UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Check One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [NO FEE REQUIRED] ---
For The Fiscal Year Ended June 28, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ___ to ___
Commission File Number: 0-22639
UNIQUE CASUAL RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3370491
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
One Corporate Place, 55 Ferncroft Road, Danvers, MA 01923
(Address of principal executive offices) (Zip Code)
978-774-6606
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days. YES X NO
The aggregate market value of the voting stock held by non-affiliates of the
registrant based on the closing price of the Common Stock of the registrant as
quoted on the National Association of Securities Dealers Automated Quotation
System on October 2, 1998 was $38,366,754 (for purposes of calculating this
amount only, directors, officers and beneficial owners of 10% or more of the
Common Stock of the registrant may be deemed affiliates).
Number of shares of Common Stock, $.01 par value, outstanding at October 2,
1998: 11,605,659
<PAGE>
Explanatory Note
This Amendment to Form 10-K is being filed solely to amend Items 10, 11, 12 and
13 of the Registrant's Form 10-K for the fiscal year ended June 28, 1998 and to
file additional exhibits thereto.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
Directors of the Registrant
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>
E. L. Cox.......................... 71 Chairman of the Board and September 1988 2000 I
Insurance Commissioner
for the State of Michigan
Erline Belton...................... 53 President and Chief December 1993 1998 II
Executive Officer of
The Lyceum Group
Joseph W. O'Donnell................ 56 Partner, Osgood, August 1996 1998 II
O'Donnell & Walsh
Donald C. Moore.................... 44 Chief Executive Officer July 1998 1999 III
and Chief Financial Officer
of the Company
Alan D. Schwartz................... 48 Senior Managing Director September 1988 1999 III
of Corporate Finance for
Bear, Stearns & Co., Inc.
</TABLE>
The name, age and principal occupation during the past five years and other
information concerning each non-employee director are set forth below:
E. L. Cox, 71, 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. As of May of 1998 Mr. Cox is the Insurance Commissioner for the
State of Michigan. Prior thereto he worked as a private insurance consultant
from August of 1996 until May of 1998, after serving as President and Chief
Executive Officer of the Michigan Accident Fund from February 1991 until August
1996. Prior thereto Mr. Cox served as Chairman and Chief Executive Officer of
Michigan Mutual/Amerisure Companies and its affiliated insurance companies from
May 1979 through January 1991. 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.
Erline Belton, 54, 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, 56, 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.
<PAGE>
Alan D. Schwartz, 48, 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 a director of Young & Rubicam, Inc.
and a member of the Board of Visitors of the Fuqua School of Business at Duke
University.
Executive Officers of the Registrant
Certain information is set forth below concerning the executive officers of the
Company, each of whom has been elected to serve until the regular meeting of the
Board of Directors and until his successor is duly elected and qualified. The
executive officers of the Company are as follows:
Name Age Position
- ---- --- --------
Donald C. Moore 44 Director, Chief Executive Officer,
Chief Financial Officer and
Treasurer
Donna L. Depoian 38 Vice President, General
Counsel and Secretary
Donald C. Moore has served as Chief Executive Officer and a Director of the
Company since July 1998. He has served as Executive Vice President and Chief
Financial Officer and Treasurer of the Company since June 1998 and was Senior
Vice President and Chief Financial Officer and Treasurer from May 1997. He
served as Senior Vice President and Chief Financial Officer and Treasurer of
DAKA International from January 1997 to May 1997. From November 1995 through
October 1996 he served as Senior Vice President and Chief Financial Officer for
Al Copeland Investments, a multi-business, privately held corporation. From
August 1990 until August 1995 he served principally as Senior Vice President
and Chief Financial Officer of Rally's Hamburgers, Inc., a publicly held
multi-unit quick service hamburger operator and franchiser. Mr. Moore is also a
director of Restaurant Consulting Services, Inc. and La Salsa Holding Co.
Donna L. Depoian has served as Secretary, Vice President and General
Counsel of the Company since May 1998. She served as Assistant Secretary and
Acting General Counsel from February 1998 to May 1998 and as Assistant Secretary
and Corporate Counsel since July 1997. Ms. Depoian also served as Assistant
Secretary and Corporate Counsel for DAKA International, Inc. since April 1994.
From May 1989 to April 1994, she practiced as an attorney for Bass & Doherty,
P.C., a Boston law firm concentrating in business and commercial real estate.
From February 1988 to April 1989 she practiced as an attorney for Rossman,
Rossman and Eschelbacher, a Boston based law firm.
Item 11. Executive Compensation.
Insofar as historical information on the executive compensation of the
Company's officers as such is not available prior to fiscal year 1998, the
following tables provide information as to compensation paid by DAKA and its
subsidiaries prior to the Spin-Off Transaction during each of the two 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
<PAGE>
whose total salary and bonus for fiscal year 1998 exceeded $100,000. In
addition, compensation information is provided with respect to two persons 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(2) 1998 $450,500 $250,000 (3)
Former Chairman and 1997 449,869 $265,014(4)
Chief Executive Officer 1996 369,558 $200,000
Donald C. Moore(5) 1998 $187,981 $ 80,000 35,000
Chief Executive Officer and 1997 70,673 30,000 $ 40,820(6)
Chief Financial Officer 1996
K.C. Moylan(7) 1998 $200,000 $ 80,000 $ 31,000(8) 50,000
President and Chief 1997 163,130 50,000
Executive Officer, 1996 51,923 21,000(9)
Champps Entertainment, Inc.
Richard B. Wolf 1998 $150,000 $ 17,500 $ 28,600(8) 25,000
Senior Vice President and 1997 150,000
Chief Operating Officer 1996 147,500 10,000
Richard K. Hendrie 1998 $145,000 $ 13,500 $ 25,000(8) 25,000
Senior Vice President 1997 145,000
of Marketing 1996 142,000 10,000
- -----------------
Dean P. Vlahos(10) 1998 $224,815 (11)
Former President and 1997 348,009
Chief Executive Officer 1996 264,500
Champps Entertainment, Inc.
Allen R. Maxwell(12) 1998 $ 78,076 $ 40,800(8)
President and Chief 1997 270,211
Operating Office, 1996 254,527 $ 50,000 $ 60,000(13) 30,000(14)
DAKA International, Inc.
</TABLE>
- -----------------
(1) Represents the number of options to acquire Common Stock granted during the
fiscal year.
(2) As of July 1998, Mr. Baumhauer was no longer an employee of the Company.
(3) Mr. Baumhauer's severance arrangements are described under "Certain
Relationships and Related Transactions."
(4) 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.
(5) Mr. Moore was appointed Chief Executive Officer of the Company in July
1998.
<PAGE>
(6) Represents reimbursed relocation expenses.
