<PAGE> 1
FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Fiscal Year Ended October 2, 1994
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 1-6192
GROUND ROUND RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
New York 13-5637682
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification No.)
35 Braintree Hill Office Park, Braintree, Massachusetts 02184
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (617) 380-3100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each Exchange on which registered
Common Stock, $ .1667 par value NASDAQ National Market System
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Indicate by check mark whether 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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of the Form 10-K or any amendment to the
Form 10-K. [X]
On November 30, 1994, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was approximately $47.2 million, based upon the
last reported sale price for a share of the Registrant's Common Stock on the
NASDAQ National Market System.
Number of shares of Common Stock outstanding as of November 30, 1994:
11,114,269.
<PAGE> 2
<TABLE>
FORM 10-K/A
PART III
<S> <C> <C>
Item 10 Directors and Executive Officers of
the Registrant 2
Item 11 Executive Compensation 5
Item 12 Security Ownership of Certain Beneficial
Owners and Management 10
Item 13 Certain Relationships and Related
Transactions 14
</TABLE>
<PAGE> 3
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS OF THE REGISTRANT
<TABLE>
Certain information is set forth below concerning the Directors of the company who have been elected to hold office for
fiscal year 1994 and until their successors are duly elected and qualified. The Directors of the Company are as follows:
<CAPTION>
Director
Name Age Since
---- --- --------
<S> <C> <C>
Michael P. O'Donnell 38 1991
J. Eric Hanson 48 1987
Robert E. Lee(1) 38 1993
David J. P. Meachin 54 1991
Stanley J. Moss 64 1991
Thomas J. Russo(1) 53 1991
Daniel R. Scoggin 57 1991
<FN>
- -------------------------
(1) Messrs. Lee and Russo have been nominated to serve as directors by the Company under the terms of an
agreement between the Company and HM Holdings, Inc. See Security Ownership of Certain Beneficial Owners
and Management - 1991 Stockholder Agreement with HM Holdings in Item 12.
</TABLE>
Mr. O'Donnell has been the Chairman of the Board, President and Chief
Executive Officer of the Company since September 1991 and the President and
Chief Executive Officer of the Company's wholly-owned subsidiary The Ground
Round, Inc. ("Ground Round") since January 1990. He was Senior Vice President
(Southern Division) of TGI Friday's Inc., a restaurant chain, from December 1986
through December 1989.
Mr. Hanson has been Senior Vice President since February 1994 and a Vice
President since February 1993 of MacAndrews and Forbes Holdings, Inc., a private
investment company. He was President of Edina Group, Inc., a private investment
firm, from February 1992 to February 1993 and has been employed by the Company
and Ground Round on a part-time basis since October 1991. He was Vice Chairman
and Chief Executive Officer of the Company from January 1990 through September
1991 and President of the Company from January 1989 through January 1990. Mr.
Hanson is a director of Meridian Sports, Incorporated.
Mr. Lee has been Vice President and Chief Financial Officer of Hanson
Industries since April 1992. He was Treasurer of Hanson Industries from January
1987 to April 1992.
2
<PAGE> 4
Mr. Meachin has been Chairman and Chief Executive Officer of Cross
Border Enterprises, Inc., an import-export company, since June 1991. He was a
Managing Director in the Investment Banking Division of Merrill Lynch & Co.,
Inc. from 1981 to 1991.
Mr. Moss has been legal counsel to NatWest Markets, Investment Banking,
a division of National Westminster Banks, Plc, since August 1994. He was
engaged in the private practice of law from February 1, 1992 to July 1994. From
January 1991 through January 1992, he was of counsel to the law firm of Katten,
Muchin & Zavis. He was Senior Vice President, Secretary and Corporate Counsel
of Drexel Burnham Lambert Incorporated from 1987 to 1990. Mr. Moss is a trustee
of Mid-Atlantic Realty Trust.
Mr. Russo has been Chairman, President and Chief Executive Officer of
Miami Subs Corporation since January 1994. He was Group Chairman and Chief
Executive Officer of the Housewares Group of Hanson Industries from December
1987 to January 1994. He was a private consultant from February 1987 until
December 1987. He was the President of Ponderosa Steakhouses, a restaurant
chain, from 1985 to February 1987. Mr. Russo is a director of JB's Restaurants,
Inc.
Mr. Scoggin was President and Chief Executive Officer of TGI Friday's
Inc. until November 1986 and has been a private investor since that time.
