Chief Operating Officer of DAKA since November 1990 and as a director since
September 1988. Mr. Maxwell, one of the original founders of Daka, Inc., has
served as its President since November 1988. Mr. Maxwell also serves as
President and Chief Operating Officer of Chartwells, a division of Compass Group
PLC.
Erline Belton, 52, has served as a director of the Company since May,
1997. Prior to the Spin-Off Transaction, Ms. Belton served as a director of DAKA
since December 1993. She has served as President and Chief Executive Officer of
The Lyceum Group, a human resource consulting firm, since September 1992. She
served as Senior Vice President of Human Resource and Organizational Development
for Progressive Insurance Companies from April 1991 through September 1992. She
also served as International Human Relations Director, as well as several other
human resources positions, with Digital Equipment Corporation from 1978 through
April 1991. Ms. Belton serves on the Board of Directors of: The National
Leadership Coalition on AIDS; National Minority AIDS Coalition; Museum of
African American History.
Joseph W. O'Donnell, 55, has served as a director of the Company since
May, 1997. Prior to the Spin-Off Transaction, Mr. O'Donnell served as a director
of DAKA since August 1996. Mr. O'Donnell is a partner in the firm of Osgood,
O'Donnell & Walsh. Mr. O'Donnell has served as Chairman and Chief Executive
Officer of The J. Walter Thompson Company and Campbell-Mithun-Esty Advertising,
Inc.
Dean P. Vlahos, 46, has served as a director of the Company since May,
1997. Prior to the Spin-Off Transaction, Mr. Vlahos served as a director of DAKA
since February 1996. Mr. Vlahos was the founder, and has been President and
Chief Executive Officer of Champps Entertainment, Inc. since its inception in
October 1988.
William H. Baumhauer, 49, has served as Chairman of the Board,
President and Chief Executive Officer of the Company since May, 1997. Mr.
Baumhauer served as Chairman of the Board and Chief Executive Officer of DAKA
since November 1990 and as a director since September 1988. He served as
President and Chief Operating Officer of DAKA from September 1988 to November
1990. He has also served Fuddruckers, Inc. as Chairman of the Board since March
1985, President and Chief Executive Officer since January 1985 and as a director
since July 1983.
Alan D. Schwartz, 47, has served as a director of the Company since
May, 1997. Prior to the Spin-Off Transaction, Mr. Schwartz served as a director
of DAKA since September 1988 and as a director of Fuddruckers, Inc. from
September 1984 until November 1988. Mr. Schwartz is Senior Managing
Director--Corporate Finance of Bear, Stearns & Co., Inc., and a director of its
parent, The Bear Stearns Companies, Inc. He has been associated with such
investment banking firm for more than five years. Mr. Schwartz is also a
director of Protein Databases, Inc. and a member of the Board of Visitors of the
Fuqua School of Business at Duke University.
Meeting and Committees
The Board of Directors of the Company has an Audit Committee, a
Compensation Committee, an Executive Committee and a Nominating Committee.
During the fiscal year ended June 29, 1997, the Board of Directors held nine
meetings, the Audit Committee held one meeting, and the Compensation Committee
held one meeting. The Nominating Committee does not meet separately and its
business is conducted at meetings of the full Board of Directors. Each director
attended 75% or more of the aggregate of (a) the total number of meetings of the
Board of Directors during fiscal year 1997, and (b) the total number of meetings
held by all committees of the Board of Directors on which such director served
during fiscal year 1997.
The Audit Committee has the responsibility of selecting the Company's
independent auditors and communicating with the Company's independent auditors
on matters of auditing and accounting. The Audit Committee is currently composed
of Ms. Belton and Messrs. Cox, O'Donnell and Schwartz.
<PAGE>
The Compensation Committee has the responsibility of reviewing on an
annual basis all officer and employee compensation. The Compensation Committee
is currently composed of Ms. Belton and Messrs. Cox, O'Donnell and Schwartz. The
Compensation Committee also acts as the Stock Option Committee, and has the
responsibility of administering the Company's 1997 Stock Option and Incentive
Plan and the 1997 Stock Purchase Plan (collectively, the "Stock Option Plans").