(7) Mr. Moylan was appointed President and Chief Executive Officer of Champps
in February 1998.
(8) Represents amounts paid in connection with the re-purchase of stock
options.
(9) 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.
(10) As of February 1998, Mr. Vlahos was no longer employed by the Company.
(11) Mr. Vlahos' severance arrangements are described under "Certain
Relationships and Related Transactions."
(12) As of the completion of the Spin-off Transaction in July 1997, Mr. Maxwell
was no longer employed by the Company but continued to be a Director of
the Company. Mr. Maxwell died in January 1998.
(13) 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.
(14) Granted on August 1, 1995 pursuant to a long-term incentive plan for
management pursuant to which the options vested 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 $13.30 per share with
respect to the remaining one third of the options granted.
Option Grants in Fiscal 1998
<TABLE>
<CAPTION>
Potential Realizable
Values at Assumed
% of Annual Rates of Stock
Total Options Price Appreciation
Granted to Exercise for Option Term
Options Employees in Price Expiration ----------------------
Name Granted Fiscal Year Per Share Date 5% ($) 10% ($)
---- ------- --------------- --------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
William H. Baumhauer 250,000(1) 44% $6.31 06/30/99 $ 78,875 $157,750
Donald C. Moore 35,000(2) 6% 6.31 08/06/07 138,891 351,978
K.C. Moylan 50,000(1) 9% 6.31 08/06/07 198,415 502,825
Richard B. Wolf 25,000(1) 4% 6.31 08/06/07 99,208 251,413
Richard K. Hendrie 25,000(1) 4% 6.31 08/06/07 99,208 251,413
</TABLE>
(1) Such options vest as to 25%, 25% and 50% of the amount of the grant on each
of the first, second and third anniversaries of the date of grant,
respectively, and under their existing terms will vest in full upon the
consummation of the Proposed Fuddruckers Transaction.
(2) Such options vest in full on the third anniversary of the date of grant and
under their existing terms will vest in full upon the consummation of the
Proposed Fuddruckers Transaction.
<PAGE>
Aggregate Option Exercises in Fiscal 1998
and Year-End Option Values
<TABLE>
<CAPTION>
Value of Outstanding
Number of Beneficial In-the-Money Options
Shares Options at Fiscal Year-End at Fiscal Year-End
Acquired Value -------------------------- ------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
N/A N/A N/A N/A N/A N/A N/A
</TABLE>
There were no options exercised in fiscal year 1998 by any of the named
executive officers (as defined in Item 402 of Regulation S-K).
Long-Term Incentive Plan--Award in Fiscal 1998
<TABLE>
<CAPTION>
Performance
Number of or Other Estimated Future Payouts Under
Shares, Units Period Until Non Stock-Price-Based Plans
or Other Maturation ---------------------------
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
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 DAKA common stock 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.
Directors' Compensation
In fiscal year 1998, 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. In addition, Messrs. Cox and Schwartz and
Ms. Belton each received $2,400 in connection with the re-purchase of stock
options.
Employment Agreement
The Moore Employment Agreement: On August 12, 1998, the Company entered
into an employment agreement with Donald C. Moore to serve the Company as chief
executive officer and chief financial officer. The agreement provides for an
initial term of one (1) year and for automatic renewal each year so that the
<PAGE>
residual term of such agreement is never less than one year. Under the
agreement, Mr. Moore receives an annual base salary of $250,000, subject to
adjustment at the discretion of the Board of Directors. The agreement further
provides that, in the event the Company terminates Mr. Moore's employment
without "cause" (as defined below) or Mr. Moore terminates his employment for
"good reason" (as defined below), the Company shall pay Mr. Moore an amount
equal to Mr. Moore's cash compensation for two years. "Good reason" is defined
in the agreement as (i) an assignment to Mr. Moore of duties other than those
contemplated by the agreement, or a limitation on the powers of Mr. Moore not
contemplated by the agreement, (ii) the removal of Mr. Moore from or failure to
elect Mr. Moore to his named position, including the position of chief executive
officer, or (iii) a reduction in Mr. Moore's rate of compensation or level of
fringe benefits. "Cause" is defined in the agreement as Mr. Moore'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 Proposed
Fuddruckers Transaction itself will not trigger any of Mr. Moore's rights or
termination benefits under his employment agreement.
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
<PAGE>
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 Interlocks
Alan D. Schwartz, a director of the Company who is also a member of the
Compensation Committee, is Senior Managing Director-Corporate Finance of Bear
Stearns. Bear Stearns acted as financial advisor to DAKA in connection with the
Spin-Off Transaction and earned a fee of approximately $1.8 million for such
services, which remains payable. In the past Bear Stearns and its affiliates
have provided financial advisory and financing services to DAKA and have
received fees for rendering such services. In addition, Bear Stearns is
presently acting as advisor to the Company in connection with evaluating and
seeking financial and strategic alternatives, including a possible sale of the
Company.
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.
Responsibilities: The responsibilities of the Compensation Committee
include:
- developing compensation programs that are consistent with and are
linked to the Company's strategy;
- assessing the performance of and determining an appropriate
compensation package for the Chief Executive Officer; and
- 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:
- attract, retain, and motivate key executive officers;
- link the interests of executive officers with stockholders by
encouraging stock ownership;
- support the Company's goal of providing superior value to its
stockholders and customers; and
- provide appropriate incentives for executive officers, based on
achieving key operating and organizational goals.
<PAGE>
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.
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.
<PAGE>
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 year 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 Common Stock.
Chief Executive Officer Compensation: Mr. Moore, the Company's current
Chief Executive Officer, was determined by the Board of Directors to be the
logical choice to serve as the Company's acting Chief Executive Officer upon the
departure of Mr. Baumhauer. Upon the appointment of Mr. Moore as Chief Executive
Officer, Mr. Moore's salary was adjusted commensurate with his new
responsibilities. Mr. Moore is serving as Chief Executive Officer pursuant to an
employment contract that includes severance provisions intended to create and
incentive for Mr. Moore to continue to serve as Chief Executive Officer while
the Company resolves issues concerning its strategic direction. Mr. Moore
participates in the compensation programs as outlined above. Mr. Baumhauer, who
served as the Company's Chief Executive Officer during fiscal year 1998, was
employed by the Company pursuant to an employment contract. He participated in
the compensation programs as outlined above.
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
Alan D. Schwartz
Performance Graph
[GRAPH]
07/15/97 06/26/98
-------- --------
Unique Casual Restaurants, Inc. $100.00 $91.96
Peer Group $100.00 $64.55
Russell 2000 Index $100.00 $119.44
The companies included in the peer group are: Rare Hospitality
International, Inc.; Planet Hollywood International, Inc.; Avado Brands, Inc.;
The Cheesecake Factory; Dave and Buster's, Inc.; Landry's Seafood Restaurants,
Inc.; Rainforest Cafe, Inc.; and Logan's Roadhouse, Inc. The returns of each
issuer in the foregoing group have been weighted according to the respective
company's stock market capitalizations as of the beginning of the period.