EXECUTIVE OFFICERS OF THE REGISTRANT
<TABLE>
Certain information is set forth below concerning the executive officers
of the Company who have been elected to hold office for such terms as may be
prescribed by the Board, and unless sooner removed under the Bylaws of the
Company, or until their successors are duly elected and qualified. The
executive officers of the Company are as follows:
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Michael P. O'Donnell 38 Chairman of the Board, President and
Chief Executive Officer
Peter J. Beaudrault 40 Executive Vice President
Michael R. Jorgensen 42 Sr. Vice President, Chief Financial
Officer & Treasurer
William C. Schoener 43 Sr. Vice President - Division Operations
Warren C. Hutchins 50 Vice President - Purchasing & Distribution
Holly J. Young 42 Vice President - Marketing
Robin L. Moroz 38 Vice President - General Counsel
Elizabeth Brennan Baker 40 Vice President - Organizational Development
</TABLE>
3
<PAGE> 5
Michael P. O'Donnell's business experience and current position with the
Company are described above. See " -- Directors of the Registrant."
Peter J. Beaudrault has served as Executive Vice President of the
Company since June 1994 and was Senior Vice President of Division Operations of
the Company from September 1993 to May 1994. He was Divisional Vice President
of the Company and Ground Round since September 1992. He was Regional Manager
of TGI Friday's Inc. from July 1989 through September 1992. He was Director of
Operations for Hard Rock Cafes, Inc. from November 1987 through July 1989.
Michael R. Jorgensen has served as Vice President, Chief Financial
Officer and Treasurer of the Company and Ground Round since June 1993 and was
appointed Senior Vice President in September 1993. He was Vice President,
Finance - Middle East of Alghanim Industries, the largest consumer products
distributor in Kuwait, from March 1992 to April 1993. Prior to that, Mr.
Jorgensen was Vice President and Chief Financial Officer of the Company (then
known as International Proteins) from May 1988 to September 1991.
William C. Schoener has served as Senior Vice President of Division
Operations since September 1993. He was Divisional Vice President of the
Company and Ground Round since September 1991 and January 1989, respectively.
He was a Director of Operations of Ground Round from June 1986 through December
1988.
Warren C. Hutchins has served as Vice President, Purchasing and
Distribution of the Company and Ground Round since September 1991 and August
1986, respectively. He was Secretary of Ground Round from March 1990 through
February 1991.
Holly J. Young has served as Vice President of Marketing since May of
1994, and served as Director of Marketing when she joined the Company in March
of 1994. She was Senior Vice President of Marketing of Chi-Chi's Restaurants,
Inc. from January 1993 through January 1994, and Vice President of Marketing for
Grisanti's Inc. from April 1992 to December 1992. From June 1989 to March 1991,
she was Senior Vice President of Marketing for Metromedia Steakhouses, Inc. She
was Vice President of Marketing for TGI Friday's Inc. from 1987 to 1989.
Robin L. Moroz was appointed Vice President, General Counsel and
Secretary of the Company in December 1994. She was hired by Ground Round as
Corporate Attorney in August 1989 and since October 1991 has served as Assistant
General Counsel.
Elizabeth Brennan Baker has served as Vice President of Organizational
Development since July of 1994. She was Vice President of Human Resources from
January 1993 through June of 1994. She was Vice President - Personnel and
Training of the Company and Ground Round since September 1991 and March 1990,
respectively. She was Vice President - Training and Development of Ground Round
from November 1988 through February 1990, Director of Training and Development
of Ground Round from August 1985 through October 1988.
There is no family relationship among any of the Officers and Directors
of the Company.
4
<PAGE> 6
ITEM 11. EXECUTIVE COMPENSATION
<TABLE>
SUMMARY COMPENSATION TABLE
The following table contains a summary of the annual, long-term and other compensation for each of the Company's fiscal
years ended September 27, 1992, October 3, 1993 and October 2, 1994, of those persons who were, at October 2, 1994, the Chief
Executive Officer and the other four most highly compensated executive officers of the Company.
