October 30, 2000
Dear Stockholder:
You are cordially invited to attend the annual meeting of stockholders of
Champps Entertainment, Inc. This year's meeting will be held on Wednesday,
December 13, 2000 at 1:00 p.m., local time, at the Harvard Club of New York, 27
West 44th St., New York, New York.
The attached proxy statement, with formal notice of the meeting on the
first page, describes the matters we expect to act upon at the meeting. We urge
you to review these materials carefully and to use this opportunity to take part
in the affairs of Champps Entertainment, Inc. by voting on the matters described
in this proxy statement. We hope that you will be able to attend the meeting. At
the meeting we will review our operations, report on 2000 financial results and
discuss our plans for the future. Our directors and management team will be
available to answer questions.
Your vote is important. Whether you plan to attend the meeting or not,
please complete the enclosed proxy card and return it as promptly as possible.
The enclosed proxy card contains instructions regarding the methods of voting.
If you attend the meeting, you may continue to have your shares voted as
instructed in the proxy or you may withdraw your proxy at the meeting and vote
your shares in person. We look forward to seeing you at the meeting.
Sincerely,
/s/ William H. Baumhauer
------------------------
Chairman of the Board
William H. Baumhauer
President and Chief Executive Officer
<PAGE>
CHAMPPS ENTERTAINMENT, INC.
5619 DTC Parkway
Suite 1000
Englewood, Colorado 80111
-------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 13, 2000
-------------------
The 2000 annual meeting of stockholders of Champps Entertainment, Inc.
(formerly Unique Casual Restaurants, Inc.) will be held on Wednesday, December
13, 2000 at 1:00 p.m., local time, at the Harvard Club of New York, 27 West 44th
St., New York, New York. At the meeting, stockholders will vote upon the
following proposals:
1. To elect two Class I directors, each to serve for a three-year term.
2. To consider and act upon any other matters that may properly be brought
before the annual meeting and at any adjournments or postponements of the
meeting.
You may vote if you are a stockholder of record as of the close of business
on October 16, 2000. If you do not plan to attend the meeting and vote your
common shares in person, please vote in the following way:
o Mark, sign, date and promptly return the enclosed proxy card in the
postage-paid envelope.
Any proxy may be revoked at any time prior to its exercise at the annual
meeting.
By Order of the Board of Directors
Donna L. Depoian, Esq.
Secretary
October 30, 2000
<PAGE>
CHAMPPS ENTERTAINMENT, INC.
October 30, 2000
5619 DTC Parkway
Suite 1000
Englewood, Colorado 80111
-------------------
PROXY STATEMENT
-------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Champps Entertainment, Inc. (formerly
Unique Casual Restaurants, Inc., "Champps") for use at the 2000 annual meeting
of stockholders of Champps to be held on Wednesday, December 13, 2000 at 1:00
pm., local time, at the Harvard Club of New York, 27 West 44th St., New York,
New York, and at any adjournments or postponements thereof.
Champps' principal executive office is located at 5619 DTC Parkway, Suite
1000, Englewood, Colorado 80111. The telephone number at Champps' principal
executive office is (303) 804-1333.
Champps was formed on May 27, 1997. At the time of its formation, Champps
was a wholly owned subsidiary of DAKA International, Inc. ("DAKA"). In
connection with the Merger of DAKA and a wholly owned subsidiary of Compass
Group PLC, DAKA distributed to each common stockholder of record of DAKA, one
share of common stock of Champps for each share of DAKA owned by such
stockholder (the "Spin-off Transaction"). As a result of the Spin-off
transaction, Champps ceased to be a subsidiary of DAKA and began operating as an
independent, publicly held company on July 17, 1997.
In November 1998, Champps sold its Fuddruckers restaurant segment and
ceased the operations of its Specialty Concepts business, including The Great
Bagel & Coffee Company, during fiscal 1998. Effective on July 15, 1999, Champps
disposed of its investment in La Salsa Fresh Mexican Grill ("La Salsa"). Champps
exchanged its convertible preferred shares of La Salsa for common shares of
Santa Barbara Restaurant Group ("SBRG") as part of the acquisition of La Salsa
by SBRG, and ultimately sold the common shares of SBRG. During fiscal year 1999,
Champps disposed of its 50% equity interest in Restaurant Consulting Services,
Inc.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
What is the purpose of the annual meeting?
At the annual meeting, stockholders will act upon the matters set forth in
the accompanying notice of meeting, including the election of directors.
Who is entitled to vote?
If our records show that you are a stockholder as of the close of business
on October 16, 2000, which is referred to as the record date, you are entitled
to receive notice of the annual meeting and to vote the shares of common stock
that you held on the record date. Each outstanding share of common stock
entitles its holder to cast one vote for each matter to be voted upon.
Can I attend the meeting?
All stockholders of record of Champps' shares of common stock at the close
of business on the record date, or their designated proxies, are authorized to
attend the annual meeting. Each stockholder or proxy will be asked to present a
form of valid picture identification, such as a driver's license or passport.
What constitutes a quorum?
The presence, in person or by proxy, of holders of at least a majority of
the total number of outstanding shares of common stock entitled to vote is
necessary to constitute a quorum for the transaction of business at the annual
meeting. As of the record date, there were 11,693,527 shares of common stock
outstanding and entitled to vote at the annual meeting. Shares that reflect
abstentions or "broker non-votes" (i.e., shares represented at the meeting held
by brokers or nominees as to which instructions have not been received from the
beneficial owners or persons entitled to vote such shares, and the brokers or
nominees do not have discretionary voting power to vote such shares) will be
counted for purposes of determining whether a quorum is present for the
transaction of business at the annual meeting.
How do I vote?
Voting by Proxy Holders for Shares Registered Directly in the Name of the
Stockholder. If you hold your shares in your own name as a holder of record, you
may instruct the proxy holders named in the enclosed proxy card how to vote your
common shares by signing, dating and mailing the proxy card in the postage-paid
envelope that has been provided to you by Champps.
Voting by Proxy Holders for Shares Registered in the Name of a Brokerage
Firm or Bank. If your common shares are held by a broker, bank or other nominee
(i.e, in "street name"), you will receive instructions from your nominee which
you must follow in order to have your common shares voted.
Vote by Mail. If you would like to vote by mail, mark your proxy card, sign
and date it, and return it to EquiServe in the postage-paid envelope provided.
Vote in Person. If you are a registered stockholder and attend the annual
meeting, you may deliver your completed proxy card in person. "Street name"
stockholders who wish to vote at the meeting will need to obtain a proxy form
from the broker, bank or other nominee that holds their common shares of record.