The Common Stock prices shown are neither indicative nor determinative of
future stock price performance.
The Company's Common Stock was not publicly traded prior to July 15, 1997.
Accordingly, stock performance data is not presented for periods prior to that
date.
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth the number of shares of Common Stock
beneficially owned as of October 13, 1998 by the chief executive officer, the
four other most highly compensated executive officers, each director, all
directors and executive officers of the Company as a group, and 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.
<TABLE>
<CAPTION>
Amount and
Nature of
Beneficial Percent
Name and Address of Beneficial Owner Ownership(l) Of Class
- ------------------------------------ ------------ --------
<S> <C> <C>
Donald C. Moore(2)........................................ 100,617(3) *%
E.L. Cox(2)............................................... 14,880(4)
Erline Belton (2)......................................... 10,680(5)
Alan D. Schwartz(2)....................................... 14,880(6)
Joseph W. O'Donnell (2)................................... 7,500(7)
K.C. Moylan(2)............................................ 73,440(8)
Richard B. Wolf(2)........................................ 36,465(9)
Richard K. Hendrie(2)..................................... 25,000(10)
Donna L. Depoian(2)....................................... 21,969(11)
Timothy R. Barakett(12)................................... 1,908,506(13) 16.4
Douglas A. Hirsch(14)..................................... 719,800(15) 6.2
Franklin Resources, Inc.(16).............................. 1,114,500(17) 9.6
Barrow, Hanley, Mewhinney & Strauss, Inc.(18)............. 579,600(19) 5.0
Atticus Management, Ltd.(20).............................. 820,200(21) 7.1
Atticus International, Ltd. (22).......................... 820,200(23) 7.1
All directors and executive officers
as a group (9 persons).................................. 305,431(24) 2.6
</TABLE>
- -----------
* Less than 1%
(1) Beneficial share ownership is determined pursuant to Rule 13d-3 promulgated
under the Exchange Act. 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 13, 1998.
(2) The address of the beneficial owner is c/o Unique Casual Restaurants, Inc.,
One Corporate Place, 55 Ferncroft Road, Danvers, Massachusetts 01923.
(3) Includes 100,000 shares of Common Stock issuable upon the exercise of
options, 91,250 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
(4) Includes 14,500 shares of Common Stock issuable upon the exercise of
options, 6,875 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
(5) Includes 10,000 shares of Common Stock issuable upon the exercise of
options, 5,675 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
(6) Includes 14,500 shares of Common Stock issuable upon the exercise of
options, 5,375 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
(7) Includes 7,500 shares of Common Stock issuable upon the exercise of
options, 5,375 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
<PAGE>
(8) Includes 70,000 shares of Common Stock issuable upon the exercise of
options, 57,500 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
(9) Includes 32,500 shares of Common Stock issuable upon the exercise of
options, 18,750 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
(10) Includes 25,000 shares of Common Stock issuable upon the exercise of
options, 18,750 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
(11) Includes 21,300 shares of Common Stock issuable upon the exercise of
options, 20,000 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
(12) The address of the beneficial owner is c/o Atticus Capital, L.L.C., 590
Madison Avenue, 32nd Floor, New York, NY 10022.
(13) This information is based on a Schedule 13D/A, dated September 1, 1998,
filed by Timothy R. Barakett with the SEC. Mr. Barakett is the Managing
Member of Atticus Holdings, L.L.C., a Delaware limited liability company
that serves as the general partner of Atticus Partners, L.P. and Atticus
Qualified Partners, L.P., which beneficially own 276,906 and 479,950 shares
of Common Stock, respectively. Mr. Barakett is also the President of
Atticus Management, Ltd., an international business company organized under
the laws of the British Virgin Islands that serves as the manager of
Atticus International, Ltd., which beneficially owns 820,200 shares of
Common Stock. Mr. Barakett is also the Managing Member of Atticus Capital,
L.L.C, which has investment discretion with respect to certain managed
accounts (the "Managed Accounts"), which collectively beneficially own
331,450 shares of Common Stock. Mr. Barakett is therefore deemed to be the
beneficial owner of all shares of Common Stock owned by Atticus Partners,
L.P., Atticus Qualified Partners, L.P., Atticus International, Ltd. and the
Managed Accounts.
(14) The address of the beneficial owner is c/o Seneca Capital Advisors LLC, 830
Third Avenue, 14th Floor, New York, NY 10022.
(15) 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 SEC.
(16) The address of the beneficial owner is 777 Mariners Island Blvd., 6th
Floor, San Mateo, CA 94404.
(17) This information is based on a Schedule 13G, dated February 11, 1998, filed
by Franklin Resources, Inc. with the SEC.
(18) The address of the beneficial owner is 3232 McKinney Avenue, 15th Floor,
Dallas, TX 75204-2429.
(19) This information is based on a Schedule 13G, dated February 13, 1997, filed
by Barrow, Hanley, Mewhinney & Strauss, Inc. with the SEC.
(20) The address of the beneficial owner is c/o Atticus Capital, L.L.C., 590
Madison Avenue, 32nd Floor, New York, NY 10022
(21) This information is based on a Schedule 13D/A, dated September 1, 1998,
filed by Atticus Management, Ltd. with the SEC. Mr. Barakett is the
Managing Member of Atticus Holdings, L.L.C., a Delaware limited liability
company that serves as the general partner of Atticus Partners, L.P. and
Atticus Qualified Partners, L.P., which beneficially own 276,906 and
479,950 shares of Common Stock, respectively. Mr. Barakett is also the
President of Atticus Management, Ltd., an international business company
organized under the laws of the British Virgin Islands that serves as the
manager of Atticus International, Ltd., which beneficially owns 820,200
shares of Common Stock. Mr. Barakett is also the Managing Member of Atticus
Capital, L.L.C, which has investment discretion with respect to the Managed
Accounts, which collectively beneficially own 331,450 shares of Common
Stock. Mr. Barakett is therefore deemed to be the beneficial owner of all
shares of Common Stock owned by Atticus Partners, L.P., Atticus Qualified
Partners, L.P., Atticus International, Ltd. and the Managed Accounts.
(22) The address of the beneficial owner is c/o Atticus Capital, L.L.C., 590
Madison Avenue, 32nd Floor, New York, New York 10022.