Directors' Compensation
In fiscal year 1997, non-employee Directors received a quarterly
retainer of $3,000 and a fee of $1,000 per meeting attended, plus travel
expenses. In connection with their agreement to serve on the Board of Directors
of the Company following the Spin-Off Transaction, each non-employee director
received in connection with the Spin-Off Transaction an option to purchase 2,500
shares of Common Stock at an exercise price equal to the fair market value of
the Common Stock as of the date of grant.
EXECUTIVE COMPENSATION
Insofar as historical information on the executive compensation of the
Company's officers as such is not available, the following tables provide
information as to compensation paid by DAKA and its subsidiaries prior to the
Spin-Off Transaction during each of the three previous fiscal years ending with
the fiscal year ended June 29, 1997 to the Chief Executive Officer and the four
other most highly compensated executive officers whose total salary and bonus
for fiscal year 1997 exceeded $100,000. In addition, compensation information is
provided with respect to one person whose employment terminated during the
fiscal year.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Awards
Name and Compensation Other Annual Options/ All Other
Principal Position Year Salary Bonus Compensation SARs(1) Compensation
------------------ ---- ------ ----- ------------ --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
William H. Baumhauer......... 1997 $449,869
Chairman and ........... 1996 369,558 $200,000 265,014(2)
Chief Executive Officer. 1995 325,000 230,000
Dean P. Vlahos............... 1997 348,009
President and Chief..... 1996 264,500
Executive Officer....... 1995 236,000
Champps Entertainment, Inc.
Allen R. Maxwell(3).......... 1997 270,211
President and Chief..... 1996 254,527 50,000 $60,000(4) 30,000(5)
Operating Officer....... 1995 248,850 50,000 60,000(4) 5,000
K.C. Moylan(6)............... 1997 163,130 50,000
Chief Operating Officer, 1996 51, 923 21,000(7)
Champps Entertainment, Inc. 1995
David G. Parker.............. 1997 182,033
Senior Vice President... 1996 172,160 25,000 18,000(5)
and Chief Administrative 1995 171,500 30,000 1,500
Officer
- -----------------
Earl Benson(8)............... 1997 59,333 125,000(9)
Chief Financial......... 1996 61,538
Officer................. 1995
</TABLE>
- -----------------
(1) Represents the number of options to acquire Common Stock granted during the
fiscal year.
(2) Represents amounts earned under Mr. Baumhauer's long term incentive plan,
which vested during fiscal 1997. In connection with the Spin-Off
Transaction, the Company's Board of Directors determined to pay amounts due
to Mr. Baumhauer pursuant to his long term incentive plan through the
issuance of Common Stock of the Company rather than in cash. On July 23,
1997 the Company issued to Mr. Baumhauer 37,973 shares of Common Stock,
having a value of $265,014 based on the average closing price of the
Company's Common Stock during the period of July 21 through July 23, 1997.
(3) As of the completion of the Spin-Off Transaction, Mr. Maxwell continued to
be a director of the Company, but was no longer an officer of the Company.
(4) In lieu of the receipt of senior executive stock options in fiscal 1992 in
connection with the recapitalization of DAKA, DAKA provided to Mr. Maxwell
an annuity for which DAKA paid to an insurance company $60,000 per year for
five years, which payments commenced in fiscal year 1992 and ended in
fiscal year 1996.
<PAGE>
(5) Granted on August 1, 1995 pursuant to a long-term incentive plan for
management pursuant to which the options will vest 100% on August 1, 1998.
As issued, such options were options to purchase DAKA common stock and had
an exercise price equal to $24.00 per share (the fair market price of DAKA
common stock as of the date of grant) with respect to one third of the
options granted, $25.80 per share with respect to another one third of the
options granted and $27.60 per share with respect to the remaining one
third of the options granted. As converted pursuant to the terms of the
Spin-Off Transaction, such options became options to purchase Common Stock
of the Company and have an exercise price equal to $11.57 per share with
respect to one third of the options granted, $12.44 per share with respect
to another one third of the options granted and $13.30 per share with
respect to the remaining one third of the options granted.
(6) Mr. Moylan became an employee of the Company in February, 1996.
(7) Granted on February 19, 1996 pursuant to a long term incentive plan for
management pursuant to which the options will vest 100% on February 19,
1999. As issued, such options were options to purchase DAKA common stock
and had an exercise price equal to $22.63 per share (the fair market price
of DAKA common stock as of the date of grant) with respect to one third of
the options granted, $24.32 per share with respect to another one third of
the options granted and $26.02 per share with respect to the remaining one
third of the options granted. As converted pursuant to the terms of the
Spin-Off Transaction, such options became options to purchase Common Stock
of the Company and have an exercise price equal to $10.91 per share with
respect to one third of the options granted, $11.72 per share with respect
to another one third of the options granted and $12.54 per share with
respect to the remaining one third of the options granted.
(8) Mr. Benson became an employee of the Company on April 2, 1996. As of
October 29, 1996, Mr. Benson was no longer an employee of the Company.
(9) Represents severance payments. Does not include $205,083 of relocation
expenses reimbursed by the Company.
Option Grants in Fiscal 1997
<TABLE>
<CAPTION>
Potential Realizable
Values at Assumed
% of Annual Rates of Stock
Total Options Price Appreciation
Granted to Exercise for Option Term
Options Employees in Price Expiration (10 Years)
Name Granted Fiscal Year Per Share Date 5% ($) 10% ($)
---- ------- --------------- --------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
(1) (1) (1) (1) (1) (1)
</TABLE>
- -----------------------
(1) There were no options granted in fiscal year 1997 to any of the named
executive officers (as defined in Item 402 of Regulation S-K).
Aggregate Option Exercises in Fiscal 1997
and Year-End Option Values
<TABLE>
<CAPTION>
Value of Outstanding
Shares Number of Beneficial In-the-Money Options
Acquired Value Options at Fiscal Year-End(1) at Fiscal Year-End(1)
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William H. Baumhauer (2) (2) 187,000 0 $2,051,520 $ 0
Dean P. Vlahos (2) (2) 0 0 0 0
Allen R. Maxwell (2) (2) 35,000 30,000 389,750 21,100
K.C. Moylan (2) (2) 0 21,000 0 28,070
David G. Parker (2) (2) 32,500 18,000 338,745 12,660
Earl Benson (2) (2) 0 0 0 0
</TABLE>
- --------------
(1) In connection with the Spin-Off Transaction, each outstanding option to
purchase DAKA stock was split into an option to purchase DAKA stock and an
option to purchase Common Stock of the Company, as more fully described in
the Form 10.
(2) There were no options exercised in fiscal year 1997 by any of the named
executive officers (as defined in Item 402 of Regulation S-K).
<PAGE>
Long-Term Incentive Plan--Award in Fiscal 1997
<TABLE>
<CAPTION>
Performance
Number of or Other
Shares, Units Period Until Estimated Future Payouts Under
or Other Maturation Non Stock-Price-Based Plans
Name Rights or Payout Threshold Target Maximum
---- ------ --------- --------- ------ -------
<S> <C> <C> <C> <C> <C>
William H. Baumhauer......... (1) June 30, 1997 (1) (1) (1)
</TABLE>
- -------------
(1) The long-term incentive plan implemented by DAKA's Board of Directors on
July 3, 1994 for the Chief Executive Officer was designed to provide an
incentive payment, payable at DAKA's option in the form of either cash or
stock, equal to 2% of the increase in the market value of DAKA, as
determined by the average 30 day trading price of DAKA Common Stock ("DAKA
Common Stock") and the weighted average number of shares outstanding, from
July 3, 1994 to June 30, 1997 in excess of 15% of the market value at June
30, 1994. As of June 30, 1997, Mr. Baumhauer's vested award under the plan
amounted to 2% of the excess (if any) of (A) the market value of DAKA as of
June 30, 1997 (determined based on the average aggregate trading price of
the outstanding shares of DAKA Common Stock during the period beginning
June 1, 1997 and ending June 30, 1997) over (B) $137,776,000. To take into
account the impact of the Spin-Off Transaction on the operation of the
plan, the Board of Directors resolved to treat Mr. Baumhauer's vested award
as the equivalent of an option to acquire 228,260 shares of common stock of
DAKA at a price of $12.07 per share. Upon the consummation of the Spin-Off
Transaction such deemed option was canceled through the issuance to Mr.
Baumhauer of 37,973 shares of the Company's Common Stock, having a value of
$265,014 based on the average closing price of the Common Stock during the
three trading days immediately following the completion of the Spin-Off
Transaction.
Employment Agreements
THE BAUMHAUER EMPLOYMENT AGREEMENT. DAKA entered into an employment
agreement (the "Baumhauer Employment Agreement") with William H. Baumhauer which
commenced on January 1, 1997 and provided for an initial term of three (3)
years. After the Spin-Off Transaction, the Company assumed the Baumhauer
Employment Agreement under the same terms and conditions and DAKA was released
therefrom. The date of the agreement, however, was amended to be June 30, 1997.
The Baumhauer Employment Agreement provides for automatic renewal each year so
that the residual term of such agreement is never less than three years. Under
the agreement, Mr. Baumhauer receives an annual base salary of $450,500, subject
to adjustment at the discretion of the Board. The Baumhauer Employment Agreement
further provides that in the event the Company terminates the executive's
employment without "cause" (as defined therein) or the executive terminates his
employment for "good reason" (as defined therein), the Company shall pay the
executive an amount equal to the executive's cash compensation for three years.
"Good reason" is defined in each agreement as (i) an assignment to the executive
of duties other than those contemplated by the agreement, or a limitation on the
powers of the executive not contemplated by the agreement, (ii) the removal of
the executive from or failure to elect the executive to his named position, or
(iii) a reduction in the executive's rate of compensation or level of fringe
benefits. "Cause" is defined in each agreement as the executive's (i) theft from
or fraud on the Company, (ii) conviction of a felony or crime of moral
turpitude, (iii) willful violation of the terms of the agreement, (iv) conscious
disregard or neglect of his duties, or (v) willful and demonstrated
unwillingness to perform his duties under the agreement.
THE VLAHOS EMPLOYMENT AGREEMENT. DAKA, Champps and Dean Vlahos were
parties to a five-year employment agreement for Mr. Vlahos (the "Vlahos
Employment Agreement") which commenced on February 21, 1996. Following the
Spin-Off Transaction, the Company succeeded DAKA as the guarantor of Champps'
obligations under the Vlahos Employment Agreement under substantially the same
terms and conditions. Under such agreement, Mr. Vlahos provides full-time
services to Champps in the capacity of Chief Executive Officer and President and
has the authority to control the operations of Champps so long as the average
gross revenues per square foot of the Champps-owned restaurants is at least
$400. During the period of Mr. Vlahos' full-time employment, Champps will pay
Mr. Vlahos an initial base salary of $350,000 plus a bonus of 50% of his base
salary if he attains certain targets established by the Board, which amount may
be increased to up to 100% of his base salary if he exceeds such performance
targets by margins determined by the Board. Twenty percent (20%) of the
potential bonus payments for Mr. Vlahos were related to performance targets
established for DAKA as a whole (prior to the Spin-Off Transaction) and eighty
percent (80%) were related to performance targets established for Champps.
Following the Spin-Off Transaction and the assumption of the Vlahos Employment
Agreement, 20% of the potential bonus payments for Mr. Vlahos will relate to the
Company as a whole and 80% will relate to performance targets established for
Champps. If Mr. Vlahos leaves for "good reason," or is terminated by the Company
without "cause," during the term of his employment contract, the Company will be
obligated to pay Mr. Vlahos his remaining salary and bonus as severance.
<PAGE>
"Good reason" is defined in such agreement as (i) an assignment to Mr. Vlahos of
duties other than those contemplated by the agreement, or a limitation on the
powers of Mr. Vlahos not contemplated by the agreement, (ii) the removal of Mr.
Vlahos from or failure to elect Mr. Vlahos to his named position, or (iii) a
reduction in Mr. Vlahos' rate of compensation or level of fringe benefits.
"Cause" is defined in the agreement as Mr. Vlahos' (i) theft from or fraud on
the Company, (ii) conviction of a felony, (iii) violation of the terms of the
agreement, (iv) conscious disregard or neglect of his duties, or (v)
demonstrated unwillingness to perform his duties under the agreement. In the
event that Mr. Vlahos' employment is terminated for any reason other than by the
Company for cause, Mr. Vlahos will be provided the right, subject to certain
obligations to the Company, to establish a franchise for up to five Champps
Americana restaurants anywhere in the world, but no such restaurant may be
within a 20 mile radius of any other Champps restaurant, or in any territory
that has been franchised or licensed by Champps.
THE MAXWELL EMPLOYMENT AGREEMENT. Allen R. Maxwell entered into an
employment agreement (the "Maxwell Employment Agreement") with DAKA which
commenced on January 1, 1997. As required by Compass Group PLC as a condition of
the Spin-Off Transaction, Mr. Maxwell released DAKA from such employment
agreement. In consideration of such release, the Company has agreed to pay Mr.
Maxwell an aggregate of $500,000 over three years commencing January 1, 1998.
Effective as of the completion of the Spin-Off Transaction, Mr. Maxwell entered
into a new employment agreement with DAKA on terms negotiated directly with
Compass Group PLC.
Indemnification Agreements
The Company has entered into Indemnification Agreements with certain of
the executive officers of the Company and members of the Board who are not
officers of the Company (the "Indemnitees"), pursuant to which the Company has
agreed to advance expenses and indemnify such Indemnitees against certain
liabilities incurred in connection with their services as executive officers
and/or directors of the Company and in connection with their services as
executive officers and/or directors of DAKA prior to the completion of the
Spin-Off Transaction. In the event of a proceeding brought against an Indemnitee
by or in the right of DAKA or the Company, such Indemnitee shall not be entitled
to indemnification if such Indemnitee is adjudged to be liable to DAKA or the
Company, as the case may be, or if applicable law prohibits such
indemnification; provided, however, that, if applicable law so permits,
indemnification shall nevertheless be made by the Company in such event if, and
only to the extent that, the Court of Chancery of the State of Delaware, or
another court in which such proceeding shall have been brought or is pending,
shall determine.
Under the terms of each Indemnification Agreement, the Company shall
advance all reasonable expenses incurred by or on behalf of such Indemnitee in
connection with any proceeding in which such Indemnitee is involved by reason of
Indemnitee's service to the Company or by reason of Indemnitee's service to DAKA
prior to the completion of the Spin-Off Transaction. Such statement shall
include, among other things, an undertaking by or on behalf of such Indemnitee
to repay any expenses so advanced if it shall be ultimately determined that such
Indemnitee is not entitled to indemnification for such expenses.
Compensation Committee Report
The Compensation Committee reviews and approves compensation levels for
the Company's executive officers and oversees and administers the Company's
executive compensation programs. All members of the Compensation Committee,
listed at the end of this report, are outside directors who are not eligible to
participate in the compensation programs that the Compensation Committee
oversees except for non-discretionary option grants. See "--Directors'
Compensation."
PHILOSOPHY. The Compensation Committee believes that the interests of
the Company's stockholders are best served when compensation is directly aligned
with the Company's financial performance. Therefore, the Compensation Committee
has approved overall compensation programs which award a competitive base
salary, and then encourage exceptional performance through meaningful incentive
awards, both short and long term, which are tied to the Company's performance.
<PAGE>
RESPONSIBILITIES. The responsibilities of the Compensation Committee
include:
o developing compensation programs that are consistent with and
are linked to the Company's strategy;
o assessing the performance of and determining an appropriate
compensation package for the Chief Executive Officer; and
o ensuring that compensation for the other executive officers
reflects individual, team, and the Company's performance
appropriately.
PURPOSE. The Company's executive compensation programs are designed to:
o attract, retain, and motivate key executive officers;
o link the interests of executive officers with stockholders by
encouraging stock ownership;
o support the Company's goal of providing superior value to its
stockholders and customers; and
o provide appropriate incentives for executive officers, based
on achieving key operating and organizational goals.
The Compensation Committee believes that the Company's executive
compensation policies should be reviewed during the first quarter of the fiscal
year when the financial results of the prior fiscal year become available. The
policies should be reviewed in light of their consistency with the Company's
financial performance, its business plan and its position within the restaurant
industry, as well as the compensation policies of similar companies in the
restaurant business. The compensation of individual executives is reviewed
annually by the Compensation Committee in light of its executive compensation
policies for that year.
In setting and reviewing compensation for the executive officers, the
Compensation Committee considers a number of different factors designed to
assure that compensation levels are properly aligned with the Company's business
strategy, corporate culture and operating performance. Among the factors
considered are the following:
COMPARABILITY -- The Compensation Committee considers the
compensation packages of similarly situated executives at companies
deemed comparable to the Company. The objective is to maintain
competitiveness in the marketplace in order to attract and retain the
highest quality executives. This is a principal factor in setting base
levels of compensation.
PAY FOR PERFORMANCE -- The Compensation Committee believes
that compensation should in part be directly linked to operating
performance. To achieve this link with regard to short-term
performance, the Compensation Committee relies on cash bonuses which
are determined on the basis of certain objective criteria and
recommendations of the Chief Executive Officer.
EQUITY OWNERSHIP -- The Compensation Committee believes that
equity-based, long-term compensation aligns executives' long-range
interests with those of the stockholders. These long-term incentive
programs are reflected in the Company's stock option plans. The
Compensation Committee believes that significant stock ownership is a
major incentive in building stockholder value and reviews grants of
options with that goal in mind.
QUALITATIVE FACTORS -- The Compensation Committee believes
that in addition to corporate performance and specific business unit
performance, in setting and reviewing executive compensation it is
appropriate to consider the personal contributions that a particular
individual may make to the overall success of the Company. Such
qualitative factors as leadership skills, planning initiatives and
employee development have been deemed to be important qualitative
factors to take into account in considering levels of compensation.
<PAGE>
ANNUAL CASH COMPENSATION. Annual cash compensation for the executive
officers consists of a base salary and a variable, at-risk incentive bonus under
the Company's Management Annual Incentive Plan.
It is the Company's general policy to pay competitive base compensation
to its executive officers. The Compensation Committee annually reviews and, if
appropriate, adjusts executive officers' base salaries. In making individual
base salary recommendations, the Compensation Committee considers the
executive's experience, management and leadership ability and technical skills,
his or her compensation history, as well as the performance of the Company as a
whole and, where applicable, the performance of specific business units.
Under the Management Annual Incentive Plan, each executive is assigned
a target incentive award. This incentive award, or some portion thereof, is
"earned" through a combination of four factors: the Company's performance,
business unit performance, attainment of predetermined individual goals, and the
level of personal/leadership impact. This evaluation process is not strictly
quantitative, but is largely based on qualitative judgments made by the Chief
Executive Officer related to individual, team, and the Company's performance.
Under DAKA's CEO Long Term Incentive Plan Mr. Baumhauer was eligible to
earn a percentage of an increase in DAKA's value, as measured by stock
appreciation above a predetermined rate of return, over a specified three-year
period. The amount due under the CEO Long Term Incentive Plan vested at the end
of fiscal 1997. The Compensation Committee determined that, as a result of the
Spin-Off Transaction, the Company would pay the amounts due under the under the
CEO Long Term Incentive Plan through the issuance of Company stock.
CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Baumhauer is employed by the
Company pursuant to an employment contract. He participates in the compensation
programs as outlined above. Mr. Baumhauer's total compensation for fiscal year
1997 reflects the Compensation Committee's view of his performance and
leadership in increasing shareholder value through the Spin-Off Transaction and
related restructuring, as well as the Compensation Committee's goal of
maintaining his compensation at a level competitive with that of chief
executives of companies comparable to the Company. Mr. Baumhauer was not awarded
an annual incentive award, compared to an annual incentive award of $200,000 for
the prior year.
COMPENSATION OF OTHER OFFICERS. The Company's executive compensation
program for other executive officers is described above, although the corporate
business unit and individual performance goals and the relative weighting of the
quantitative performance factors described above varies, depending upon the
responsibilities of particular officers.
Erline Belton
E.L. Cox
Joseph W. O'Donnell
Alan D. Schwartz
CERTAIN TRANSACTIONS
Joseph W. O'Donnell, a director of the Company, is a principal in
Osgood, O'Donnell & Walsh, which provides marketing consulting services to the
Company. During fiscal year 1997, the Company paid Osgood, O'Donnell & Walsh
$63,231 for such services and related expenses. Mr. O'Donnell also owns a 16.66%
interest in PulseBack, Inc. ("PulseBack"), a company in which the Company owns a
50% interest. PulseBack provides customer satisfaction measurement services to
the Company. During fiscal 1997, the Company paid PulseBack $196,912 for such
services.
Bear Stearns acted as financial advisor to DAKA in connection with the
Spin-Off Transaction and will receive a fee which the Company estimates to be
approximately $1.8 million for such services. In the past Bear Stearns and its
affiliates have provided financial advisory and financing services to DAKA and
has received fees for rendering such services. Alan D. Schwartz is Senior
Managing Director - Corporate Finance of Bear Stearns and a director of the
Company.
<PAGE>
PERFORMANCE GRAPH
The Company's Common Stock was not traded on a public market during any
part of fiscal year 1997. Accordingly, the performance graph is omitted.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who own more than 10% of a
registered class of the Company's equity securities to file reports of ownership
and changes in ownership with the Securities and Exchange Commission and to
furnish copies to the Company.
Based upon a review of the reports furnished to the Company and
representations made to the Company by its officers and directors, the Company
believes that, during fiscal year 1997, its officers, directors and 10%
beneficial owners complied with all applicable reporting requirements.
AUDITORS
The Board of Directors has selected the firm of Deloitte & Touche LLP
as auditors of the Company for fiscal year 1997. Representatives of Deloitte &
Touche LLP are expected to be present at the Annual Meeting and will have an
opportunity to make a statement if they desire to do so, and they will be
available to respond to appropriate questions.
EXPENSE OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In
addition, the Company will reimburse its transfer agent for charges and expenses
in connection with the distribution of proxy materials to brokers or other
persons holding stock in their names or in the names of their nominees and for
charges and expenses in forwarding proxies and proxy materials to the beneficial
owners. Solicitations may further be made by officers and regular employees of
the Company, without additional compensation, by use of the mails, personal
interview, telephone or telegraph.
STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal for inclusion in the
Company's proxy statement in connection with its 1998 annual meeting of
stockholders must submit the proposal so as to be received by the Secretary of
the Company at the principal executive offices of the Company located at One
Corporate Place, 55 Ferncroft Road, Danvers, Massachusetts 01923-4001, not later
than July 10, 1998. In addition, in order to be included in the proxy statement,
such a proposal must comply with the requirements as to form and substance
established by applicable laws and regulations.
OTHER MATTERS
The Board of Directors is not aware of any other matter to be presented
for action at the Annual Meeting; however, if any other matter is properly
presented it is the intention of the persons named in the enclosed form of proxy
to vote in accordance with their judgment on such matter.
THIS PROXY STATEMENT IS ACCOMPANIED BY THE COMPANY'S ANNUAL REPORT TO
STOCKHOLDERS FOR FISCAL YEAR 1997. ADDITIONAL INFORMATION IS CONTAINED IN THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JUNE 29, 1997,
INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO. THE COMPANY WILL
FURNISH WITHOUT CHARGE TO ANY STOCKHOLDER A COPY OF ITS ANNUAL REPORT ON FORM
10-K UPON WRITTEN REQUEST TO: INVESTOR RELATIONS, UNIQUE CASUAL RESTAURANTS,
INC., ONE CORPORATE PLACE, 55 FERNCROFT ROAD, DANVERS, MASSACHUSETTS 01923-4001.
CHARLES W. REDEPENNING, JR.
Secretary
November 7, 1997