Will other matters be voted on at the annual meeting?
We are not aware now of any other matters to be presented at the annual
meeting other than those described in this proxy statement. If any other matters
not described in the proxy statement are properly presented at the meeting,
proxies will be voted in accordance with the best judgment of the proxy holders.
Can I revoke my proxy instructions?
You may revoke your proxy at any time before it has been exercised by:
o filing a written revocation with the Secretary of Champps at the address
set forth below;
o filing a duly executed proxy bearing a later date; or
o appearing in person and voting by ballot at the annual meeting.
Any stockholder of record as of the record date attending the annual
meeting may vote in person whether or not a proxy has been previously given, but
the presence (without further action) of a stockholder at the annual meeting
will not constitute revocation of a previously given proxy.
What other information should I review before voting?
For your review, our fiscal 2000 annual report, including financial
statements for the fiscal year ended July 2, 2000, is being mailed to
stockholders concurrently with this proxy statement. The annual report, however,
is not part of the proxy solicitation material. For your further review, a copy
of our annual report filed with the Securities and Exchange Commission (the
"SEC") on Form 10-K, including the financial statements and the financial
statement schedule, may be obtained without charge by writing to Chief Executive
Officer of Champps, William H. Baumhauer, at the following address: Champps
Entertainment, Inc., 5619 DTC Parkway, Suite 1000, Englewood, Colorado 80111,
Attn: Angela Collins.
PROPOSAL 1: ELECTION OF DIRECTORS
Introduction
Our Board of Directors currently consists of five members who are divided
into three classes. At the annual meeting, two Class I directors will be elected
to serve until the 2003 annual meeting, or until their respective successors are
duly elected and qualified.
Our Board of Directors has nominated Timothy R. Barakett and James Goodwin
to serve as the Class I directors. Both nominees are currently serving as
directors of Champps. Our Board of Directors anticipates that the nominees will
serve, if elected, as directors. However, if any persons nominated by our Board
of Directors are unable to accept election, the proxies will be voted for the
election of such other person or persons as our Board of Directors may
recommend. Our Board of Directors will consider a nominee for election to our
Board of Directors recommended by a stockholder of record, if the stockholder
submits the nomination in compliance with the requirements of our by-laws.
Vote Required
Directors must be elected by a plurality of the votes of the shares of
common stock present in person or represented by proxy and entitled to vote on
the issue at the annual meeting. Votes may be cast for or withheld from each
nominee. Votes cast for the nominees will count as "yes votes;" votes that are
withheld from the nominees will be excluded entirely from the vote and will have
no effect.
Recommendation
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THEIR NOMINEES,
TIMOTHY R. BARAKETT AND JAMES GOODWIN. PROXIES SOLICITED BY THE BOARD WILL BE
VOTED FOR EACH OF THE NOMINEES UNLESS INSTRUCTIONS TO WITHHOLD OR TO THE
CONTRARY ARE GIVEN.
Information Regarding the Nominees and Other Directors
The following biographical descriptions set forth certain information with
respect to the two nominees for re-election as Class I directors at the annual
meeting, each director who is not up for election based on information furnished
to Champps by each director. The following information is correct as of
September 25, 2000.
Nominees for Election as Directors - Term Expiring 2003
Timothy R. Barakett. Mr. Timothy R. Barakett has been the Chairman and
Managing Member of Atticus Capital, L.L.C., a private investment management
company, since October 1995. From June 1993 until March 1995, Mr. Barakett was a
Managing Director and General Partner at Junction Advisors Inc., a private
investment management company. Mr. Barakett also serves as a director of RIT
Capital Partners, plc. and a director of Group Andre, S.A. He is 35 years old.
James Goodwin. Mr. James Goodwin has been a private investor since 1998.
From 1990 until February 1998, Mr. Goodwin was a Managing Director at Gleacher
Natwest, Inc., an investment banking company. Mr. Goodwin also serves as a
director of Kiewet Materials Company. He is 44 years old.
Incumbent Directors - Term Expiring 2001
William H. Baumhauer. Mr. William H. Baumhauer has served as a director and
Chairman of the Board of Directors since August 23, 1999, and as President and
Chief Executive Officer of Champps since June 24, 1999. Mr. Baumhauer also held
these positions with Champps or its predecessors from September 1988 until July
24, 1998, when he left Champps to serve as President and Chief Operating Officer
of Planet Hollywood International, Inc., a position he held until his return to
Champps on June 24, 1999. He served Fuddruckers, Inc. as Chairman of the Board,
President and Chief Executive Officer between March 1985 and the merger of
Fuddruckers, Inc. with DAKA in 1988. He is 52 years old.
Nathaniel P.V.J. Rothschild. Mr. Nathaniel Rothschild has been President of
Atticus Capital, L.L.C. since January 2000, and a member of Atticus Capital,
L.L.C., a private investment management company, since March 1996,
Mr. Rothschild is the Chairman and Director of Group Andre, S.A. From April of
1997 to January of 1999, Mr. Rothschild was a Vice President at Atticus
Management (Bermuda) Ltd. From March 1995 to March 1996, Mr. Rothschild was a
Financial Analyst with Gleacher & Co. and prior to that time he was a Financial
Analyst with Lazard Brothers & Co. Ltd. in London. He is 29 years old.
Incumbent Director - Term Expiring 2002
Alan D. Schwartz. Mr. Alan D. Schwartz has served as a director of Champps
or its predecessors since September 1988, and served as a director of
Fuddruckers, Inc. from September 1984 until its merger with DAKA in 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 firms for more than five years. Mr.
Schwartz is also a director of Young & Rubicam, Inc., Atwood Richards, Inc., St.
Vincent's Services, the American Foundation for AIDS Research, the New York
Blood Center and NYU Medical Center and a member of the Board of Visitors of the
Fuqua School of Business at Duke University. He is 50 years old.
The Board of Directors and Its Committees
Board of Directors. Champps is managed by a five member Board of Directors,
a majority of whom are independent of our management. Our Board of Directors is
divided into three classes, and the members of each class of directors serve for
staggered three-year terms. Our Board of Directors is composed of two Class I
directors (Messrs. Barakett and Goodwin), two Class II directors (Messrs.
Baumhauer and Rothschild) and one Class III director (Mr. Schwartz). The terms
of the Class II and Class III directors will expire upon the election and
qualification of directors at the annual meetings of stockholders held in 2001
and 2002, respectively. At each annual meeting of stockholders, directors will
be re-elected or elected for a full term of three years to succeed those
directors whose terms are expiring.