<PAGE>
(23) This information is based on a Schedule 13D/A, dated September 1, 1998,
filed by Atticus International, Ltd. with the SEC. Mr. Barakett is the
Managing Member of Atticus Holdings, L.L.C., a Delaware limited liability
company that. serves as the general partner of Atticus Partners, L.P. and
Atticus Qualified Partners, L.P., which beneficially own 276,906 and
479,950 shares of Common Stock, respectively, Mr. Barakett is also the
President of Atticus Management, Ltd., an international business company
organized under the laws of the British Virgin Islands that serves as the
manager of Atticus International, Ltd., which beneficially owns 820,200
shares of Common Stock. Mr. Barakett is also the Managing Member of Atticus
Capital, L.L.C, which has investment discretion with respect to the Managed
Accounts, which collectively beneficially own 331,450 shares of Common
Stock. Mr. Barakett is therefore deemed to be the beneficial owner of all
shares of Common Stock owned by Atticus Partners, L.P., Atticus Qualified
Partners, L.P., Atticus International, Ltd. and the Managed Accounts.
(24) Includes 295,300 shares of Common Stock issuable upon the exercise of
options, 229,550 of which vest and are exercisable only upon the closing of
the Proposed Transaction.
Item 13. Certain Relationships and Related Transactions
William H. Baumhauer, the former chairman and chief executive officer of
the Company, was a party to an employment agreement with the Company. Under the
agreement, Mr. Baumhauer received an annual base salary of $450,500, subject to
adjustment at the discretion of the Board. The Baumhauer Employment Agreement
further provided that in the event the Company terminated Mr. Baumhauer's
employment without "cause" (as defined therein) or Mr. Baumhauer terminated his
employment for "good reason" (as defined therein), the Company would be required
to pay Mr. Baumhauer an amount equal to his cash compensation for three years.
"Good reason" was defined in the agreement as (i) an assignment to Mr. Baumhauer
of duties other than those contemplated by the agreement, or a limitation on his
powers not contemplated by the agreement, (ii) the removal of Mr. Baumhauer from
or failure to elect him to his named position, or (iii) a reduction in his rate
of compensation or level of fringe benefits. "Cause" is defined in each
agreement as Mr. Baumhauer'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 consummation of the Proposed Fuddruckers Transaction would have
given rise to "Good Reason" under Mr. Baumhauer's employment agreement such that
he would have become entitled to termination benefits equal to his base
compensation for a period of three years following a sale of Fuddruckers if he
resigned after the closing of the Proposed Fuddruckers Transaction. In
connection with Mr. Baumhauer's resignation in July 1998 to pursue other
opportunities, the Company's Board of Directors reached an agreement with Mr.
Baumhauer whereby, in consideration of Mr. Baumhauer's contribution to the
Fuddruckers business and his commitment to cooperate with the Company in
satisfying the various pre-closing covenants and conditions required by the
Stock Purchase Agreement, Mr. Baumhauer is entitled, if and when the Proposed
Fuddruckers Transaction is consummated, to (i) a cash payment in the amount of
$675,000 and (ii) immediate vesting of options to acquire 187,500 shares of the
Company's Common Stock at $6.31 per share which were not vested at the time of
Mr. Baumhauer's resignation, which options would then be exercisable until June
30, 1999 and terminate on that date unless exercised. In addition, the Board
approved a bonus for Mr. Baumhauer for his performance during fiscal 1998 and
resolved to make the payment of such bonus contingent on the closing of the
Proposed Fuddruckers Transaction.
Joseph W. O'Donnell, a director of the Company who is also a member of the
Compensation Committee, 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 $83,086 for such services and related
expenses. Mr. O'Donnell also owns a 66.2% interest in PulseBack, Inc.
("PulseBack"), a company in which the Company owns a 32.5% interest. PulseBack
provides customer satisfaction measurement services to the Company. During
fiscal 1998, the Company paid PulseBack $112,433 for such services.
<PAGE>
On February 2, 1998 the Company sold a Company-owned Champps restaurant in
Minnetonka, Minnesota to Dean P. Vlahos, a former Director of the Company and
the former President and Chief Executive officer of Champps for $2.9 million,
representing the fair value of the restaurant based upon an independent
appraisal. The purchase price was settled through a cash payment by Mr. Vlahos
of $1.5 million and the cancellation of Mr. Vlahos' employment contract. The
Company recognized a net gain of approximately $700,000 on this transaction. As
part of this transaction, the Company entered into a separation agreement with
Mr. Vlahos which grants Mr. Vlahos the right, subject to certain restrictions,
to develop up to six franchised Champps restaurants in the United States by
February 2, 2006. Under the separation agreement, Mr. Vlahos will not pay a
franchise fee with respect to such restaurants and will pay a continuing royalty
of 1.25% of gross sales.
Under Mr. Vlahos' employment contract, Mr. Vlahos provided full-time
services to Champps in the capacity of Chief Executive Officer and President and
had the authority to control the operations of Champps so long as the average
gross revenues per square foot of the Champps-owned restaurants was at least
$400. During the period of Mr. Vlahos' full-time employment, Champps paid Mr.
Vlahos an initial base salary of $350,000 plus a bonus of 50% of his base salary
if he attained certain targets established by the Board, which amount could be
increased to up to 100% of his base salary if he exceeded 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 related to the
Company as a whole and 80% related to performance targets established for
Champps. If Mr. Vlahos left the Company for "good reason," or was terminated by
the Company without "cause," during the term of his employment contract, the
Company would have been obligated to pay Mr. Vlahos his remaining salary and
bonus as severance. "Good reason" was 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" was 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 was terminated for any
reason other than by the Company for cause, Mr. Vlahos would have been 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 could be within a 20 mile radius of any other Champps
restaurant, or in any territory that was franchised or licensed by Champps.
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
The following are being filed as part of this Annual Report on Form 10-K.
A. Financial Statements:
*** Independent Auditors' Report
*** Consolidated Balance Sheets - June 28, 1998 and June 29, 1997
*** Consolidated Statements of Operations - Years ended June 28, 1998, June
29, 1997 and 1996.
*** Consolidated Statements of Cash Flows - Years ended June 28, 1998, June
29, 1997 and 1996.
*** Consolidated Statements of Changes in Stockholders' Equity - Years
ended June 28, 1998, June 29, 1997 and 1996.
*** Notes to Consolidated Financial Statements - Years ended June 28, 1998,
June 29, 1997 and 1996.
B. Financial Statement Schedules:
There are no Financial Statement Schedules required to be filed.
Information required by Article 12 of Regulation S-X with respect to
Valuation and Qualifying Accounts has been included in the Notes to the
Consolidated Financial Statements.
<PAGE>
C. Exhibits:
* 2.1 Agreement and Plan of Merger, dated as of May 27, 1997, by and among
Compass Interim, Inc. ("Compass Interim"), Compass Holdings, Inc.