<CAPTION>
Annual Compensation Long-Term Compensation
Securities
Under-
Other Restricted Lying
Annual Stock Options/ All Other
Name and Fiscal Salary Bonus Compensation Award(s) SARs Compensation
Principal Position Year ($) ($) ($) ($) (#) ($)
- ---------------------- ------ ------- ----- ------------ ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Michael P. O'Donnell 1994 275,000 137,500 0 0 0 11,775(4)
Chairman of the Board, 1993 235,000 117,500 0 273,600(3) 103,700 10,575(4)
President and Chief 1992 235,000 63,098(2) 0 0 85,000 8,943(4)
Executive Officer
Peter J. Beaudrault 1994 130,000 69,033 0 0 0 18,255(5)
Executive Vice President 1993 92,500 23,125 0 0 23,610 15,000(5)
1992 5,832(1) 0 0 0 40,000 0
Michael R. Jorgensen 1994 130,000 69,033 0 0 0 4,642(4)
Senior Vice President, 1993 37,902(1) 16,250 0 0 47,500 1,167(4)
Chief Financial Officer 1992 N/A N/A N/A N/A N/A N/A
and Treasurer
Frank M. Puthoff 1994 120,000 65,283 0 0 0 5,579(4)
Senior Vice President, 1993 114,950 57,475 0 0 23,610 5,173(4)
General Counsel 1992 112,338 30,864(2) 0 0 40,000 4,296(4)
and Secretary
William C. Schoener 1994 120,000 65,283 0 0 0 5,000(4)
Senior Vice President 1993 92,500 38,192 0 0 23,610 3,921(4)
of Division Operations 1992 92,500 0 0 0 40,000 2,775(4)
<FN>
(1) Messrs. Beaudrault and Jorgensen were employed by the Company commencing in September 1992 and June 1993, respectively.
(2) Because the Company changed its fiscal year-end in September 1991, bonuses for fiscal 1992 were based on the Company's
performance during the nine-month period ended September 27, 1992.
(3) As of October 3, 1994, Mr. O'Donnell held an aggregate of 30,000 shares of restricted stock, the value of which is shown in
the table. The grant to Mr. O'Donnell was made in February 1993 and the shares are subject to forfeiture restrictions which
lapse in equal installments over a period of three years. In the event of Mr. O'Donnell's death or disability, the shares of
restricted stock are no longer subject to forfeiture.
</TABLE>
5
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(4) Represents the amount of the Company's contributions to the Company's
non-qualified Deferred Compensation Plan made on behalf of the named
executive officers.
(5) The Company agreed to pay Mr. Beaudrault $30,000 when he joined the
Company, one-half of which was paid in fiscal 1993 and one-half of which
was paid in fiscal 1994. The remaining $3,255 Mr. Beaudrault received in
fiscal 1994 represents the amount of the Company's contribution to the
Deferred Compensation Plan made on his behalf.
<TABLE>
AGGREGATED OPTIONS/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR VALUES
The following table shows certain information as of October 2, 1994 concerning unexercised stock options held by the Chief
Executive Officer and the named executive officers that were granted under the Company's 1989 Stock Option Plan and 1992 Equity
Incentive Plan. None of the named individuals exercised any stock options during 1994.
Number of
Securities Underlying Value of
Unexercised Unexercised
Options/SARs at Options/SARs at
FY end (#) FY end ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable (1)
- ---- --------------- ------------ ------------- -----------------
<S> <C> <C> <C> <C>
M. O'Donnell 0 0 127,519 / 87,033 471,896 / 72,683
P. Beaudrault 0 0 42,500 / 21,110 88,437 / 14,930
M. Jorgensen 0 0 2,500 / 45,000 3,437 / 61,875
F. Puthoff 0 0 47,025 / 21,110 176,201 / 14,930
W. Schoener 0 0 47,025 / 21,110 176,201 / 14,930
<FN>
Footnote:
(1) Valuation is based on the fair market value of Ground Round common stock on October 2, 1994 (the last day of
the 1994 fiscal year).
</TABLE>
DEFINED BENEFIT PLAN TABLE
The following is a pension plan table showing estimated annual benefits
(exclusive of reductions of Social Security benefits) payable upon normal
retirement to persons in specified compensation and years of service
classifications under the Company's unfunded, non- qualified retirement plan
(the "Retirement Plan"). Officers of the Company who hold the title of
President, Vice President or General Counsel are entitled to participate in the
Retirement Plan. The Company pays the full cost of the Plan.
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<PAGE> 8
<TABLE>
The table below shows the annual amounts payable under the present provisions of the Plan as amended through October 2,
1994, based on Final Average Salary for various years of service, assuming the employee would retire at age 65 in 1994.