Our Board of Directors met seven times in fiscal 2000. Each of the
directors attended 75% or more of the aggregate of (a) the total number of
meetings of the Board of Directors during fiscal year 2000, and (b) the total
number of meetings held by all committees of the Board of Directors on which
such director served during fiscal year 2000.
Audit Committee. Our Board of Directors has established an Audit Committee
consisting of Messrs. Barakett, Goodwin and Rothschild. The Audit Committee
makes recommendations concerning the engagement of independent public
accountants and communicates with Champps' independent auditors on matters of
auditing and accounting. The Audit Committee met four times during fiscal 2000.
Compensation Committee. Our Board of Directors has established a
Compensation Committee consisting of Messrs. Barakett, Goodwin, Rothchild and
Schwartz. The Compensation Committee exercises all powers of our Board of
Directors in connection with officer and employee compensation matters,
including administering Champps' 1997 Stock Option and Incentive Plan and the
1997 Stock Purchase Plan. The Compensation Committee also has authority to grant
awards under the 1997 Stock Option and Incentive Plan. The Compensation
Committee did not meet separately as its duties were performed at meetings of
the full Board of Directors.
Nominating Committee. Our full Board of Directors performs the function of
the Nominating Committee. Our Nominating Committee did not meet separately as
its duties were performed at meetings of the full Board of Directors.
Our Board of Directors may from time to time establish other special or
standing committees to facilitate the management of Champps or to discharge
specific duties delegated to the committee by the full Board of Directors.
<PAGE>
PRINCIPAL AND MANAGEMENT STOCKHOLDERS
The following table shows the amount of Common Stock of Champps
beneficially owned as of September 25, 2000 by:
o each director;
o the Chief Executive Officer and Chairman of the Board and the five most
highly compensated executive officers of Champps, each of whose compensation
exceeded $100,000 during the fiscal year ended July 2, 2000 (the "named
executive officers");
o all directors and executive officers of Champps as a group; and o each
person known by Champps to hold more than 5% of our outstanding
Common Stock.
Beneficial ownership of Common Stock includes shares that are individually
or jointly owned, as well as shares of which the individual has sole or shared
investment or voting authority. Beneficial ownership of Common Stock also
includes shares which could be purchased by the exercise of options at or within
60 days of September 25, 2000. 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.
Amount and
Nature of Percent
Beneficial Of
Name and Address of Beneficial Owner Ownership Class(1)
------------------------------------- --------- --------
Directors and Executive Officers
William H. Baumhauer(2)............. 446,037(3) 3.68%
Timothy R. Barakett(4).............. 2,496,706(5) 21.34%
James Goodwin(4).................... 0(6) *
Nathaniel P.V.J. Rothschild(4)...... 5,000(7) *
Alan D. Schwartz(2)................. 69,880(8) *
Donna L. Depoian(2)................. 27,778(9) *
Donnie N. Lamb(2)................... 16,331(10) *
Donald C. Moore(11)................. 100,617(12) *
Kevin C. Moylan(13)................. 3,440(14) *
Cynthia S. Randall(15).............. 26,158(16) *
5% Holders
Atticus Qualified Partners, L.P.(4). 661,796(5) 5.66%
Dimensional Fund Advisors Inc.(17).. 656,130(18) 5.61%
Franklin Resources, Inc.(19)........ 1,118,000(20) 9.56%
Douglas A. Hirsch (21).............. 732,200(22) 6.26%
All directors and executive officers
as a group (7 persons)............ 3,061,732 (23) 25.09%
* Less than 1%
(footnotes on next page)
<PAGE>
------------------
(1) The total number of shares of Common Stock outstanding used in
calculating the percentage assumes that all exercisable options or options that
become exercisable within 60 days of September 25, 2000 to acquire shares of
common stock are exercised.
(2) The address of the beneficial owner is c/o Champps Entertainment, Inc.,
5619 DTC Parkway, Suite 1000, Englewood, Colorado 80111.
(3) Includes 437,000 shares of Common Stock issuable upon the exercise of
options.
(4) The address of the beneficial owner is c/o Atticus Capital, L.L.C., 590
Madison Avenue, 32nd Floor, New York, NY 10022
(5) Includes 5,000 shares of Common Stock issuable on the exercise of
options held Mr. Barakett. Timothy R. Barakett is the General Partner of Atticus
Holdings LLC, a Delaware limited liability company, and the chairman of Atticus
Management, Ltd., an international business company organized under the laws of
the British Virgin Islands, and Atticus Capital LLC, a Delaware limited
liability company (collectively the "Atticus Entities"). The Atticus Entities
have investment discretion over various funds (the "Funds"), none of which,
other than Atticus Qualified Partners, LP, owns greater than 5% of the
outstanding shares of Common Stock. Based on his relationship with the Atticus
Entities, Timothy R. Barakett is deemed to be a beneficial owner of the Common
Stock owned by the Funds.
(6) Excludes 5,000 shares of Common Stock issuable on the exercise of
options held by the Gordan Tang Goodwin Trust of which Mr. Goodwin is a trustee
and, as such, Mr. Goodwin disclaims beneficial ownership of any of these shares.
In connection with Mr. Goodwin's appointment to the Board of Directors in March
1999, Atticus Capital, L.L.C. entered into an agreement with Mr. Goodwin, which
provides that Atticus Capital, L.L.C. will pay to Mr. Goodwin an amount equal to
five percent of the proceeds above $4.875 per share of Common Stock realized by
Atticus Partners, L.P., Atticus Qualified Partners, L.P. and Atticus
International, Ltd. upon the sale or disposition of the Common Stock
beneficially owned by them. In addition, Atticus Partners, L.P. agreed to
indemnify Mr. Goodwin against any and all losses, claims, liabilities and
expenses in connection with serving as a member of Champps' Board of Directors.
Mr. Goodwin does not have or share the power to vote or the power to dispose of
any shares of Common Stock beneficially owned by the Funds over which the
Atticus Entities have investment discretion, and, therefore, disclaims
beneficial ownership of any of the shares of Common Stock owned by the Funds.