("Purchaser"), Compass Group PLC ("Parent") and DAKA International,
Inc. ("DAKA International").
* 2.2 Reorganization Agreement dated as of May 27, 1997, by and among
DAKA International, Daka, Inc. ("Daka"), the Company, Parent and
Compass Holdings, together with certain exhibits thereto.
* 2.3 Agreement and Plan of Merger among Champps Entertainment, Inc.
("Champps"), DAKA and CEI Acquisition Corp., dated as of October 10,
1995, incorporated herein by reference to DAKA's Registration
Statement on Form S-4 (File No. 33-65425) ("1996 DAKA Form S-4").
** 2.4 Series D Convertible Preferred Stock and Warrant Purchase Agreement,
dated as of January 12, 1996, by and among La Salsa Holding Co. and
Casual Dining Ventures, Inc. Pursuant to Item 601(b)(2) of Regulation
S-K, the Schedules to the Series D Convertible Preferred Stock and
Warrant Purchase Agreement are omitted. The Company hereby undertakes
to furnish supplementally a copy of any omitted Schedule to the
Commission upon request.
** 2.5 Stock Purchase Agreement, dated as of March 18, 1996, by and among
Casual Dining Ventures, Inc., DAKA, Champps Development Group, Inc.,
Steven J. Wagenheim, Arthur E. Pew, III, PDS Financial Corporation,
Douglas B. Tenpas and certain other stockholders of Americana Dining
Corp. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to
the Stock Purchase Agreement are omitted. The Company hereby
undertakes to furnish supplementally a copy of any omitted Schedule
to the Commission upon request.
** 2.6 Asset Purchase Agreement, dated March 18, 1996, between Americana
Dining Corp., as Seller, and New Brighton Ventures, Inc., as Buyer.
Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to the
Asset Purchase Agreement are omitted. The Company hereby undertakes
to furnish supplementally a copy of any omitted Schedule to the
Commission upon request.
** 2.7 Stock Purchase Agreement, dated as of March 29, 1996, by and among
DAKA, The Great Bagel & Coffee Franchising Corp., GBC Credit Company,
Gemini Production Facility, Inc., The Great Bagel & Coffee Company,
Mark C. Gordon, Brian H. Loeb, Jason R. Olivier, Michael F. Zerbib,
Nicholas D. Zerbib, and Thierry E. Zerbib. Pursuant to Item 601(b)(2)
of Regulation S-K, the Schedules to the Stock Purchase Agreement are
omitted. The Company hereby undertakes to furnish supplementally a
copy of any omitted Schedule to the Commission upon request.
** 2.8 Stock Purchase Agreement, dated as of March 31, 1996, by and among
Casual Dining Ventures, Inc., DAKA and Edgebrook, Inc. Pursuant to
Item 601(b)(2) of Regulation S-K, the Schedules to the Stock Purchase
Agreement are omitted. The Company hereby undertakes to furnish
supplementally a copy of any omitted Schedule to the Commission upon
request.
* 3.1 Certificate of Incorporation of the Company.
* 3.2 By-laws of the Company
* 3.3 Form of Amended and Restated Certificate of Incorporation of the
Company.
<PAGE>
* 3.4 Form of Amended and Restated By-laws of the Company.
3.5 Certificate of Designations, Preferences and Rights of a Series of
Preferred Stock of the Company, dated January 30, 1998, incorporated
herein by reference to the Company's Current Report on Form 8-K filed
February 2, 1998.
4.2 Amended and Restated Shareholder Rights Agreement, dated as of
January 30, 1998, between the Company and American Stock Transfer and
Trust Company, as Rights Agent, incorporated herein by reference to
the Company's Current Report on Form 8-K filed February 2, 1998.
* 4.1 Specimen Stock Certificate for shares of the UCRI Common Stock.
* 10.1 Tax Allocation Agreement dated as of May 27, 1997, by and among DAKA,
the Company, and Parent.
* 10.2 Post-Closing Covenants Agreement, dated as of May 27, 1997, by and
among DAKA, Daka, Inc., the Company, Champps, Fuddruckers, Inc.,
Purchaser and Parent.
* 10.3 Stock Purchase Agreement, dated as of May 26, 1997, between DAKA,
Parent, Purchaser, First Chicago Equity Corporation, Cross Creek
Partners I and the other holders of Series A Preferred Stock of DAKA.
* 10.4 Form of the Company's 1997 Stock Option and Incentive Plan.
* 10.5 Form of the Company's 1997 Stock Purchase Plan.
* 10.6 Form of Indemnification Agreement, by and between the Company and
directors and officers of DAKA.
* 10.7 Employment Agreement, dated as of January 1, 1997, by and between
DAKA and William H. Baumhauer.
* 10.8 Employment Agreement, dated as of January 1, 1997, by and between
DAKA and Allen R. Maxwell.
* 10.9 Employment Agreement, dated as of February 21, 1996, by and among
Dean P. Vlahos, DAKA and Champps.
**10.10 Third Amended and Restated Registration Rights Agreement, dated
as of January 12, 1996, by and among La Salsa Holding Co., FMA High
Yield Income L.P., WSIS Flexible Income Partners L.P., WSIS High
Income L.P., Howdy S. Kabrins, La Salsa, Inc., Crown Associates III,
L.P., Crown-Glynn Associates, L.P., Nueberger & Berman as Trustee for
the Crown Trust, Theodore H. Ashford, Noro-Moseley Partners II, L.P.,
Seidler Salsa, L.P., Bankers Trust Company as Master Trustee for
Hughes Aircraft Retirement Plans, Charles A. Lynch, Sienna Limited
Partnership I, Sienna Limited Partnership II, Sienna Holdings, Inc.,
as Nominee, InterWest Partners IV, Donald Benjamin, Vicki Tanner,
Ronald D. Weinstock, Inc., Frank Holdraker, and Casual Dining
Ventures, Inc.
<PAGE>
**10.11 Fourth Amended and Restated Restricted Stock Agreement, dated as
of January 12, 1996, by and among La Salsa Holding Co., Howdy S.
Kabrins, La Salsa, Inc., InterWest Partners IV, Sienna Holding, Inc.,
Sienna Limited Partnership I, Charles A. Lynch, Theodore H. Ashford,
Crown Associates III, L.P., Crown-Glynn Associates, L.P., Nueberger &
Berman as Trustee for The Crown Trust, Noro-Moseley Partners II,
L.P., Seidler Salsa, L.P., Bankers Trust Company, as Master Trustee,
for Hughes Aircraft Retirement Plans, FMA High Yield Income L.P.,
WSIS Flexible Income Partners L.P., WSIS High Yield Income L.P.,
Sienna Limited Partnership II, Donald Benjamin, Vicki Tanner, Ronald
D. Weinstock, Inc., Frank Holdraker, and Casual Dining Ventures, Inc.
**10.12 La Salsa Holding Co. Warrant to Purchase Shares of Series D
Convertible Preferred Stock, dated as of January 12, 1996, issued to
Casual Dining Ventures, Inc. by La Salsa Holding Co.