<CAPTION>
Final Years of Service
Average ----------------------------------------------------------
Salary 10 15 20 25
------- ------ ------ ------ -------
<S> <C> <C> <C> <C>
$80,000 16,000 16,000 28,000 40,000
100,000 20,000 20,000 35,000 50,000
120,000 24,000 24,000 42,000 60,000
140,000 28,000 28,000 49,000 70,000
160,000 32,000 32,000 56,000 80,000
200,000 40,000 40,000 70,000 100,000
250,000 50,000 50,000 87,500 125,000
300,000 60,000 60,000 105,000 150,000
350,000 70,000 70,000 122,500 175,000
400,000 80,000 80,000 140,000 200,000
</TABLE>
Final Average Salary is the highest five-year average of consecutive
years' Salary (from the Summary Compensation Table) over an employee's career
with the Company.
The amounts above are payable for the life of the retiree only, and
would be reduced on an actuarial basis if survivor options were chosen. In
addition, a 100% Social Security offset applies to amounts above.
The years of service at October 2, 1994 under the Plan for those
individuals named in the Summary Compensation Table were as follows: Mr.
O'Donnell, 4 years, 8 months; Mr. Puthoff 4 years, 2 months; Mr. Schoener, 21
years, 7 months; Mr. Beaudrault, 2 years; and Mr. Jorgensen, 1 year, 3 months.
The compensation covered by the Retirement Plan is the base salary of
individual participants as shown in the Summary Compensation Table.
Participants in the Retirement Plan are entitled to a monthly benefit upon
retirement after attaining the age of 65 equal to 50% of final average
compensation, reduced by 1/2 of 1% of final average compensation for each month
(not in excess of 120 months) by which the participants's credited service with
the Company is less than 300 months, less the amount of the participant's
primary Social Security benefit. Early retirement benefits are also available
for participants who are 55 and have completed 15 years of service equal to the
participant's normal retirement benefit reduced for early commencement by 5/9 of
1% for each of the first 60 months plus 5/18 of 1% for each month in excess of
60 months by which the benefit commencement date precedes a participant's normal
retirement date, and increased by 1/48 of 1% of the participant's final average
compensation times months of projected credited service over 25 years, not to
exceed 120 months, less the amount of the participant's primary social security
benefit. Projected credited service indicates that period to time which
commences on the participant's date of hire and ends on the participant's normal
retirement date.
7
<PAGE> 9
COMPENSATION OF DIRECTORS
Each of the directors of the Company, other than directors who are
officers or employees of the Company or of HM Holdings, Inc. ("HMH") or its
affiliates, receives an annual fee of $12,000 for serving as a director. In
addition, under the Company's 1992 Equity Incentive Plan, each director of the
Company who is not an officer or employee of the Company receives a five-year
option to purchase 2,000 shares of Common Stock of the Company when he or she is
first elected a director of the Company and an option to purchase 1,000 shares
of Common Stock of the Company as of the date of each meeting of shareholders at
which the director is re-elected. These options are immediately exercisable at
a purchase price equal to the closing price of a share of the Company's Common
Stock on the NASDAQ/NMS Stock Market on the date the option is granted. Those
directors who are employees of HMH or its affiliates have declined to accept
options under the Company's 1992 Equity Incentive Plan.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Employment Agreements. The Company has entered into an employment
agreement with Michael P. O'Donnell effective June 10, 1991 and amended
effective April 21, 1992 under which Mr. O'Donnell has agreed to serve the
Company as Chairman, President and Chief Executive Officer for a term commencing
upon September 27, 1991 and extending until December 31, 1996. The agreement
will be automatically renewed on each December 31 thereafter for an additional
year, unless, not later than the September 30 prior to such December 31, either
party gives notice to the other that it or he wishes to terminate the agreement.