(7) Includes 5,000 shares of Common Stock issuable on the exercise of
options held Mr. Rothschild. Mr. Rothschild is the President of Atticus Holdings
LLC, a Delaware limited liability company, Atticus Management, Ltd., an
international business company organized under the laws of the British Virgin
Islands, and Atticus Capital LLC, a Delaware limited liability company
(collectively the "Atticus Entities"). The Atticus entities have investment
discretion over various funds (the "Funds"), none of which, other than Atticus
Qualified Partners, LP, owns greater than 5% of the outstanding shares of common
stock. Mr. Rothschild does not have or share the power to vote or the power to
dispose of any shares of Common Stock beneficially owned by the Funds over which
The Atticus Entities have investment discretion, and, therefore, disclaims
beneficial ownership of any of the shares of Common Stock owned by the Funds.
(8) Includes 19,500 shares of Common Stock issuable upon the exercise of
options.
(9) Includes 26,300 shares of Common Stock issuable upon the exercise of
options.
(10) Includes 15,333 shares of Common Stock issuable upon the exercise of
options.
(11) The address of the beneficial owner is 412 Dummyline Road,
Madisonville, Louisiana 70447.
(12) Includes 100,000 shares of Common Stock issuable upon the exercise of
options.
(13) The address of the beneficial owner is 211 Colonial Homes Drive,
Atlanta, Georgia 03039.
(14) This information is stated on a Form 3, dated February 25, 1998, filed
by Kevin C. Moylan.
(15) The address of the beneficial owner is 6183 Buffalo Run, Littleton, CO
80125.
(16) Includes 18,333 shares of Common Stock issuable upon the exercise of
options.
(17) The address of the beneficial owner is 1299 Ocean Avenue, 11th Floor,
Santa Monica, CA 90401.
(18) This information is stated on a Schedule 13G, dated February 3, 2000,
filed by Dimensional Fund Advisors.
(19) The address of the beneficial owner is 777 Mariners Island Blvd., 6th
Floor, San Mateo, CA 94404.
(20) This information is based on a Schedule 13G/A, dated January 19, 2000,
filed by Franklin Resources, Inc. with the SEC. Franklin Advisory Services, LLC
may be deemed to be a beneficial owner of 1,118,000 shares of Common Stock held
by Franklin Resources, Inc. Charles B. Johnson and Rupert H. Johnson each may be
deemed to be beneficial owners of securities held by Franklin Resources, Inc.
and, therefore, each disclaims beneficial ownership of any of the 1,118,000
shares of Common Stock held by them collectively.
(21) The address of the beneficial owner is c/o Seneca Capital Advisors
LLC, 880 Third Avenue, 14th Floor, New York, NY 10022.
(22) 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 information delivered to the
Company by Seneca Capital Advisors LLC and Seneca Capital Investments, LLC.
(23) Includes 508,133 shares of Common Stock issuable upon the exercise of
options.
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
In fiscal year 2000, non-employee directors received an annual grant of
options to acquire 5,000 shares of Common Stock at an exercise price at least
equal to the fair market value of the Common Stock as of the date of grant.
Executive Compensation
Summary Compensation Table
The following table provides information as to compensation paid by Champps
for fiscal years 1998, 1999 and 2000 to the Chief Executive Officer and the four
other most highly compensated executive officers whose total salary and bonus
for fiscal year 2000 exceeded $100,000, the named executive officers.
<TABLE>
Summary Compensation Table
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
Name and ------------------- 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)............... 2000 $400,010 $ 0 $ 0(3) 750,000 $ 140,939(4)
Chairman, President and 1999 $ 58,950 $ 0 $ 0 0(5) $ 0(5)
Chief Executive Officer............. 1998 $450,500 $175,000(6) 50,000 $ 675,000(7)
Donna L. Depoian (8).................. 2000 $124,615 $ 20,000 $ 0 5,000 $
Vice President, General 1999 $120,000 $ 0 $ 0 20,000 $ 120,000(9)
Counsel and Secretary............... 1998 $ 80,000 $ 35,000 1,000 $
Donnie N. Lamb (10)................... 2000 $145,961 $ 56,950 25,000 $ 25,696(11)
1999 $ 99,036 $ 13,175 5,000
1998 $ 91,460 $ 11,525 1,000
Donald C. Moore (12).................. 2000 $ 37,500 $ 0 35,000 $ 280,879(13)
Chief Executive Officer 1999 $250,000 $ 0 20,000
1998 $187,981 $ 80,000 35,000
K.C. Moylan (14)...................... 2000 $ 48,000 $ 0 ---- $ 73,846(15)
1999 $240,000 $ 0 20,000
1998 $200,000 $ 80,000 $ 31,700(16) 50,000
Cynthia S. Randall (17)............... 2000 $129,807 $ 0 25,000 $ 41,253(18)
Director of Human 1999 $110,000 $ 0 5,000
Resources........................... 1998 $ 90,000 $ 11,000 2,000
</TABLE>
(footnotes on next page)
<PAGE>
-------------
(1) Represents the number of options to acquire Common Stock granted during
the applicable fiscal year.
(2) Mr. Baumhauer resigned as President and Chief Executive Officer of
Champps in June 1998, and returned to Champps as President and Chief Executive
Officer effective June 24, 1999. He was elected a director of Champps and
appointed Chairman of the Board of Directors in August 1999. Mr. Baumhauer also
held these positions with the Company or its predecessors from September 1988
until July 24, 1998, when he left the Company to serve as President and Chief
Operating Officer of Planet Hollywood International, Inc., a position he held
until his return to the Company on June 24, 1999.
(3) Does not include the extension effective September 28, 2000, of Mr.
Baumhauer's options to acquire 1,009,000 shares of Common Stock at exercise
prices ranging from $4.00 per share to $6.31 per share from June 30, 2001 until
June 30, 2003.
(4) Includes $133,739 reimbursed for relocation expenses.
(5) Does not include the extension until June 30, 1999, upon Mr.
Baumhauer's resignation from Champps in July 1998, of the termination date of
options to acquire 437,000 shares of Common Stock at exercise prices ranging
from $1.21 per share to $6.31 per share (including options to acquire 187,500
shares of Common Stock at an exercise price of $6.31 per share that were not
vested at the time of Mr. Baumhauer's resignation from Champps on July 24, 1998,
and that would have terminated on such date unless exercised). The termination
date of these options was further extended until June 30, 2001, upon Mr.
Baumhauer's return to Champps on June 24, 1999. Champps recorded $1,243,000 of
non-cash compensation expense in fiscal year 1999 on account of these
modifications to employee stock options.
(6) Represents a bonus for fiscal year 1998 made conditional and paid upon
the consummation of the sale of Fuddruckers awarded to Mr. Baumhauer in
consideration of his contribution to the turnaround of the Fuddruckers business,
his role in positioning Fuddruckers for sale, and his commitment to cooperate
with Champps in satisfying various pre-closing covenants and conditions.
(7) Represents a cash payment made to Mr. Baumhauer upon the consummation
of the sale of Fuddruckers pursuant to separation arrangements in July 1998, in
part in consideration of his contribution to the Fuddruckers business during
fiscal year 1998 and his commitment to cooperate with Champps in completing the
sale of Fuddruckers during fiscal year 1999 and in part in consideration of the
fact that the sale of Fuddruckers would have allowed Mr. Baumhauer to terminate
his employment agreement with Champps for "good reason", thereby becoming
entitled to termination benefits equal to his base salary of $450,500 per year
for a period of three years, if he had resigned after the date of consummation
of the sale.
(8) Donna L. Depoian has served as Vice President, General Counsel and
Secretary of the Company since May 1998. She served as Acting General Counsel
and Assistant Secretary from February 1998 to May 1998 and as Corporate Counsel
and Assistant Secretary since July 1997. Ms. Depoian also served as Corporate
Counsel and Assistant Secretary for DAKA International, Inc. since April 1994.
(9) Represents a cash payment made to Ms. Depioan upon the consummation of
the sale of Fuddruckers in consideration of her role in completing the sale.
(10) Mr. Lamb serves as Vice President of Operations for Champps since
August 1999. He served for two months as Vice President of Operation of Champps
Operating Company, Inc. (formally known as Champps Entertainment, Inc., the
"Subsidiary") and for the three years prior to that he served as the Director of
Operations of Champps. He is 47 years old.
(11) Represents reimbursed relocation expenses.
(12) Mr. Moore served as Chief Executive Officer and Chief Financial
Officer of Champps from July 1998 through June 1999. As of July 1999, Mr. Moore
was no longer employed by Champps.
(13) Represents amounts paid to Mr. Moore's pursuant to a Termination
Agreement and General Release.
(14) Mr. Moylan served as President and Chief Executive Officer of the
Subsidiary during fiscal years 1998 and 1999. As of August 1999, Mr. Moylan was
no longer employed by Champps or the Subsidiary.
(15) Represents amounts paid in severance to Mr. Moylan's. In October 1999,
Mr. Moylan and Champps entered into arbitration before the American Arbitration
Association over the amount of severance due to Mr. Moylan. The arbitrated
decision should be released in December 2000. It is Champps' position that
$73,846 (excluding $13,846 in unpaid vacation) severance payment represents the
full amount of severance that Mr. Moylan is entitled to in full settlement of
his employment contract.
(16) Represents amounts paid in connection with the repurchase of stock
options.
(17) Ms. Randall served as the Vice President of Human Resources for
Champps. Prior to her appointment in August 1999 to such position, she served
for a year as Vice President of Human Resources and Training of the Subsidiary
and prior to her appointment to such position in July 1998 she served as
Director of Human Resources and Training for the Subsidiary. As of July 17,
2000, Ms. Randall was no longer employed by Champps or the Subsidiary. She is 42
years old.
(18) Represents reimbursed relocation expenses.
Option Grants in Fiscal Year 2000
The following table provides certain information with respect to stock
options granted by Champps during fiscal year 2000 to the Chief Executive
Officer and each of the Named Executives.
<TABLE>
<CAPTION>
Potential Realizable Value
At Assumed Annual Rates
of Stock Price
% of Total Appreciation for Option
Options Term (1)
Granted to Exercise --------
Options Employees In Price Per Expiration
Name Granted Fiscal Year Share Date 5% 10%
---- ------- ---------- --------- ---------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
William H.Baumhauer 750,000 79.05% $ 4.00 6/30/01(2) $ -- (3) $ -- (3)
Donnie N. Lamb 25,000 2.64% $ 4.00 8/19/09 $ -- (3) $ 49,975
Donald C. Moore -- --% $ -- -- $ -- $ --
Kevin C. Moylan -- --% $ -- -- $ -- $ --
Donna L. Depoian 5,000 .53% $ 4.00 12/31/00 $ --(4)(3) $ --(4)(3)
Cynthia S. Randall 25,000 2.64% $ 4.00 8/19/09 $ --(3) $ 49,983
</TABLE>
---------------
(1) Potential Realizable Value is the value of the granted options, based
on the assumed annual growth rates of the share price shown during their option
term. For example, a 5% growth rate, compounded annually, for Mr. Lamb's grant,
with its ten-year option term, results in a share price of $3.77 per share, and
a 10% growth rate, compounded annually, results in a share price of $6.00 per
share. These potential realizable values are listed to comply with the
regulations of the Commission, and Champps cannot predict whether these values
will be achieved. Actual gains, if any, on stock option exercises are dependent
on the future performance of the shares of Common Stock.
(2) Does not include the extension effective September 28, 2000 of Mr.
Baumhauer's options to acquire 1,009,000 shares of Common Stock at exercise
prices ranging from $4.00 per share to $6.31 per share from June 30, 2001 until
June 30, 2003.
(3) The exercise price on the date of grant, $4.00, was in excess of the
fair market value on the date of grant and, thus, even after calculating the
Potential Realizable Value by using either the 5% or the 10% growth rate still
results in a number that is less than zero.
(4) The value of Ms. Depoian's grant, with its 500-day term, was based on
an assumed pro-rated annual growth rate of the share price during its option
term. For example, a 5% growth rate, compounded annually and pro-rated, for Ms.
Depoian's grant results in a share price of $2.47 per share, and a 10% growth
rate, compounded annually and pro-rated, results in a share price of $2.636 per
share.
Aggregate Option Exercises in Fiscal Year 2000
and Year-End Option Values
Neither the Chief Executive Officer nor any of the Named Executives
exercised any of their stock options during fiscal year 2000. The following
table sets forth the number of shares of Common Stock covered by the stock
options held by the Chief Executive Officer and the Named Executives as of the
end of fiscal year 2000. The value of unexercised in-the-money options is based
on the closing price of the Common Stock as reported by Nasdaq on June 30, 2000,
minus the exercise price, multiplied by the number of shares underlying the
options.
<TABLE>
<CAPTION>
Value of Outstanding
Number of Beneficial In-the-Money options
Shares Options at Fiscal Year-End at Fiscal Year-End(1)
Acquired Value -------------------------- ---------------------
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
William H. Baumhauer 0 $0 437,000 750,000 $ 614,825(1) $1,031,250
Donnie N. Lamb 0 $0 15,333 16,666 $ 11,460 $ 22,917
Donald C. Moore 0 $0 100,000 0 $ 15,550 $ 0
K.C. Moylan 0 $0 0 0 $ 0 $ 0
Donna L. Depoian 0 $0 26,300 0 $ 6,875 $ 0
Cynthia S. Randall 0 $0 18,333 16,666 $ 11,460 $ 22,917
</TABLE>
---------------
(1) Does not include 178,000 shares of Common Stock acquired upon exercise
of options by Mr. Baumhauer on September 28, 2000.
Employment and Termination Agreements
William H. Baumhauer Employment Agreement.
On June 24, 1999, Champps entered into a two-year employment contract with
Mr. Baumhauer. The agreement provides for a base salary of $400,000 per year.
The agreement further provides that, in the event Champps terminates Mr.
Baumhauer's employment without "Cause" (as defined below), or Mr. Baumhauer
terminates his employment for "Good Reason" (as defined below), Champps shall
continue to pay Mr. Baumhauer's base salary through the term of the agreement as
described above. "Good Reason" is defined as: (i) any assignment to Mr.
Baumhauer of any duties other than those contemplated by or any limitation of
the powers of Mr. Baumhauer in any respect not contemplated by the agreement;
(ii) removal of Mr. Baumhauer from or failure to re-elect or elect Mr. Baumhauer
to the positions of President and Chief Executive Officer of Champps except in
connection with termination of employee's employment for cause or (iii) a
reduction in Mr. Baumhauer's rate of compensation. "Cause" is defined as: (i)
theft or fraud from Champps; (ii) Mr. Baumhauer's conviction of or pleading
guilty or no contest to a felony; (iii) violation of terms and conditions of his
employment; (iv) his willful disregard or neglect in the duties required to be
performed under the agreement or (v) his willful and demonstrated unwillingness
to prosecute and perform such duties to the extent deemed reasonably necessary
and advisable and which duties encompass the duties reasonably required of a
President and Chief Executive Officer of a restaurant company. The agreement
grants Mr. Baumhauer certain rights in the event of a sale of Champps that would
cause a termination of his employment. These rights include a payment on account
of Mr. Baumhauer's stock options if the amount of salary paid to him plus gross
proceeds received by him, net of any cash exercise price paid, upon the exercise
or other disposition of stock options is less than $1,200,000. Mr. Baumhauer was
granted, pursuant to the agreement, options to acquire 750,000 shares of Common
Stock at an exercise price of $4.00 per share, which will vest in December 2000
or earlier if Mr. Baumhauer's employment is terminated by Champps without Cause
or by Mr. Baumhauer with Good Reason, or if Champps is sold. In addition, all
stock options held by Mr. Baumhauer and fully vested, as of June 24, 1999, were
extended until June 30, 2001. On September 28, 2000, Champps amended Mr.
Baumhauer's employment contract to modify certain terms of his employment,
including extending the term of the employment contract though June 30, 2003,
and extending the expiration date of Mr. Baumhauer's remaining options to
purchase 1,009,000 shares or Common Stock from June 30, 2001, until June 30,
2003. The amended employment contract provides for a review of Mr. Baumhauer's
base salary on a yearly basis by the Board of Directors and a loan of $550,000
to Mr. Baumhauer, to be used to exercise his options to purchase 178,000 shares
of Common Stock and pay related tax liabilities which loan was evidenced by a
promissory note in favor of Champps and secured by a pledge of the purchased
stock.
Donna L. Depoian Employment Agreement.
Effective as of February 26, 1999, Champps entered into an employment
agreement with Donna L. Depoian to serve as Vice President, General Counsel and
Secretary of Champps. The agreement provides for an initial term of one year and
for successive one-year renewals thereafter. Under the agreement, Ms. Depoian
receives an annual base salary of $120,000, subject to adjustment at the
discretion of the Board of Directors. The agreement further provides that, in
the event Champps terminates Ms. Depoian's employment without "Cause" (as
defined below) or Ms. Depoian terminates her employment for "Good Reason" (as
defined below), Champps shall pay Ms. Depoian an amount equal to Ms. Depoian's
cash compensation for one year. "Good Reason" is defined in the agreement as:
(i) an assignment to Ms. Depoian of duties other than those contemplated by the
agreement, or a limitation on the powers of Ms. Depoian not contemplated by the
agreement; (ii) the removal of Ms. Depoian from or failure to elect Ms. Depoian
to her named position, including the position of Vice President, General Counsel
and Secretary of Champps or (iii) a reduction in Ms. Depoian's rate of
compensation or level of fringe benefits. "Cause" is defined in the agreement
as: Ms. Depoian's (i) theft from or fraud on Champps; (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 her duties or (v) willful and
demonstrated unwillingness to perform her duties under the agreement.
Donald C. Moore Termination Agreement
On July 21, 1999, Donald C. Moore entered into a Termination Agreement and
General Release (the "Termination Agreement"). The Termination Agreement
provides that Mr. Moore will be paid $500,000 in liquidated damages over a
two-year period. In August 1999, Champps paid Mr. Moore a $50,000 advance toward
future liquidated damages payments. With respect to Mr. Moore's options to
acquire 100,000 shares of Common Stock of Champps, the period during which all
unexercised and unexpired options may be exercised was extended until July 21,
2001. The Termination Agreement provided for a mutual release from Mr. Moore and
Champps from any actions, suits, debts, demands, or claims. Mr. Moore was party
to an employment agreement with Champps dated August 12, 1999. The agreement
provided for an initial term of one year. Under the agreement, Mr. Moore
received an annual base salary of $250,000, subject to adjustment at the
discretion of the Board of Directors. The agreement further provided that, in
the event Champps terminated Mr. Moore's employment without "Cause" (as defined
below) or Mr. Moore terminated his employment for "Good Reason" (as defined
below), Champps would pay Mr. Moore an amount equal to Mr. Moore's cash
compensation for two years. "Good Reason" was 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 of
Champps, or (iii) a reduction in Mr. Moore's rate of compensation or level of
fringe benefits. "Cause" was defined in the agreement as Mr. Moore's (i) theft
from or fraud on Champps, (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.
Kevin C. Moylan Employment Agreement
On August 31, 1999, Mr. Moylan resigned as President and Chief Executive
Officer of the Subsidiary and received a termination payment of $73,846
(excluding $13,846 in unpaid vacation) in cash. Mr. Moylan was party to an
employment agreement with Champps dated November 17, 1998, as amended as of July
27, 1999. The agreement provided for an initial term of one year. Under the
agreement, Mr. Moylan received an annual base salary of $240,000, subject to
adjustment at the discretion of the Board of Directors. The agreement further
provided that, in the event Champps terminated Mr. Moylan's employment without
"Cause" (as defined below), or Mr. Moylan terminated this employment for "Good
Reason" (as defined below), Champps would pay Mr. Moylan an amount equal to Mr.
Moylan's cash compensation for one year. "Good Reason" was defined in the
agreement as (i) an assignment to Mr. Moylan of duties other than those
contemplated by the agreement, or a limitation on the powers of Mr. Moylan not
contemplated by the agreement, (ii) the removal of Mr. Moylan from or failure to
elect Mr. Moylan to his named position, including the position of Chief
Executive Officer of Champps, or (iii) a reduction in Mr. Moylan's rate of
compensation or level of fringe benefits. "Cause" was defined in the agreement
as Mr. Moylan's (i) theft from or fraud on Champps, (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
employment agreement further provided that in the event Champps completed a sale
of itself or Champps (or a transaction with similar effect), Champps would pay
Mr. Moylan upon the closing of such sale or transaction a lump sum amount equal
to his base salary in effect at the time of the sale.
Indemnification Agreements
Champps has entered into Indemnification Agreements with certain of the
executive officers of Champps and members of the Board who are not officers of
Champps (the "Indemnitees"), pursuant to which Champps 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
Champps, 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 Champps, such Indemnitee shall not be entitled to indemnification if such
Indemnitee is adjudged to be liable to DAKA or Champps, 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 Champps
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, Champps 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 Champps or by reason of Indemnitee's service to DAKA, if
applicable, 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.
Stock Performance Graph
The following graph provides a comparison of cumulative total stockholder
return for the period from July 15, 1997 (the date on which our common stock was
first publicly traded, accordingly, stock performance data is not presented for
period prior to that date) through July 2, 2000, among Champps; the Russell 3000
Index; the Cheesecake Factory, Inc., BUCA, Inc., P.F. Changs China Bistro, Inc.,
Landry's Seafood Restaurant, Inc. and Rare Hospitality International, Inc. (the
"Next Peer Group") and Avado Brands, Inc., Cheesecake Factory, Inc., Dave and
Buster's. Inc., Rainforest Cafe, Inc., Landry's Seafood Restaurant, Inc. and
Rare Hospitality International, Inc. (the "Old Peer Group"). The returns of each
issuer in the foregoing Next Peer Group and the Old Peer Group have been
weighted according to the respective company's market capitalization as of the
beginning of the period. The stock performance graph assumes an investment of
$100 in each of Champps and the three indexes, and the reinvestment of any
dividends. The historical information set forth below is not necessarily
indicative of future performance.
[Performance Graph]
COMPANY/INDEX/MARKET 6/26/1998 6/25/1999 7/2/2000
Champps Entertainment Inc. 91.96 53.57 76.79
Next Peer Group 103.48 105.86 127.83
Old Peer Group 98.34 82.41 66.58
Russell 3000 Index 119.44 142.18 153.91
Compensation Committee Report
The Compensation Committee reviews and approves compensation levels for
Champps' executive officers and oversees and administers Champps' 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
Champps' stockholders are best served when compensation is directly aligned with
Champps' financial performance. Therefore, the Compensation Committee has
approved overall compensation programs that award a competitive base salary, and
encourage exceptional performance through meaningful incentive awards, both
short and long term, which are tied to Champps' performance.
Responsibilities. The responsibilities of the Compensation Committee
include:
o developing compensation programs that are consistent with and are linked
to Champps' 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 Champps' performance appropriately.
Purpose. Champps' 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 Champps' 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 Champps' 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 Champps' 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 Champps' 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
Champps. 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 Champps' 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
Champps. 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
Champps' Management Annual Incentive Plan.
It is Champps' 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 Champps 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
awarded by the Compensation Committee in its discretion based on its assessment
of a combination of four factors: Champps' overall 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, with the concurrence of the Compensation Committee, related
to individual, team, and Champps' performance.
Chief Executive Officer Compensation. Effective June 24, 1999, Mr.
Baumhauer became President and Chief Executive Officer of Champps and in August
1999 was elected as a director and was appointed Chairman of the Board of
Directors. At the recommendation of the Compensation Committee, Champps entered
into an employment contract with Mr. Baumhauer, which was subsequently amended
as of September 28, 2000, as disclosed elsewhere in this Proxy Statement. The
modifications to the terms of Mr. Baumhauer's employment, included the extension
of his employment contract through June 30, 2003, and the extension of the
expiration date of options to purchase 1,009,000 shares of Champps' Common Stock
from June 30, 2001, until June 30, 2003. On September 23, 2000, Mr. Baumhauer
exercised options to purchase 178,000 shares of Champps' Common Stock at an
average price of $1.95 per share; Mr. Baumhauer stated that he has no present
intention to dispose of these shares. The Compensation Committee also approved a
loan of approximately $550,000 by Champps to Mr. Baumhauer to fund the $347,522
exercise price of the options he is exercising and the income tax liability
incurred by him upon such exercise, which is based on the difference between the
option exercise price and the value of the shares on the date of exercise of
$4,625 per share; the loan is secured by the stock being issued and is a full
recourse personal liability of Mr. Baumhauer, maturing on September 30, 2003,
and accruing interest at the rate of 9% per annum, payable at maturity. The
Compensation Committee of Champps' Board of Directors took these actions in
consideration of the significant progress made by Champps under Mr. Baumhauer's
leadership since July 1999 in improving operating results, including positive
comparable same-store sales, significant improvement in operating margins and
the resolution of several contingent liabilities Champps had retained after the
disposition of predecessor businesses. The Committee was guided in its action by
the objectives of making sure Mr. Baumhauer's interests are aligned with the
interests of Champps' shareholders, of ensuring Mr. Baumhauer's commitment to
the execution of Champps' expansion strategy beyond the initial time horizon of
his current arrangement with Champps, and of putting Champps in the best
position to capitalize on the strong market position of the Champps concept. The
Compensation Committee believes that the terms of Mr. Baumhauer's new employment
contract are appropriate in light of Champps' current strategic direction, the
Board of Directors' decision that Champps would remain independent and pursue
the growth of the Champps Americana restaurant concept, and Mr. Baumhauer's
experience and reputation in the restaurant industry. For fiscal year 2000, Mr.
Baumhauer participated in the compensation programs outlined above.
Compensation of Other Officers. Champps' 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.
Timothy R. Barakett
James Goodwin
Nathaniel P.V.J. Rothschild
Alan D. Schwartz
Compensation Committee Interlocks
Alan D. Schwartz, a director of Champps who is also a member of the
Compensation Committee, is Senior Managing Director-Corporate Finance of Bear
Stearns & Co., Inc. In the past, Bear Stearns and its affiliates have provided
financial advisory and financing services to Champps and have received fees and
reimbursement of expenses for rendering such services.
Timothy R. Barakett and Nathaniel P.V.J. Rothschild, two directors of
Champps who are also members of the Compensation Committee, are Chairman and
President, respectively of Atticus Capital, L.L.C. As disclosed elsewhere in
this Proxy Statement, Mr. Barakett may also be deemed the beneficial owner of
2,496,706 shares of Common Stock, or approximately 21.34% of all Common Stock
outstanding. Mr. Goodwin is also a member of the Compensation Committee. In
connection with Mr. Goodwin's appointment to Champps' Board of Directors,
Atticus Capital, L.L.C. entered into an agreement with Mr. Goodwin which
provides that Atticus Capital, L.L.C. will pay to Mr. Goodwin an amount equal to
five percent of the proceeds above $4.875 per share of Common Stock realized by
Atticus Partners, L.P., Atticus Qualified Partners, L.P. and Atticus
International, Ltd. upon the sale or disposition of shares of Common Stock
beneficially owned by them. In addition, Atticus Partners, L.P. agreed to
indemnify Mr. Goodwin against any and all losses, claims, liabilities and
expenses in connection with serving as a member of Champps' Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Champps' executive officers, directors and persons who own more than 10% of a
registered class of Champps' equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission and to furnish
copies to Champps.
Based upon a review of the reports furnished to Champps and representations
made to Champps by its officers and directors, Champps believes that, during
fiscal year 2000, its officers, directors and its 10% beneficial owners, other
than Messrs. Dreibholz and Schwartz and Ms. Randall, complied with all
applicable reporting requirements.
AUDITORS
The Board of Directors appointed the firm of Arthur Andersen, LLP as
auditors of Champps for fiscal year 2000.
EXPENSE OF SOLICITATION
The cost of soliciting proxies will be borne by Champps. In addition,
Champps 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 Champps,
without additional compensation, by use of the mails, personal interview,
telephone or telegraph.
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
Stockholder proposals intended to be presented at the next annual meeting
of stockholders must be received by Champps no later than July 11, 2000 in order
to be considered for inclusion in Champps' proxy statement. Such a proposal must
also comply with the requirements as to form and substance established by the
SEC in order to be included in the proxy statement and should be directed to:
the Secretary of Champps at the principal executive offices of Champps located
at 5619 DTC Parkway, Suite 1000, Englewood, Colorado 80111.
Stockholder proposals to be presented at the next annual meeting of
stockholders other than proposals to be considered for inclusion in Champps'
proxy statement described above, must comply with the requirements set forth in
Champps' By-laws. Champps' By-laws provide that any stockholder of record
wishing to have such a stockholder proposal considered at an annual meeting must
provide written notice of such proposal and appropriate supporting
documentation, as set forth in the By-laws of Champps at its principal executive
office, not less than 75 days nor more than 120 days prior to the anniversary
date of the immediately preceding annual meeting (the "Anniversary Date");
provided, however, that in the event the annual meeting is scheduled to be held
on a date more than 30 days before or more than 60 days after the Anniversary
Date, notice must be so delivered not later than the close of business on the
later of (i) the 75th day prior to the scheduled date of such annual meeting or
(ii) the 15th day after public disclosure of the date of such meeting. Proxies
solicited by the Board of Directors may, under certain circumstances prescribed
in Rule 14a-4 of the Exchange Act, be voted in accordance with the discretion of
the proxy holders with respect to stockholder proposals presented at the next
annual meeting of stockholders (other than proposals included in Champps' proxy
statement).
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 CHAMPPS' ANNUAL REPORT TO
STOCKHOLDERS FOR FISCAL YEAR 2000. ADDITIONAL INFORMATION IS CONTAINED IN
CHAMPPS' ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED JULY 2, 2000,
INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO. CHAMPPS WILL FURNISH
WITHOUT CHARGE TO ANY STOCKHOLDER A COPY OF ITS ANNUAL REPORT ON FORM 10-K UPON
WRITTEN REQUEST TO: INVESTOR RELATIONS, CHAMPPS ENTERTAINMENT, INC., 5619 DTC
PARKWAY, SUITE 1000, ENGLEWOOD, COLORADO 80111.
Donna L. Depoian
Secretary
October 30, 2000
<PAGE>
DETACH HERE
PROXY
CHAMPPS ENTERTAINMENT, INC.
5619 DTC Parkway
Suite 1000
Englewood, Colorado
SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned stockholder of Champps Entertainment, Inc. (the "Company")
hereby appoints William H. Baumhauer and Donna L. Depoian, each with the power
to appoint his substitute, and hereby authorizes them to represent and to vote,
as designated on the reverse side, all shares of common stock of the Company
held of record by the undersigned on October 16, 2000 at the Annual Meeting of
Stockholders to be held on December 13, 2000 and any adjournments or
postponements thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED. IF NO
DIRECTION IS GIVEN WITH RESPECT TO A PARTICULAR PROPOSAL, THIS PROXY WILL BE
VOTED IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF DIRECTORS. The
undersigned's vote will be cast in accordance with the proxies' discretion on
such other business as may properly come before the meeting or at any
adjournments or postponements thereof.
PLEASE MARK, DATE, SIGN, AND RETURN THIS PROXY CARD PROMPTLY, USING THE
ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
---------------- --------------
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
---------------- --------------
<PAGE>
CHAMPPS ENTERTAINMENT, INC.
c/o American Stock Transfer & Trust Company
6201 Fifteenth Avenue
Brooklyn, N.Y. 11219
DETACH HERE
------ ---------
X Please mark votes as in this example.
------
1. Proposal to elect the following
persons as Class I Directors:
Nominees: (1) James Goodwin and (2) Timothy R. Barakett
FOR ---- ---- WITHHELD
BOTH FROM BOTH
---- ----
-----
----- -----------------------------------------------
WITHHELD AS TO THE NOMINEE NOTED
ABOVE
MARK HERE FOR ADDRESS CHANGE AND ----
NOTE AT LEFT
----
Please Sign exactly as your name appears
hereon. Joint owners should each sign.
Executors, administrators, trustees,
guardians or other fiduciaries should give
full title as such. If signing for a
corporation, please sign in full corporate
name by a duly authorized officer.
Signature:_______________ Date:______ Signature:________________ Date:______