**10.13 Severance, Non-Competition and Confidentiality Agreement, dated as
of March 18, 1996, between Steven J. Wagenheim and Americana Dining
Corp.
**10.14 La Salsa License Agreement, dated as of February 14, 1996, by and
between La Salsa Franchise, Inc. and La Salsa Holding Co.
***10.15 Separation Agreement, dated as of February 2, 1998, by and among Dean
P. Vlahos, the Company and Champps.
***10.16 Asset Purchase Agreement, dated as of February 2, 1998, by and
between Dean P. Vlahos and Champps.
***10.17 Champps Restaurant Development Agreement, dated as of February 2,
1998, by and between Dean P. Vlahos and Champps.
***10.18 Venturino Settlement Agreement, dated as of December, 1997, by and
among Rita Venturino, Cosmos Phillips and Matthew Minogue, et. al.
and DAKA International, Inc. and William H. Baumhauer.
***10.19 Stock Purchase Agreement, dated as of July 31, 1998, by and between
King Cannon, Inc. and Unique Casual. Restaurants, Inc.
***10.20 Employment Agreement, dated as of August 12, 1998, by and between
Unique Casual Restaurants, Inc. and Donald C. Moore.
10.21 Post-Closing Payments Agreement, dated as of January 21, 1998, by and
among DAKA International, Inc., Daka, Inc., Compass Group PCL, the
Company, Champps and Fuddruckers.
***21.1 Subsidiaries of the Company.
***23.1 Consent of Deloitte & Touche LLP
***24.1 Powers of Attorney.
* Incorporated herein by reference to the Company's Registration Statement
on Form 10 filed June 3, 1997, as amended.
** Incorporated herein by reference to the Annual Report on Form 10-K of DAKA
International for the year ended June 29, 1996.
*** Previously filed
D. Reports on Form 8-K
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
UNIQUE CASUAL RESTAURANTS, INC.
(Registrant)
By: /s/Donald C. Moore
-----------------------
Donald C. Moore
Director, Chief Executive Officer,
Chief Financial Officer and Treasurer
(Principal Executive, Financial and
Accounting Officer)
Date: October 26, 1998
Pursuant to the requirement of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant, and
in the capacities and on the date indicated.
Signature Title
E. L. Cox* Chairman of the Board
Joseph W. O'Donnell* Director
Erline Belton* Director
Alan D. Schwartz* Director
/s/Donald C. Moore Director, Chief Executive Officer,
- ------------------------ Chief Financial Officer and Treasurer
Donald C. Moore (Principal Executive, Financial and
Accounting Officer)
*By: /s/Donna L. Depoian Date: October 26, 1998
-----------------------
Donna L. Depoian
Attorney-In-Fact
Exhibit 10.21
POST-CLOSING PAYMENTS AGREEMENT
This POST-CLOSING PAYMENTS AGREEMENT (the "Agreement") is dated as of
January __, 1998 among DAKA INTERNATIONAL, INC., a Delaware corporation
("International"), DAKA, INC., a Massachusetts corporation ("Daka"), COMPASS
GROUP PLC, a public limited company incorporated in England and Wales
("Compass"), COMPASS HOLDINGS, INC., a Delaware corporation ("Compass
Holdings"), UNIQUE CASUAL RESTAURANTS, INC., a Delaware corporation ("UCRI"),
CHAMPPS ENTERTAINMENT, INC., a Minnesota corporation ("Champps"), and
FUDDRUCKERS, INC., a Texas corporation ("Fuddruckers").
RECITALS
WHEREAS, under the terms of an Agreement and Plan of Merger dated as of
May 27, 1997 (the "Merger Agreement"), by and among Compass, Compass Holdings,
Compass Interim, Inc. ("Compass Interim") and International, International
agreed to transfer its restaurant business to UCRI, and Compass Holdings agreed
to commence a tender offer for the shares of International and to thereafter
cause the merger of International into Compass Interim (the "Acquisition"); and
WHEREAS, as a part of the transactions described in the Merger
Agreement, the following agreements were entered into: (a) the Reorganization
Agreement, dated as of May 27, 1997, among International, Daka, UCRI, Compass
and Compass Holdings (the "Reorganization Agreement"), (b) the Tax Allocation
Agreement, dated as of May 27, 1997, among International, UCRI and Compass (the
"Tax Allocation Agreement"), (c) the Post-Closing Covenants Agreement, dated as
of May 27, 1997, among International, UCRI, Champps, Fuddruckers, Compass and
Compass Holdings (the "PCCA"), and (d) the Transition Agreement, dated as of
July 17, 1997, among UCRI, International and Compass (the "Transition
Agreement") (collectively, the "Ancillary Agreements"); and
WHEREAS, the Merger Agreement and Ancillary Agreements specify certain
actions to be taken following the effective date of the Acquisition, including
but not limited to certain payments and purchase price adjustments pursuant to
Articles IV and V, respectively, of the PCCA; and
WHEREAS, the parties to this Agreement have determined to set forth the
amount of such post-closing payments, the method of payment and certain other
post-closing matters;
NOW, THEREFORE, in consideration of the premises, and of the terms and
conditions set forth herein, the parties hereto agree as follows:
<PAGE>
Section 1. Trade Receivables and Obligations Settlement. The parties
agree as follows:
(a) Attached hereto as Schedule 1(a) and Schedule 6 is a
complete and accurate list of all Trade Receivables delivered by Daka
to UCRI, as of the date hereof, pursuant to Section 4.8(a) of the PCCA.
The parties acknowledge that payment with respect to the Trade
Receivables set forth in Schedule 1(a) may be received by Daka as the
named account creditor or by Compass as the successor to International.
The parties agree that any payment received by Compass, Daka or
International with respect to such Trade Receivables shall be remitted
to UCRI not later than the third business day following receipt and
that Compass shall have no right of set-off whatsoever against any such
amount.
(b) Attached as Schedule 1(b) is a complete and accurate
description of all Obligations delivered by Daka to UCRI, as of the
date hereof, pursuant to Section 4.8(a) of the PCCA.
(c) The amount to be remitted by UCRI to Compass under Section
4.8(a) of the PCCA is $3,800,000.
(d) Each party has performed fully, to the other party's
satisfaction, all duties and obligations set forth in Article IV of the
PCCA, and all further performance obligations thereunder shall hereby
cease, including without limitation Compass' obligation to collect any
Trade Receivables, to pay any Obligations or to otherwise act in any
capacity as agent on behalf of UCRI in connection therewith.