Under the amended agreement, Mr. O'Donnell is entitled to compensation
consisting of (1) a base salary of $235,000 per annum, subject to upward
adjustment effective January 1 in each year, and (ii) an annual bonus of up to
100% of his base salary for the preceding fiscal year determined in the same
manner as bonuses are determined for other executives (other than executive and
senior vice presidents) of the Company under the Company's bonus plan then in
effect. For fiscal 1994, Mr. O'Donnell's base salary under his agreement was
$275,000. Mr. O'Donnell is also entitled to receive certain benefits, including
insurance, participation in deferred compensation and stock option plans, use of
a company car or a car allowance, and payment of annual country club dues. The
Company may terminate the agreement at any time for "cause" or "disability" (as
defined in the agreement). Mr. O'Donnell may terminate the agreement at any
time if the Company is in breach of any of its obligations to him and such
breach is not cured within 30 days; if he is not reelected to serve as Chairman,
President and Chief Executive Officer of the Company or is removed from any of
such positions (unless he is not reelected or removed as Chairman of the Company
as a result of action taken by any person, entity or group of persons or
entities which has the power to elect a majority of the Board of Directors of
the Company); or if the successor to all or substantially all of the business or
assets of the Company fails to assume its obligations under the agreement. In
the event that Mr. O'Donnell's employment is terminated by him pursuant to the
terms of the agreement or by the Company (other than for "cause" or
"disability"), Mr. O'Donnell will be entitled to receive a lump sum payment
equal to two times his base salary then in effect. In the event Mr. O'Donnell's
employment terminates because of death, disability or expiration of his
agreement without renewal, or is terminated without cause, he will receive his
bonus pro-rated based upon the number of days during the fiscal year he was
employed. If his employment is terminated for cause or for breach of his
agreement, he shall not receive any bonus for the year.
8
<PAGE> 10
In August 1991, Ground Round and the Company entered into an agreement
with J. Eric Hanson, a director of the Company and its former Chief Executive
Officer and Vice Chairman, pursuant to which he will be employed by Ground Round
and the Company on a part-time basis for a period of five years currently to
provide advice in connection with the Company's ongoing commercial banking
relationships. In consideration for his services, Mr. Hanson received $36,000
in fiscal 1993 and $12,000 in fiscal 1994 and continues to be eligible to
participate in the Company's stock option plans but is not entitled to receive
directors' fees.
Severance Agreements. In July 1994, the Company entered into severance
agreements (the "Severance Agreements") with Michael P. O'Donnell, Chairman of
the Board, President and Chief Executive Officer, Michael R. Jorgensen, Senior
Vice President and Chief Financial Officer, Peter J. Beaudrault, Executive Vice
President, and William C. Schoener, Senior Vice President, each of whom is a
member of the Management Group. The Severance Agreements provide benefits in
the event of a change in control of the Company as defined therein.
Mr. O'Donnell's Severance Agreement provides that he will receive a lump
sum payment if (i) he does not voluntarily terminate his employment with the
Company for a period of 120 days after a change in control of the Company has
occurred (the "Stay Period") or (ii) his employment by the Company is terminated
by the Company during the Stay Period for any reason other than "cause" (as
defined in his Severance Agreement). The lump sum payment will be equal to two
times the sum of (i) Mr. O'Donnell's highest annual base salary at any time on
or after the date of his Severance Agreement and (ii) Mr. O'Donnell's highest
targeted bonus under the Company's incentive bonus plan at any time on or after
the date of his Severance Agreement. In addition, for a period of approximately
28 months after the date of the change in control, Mr. O'Donnell will be
entitled to the benefit of all employee benefit plans and arrangements in which
he is entitled to participate immediately prior to the change in control
(including, without limitation, medical and dental insurance plans, disability
and life insurance plans, and car and country club allowance programs).
The Severance Agreements for Messrs. Jorgensen, Beaudrault and Schoener
provide that each will receive a bonus (a "Bonus Payment") within five days
after the expiration of the Stay Period following a change in control if (i)
during the Stay Period his employment is terminated by the Company for any
reason other than cause or (ii) he does not voluntarily terminate his employment
during the Stay Period other than for Good Reason (as defined in the Severance
Agreements). The Bonus Payment will be equal to one- half of the employee's
highest annual base salary at any time on or after the date of the Severance
Agreement. The Severance Agreement for each of Messrs. Jorgensen, Beaudrault
and Schoener also provides that such employee will receive an additional payment
(each a "Severance Payment:"), if (i) within 24 months after a change in control
of the Company, the employee terminates his employment with the Company for Good
Reason within 90 days after the event which constitutes Good Reason or (ii)
within such 24- month period, the Company terminates his employment for any
reason other than cause. The Severance Payment will be equal to two times the
sum of (i) the employee's highest annual base salary at any time on or after the
date of the Severance Agreement and (ii) the employee's highest targeted bonus
under the Company's incentive bonus plan at any time on or after the date of the
Severance Agreement. In addition, each of Messrs. Jorgensen, Beaudrault and
Schoener will be entitled for a period of 24 months after the date of
termination of employment to the benefit of all employee welfare benefit plans
and arrangements in which he is entitled to participate immediately prior to the
change of control (including, without limitation, medical and dental insurance
plans, disability and life insurance plans, and car allowance programs).
9
<PAGE> 11
Each Severance Agreement provides that all outstanding Company Options
(as defined below) and, in the case of Mr. O'Donnell, all restricted stock will
vest immediately upon a change of control.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
<TABLE>
GENERAL. The following table sets forth, in accordance with the Commission's beneficial ownership rules, certain
information about the only persons known by the Company to be the beneficial owners of more than five percent of the outstanding
shares of Common Stock as of October 2, 1994. The information has been derived from statements on Schedules 13D or 13G filed by the
persons listed in the table. Unless otherwise indicated, each of the beneficial owners has sole voting and investment power with
respect to its or his shares.
<CAPTION>
Name and Address of Number of Shares Percent
Beneficial Owner Beneficially Owned of Class
------------------- ------------------- --------
<S> <C> <C>
HM Holdings, Inc. 3,680,000 (1)(2) 33.11%
99 Wood Avenue South
Iselin, NJ 08830
FMR Corp. 1,393,600 (3) 12.54%
82 Devonshire Street
Boston, MA 02109-3614
Wellington Management Company 668,500 (4) 6.01%
75 State Street
Boston, MA 02109
David H. Clarke 666,467 (1)(5) 6.00%
16 West River Road
P.O. Box 521
Rumson, NJ 07760
GSB Holdings, Inc. 640,000 (1) 5.76%
16 West River Road
P.O. Box 521
Rumson, NJ 07760
Dimensional Fund Advisor 575,600 5.18%
1299 Ocean Ave.
Santa Monica, CA 90401
</TABLE>
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<PAGE> 12
(1) HM Holdings is engaged principally in the business of holding
investments and is an indirect, wholly-owned subsidiary of Hanson PLC.
GSB Holdings is engaged principally in the business of holding
investments and is a wholly-owned subsidiary of Great South Beach
Improvement Co. ("GSB Improvement"), a corporation principally engaged
in real estate development. David H. Clarke is a Vice Chairman of
Hanson PLC, an officer and director of HM Holdings, a director, officer
and controlling shareholder of GSB Improvements, and an officer and a
director of GSB Holdings. HM Holdings, on the one hand, and Mr. Clarke,
GSB Improvement and GSB Holdings, on the other hand, disclaim the
existence of a group for the purposes of Section 13(d) of the Exchange
Act. Pursuant to the 1991 Agreement (as hereinafter defined), HM
Holdings has two nominees, Robert E. Lee and Thomas J. Russo, serving on
the company's Board of Directors. Mr. Lee is Vice President and Chief
Financial Officer of Hanson America Inc., a subsidiary of Hanson PLC
that is a direct parent of HM Holdings. GSB Holdings is not entitled to
nominate any directors of the Company. To the Company's knowledge,
other than as described above and under "-- Security Ownership of
Certain Beneficial Owners -- 1991 Stockholder Agreement with HM
Holdings" below, neither HM Holdings nor GSB Holdings has any
affiliation with the Company or its management.
(2) Excludes an aggregate of 9,400 shares of Common Stock beneficially
owned by Robert E. Lee and Thomas J. Russo, whom HM Holdings has
nominated to the Board of Directors pursuant to the 1991 Agreement. See
"-- Security Ownership of Certain Beneficial Owners - 1991 Stockholder
Agreement with HM Holdings." Also excludes any other shares of Common
Stock that may be beneficially owned by directors, executive officers
and/or employees of Hanson PLC and its subsidiaries, directly or through
individual employee savings plan accounts.
(3) All shares are beneficially owned by Fidelity Management & Research
Company.
(4) All Shares are owned by numerous investment counselling clients to
whom Wellington Management Company serves as investment advisor.
(5) Includes (i) 640,000 shares owned by GSB Holdings (as listed in the
table above), and (ii) 26,467 shares owned directly by Mr. Clarke. Mr.
Clarke is an indirect majority shareholder and an officer and director
of GSB Holdings and may, therefore, be deemed to own beneficially the
shares of Common Stock owned by GSB Holdings. Excludes 37,333 shares of
Common Stock owned by Mr. Clarke's spouse and children, as to which Mr.
Clarke disclaims beneficial ownership. Also excludes all shares
beneficially owned by HM Holdings and any shares that may be
beneficially owned by directors, executive officers and/or employees of
Hanson PLC and its subsidiaries, directly or through individual employee
savings plan accounts.
1991 STOCKHOLDER AGREEMENT WITH HM HOLDINGS. HM Holdings and the
Company are parties to a Stockholder Agreement dated as of August 1, 1991 (the
"1991 Agreement") providing for certain rights and restrictions with respect to
HM Holdings' ownership of the
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<PAGE> 13
Common Stock. In the 1991 Agreement, the Company agreed that, upon HM Holding's
request, the Company will use its best efforts to nominate and cause to be
elected to the Company's Board of Directors two persons designated by HM
Holdings as long as HM Holdings and its corporate affiliates beneficially own
20% or more of the outstanding shares of Common Stock, and one person designated
by HM Holdings as long as HM Holdings and its corporate affiliates beneficially
own less than 20% but more than 10% of the outstanding shares of Common Stock.
Messrs. Lee and Russo are the current nominees of HM Holdings serving on the
Board of Directors. HM Holdings has the right to propose for election and/or to
solicit proxies in favor of the election of any number of directors of the
Company, but has advised the Company that it has no present intention to seek to
have additional designees elected to the Board.
In the 1991 Agreement, HM Holdings agreed that neither HM Holdings nor
any of its corporate affiliates will acquire, directly or indirectly, such
number of additional shares of Common Stock as would result in HM Holdings and
such affiliates beneficially owning 50% or more of the outstanding shares of
Common Stock unless, in such acquisition, HM Holdings and/or such affiliates
offer to acquire all outstanding shares of Common Stock not held by them upon
substantially the same terms and conditions. In addition, HM Holdings has
agreed that, except in certain limited circumstances, so long as HM Holdings or
any such affiliates seek to sell or otherwise dispose of all or substantially
all of the shares of Common Stock owned by it to a third party, except as may be
otherwise approved by a majority of the members of the Board of Directors not
designated by HM Holdings, HM Holdings or such affiliate will use its best
efforts to cause such third party to offer to purchase all other outstanding
shares of Common Stock upon substantially the same terms and conditions. HM
Holdings also agreed that, if such third party fails to make such offer, HM
Holdings or such affiliate will not so sell or otherwise dispose of such shares
unless such third party agrees to be subject to the same limitation on its
ability to sell and to the requirements applicable to HM Holdings with respect
to the acquisition of 50% or more of the outstanding shares of the Common Stock.
In addition, in the 1991 Agreement the Company agreed that, if at any
time it shall propose to sell any shares of Common Stock or any other security
entitling the holder thereof to vote for the election of directors of the
Company, or any warrants or rights therefor or securities convertible into or
exchangeable therefor, to any person or entity other than HM Holdings or its
affiliates, it shall give HM Holdings the opportunity to purchase such number of
shares or other securities as will permit HM Holdings and its corporate
affiliates to retain their percentage of the Company's voting power.
The Company also agreed that, so long as HM Holdings owns 5% or more of
the outstanding shares of Common Stock, upon HM Holding's request, the Company
will cause up to four registration statements to be filed with the Commission in
order to permit HM Holdings or a corporate affiliate to sell all or a portion of
its shares of Common Stock. In addition the Company agreed, if requested, to
include some or all shares of Common Stock owned by HM Holdings or an affiliate
in any registration statement it otherwise files (other than registration
statements relating to employee stock options). The Company and HM Holdings
also agreed to indemnify each other for certain liabilities that may arise in
connection with any such registration statements.
It is an event of default under the Company's principal credit facility
if HM Holdings does not beneficially own at least 25% of the Company's
outstanding Common Stock or the Company's Board of Directors does not include
two designees of HM Holdings, but if
12
<PAGE> 14
the Company were to raise $10 million of additional common equity capital after
October 1993, the 25% ownership requirement would be reduced to 0% and no HM
Holdings nominees would be required. HM Holdings has agreed that, as long as
the principal credit facility is outstanding, it will not take any action to
cause its beneficial ownership to fall below such percentage and has agreed to
nominate two individuals for election as directors of the Company. The Company
does not have an agreement with HM Holdings or its affiliates requiring them to
provide financial support in connection with the principal credit facility.
1991 REGISTRATION RIGHTS AGREEMENT WITH GSB HOLDINGS. GSB Holdings and
the Company are parties to a Registration Rights Agreement, dated as of August
20, 1991, which allows GSB Holdings certain registration rights with respect to
the shares of Common Stock owned by it. The Company agreed, if requested, to
include no less than 50,000 shares of Common Stock owned by GSB Holdings in any
registration statement it otherwise files (other than registration statements
relating to employee stock options). GSB Holdings agreed to observe the same
lock-ups with regard to the sale of the shares of Common Stock owned by it as
the Company agrees to, if any, in connection with such registration statement if
so requested by the managing underwriter. The Company and GSB Holdings also
agreed to indemnify each other for certain liabilities that may arise in
connection with any such registration statement.
<TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information as of December 31, 1994 with respect to (i) each director of the
Company, (ii) certain executive officers of the Company, and (iii) all officers and directors as a group. This information has been
furnished by the persons listed in the table.
Number of Shares Percent of
Name Beneficially Owned Class
- --------------------------- ------------------ ----------
<S> <C> <C>
(a) Security ownership of directors:
Michael P. O'Donnell 185,419 (1) 1.7%
J. Eric Hanson 123,826 (2) 1.1%
Robert E. Lee 1,000 (3) *
David J. P. Meachin 5,000 (4) *
Stanley J. Moss 4,000 (4) *
Thomas J. Russo 8,400 (5) *
Daniel R. Scoggin 4,000 (4) *
(b) Security ownership of executive officers:
Michael P. O'Donnell 185,419 (1) 1.7%
Michael R. Jorgensen 2,500 (6) *
</TABLE>
13
<PAGE> 15
<TABLE>
<S> <C> <C>
Peter J. Beaudrault 47,870 (6) *
Frank M. Puthoff 52,395 (6) *
William C. Schoener 52,395 (6) *
(c) All officers and directors
as a group (15 persons) 528,751 (7) 4.6%
<FN>
* Less than 1%.
(1) Includes an aggregate of 145,419 shares of Common Stock that may be acquired under stock options exercisable within
60 days of December 31, 1994. Also includes 30,000 shares of restricted Common Stock.
(2) Includes an aggregate of 71,926 shares of Common Stock that may be acquired under stock options exercisable within 60
days of December 31, 1994.
(3) Excludes all shares of Common Stock beneficially owned by HM Holdings, of which Mr. Lee is an executive officer. See
"--Security Ownership of Certain Beneficial Owners."
(4) Includes 4,000 shares of Common Stock that may be acquired under stock options exercisable within 60 days of
December 31, 1994.
(5) Includes 1,000 shares of Common Stock that may be acquired under stock options exercisable within 60 days of
December 31, 1994.
(6) Represents shares of Common Stock that may be acquired under stock options exercisable within 60 days of December 31, 1994.
(7) Includes an aggregate of 420,301 shares of Common Stock that may be acquired under stock options exercisable within
60 days of December 31, 1994.
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
See "Security Ownership of Certain Beneficial Owners and Management -
Security Ownership of Certain Beneficial Owners - 1991 Registration Rights
Agreement with GSB Holdings" in Item 12.
14
<PAGE> 16
SIGNATURES
Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Amendment
on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly
authorized, on the 27th day of January, 1995.
GROUND ROUND RESTAURANTS, INC.
(Registrant)
By:_______________________
Michael R. Jorgensen
Senior Vice President, Chief Financial
Officer and Treasurer
(Principal Financial and Accounting Officer)
<TABLE>
Pursuant to the requirement of the Securities Exchange Act of 1934, as amended, this report has been signed below by the
following persons on behalf of the Registrant in the capacities and on the dates indicated.
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
Michael P. O'Donnell* Chairman of the Board, President, January 27, 1995
- --------------------- and Chief Executive Officer
Michael P. O'Donnell
Michael R. Jorgensen* Senior Vice President, Chief Financial January 27, 1995
- --------------------- Officer and Treasurer
Michael R. Jorgensen (Principal Financial and
Accounting Officer)
J. Eric Hanson* Director January 27, 1995
- ---------------------
J. Eric Hanson
Robert E. Lee* Director January 27, 1995
- ---------------------
Robert E. Lee
David J. P. Meachin* Director January 27, 1995
- ---------------------
David J. P. Meachin
Stanley J. Moss* Director January 27, 1995
- ---------------------
Stanley J. Moss
Thomas J. Russo* Director January 27, 1995
- ---------------------
Thomas J. Russo
Daniel R. Scoggin* Director January 27, 1995
- ---------------------
Daniel R. Scoggin
<FN>
By: ____________________________
Michael R. Jorgensen
Attorney-in-Fact
* A Power of Attorney was filed with the Company's Annual Report on Form 10-K.
</TABLE>
15