Notwithstanding the foregoing, Compass' and UCRI's respective
performance obligations under Section 4.8(b) of the PCCA shall remain
in effect, as provided therein.
Section 2. Balance Sheet and Managed Volume/Profit Adjustments. The
parties agree that the aggregate amount to be paid by UCRI to Compass pursuant
to Sections 5.2 and 5.3 of the PCCA is $15,000,000.
Section 3. Amount and Method of Payment. The parties agree as follows:
(a) The methods described in Sections 4.8(a) and 5.4 of the
PCCA for determining the amounts of payments and the method of payment
under Articles IV and V of the PCCA are no longer in force and effect
and are superseded in their entirety by this Agreement. In addition,
Sections 5.6, 5.10, 5.11, 5.12 and 5.13 of the Transition Agreement are
superseded in their entirety by this Agreement.
(b) The aggregate amount of $18,800,000 owing by UCRI to
Compass pursuant to Articles IV and V of the PCCA (the "Post-Closing
Payment"), as described in Sections 1 and 2 hereof, shall be paid as
follows:
<PAGE>
(i) Retained Cash (Section 4) $4,200,000
(ii) Tax Refund (Section 5) 6,300,000
(iii) Assigned Trade Receivables (Section 6) 4,200,000
(iv) Assigned UCRI Accounts (Section 7) 2,300,000
(v) Assigned Tax Benefits (Section 8) 8,000,000
(vi) Assigned Rebates (Section 9) 200,000
(vii) Agreed Discount (Section 10) (6,400,000)
-----------
Total $18,800,000
(c) UCRI will have no rights or interests in any assets (or
any portions thereof) assigned by UCRI to Compass and credited against
the Post-Closing Payment pursuant to this Agreement to the extent that
the aggregate value of such asset exceeds $18,800,000, or otherwise.
Compass will have no rights or interests in any assets (or any portion
thereof) assigned by UCRI to Compass and credited against the
Post-Closing Payment pursuant to this Agreement to the extent that the
aggregate value of such asset is less than $18,800,000, or otherwise.
Except for any Assigned UCRI Account that is evidenced by a note and is
to be delivered to Compass pursuant to Section 7 below, Compass
acknowledges and agrees that it is in possession of all cash or other
assets to be conveyed or delivered by UCRI to Compass pursuant to this
Agreement.
Section 4. Retained Cash. The parties agree that the amount of cash in
the possession of Compass that is classified as UCRI Assets pursuant to Section
1.1 of the Reorganization Agreement equals $4,200,000. The parties further agree
that ownership of such cash amount of $4,200,000 has been conveyed to Compass
(the "Retained Cash") pursuant to that certain Conveyance and Assignment
Agreement, dated as of the date hereof, between UCRI and Compass Holdings (the
"Conveyance and Assignment Agreement") and will be credited against the Post-
Closing Payment as specified in Section 3(b) hereof.
Section 5. Tax Refund. The parties agree that (a) the Refund (as
defined in that certain letter from UCRI to Compass, dated July 14,1997) equals
$6,300,000 and has been received and retained by Compass in accordance with
Compass' lien on and security interest therein, (b) the Refund has been conveyed
to Compass pursuant to the Conveyance and Assignment Agreement and will be
credited against the Post-Closing Payment as specified in Section 3(b) hereof,
and (c) UCRI shall have no further rights to or claims on the Refund as a UCRI
Asset pursuant to the Tax Allocation Agreement or otherwise.
Section 6. Assigned Trade Receivables. Attached as Schedule 6 is a list
of trade receivables that have been assigned by UCRI to Compass (the "Assigned
Trade Receivables") pursuant to the Conveyance and Assignment Agreement. The
parties agree that $4,200,000 will be credited against the Post-Closing Payment
as specified in Section 3(b) hereof in consideration for such assignment. The
parties further agree that all client advances related to the Assigned Trade
Receivables are the responsibility of Compass, and UCRI will have no liability
in connection therewith.
<PAGE>
Section 7. Assigned UCRI Accounts. Attached as Schedule 7 is a list of
certain notes receivable and accounts that have been assigned by UCRI to Compass
(the "Assigned UCRI Accounts") pursuant to the Conveyance and Assignment
Agreement. To the extent that any Assigned UCRI Account is evidenced by a note,
each such note has been endorsed by UCRI and delivered to Compass. The parties
agree that $2,300,000 will be credited against the Post-Closing Payment as
specified in Section 3(b) hereof in consideration for such assignment.
Section 8. Assigned Tax Benefits. Section 3.2(c) of the Tax Allocation
Agreement provides that Compass shall pay to UCRI the amount of the Income Tax
Benefit (as defined therein) associated with any Carryforward Item (as defined
therein). UCRI has assigned its rights to any such payment under Section 3.2(c)
(the "Assigned Tax Benefits") pursuant to the Conveyance and Assignment
Agreement. The parties agree that $8,000,000 will be credited against the
Post-Closing Payment as specified in Section 3(b) hereof in consideration for
such assignment.
Section 9. Assigned Rebates. Attached as Schedule 9 is a list of
certain rebates that were classified as UCRI Assets, which rebates have been
assigned by UCRI to Compass (the "Assigned Rebates") pursuant to the Conveyance
and Assignment Agreement. The parties agree that $200,000 will be credited
against the Post-Closing Payment as specified in Section 3(b) hereof in
consideration for such assignment.
Section 10. Agreed Discount. In lieu of an itemized valuation of the
Refund, the Assigned Trade Receivables, the Assigned UCRI Accounts, the Assigned
Tax Benefits and the Assigned Rebates, the parties have assigned an aggregate
discount of $6,400,000 to such items.
Section 11. Venturino Claim. As a condition to the various agreements
of the parties contained in this Agreement and in furtherance thereof, the
parties each acknowledge and agree as follows:
(a) UCRI (i) in accordance with the Stipulation and Agreement
of Settlement, dated December 19, 1997, among Shapiro Haber & Urmy LLP,
Milberg Weiss Bershad Hynes & Lerach LLP, Schiffrin & Craig, Ltd. and
Law Offices of Alfred G. Yates, Jr. (collectively as counsel for the
Plaintiffs) and Goodwin, Procter & Hoar LLP (as counsel for the
Defendants) and Daka International, Inc. (the "Settlement Agreement"),
and in accordance with the Supplemental Agreement, dated December 15,
1997, among the parties listed above (together with the Settlement
Agreement, the "Venturino Agreements"), has directed National Union
Fire Insurance Company of Pittsburgh, PA (the "Insurer") to proceed
promptly to complete the settlement (the "Venturino Settlement") of the
Venturino Claim (as defined in Section 2.1(d) of the PCCA) and to pay
all settlement amounts as directed in the final approval of the
Venturino Settlement by the United States District Court for the
District of Massachusetts (the "Court"), (ii) in accordance with the
Venturino Agreements, has directed its counsel to immediately take all
actions required to complete the Venturino Settlement and will not
withdraw or modify these instructions, (iii) has fully complied with
<PAGE>
all requests to date of plaintiff's counsel in the Venturino Claim for
confirmatory discovery so that no further discovery is necessary to
complete the Venturino Settlement, except as may be directed by the
Court after the date hereof, and (iv) has notified, or has caused its
counsel to notify, the Court in writing that the Venturino Claim has
been settled and has filed an appropriate motion seeking court
approval of the Venturino Settlement.
(b) UCRI will promptly take all actions necessary and to
otherwise use all commercially reasonable efforts to cause the
Venturino Settlement to be completed as soon as practical in accordance
with the Venturino Agreements.
Section 12. Miscellaneous.
(a) UCRI makes no representations or warranties regarding the
condition or value of the Tax Refund, the Assigned Trade Receivables,
the Assigned UCRI Accounts, the Assigned Tax Benefits or the Assigned
Rebates, and Compass agrees that it takes such assets as is.
(b) Except as otherwise expressly amended or modified by this
Agreement, the Merger Agreement and the Ancillary Agreements shall
remain in full force and effect, including without limitation (i)
UCRI's obligations pursuant to the Transition Agreement regardless of
whether UCRI relocates its corporate headquarters and (ii) UCRI's
obligations pursuant to the Tax Allocation Agreement to provide to
Compass access to tax personnel and records. The parties hereto may
modify or amend this Agreement only by written agreement executed and
delivered by duly authorized officers of the respective parties.
(c) No delay on the part of any party hereto in exercising any
right, power or privilege hereunder will operate as a waiver thereof,
nor will any waiver on the part of any party hereto of any right, power
or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder, nor will any single or partial exercise of any
right, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or privilege
hereunder. No waiver will be effective hereunder unless it is in
writing. Unless otherwise provided, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies
which the parties may otherwise have at law or in equity.
(d) For the convenience of the parties, this Agreement may be
executed in any number of separate counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
DELAWARE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE CONFLICTS
OF LAW PRINCIPLES OF SUCH STATE.
<PAGE>
(f) Any notice, request, instruction or other communication to
be given hereunder by any party to any other shall be in writing and
shall be deemed to have been duly given (i) on the date of delivery if
delivered personally, or by telecopy or telefacsimile, upon
confirmation of receipt, (ii) on the first business day following the
date of dispatch if delivered by Federal Express or other nationally
reputable next-day courier service, or (iii) on the third business day
following the date of mailing if delivered by registered or certified
mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive
such notice:
(i) If to UCRI, Champps or Fuddruckers:
Unique Casual Restaurants, Inc.
One Corporate Place
55 Ferncroft Road
Danvers, Massachusetts 01923-4001
Attention: General Counsel
(ii) If to Compass, International or Daka:
Compass Group USA, Inc.
2400 Yorkmont Road
Charlotte, North Carolina 28217
Attention: General Counsel
(g) The Merger Agreement, the Ancillary Agreements, the
Confidentiality Agreement , the Assignment of Debt and Collateral by
UCRI, dated November 20, 1997, and this Agreement constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, among the
parties, with respect to the subject matter hereof and thereof.
(h) No party to this Agreement shall convey, assign or
otherwise transfer any of its rights or obligations under this
Agreement without the express written consent of the other parties
hereto in their sole and absolute discretion, except that any party
hereto may assign any of its rights hereunder to a successor to all or
any part of its business. Except as aforesaid, any such conveyance,
assignment or transfer without the express written consent of the other
parties shall be void ab initio. No assignment of this Agreement shall
relieve the assigning party of its obligations hereunder.
(i) If any provision of this Agreement or the application
thereof to any person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the
remaining provisions hereof, or the application of such provision to
persons or circumstances other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and
shall in no way be affected, impaired or invalidated thereby, so long
as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner adverse to any party.
<PAGE>
Upon any such determination, the parties shall negotiate in good faith
in an effort to agree upon a suitable and equitable substitute
provision to effect the original intent of the parties.
(j) Nothing contained in this Agreement is intended to confer
upon any person or entity other than the parties hereto and their
respective successors and permitted assigns, any benefit, right or
remedies.
(k) (i) The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were
not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the
terms and provisions of this Agreement, this being in addition
to any other remedy to which they are entitled at law or in
equity.
(ii) Except for claims barred by the applicable
statute of limitations (which may not be pursued by the
parties in any judicial, arbitral or other forum), any and all
disputes between the parties that arise out of or relate to
this Agreement or any other agreement between the parties
entered into in connection herewith or the transactions
contemplated hereby or thereby, and which cannot be amicably
settled, shall be determined solely and exclusively by
arbitration administered by the American Arbitration
Association ("AAA") under its commercial arbitration rules for
such disputes at its office in Boston, Massachusetts. The
parties expressly, unconditionally and irrevocably waive any
right to recision, repudiation or any similar remedy in any
legal action hereunder. The arbitration panel (the "Panel")
shall be formed of three arbitrators approved by the AAA, one
to be appointed by Compass, one to be appointed by UCRI, and
the third to be appointed by the first two or, in the event of
failure to agree within 30 days, by the President of the AAA.
Judgment on the award rendered by the Panel may be entered in
any court having jurisdiction thereof.
(iii) To the extent a court action is authorized
above, the parties hereby consent to the jurisdiction of the
United States District Court of Delaware. Each of the parties
waives personal service to any and all process upon them and
each consents that all such service of process be made by
certified mail directed to them at their address shown in
Section 12(e) hereof. THE PARTIES WAIVE TRIAL BY JURY AND
WAIVE ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED
HEREUNDER.
(l) Each party hereto agrees to cooperate reasonably with the
other parties, and to execute and deliver, or use its reasonable best
efforts to cause to be executed and delivered, all instruments and
documents and to take all such other actions as such party may
reasonably be requested to take by any other party hereto from time to
time, consistent with the terms of this Agreement, in order to
effectuate the provisions and purposes of this Agreement.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first
hereinabove written.
DAKA INTERNATIONAL, INC.
By:
Title:
UNIQUE CASUAL RESTAURANTS, INC.
By:
Title:
DAKA, INC.
By:
Title:
CHAMPPS ENTERTAINMENT, INC.
By
Title:
FUDDRUCKERS, INC.
By:
Title:
<PAGE>
COMPASS GROUP PLC
By:
Title:
COMPASS HOLDINGS, INC.
By:
Title:
