SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant X
Filed by a Party other than the Registrant
Check the appropriate box:
Preliminary Proxy Statement
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
X Definitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
VICORP Restaurants, Inc.
------------------------
(Name of Registrant as Specified In Its Charter)
Stanley Ereckson, Jr.
---------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
X $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-
6(j)(2) or Item 22(a)(2) of Schedule 14A
$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________
2) Aggregate number of securities to which transaction applies:
____________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(Set forth the amount on which the filing fee is calculated
and state how it was determined.)
_____________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_____________________________________________________________________
Fee paid previously with preliminary materials
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
_____________________________________________________________________
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_____________________________________________________________________
4) Date Filed:
_____________________________________________________________________
VICORP RESTAURANTS, INC.
400 West 48th Avenue
Denver, Colorado 80216
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
April 18, 1997
----------------------
The Annual Meeting of the Shareholders of VICORP Restaurants, Inc. will
be held at 777 Westchester Avenue, White Plains, New York 10604, on Friday,
April 18, 1997, at 11:00 a.m., New York time, for the following purposes:
(1) To elect directors to serve until the next Annual Meeting of
Shareholders and until their successors are duly elected and qualified;
(2) To consider and vote upon a proposal to ratify the appointment of
Arthur Andersen LLP as independent auditors for the Company for fiscal year
1997;
(3) To consider and vote upon a proposal approving the VICORP
Restaurants, Inc. Employee Stock Purchase Plan;
(4) To transact such other business as may properly come before the
Meeting.
The Board of Directors has fixed the close of business on February 28,
1997, as the record date for the determination of shareholders of record who
are entitled to notice of and to vote at the Meeting and any adjournment
thereof.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. IF
YOU CANNOT ATTEND, PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN
THE ENCLOSED ENVELOPE SO THAT YOUR SHARES MAY BE VOTED AT THE MEETING. YOUR
VOTE IS IMPORTANT. YOUR PROXY MAY BE REVOKED AT ANY TIME PRIOR TO ITS EXERCISE.
By Order of the Board of Directors
Stanley Ereckson, Jr.
Secretary
Denver, Colorado
March 7, 1997
VICORP RESTAURANTS, INC.
400 West 48th Avenue
Denver, Colorado 80216
____________________
PROXY STATEMENT
___________________
Annual Meeting of Shareholders
To Be Held April 18, 1997
General Information on The Meeting
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of VICORP
Restaurants, Inc. (the "Company") whose principal offices are
located at 400 West 48th Avenue, Denver, Colorado 80216,
telephone number (303) 296-2121, to be used at the Annual Meeting
of Shareholders of the Company (the "Meeting") to be held on
Friday, April 18, 1997, at 11:00 a.m. New York time, at 777
Westchester Avenue, White Plains, New York 10604, and at any
adjournment thereof.
This Proxy Statement, the form of Proxy, and the 1996 Annual
Report to Shareholders are first being sent to shareholders on
approximately March 7, 1997.
Shareholder Proposals
Any shareholder proposal to be considered for presentation at
the 1998 Annual Meeting of Shareholders must be received by the
Company at its executive offices on or before November 8, 1997,
to be considered for inclusion in the Company's proxy materials
under the rules of the Securities and Exchange Commission.
Revocability of Proxy
Any shareholder giving a proxy has the power to revoke it at
any time prior to the voting of the shares represented by the
proxy, by either (1) filing with the Secretary of the Company at
400 West 48th Avenue, Denver, Colorado 80216, an instrument
revoking the proxy or a duly executed proxy bearing a later date;
or (2) attending the meeting and, after notifying the Secretary
of the Company, voting the shares covered by the proxy in person.
Officers and other employees of the Company, for no
additional compensation, may solicit proxies by telephone or
personal interview as well as by mail. The cost of soliciting
proxies will be borne entirely by the Company.
Only shareholders of record at the close of business on the
record date, February 28, 1997, will be entitled to notice of and
to vote at the Meeting. There were outstanding on the record
date 9,073,520 shares of the Company's $.05 par value Common Stock
("Stock").
Each share of Stock is entitled to one vote on each matter to
come before the Meeting. In the election of Directors, cumulative
voting is not allowed. Shares represented by all valid proxies will
be voted in accordance with the instructions contained in the proxies.
In the absence of instructions, shares represented by valid proxies
will be voted in accordance with the best judgment of the persons named
in the solicited proxy. Shares of the Company representing one-third
of the votes entitled to be cast by all outstanding shares of Stock will
constitute a quorum for the transaction of business at the Meeting.
The affirmative vote of the holders of shares of Stock representing a
majority of the votes represented at the Meeting will be sufficient
for approval of the matters to come before the Meeting. Abstentions
and broker non-votes are counted for purposes of determining the presence
or absence of a quorum. Broker non-votes are not counted for purposes
of determining whether a proposal has been approved. Since the affirmative
vote of the holders of shares of Stock representing a majority of the votes
represented at the meeting is required for approval of the matters to
come before the meeting, abstentions will have the effect of a negative
vote.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Stock
The following table sets forth information as of February 20,
1997, with respect to the beneficial ownership of VICORP's Stock
by all persons known by the Company to be the beneficial owners
of 5% or more of the outstanding shares, each director of the
Company, each of the executive officers named in the Summary
Compensation Table (see Compensation of Directors and Executive
Officers) and all directors and executive officers of the Company
as a group.
Name and Amount and
Address of Nature of
Title of Beneficial Beneficial Percent
Class Owner Ownership of Class
-------- ---------- ---------- --------
Stock First Manhattan Co. 1,154,995 <F1) 12.73%
(par value $.05 437 Madison Avenue
per share) New York, NY 10022
Southeastern Asset 587,500 <F2> 6.47%
Management, Inc.
6075 Poplar Avenue, Suite 900
Memphis, TN 38119
Quaker Capital 678,600 <F3> 7.48%
Management Corporation
1300 Arrott Building
401 Wood Street
Pittsburgh, PA 15222
The TCW Group, Inc. 532,300 <F4> 5.87%
865 South Figueroa Street
Los Angeles, CA 90017
Dimensional Fund Advisors, 474,800 <F5> 5.23%
Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Carole Lewis Anderson 17,000 <F6> *
3616 Reservoir Road NW
Washington, DC 20007
Bruce B. Brundage 27,000 <F6> *
5290 DTC Parkway
Suite 160
Englewood, CO 80111
James R. Burke 7,000 <F6> *
400 West 48th Avenue
Denver, CO 80216
Charles R. Frederickson 231,654 <F6> 2.51%
400 West 48th Avenue
Denver, CO 80216
John C. Hoyt 57,868 <F6> *
500 SE Sixth Street
Bartlesville, OK 74003
J. Michael Jenkins 120,000 <F6> 1.31%
400 West 48th Avenue
Denver, CO 80216
Robert E. Kaltenbach 12,925 <F6> *
400 West 48th Avenue
Denver, CO 80216
Robert T. Marto 20,000 <F6> *
White Plains Office Park
777 Westchester Avenue
White Plains, NY 10604
Dudley C. Mecum 19,500 <F6> *
33 Khakum Wood Road
Greenwich, CT 06831
Dennis B. Robertson 24,000 <F6> *
1987 West 111th Street
Chicago, IL 60643
Arthur Zankel 163,000 <F7> 1.82%
437 Madison Avenue
New York, NY 10022
All directors 691,321 7.30%
and executive officers
as a group (14 persons
including those
named above)
_______________________
* Percent of class is less than 1%
[FN]
<F1> Of the 1,154,995 shares beneficially owned, the shareholder
has sole voting power over 356,500 shares, shared voting power over
770,046 shares, sole dispositive power over 356,500 shares, and
shared dispositive power over 798,495 shares. Arthur Zankel, a
director of the Company, is a Co-Managing Partner of First Manhattan
Co.
<F2> Of the 587,500 shares beneficially owned, the shareholder
has sole voting power over 281,000 shares, shared voting power
over 290,000 shares, no voting power over 16,500 shares, sole
dispositive power over 297,500 shares, and shared dispositive
power over 290,000 shares.
<F3> Of the 678,600 shares beneficially owned, the shareholder
has sole voting power over 173,300 shares, shared voting power
over 505,300 shares, sole dispositive power over 173,300 shares,
and shared dispositive power over 505,300 shares.
<F4> Of the 532,300 shares beneficially owned, the shareholder
has sole voting and dispositive power over all 532,300 shares.
<F5> Of the 474,800 shares beneficially owned, the shareholder
has sole voting power over 329,500 shares, no shared voting
power, sole dispositive power over 474,800 shares, and no shared
dispositive power.
<F6> Includes 16,000, 22,000, 7,000, 152,000, 20,000, 100,000,
12,000, 20,000, 18,000, and 22,000 shares which Ms. Anderson,
Messrs. Brundage, Burke, Frederickson, Hoyt, Jenkins, Kaltenbach,
Marto, Mecum, and Robertson, respectively, have the right to
purchase under options that are presently exercisable.
<F7> Includes 142,000 shares owned directly by Mr. Zankel,
22,000 shares which he has the right to purchase under options
that are presently exercisable.
VICORP is unaware of any arrangement which would at a
subsequent date result in a change in the control of the Company.
ELECTION OF DIRECTORS
Directors are to be elected to hold office until the next
Annual Meeting of Shareholders and until their successors shall
be elected and shall qualify. Each of the persons nominated is
currently a member of the Board of Directors.
NOMINEES FOR ELECTION AT THE ANNUAL MEETING
Served as
a director
Name and Age Position since
- ------------ -------- ----------
Carole Lewis Anderson, 52 Director of the Company April 1991
Bruce B. Brundage, 61 Director of the Company August 1988
Charles R. Frederickson, 59 Chairman of the Board June 1968
John C. Hoyt, 69 Director of the Company October 1982
J. Michael Jenkins, 50 Director, Chief Executive August 1994
Officer and President of the
Company
Robert T. Marto, 51 Director of the Company August 1989
Dudley C. Mecum, 62 Director of the Company December 1989
Dennis B. Robertson, 59 Director of the Company August 1988
Hunter Yager, 67 Director of the Company April 1996
Arthur Zankel, 64 Director of the Company October 1988
Carole Lewis Anderson, became a director in April 1991.
Since June of 1995, she has been a principal of Suburban Capital
Markets, Inc., a commercial real estate mortgage company. Prior
to that time, she was the President of MASDUN Capital Advisors, a
private investment banking company which engages in corporate and
real estate finance. Ms. Anderson is also a director of AARP
Cash Investment Funds and AARP Income Trust.
Bruce B. Brundage became a director of the Company in August
1988. Since 1973, Mr. Brundage has been the President of
Brundage & Company, a Denver-based company specializing in the
private placement of long-term financing and the negotiation,
appraisal and arrangement of mergers and acquisitions. Mr.
Brundage is also a director of Black Hills Corporation.
Charles R. Frederickson, a director of the Company since
1968, was appointed to the position of Chairman of the Board in
November 1986.
John C. Hoyt, a director since October 1982, has for more
than the past five years been an officer, director and
controlling shareholder of Midwest Pancake Houses, Inc., which is
a Village Inn franchisee. See Certain Transactions.
J. Michael Jenkins became a director of the Company and its
Co-Chief Executive Officer and President in August 1994 and Chief
Executive Officer in August 1996. Immediately prior to his
joining the Company, he was the Chairman of the Board and Chief
Executive Officer of El Chico Restaurants, Inc., positions which
he held since February 1992. From May 1989 to February 1992 Mr.
Jenkins served as President and Chief Executive Officer of
Metromedia Steakhouses, Inc.
Robert T. Marto, a director since August 1989, is currently
President and Chief Executive Officer of White River Corporation.
He served as Executive Vice President and Chief Financial Officer
of Fund American Enterprises Holdings, Inc., and as President of
its wholly owned subsidiary Fund American Enterprises, Inc. from
1990 to December 1993. Mr. Marto is a director of CCC
Information Services, Inc., White River Corporation and Zurich
Reinsurance Center Holdings, Inc.
Dudley C. Mecum became a director in December 1989. In 1996
he retired from G.L. Ohrstrom & Company where he had been a
partner since August 1989. Since his retirement, he has been the
Chairman of Mecum Associates, Inc. Mr. Mecum is also a director
of The Travelers Group, Lyondell Petrochemical Co., Dyncorp,
Fingerhut Companies, Inc., Roper Industries, Inc., and Harrow
Industries, Inc.
Dennis B. Robertson became a director of the Company in
August 1988. Mr. Robertson is currently the Chairman and Chief
Executive Officer of DOCK'S Great Fish, Inc., which operates
seafood restaurants. Prior to his appointment as Chairman, he
was that company's President, a position he held since 1985.
Hunter Yager became a director in April 1996. In 1985 he
retired from Grey Advertising, Inc. where he was an Executive
Vice President. Since his retirement, he has been a private
consultant in marketing and advertising.
Arthur Zankel became a director of the Company in October
1988. He is currently the Co-Managing Partner of First Manhattan
Co., a position which he has held since 1979. First Manhattan
Co. is a money management firm. Mr. Zankel is also a director of
Travelers Group, Fund American Enterprises Holdings, Inc., and
Travelers/Aetna Casualty Property Corp.
The Board of Directors, while not having a nominating
committee, does have standing Audit and Compensation Committees.
The Audit Committee met four times in fiscal 1996, and consisted
of Ms. Anderson and Messrs. Brundage, Hoyt, Marto, Mecum,
Robertson, Yager and Zankel. The functions of the Committee are
to recommend to the Board of Directors the appointment of the
Company's independent auditors, review the fee arrangements and
scope of the annual audit, and consider the comments of the
independent and internal auditors with respect to internal
controls.
The Compensation Committee, which also acts as the Regular
Stock Option Committee for the Company's 1982 Stock Option Plan,
was composed of Ms. Anderson and Messrs. Brundage, Marto, Mecum,
Robertson, Yager and Zankel. That committee met four times
during the last fiscal year. The Committee recommends to the
Board of Directors officers' salaries, administers executive
compensation plans, grants options, and approves bonuses for the
Company's executive employees.
During fiscal 1996, the Board of Directors met six times.
Each of the Directors attended at least 75% of the meetings of
the Board of Directors and the committees of which that person
was a member.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary of Cash and Certain Other Compensation
The following table discloses compensation received by the
Company's Chief Executive Officer and named executive officers
for the three fiscal years ended October 31, 1996.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Long Term
Compensation Compensation
------------ ------------
Other
annual Securities
Name and compen- underlying All other
principal Salary Bonus sation Options/ compensation
position Year ($) ($) ($) SARs (#) ($)
-------- ---- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Charles R. 1996 291,923 703 <F2>
Frederickson <F1> 1995 300,000 3,398 <F2>
Chairman 1994 297,115 4,717 <F7>
James R. Burke <F3> 1996 174,327 4,094 534
President/ 1995 130,160 6,355 29,000 2,558
Bakers Square 1994
Division
Nicholas S. Galanos <F4> 1996 200,000 245
Executive Vice 1995 148,462 177
President/Development 1994
J. Michael Jenkins <F5> 1996 350,000 300,000 520
Chief Executive 1995 350,000 46,910 610
Officer and President 1994 55,192 1,000,000
Robert E. Kaltenbach 1996 175,000 100,000 564 <F6>
President/Village Inn 1995 172,981 13,860 3,238 <F6>
Division 1994 143,192 26,950 3,545 <F7>
- ---------------------------
<FN>
<F1> Mr. Frederickson served as a Co-Chief Executive Officer of
the Company with J. Michael Jenkins until August 19, 1996, at
which time he ceased serving in that capacity.
<F2> The amount shown represents $3,000 and $335 paid as the
Company's matching contribution under its 401(k) plan and $398
and $368 paid by the Company for term life insurance premiums
respectively for 1995 and 1996.
<F3> Mr. Burke first became an executive officer of the Company
during 1995. The amount reflected in the column captioned "Other
Annual Compensation" represents the amount he was reimbursed by
the Company for his expenses paid in 1995 and 1996 respectively
in relocating to Denver. Under "All Other Compensation", the
amount shown represents $2,388 and $335 paid as the Company's
matching contribution under its 401(k) plan and $170 and $199
paid by the Company for term life insurance premiums respectively
for 1995 and 1996.
<F4> Mr. Galanos first became an executive officer of the Company
during 1995. The $177 and $245 payment reflected under "All
Other Compensation" represents the Company's payment for term
life insurance premiums for 1995 and 1996 respectively.
<F5> Mr. Jenkins first became an executive officer of the Company
during 1994. See discussion of his employment contract under
Employment Contracts and Termination of Employment and Change-of-
Control Arrangements. The amount reflected in the column
captioned "Other Annual Compensation" represents a reimbursement
of moving expenses in conjunction with his relocation to Denver.
Under "All Other Compensation", the amount shown represents the
Company's payment for term life insurance premiums for 1995 and
1996 respectively.
<F6> The amount shown represents $3,000 and $335 paid as the
Company's matching contribution under its 401(k) plan and $238
and $229 paid by the Company for term life insurance premiums
respectively for 1995 and 1996. Mr. Kaltenbach first became an
executive officer of the Company during 1994.
<F7> The amounts shown represent $4,717 paid on behalf of Mr.
Frederickson; and $3,545 on behalf of Mr. Kaltenbach as the
Company's matching contribution for the stated individuals to its
401(k) Plan.
</TABLE>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Potential
Realizable
Value at
Assumed
Individual Grants Annual Rates
----------------------- of
Number of Percent of Stock Price
Securities Total Options/ Appreciation
Underlying SARs Exercise for
Options/ Granted to or Option Term
SARs Granted Employees in Base Price Expiration ------------------
Name (#) Fiscal Year ($/Sh) Date 5% ($) 10% ($)
---- ------------ ------------ ---------- ---------- ------ -------
(a) (b) (c) (d) (e) (f) (g)
<S> <C> <C> <C> <C> <C> <C>
J. Michael 300,000<1> 60% 13.00 8/20/06 2,452,689 6,215,596
Jenkins
- ---------------
<FN>
<F1> The stated options vest in 100,000 share increments on August
19, 1996, and October 1, 1999 and 2002.
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal
Year-End Option/SAR Values
The following table provides information on option/SAR
exercises in fiscal 1996 by the named executive officers and the
value of such officers' unexercised options/SARs at October 31,
1996.
<TABLE>
<CAPTION>
Value of
Number of Unexercised In-
Unexercised the-Money
Options/SARs at Options/SARs at
Fiscal Year End Fiscal Year End
Shares (#) ($)
Acquired on Value --- ---
Exercise realized Exercisable/ Exercisable/
Name (#) ($) unexercisable unexercisable
---- ----------- -------- ------------- -------------
<S> <C> <C> <C>
Charles R. Frederickson 152,000/0 899,500/0
J. Michael Jenkins 100,000/200,000 150,000/300,000
James R. Burke 7,000/0 0/0
Nicholas S. Galanos 0/0 0/0
Robert E. Kaltenbach 12,000/0 24,000/0
</TABLE>
Ten-Year Option Repricings
<TABLE>
<CAPTION>
Securities Market Exercise Length of
Underlying Price of Price at Original
Number of Stock at Time of Option Term
Options/ Time of Repricing Remaining at
SARs Repricing or or New Date of
Repriced or Amendment Amendment Exercise Repricing or
Name Date Amended (#) ($) ($) Price ($) Amendment
---- ---- ----------- ------------ --------- --------- ------------
(a) (b) (c) (d) (e) (f) (g)
<S> <C> <C> <C> <C> <C> <C>
J. Michael August 19, 300,000 13.00 15.00 to 13.00 8 years
Jenkins, 1996 30.17 and 6
CEO/ weeks
President
</TABLE>
The Committee determined that the grant of the new stock options
to Mr. Jenkins (in consideration for the cancellation of existing
options) was in the Company's best interest. In the Committee's
view, the higher exercise prices of the former options, plus the
delayed vesting of those options provided less direct and
immediate incentive to Mr. Jenkins than the new grant. By
issuing new options with faster vesting, Mr. Jenkins was given a
further incentive to improve Company performance. The repriced
options were at market value, and one-third of them vested
immediately. The extension of the vesting of the final one-third
of the options from October 1999 to October 2002 was also seen as
a benefit to the Company.
The members of the Compensation Committee for fiscal 1996 were:
Dennis B. Robertson, Chairman
Carole Lewis Anderson
Bruce B. Brundage
Robert T. Marto
Dudley C. Mecum
Hunter Yager
Arthur Zankel
Compensation Committee Interlocks and Insider Participation in
Compensation Decisions
The members of the Compensation Committee for fiscal 1996 were
Carole Lewis Anderson, Bruce B. Brundage, Robert T. Marto, Dudley
C. Mecum, Dennis B. Robertson, Hunter Yager, and Arthur Zankel.
Employment Contracts and Termination of Employment and Change-of-
Control Arrangements
In August 1994, Mr. Jenkins entered into a five-year
employment agreement. Under that agreement, Mr. Jenkins received
a $1 million cash payment upon the execution of the contract and
is to receive a base salary of $350,000 per year for the first
three years and $450,000 per year for the final two years of the
agreement's term. During the term of the employment agreement,
he is entitled to earn annual bonuses, not to exceed a cumulative
total of $4 million through fiscal year 1999. For the Company's
1995, 1996 and 1997 fiscal years, his annual bonuses, if any,
will be 20% of the amount by which the Company's earnings before
interest, taxes and the bonus itself exceed $25 million, and for
fiscal years 1998 and 1999, 20% of the amount by which such
earnings exceed $32 million. In no event, however, shall the
cumulative bonus paid exceed $4 million over the term of the
contract or, except in the last year of the agreement, $1.5
million in any one year.
Simultaneously with the execution of the employment
agreement, and as a part of it, Mr. Jenkins was granted the
option to purchase a total of 300,000 shares of the Company's
common stock at prices ranging from $15.00 to $30.17 per share.
The options were to vest on October 1, 1999, and were exercisable
until October 1, 2004. In the event Mr. Jenkins died, became
permanently disabled, resigned on Just Grounds or was terminated
other than for Just Cause, the vesting was to have accelerated in
50,000 share increments on September 1, 1994 and on October 1,
1995 and each year thereafter through October 1, 1999.
On August 19, 1996, Mr. Jenkins surrendered, and the Company
canceled, the described options in exchange for the grant of new
options to purchase a total of 300,000 shares of the Company's
common stock at an exercise price of $13.00 per share. The
options vest in 100,000 share increments on August 19, 1996,
October 1, 1999, and October 1, 2002 and are exercisable until
August 20, 2006. In the event Mr. Jenkins dies, becomes
permanently disabled, resigns on Just Grounds or is terminated
other than for Just Cause, the vesting accelerates in 50,000
share increments on October 1, 1996 and each year thereafter
through October 1, 1999.
In the event the Board of Directors terminates Mr. Jenkins
without Just Cause or if he terminates his employment with Just
Grounds, the agreement provides that he is to receive the
greatest of (i) two times his then current base salary, (ii) $2
million, less the amount of any bonus previously paid or (iii)
any amount accrued but unpaid from bonuses in prior years in
excess of $1.5 million but in no event to exceed $4 million.
If there is a change in control (any person becomes the
beneficial owner of 50% or more of the combined voting power of
the Company's outstanding securities; a majority of the members
of the Board of Directors changes in any period of 12 months,
unless the nomination and election of each new director was
approved by a vote of at least a majority of the directors then
still in office and who were directors at the beginning of the
period or any person acquires gross assets of the Company that
have an aggregate fair market value of 50% or more of the fair
market value of all the Company's gross assets immediately prior
to such acquisition) and Mr. Jenkins is terminated within 180
days thereafter, he shall receive the greater of two times his
then current salary or $4 million, less the amount of any bonus
previously paid to him.
In addition to the above, the employment agreement provides
Mr. Jenkins life, health, hospitalization, disability, vacation
and other benefits consistent with those provided to other
Company officers.
Mr. Galanos executed an employment agreement of undefined
term with the Company in February 1995. Under that agreement,
Mr. Galanos is to receive a base salary of $200,000 per year and
is eligible to earn an annual bonus equal to 10% of the
divisional operating income of the Company's Angel's restaurant
division. Divisional operating income is defined as the amount
of store operating profit minus divisional overhead expenses. In
no event shall the bonus exceed, on a cumulative basis, $2.5
million over the Company's 1995 through 1999 fiscal years.
Should the Company terminate Mr. Galanos without just cause,
the agreement provides he will be entitled to severance equal to
one year's base salary, plus benefits for up to the earlier of 12
months or until he secures another position which includes
benefits.
Finally, the agreement provides Mr. Galanos benefits
consistent with those provided to other Company officers.
Certain employees of the Company, including Messrs. Burke and
Kaltenbach, have entered into employment severance agreements
with the Company. The term of those agreements expires December
31 of each year; however, they are extended automatically on
January 1 of each year, unless ninety days' notice of non-renewal
is given by either party. The severance agreement provides that,
in the event a covered employee is terminated within one year
following a change of control in the Company, the terminated
employee will be entitled to the following described payments as
applicable. If the employee's termination is by reason of death,
disability, retirement or is a voluntary action on the part of
the employee, the Company is required to pay the employee all
earned, but unpaid, compensation to the date of termination. If
the employee is terminated for cause, as defined in the
agreement, the Company is required to pay the employee his base
salary through the date of termination. If the employee's
termination is for reasons other than those specified above, the
employee is entitled to all compensation earned and unpaid as of
the date of termination; a lump sum cash payment equal to one and
one-half times the employee's annual base salary; one year's
life, health, hospitalization, dental and disability benefits
consistent with those provided by the Company prior to
termination; and the right to immediately exercise any granted
stock options. Under the severance agreements, a change of
control is defined as a change in beneficial ownership of 50% or
more of the combined voting power of the Company; the first
purchase of stock in a non-Company sponsored tender or exchange
offer; or upon shareholder approval of certain merger
consolidations, sales or disposition of substantially all of the
Company's assets, a plan of liquidation; or a change in at least
two-thirds of the members of the Board absent approval of the
then existing Board members.
In April 1989, Mr. Frederickson entered into an employment
severance agreement with the Company. The terms of that
agreement are substantially the same as described above for other
Company employees except (i) if termination is for reasons other
than cause, disability, retirement or by the voluntary action of
the employee, the lump sum cash payment shall be equal to two and
three-quarters times his annual base salary plus the amount equal
to the bonus compensation to which he was entitled during the
most recent fiscal year in which he earned a bonus; and (ii) if
he becomes employed within one year after termination, he shall
repay to the Company any cash compensation actually received by
him as a result of such employment during the one-year period up
to a specified amount.
Report of the Compensation Committee
This report discusses the manner in which base salaries,
incentive compensation and stock option grants for the Company's
Chief Executive Officers and other executives named in the
Summary Compensation Table were determined for the 1996 fiscal
year.
The Company's compensation policies for the stated
individuals are administered by the Compensation Committee of the
Board of Directors, all members of which are outside directors.
The compensation policies are intended to enhance the financial
performance of the Company by aligning the financial interest of
the Company's executives with those of its stockholders. The
Committee believes that the most effective executive compensation
program is one which serves to attract and retain talented
individuals who are incented to achieve both current and long-
term management goals toward the end of enhancing stockholder
value.
The primary components of executive compensation are base
salary, cash bonus and longer-term incentives in the form of
stock option grants.
Base Salaries:
The base salaries, which were in the median range of the
companies included in the survey described below, of Mr.
Frederickson and each of the Named Executives with the exception
of Mr. Jenkins for the 1996 fiscal year, were determined by the
Compensation Committee in December 1995. In making its
determinations, the Committee reviewed the information contained
in the 1995 Chain Restaurant Compensation Association Survey and
evaluated the competitiveness of the entire compensation package.
The independently conducted Chain Restaurant Compensation
Association Survey was deemed to be an appropriate indicator of
the competitiveness of the Company's salaries when compared with
other restaurant companies because of the number and nature of
companies participating. In excess of sixty companies
participated representing both publicly and privately owned
businesses in various segments of the restaurant industry.
Included with that representation were the restaurant companies
on the Dow Jones Entertainment & Leisure - Restaurant Index.
Mr. Jenkins' compensation is governed by the terms of his
employment agreement with the Company, which was approved by the
Board of Directors when it was executed in 1994. See Executive
Contracts and Termination of Employment and Change-of-Control
Arrangements for a detailed discussion of Mr. Jenkins' employment
agreement.
Bonus Program:
In December 1994, the Compensation Committee approved a
bonus program which was predicated upon achievement of overall
Company performance against a set baseline of the Company's
earnings before interest and taxes as computed in accordance with
generally accepted accounting principles. The measure of
earnings before interest and taxes and the baseline that was
established (which was a substantial earnings increase over the
previous year) were selected by the Committee as being
appropriate because of their direct relationship to shareholder
interest. That program applied to each of the Company's
executives for fiscal 1996, except Mr. Jenkins (whose bonus
compensation is governed by his employment contract), and the
Presidents of the operating divisions. The Company failed to
meet the earnings target and accordingly no bonus was paid to any
executive under that program for fiscal 1996. Additionally, no
bonus was paid to Mr. Jenkins because the performance targets set
forth in his employment contract were not met.
With respect to the 1996 bonus program for Presidents of the
Company's operating divisions, in December 1995 the Compensation
Committee approved a bonus program for those individuals which
was predicated upon improvement in store operating profits
(restaurant results excluding corporate overhead) over the
preceding year in their respective divisions. That measure was
selected because of its focus on increasing profits and was
directly tied to their areas of control and responsibility. The
President of the Village Inn Division, after meeting his target,
was paid a bonus. The Bakers Square Division failed to meet the
target and accordingly no bonus was paid to its President.
1996 Stock Options:
In connection with their initial employment in 1996, two of
the Company's executive officers were granted stock options. One
of those executives is no longer employed with the Company. The
remaining individual, the Company's Chief Financial Officer, was
granted the option to purchase 100,000 shares of the Company's
common stock at $11.50, the fair market value on the date of
grant. The options vest in 25,000 share increments on September
1 of each year beginning in 1997. The Committee issued the
options based on an evaluation of the executives'levels of
responsibility for and their potential contribution to the
Company's operating results and to provide them with significant
long-term incentives to enhance stockholder value. Additionally,
the options previously granted to Mr. Jenkins were repriced in
1996. For the specifics concerning that repricing, see
"Compensation of Directors and Executive Offices - Ten Year
Options Repricing". The shares issued in 1996 are generally in
line with levels granted to similar executives at other
restaurant companies reviewed in the stated compensation survey.
Deductibility of Compensation:
The Compensation Committee has considered the potential
impact of Section 162(m) (the "Section") of the Internal Revenue
Code adopted under the federal Revenue Reconciliation Act of
1993. The Section disallows a tax deduction for any publicly-
held company for individual compensation exceeding $1 million in
any tax year for any of the named executive officers, unless the
compensation is performance-based. The Company intends to
structure its compensation plans to achieve maximum deductibility
under the Section with minimal sacrifices in flexibility and
Company objectives. The Compensation Committee will consider the
deductibility of compensation payments in connection with future
compensation arrangements with the named executive officers, but
deductibility will not be the sole factor used by the Compensation
Committee in determining appropriate levels or types of compensation.
If, in the judgment of the Compensation Committee, the benefits of
a compensation package that does not satisfy the requirements of
the Section outweigh the costs to the Company of a failure to comply
with the Section, the Compensation Committee may adopt compensation
arrangements in the future under which payments are not deductible
under the Section.
Compensation Committee Members:
This report is submitted by the members of the Compensation
Committee of the Board of Directors:
Dennis B. Robertson, Chairman
Carole Lewis Anderson
Bruce B. Brundage
Robert T. Marto
Dudley C. Mecum
Hunter Yager
Arthur Zankel
Directors' Compensation:
Non-employee directors are compensated for their services at
the rate of $2,000 per fiscal quarter, plus $1,000 per day for
services rendered, and reimbursement of actual expenses incurred.
Each non-employee director is also granted options to purchase
shares of the Company's Stock pursuant to the terms of its 1983
Non-Qualified Stock Option Plan ("1983 Plan"). The 1983 Plan,
which is mandatory in its operation, provides that each non-
employee director when first elected to the Board is granted an
option to purchase 10,000 shares of the Company's Stock, which
vest 4,000, 4,000, and 2,000 shares over the ensuing three years.
Upon a director's election for the fourth consecutive term and
each year thereafter, the director is granted an additional 2,000
shares. All options granted under the 1983 Plan are at 100% of
the fair market value of the Company's Common Stock on the date
of grant.
PERFORMANCE GRAPH
The following performance graph reflects percentage change in
the Company's cumulative total shareholder return on common stock
as compared with the cumulative total return of the Dow Jones
Equity Market Index and the Dow Jones Entertainment & Leisure -
Restaurant Index.
1991 1992 1993 1994 1995 1996
---- ---- ---- ---- ---- ----
VICORP Restaurants, Inc. 100.00 105.33 98.22 79.29 52.07 68.64
Dow Jones Restaurant Index 100.00 126.95 164.05 154.76 204.51 224.23
Dow Jones Equity Market Index 100.00 112.02 130.33 135.22 171.23 213.19
CERTAIN TRANSACTIONS
John C. Hoyt, a director of the Company, and members of his
family are the principal shareholders of Midwest Pancake Houses,
Inc. ("MPH"). MPH has been a franchisee of the Company since
1970 and currently operates six Village Inn Restaurants in
Oklahoma. MPH paid an initial franchise fee of $1,000 each for
the operating units and pays franchise service fees equal to 2%
of gross sales at each of those locations. Total franchise
service fees paid by MPH in fiscal 1996 were $129,532. MPH
additionally was indebted to the Company on its open account.
The largest aggregate amount outstanding on that open account at
any time during fiscal 1996 was $10,918. As of February 20,
1997, MPH's open account was current.
MPH is also the managing partner for a franchised Village Inn
Restaurant located in New Mexico. In fiscal 1996 the franchisee,
3155 Associates Limited Partnership ("3155"), paid franchise
service fees (4% of gross sales at that location) in the amount
of $60,780. It was also indebted to the Company on its open
account. The largest aggregate amount outstanding on that open
account at any time during fiscal 1996 was $15,377. As of
February 20, 1997, 3155's open account was current.
Ratification of Certain Transactions
The transactions described in the foregoing discussion have
been approved or ratified by the unanimous vote of those
directors having no interest in those transactions. The Company
believes that the terms of those transactions are no less
favorable to the Company than those that could have been obtained
from independent third parties.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on a review of the written representation of the
Company's directors and executive officers and copies of the
reports they have filed with the Securities and Exchange
Commission, the Company believes that all Section 16(a) filing
requirements applicable to its executive officers, directors and
greater than ten percent (10%) beneficial owners were followed,
with the exception of Carole Lewis Anderson's filing of a Form 4 dated
April 12, 1996, was filed two days late with respect to her purchase of
Company stock on March 13, 1996.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP served as the Company's independent
accountants for the year ended October 31, 1996. The Board of
Directors has selected Arthur Andersen LLP to serve as the
Company's independent accountants for fiscal 1997.
Representatives of Arthur Anderson LLP are not expected to be
present at the meeting and, accordingly, they will not make a
statement or be available to respond to questions.
VICORP RESTAURANTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
There will be presented to the shareholders a proposal to
approve the VICORP Restaurants, Inc. Employee Stock Purchase Plan
("ESSP"), which provides for the sale of up to 500,000 shares of
the Company's Common Stock at a discount to eligible employees of
the Company. The ESSP as adopted by the Board of Directors is
subject to shareholder approval at the Meeting. Approval of the
ESSP requires the affirmative vote of a majority of the
outstanding shares of the Company's Common Stock that are
entitled to be voted at the Meeting. A copy of the ESSP is
included in this Proxy Statement as Appendix A, and the following
summary is qualified by reference to the ESSP in its entirety.
The purpose of the ESSP is to provide eligible employees of
the Company with a voluntary means to acquire an equity interest
in VICORP through regular payroll deductions. The ESSP provides
that any employee of the Company who has completed 12 months of
employment (full or part time) but owns less than 5% of the
Company (including unexercised stock options) may elect quarterly
to have amounts deducted from the employee's after-tax pay up to
a maximum of $25,000 of the value of the Company's Common Stock
in the applicable calendar year. Those amounts are used
quarterly to purchase from the Company its Common Stock at a
discount from market value on the date of purchase. The
discount, which may be modified by the Committee that administers
the plan, may not exceed 15%, the current discount.
Employees are offered the opportunity to enroll in the plan
each calendar quarter. Once enrolled, the employee's
participation carries forward without change indefinitely until
the employee changes the participation at a later enrollment
period.
VICORP intends for the ESSP to provide a long-term
investment arrangement for employees. As a result, it requires
that employees hold the stock purchased through the plan for two
years from the date of purchase. During the two-year holding
period, the stock may not be sold or transferred.
The number of shares issuable under the ESSP will be subject
to adjustment in the case of stock splits, combinations,
reorganization, and similar events. The Company will pay all
fees and charges related to the purchase of the stock through the
ESSP. The employee will be responsible for all fees and charges
related to the sale of such stock.
The ESSP is administered by the Board of Directors which has
the right to amend it. Smith Barney, Inc. has been designated as
the broker and record keeper of the plan.
The ESSP is intended to qualify under Section 423 of the
Internal Revenue Code. As a result, the employee will pay no
income tax on the amount of the discount applied for the purchase
of the stock, if the employee complies with the holding period.
Upon the disposition of the stock after the holding period, the
employee will generally have ordinary income equal to the excess
of the fair market value of the stock on the date it was
purchased over the purchase price and capital gain equal to the
excess of the sale proceeds over the employee's basis. VICORP
may not deduct the difference between the fair market value of
the stock and the discounted purchase price, unless the stock is
disposed of in a disqualifying disposition (in which case, VICORP
is entitled to a deduction equal to the amount the employee
recognizes as ordinary income).
On October 31, 1996 there were 553 employees participating
in ESSP, none of which were executive officers. A total of $10,
367 had been contributed and no shares had issued.
OTHER MATTERS
The Company knows of no other matters to be brought before
the Meeting; if other matters properly come before the Meeting,
it is the intention of the persons named in the solicited proxy
to vote such proxy in accordance with their judgment.
ANNUAL REPORTS AND FINANCIAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the
fiscal year ended October 31, 1996, is being mailed with this
Proxy Statement to each shareholder of record as of February 28,
1997.
THE COMPANY WILL FURNISH WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FILED WITH THE UNITED STATES
SECURITIES AND EXCHANGE COMMISSION TO ANY PERSON REQUESTING A
COPY IN WRITING AND STATING THAT HE/SHE WAS THE BENEFICIAL OWNER
OF SHARES OF STOCK OF THE COMPANY ON FEBRUARY 28, 1997. REQUESTS
AND INQUIRIES SHOULD BE ADDRESSED TO:
Stanley Ereckson, Jr., Secretary
VICORP Restaurants, Inc.
400 West 48th Avenue
Denver, Colorado 80216
Fax (303) 672-2668
Neither the Company's Annual Report to Shareholders nor the
Form 10-K is to be regarded as proxy soliciting material or as a
communication by means of which a solicitation is to be made.
By Order of the Board of Directors
Stanley Ereckson, Jr.
Secretary
Dated: March 7, 1997.
VICORP RESTAURANTS, INC.
EMPLOYEE STOCK PURCHASE PLAN
ARTICLE 1
PURPOSE
1.1 PURPOSE. The VICORP Restaurants, Inc. Employee Stock
Purchase Plan (the "Plan") is intended to provide a method
whereby employees of VICORP Restaurants, Inc. and its subsidiary
corporations (hereinafter referred to, unless the context
otherwise requires, as the "Company") will have an opportunity
to acquire an equity interest in the Company through the
purchase of shares of the Common Stock, $.05 par value per
share, of the Company ("VICORP Stock"). It is the intention of
the Company to have the Plan qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of
1986, as amended (the "Code"). The provisions of the Plan shall
be construed so as to extend and limit participation in a manner
consistent with the requirements of Code Section 423.
1.2 EFFECTIVE DATE. The Effective Date of this Plan is October 1, 1996.
1.3 TERM OF PLAN. The Plan will remain in effect until September 30,
2001.
ARTICLE 2
DEFINITIONS
2.1 ADMINISTRATOR. "Administrator" shall mean the person
appointed by the Committee to perform the duties delegated to the
Administrator under this Plan. The initial Administrator will be
Smith Barney, Inc.
2.2 BASE PAY. "Base Pay" shall mean regular base wages
(which includes pay for overtime, holidays, vacation and sick
days, and bonuses), but excluding commissions, other special or
incentive payments, moving expense reimbursements, and disability pay.
2.3 COMMITTEE. "Committee" shall mean the individuals described in
Article 10.
2.4 EMPLOYEE. "Employee" means any person who is employed on a
full-time or part-time basis by the Company.
2.5 HOLDING PERIOD. "Holding Period" means the period during which
the Committee, in its sole discretion, has imposed restrictions on the sale,
transfer, or other disposition of VICORP Stock purchased under this Plan.
The initial Holding Period for the VICORP Stock will be two years from the
date the VICORP Stock is purchased under this Plan. This Holding Period
will be applicable to all VICORP Stock purchased under this Plan
from the Effective Date until the Committee determines otherwise.
2.6 SUBSIDIARY CORPORATION. "Subsidiary Corporation" shall
mean any present or future corporation which (a) would be a "subsidiary
corporation" of VICORP Restaurants, Inc. as that term is defined in Code
Section 424, and (b) is designated as a participating employer in the
Plan by the Committee.
ARTICLE 3
ELIGIBILITY AND PARTICIPATION
3.1 INITIAL ELIGIBILITY. Any employee who has completed
twelve (12) months of employment with the Company and who is
employed by the Company on the date of his or her commencement of
participation in the Plan shall be eligible to participate in
Offerings under the Plan which commence on or after such twelve-
month period has concluded; provided, however, that signed
participation forms are received in the Benefits Department no
later than the day before the Offering Commencement Date of the
Offering in which the employee elects to participate.
3.2 ELIGIBILITY UPON REEMPLOYMENT. Any employee who has
completed the twelve (12) months of employment with the Company
required under Section 3.1, who terminates employment with the
Company, and who subsequently becomes reemployed with the
Company, shall be eligible to participate in Offerings under the
Plan which commence on or after such reemployment date.
3.3 LEAVE OF ABSENCE. Solely for purposes of participation
in the Plan, a person on leave of absence shall be deemed to be
an employee for the first 180 days of such leave of absence and
such employee's employment shall be deemed to have terminated at
the close of business on the 180th day of such leave of absence
unless such employee shall have returned to regular full-time or
part-time employment (as the case may be) prior to the close of
business on such 180th day. If an employee's leave of absence is
terminated for any reason (except for the employee's return to
full or part time employment with the Company), then such
employee's participation in this Plan and right to exercise
options under the Plan shall terminate as of the date the leave
of absence is terminated.
3.4 RESTRICTIONS ON PARTICIPATION. Notwithstanding any
contrary provision of the Plan, no employee shall be granted an
option to participate in the Plan:
(a) if, immediately after the grant, such employee
would own stock, and/or hold outstanding options to purchase
stock, possessing 5% or more of the total combined voting power
or value of all classes of stock of the Company (for purposes of
this paragraph, the rules of Code Section 424(d) shall apply in
determining the stock ownership of any employee). For purposes
of this paragraph (a), the Market Value of the stock on the
Offering Commencement Date will be used to determine an employee's
ownership; or
(b) which permits his or her rights to purchase VICORP
Stock under all employee stock purchase plans of the Company to
accrue at a rate which exceeds $25,000 in fair market value of
the VICORP Stock (determined at the time such option is granted)
for any calendar year.
3.5 COMMENCEMENT OF PARTICIPATION. An eligible employee
may become a participant by completing an authorization for a
payroll deduction on the form provided by the Company (the
"Enrollment Form") and filing the Enrollment Form with the
Benefits Department on or before the date set by the Committee,
which date shall be prior to the Offering Commencement Date for
the Offering (as such terms are defined below). Upon delivery of
the Enrollment Form to the Benefits Department, payroll deductions
for the participant shall commence on the first Payroll Date
immediately following the Offering Commencement Date for which the
employee's Enrollment Form is effective. An employee's Enrollment
Form shall be effective as of the quarterly Offering Commencement
Date specified by the employee, and for all subsequent Offerings
unless the employee terminates his or her Enrollment Form as provided
in Article 8. The Payroll Date is the last day of any payroll period.
ARTICLE 4
OFFERINGS
4.1 OFFERINGS. The Plan shall be implemented by quarterly
offerings of VICORP Stock (the "Offerings"), with each Offering
consisting of one three-month period. The first Offering will
commence on October 1, 1996, and subsequent Offerings will
commence on the next following January 1, April 1, July 1, and
October 1 until the final Offering commences on July 1, 2001. As
used in the Plan, "Offering Commencement Date" means the first
day of an Offering and "Offering Termination Date" means the last
day of an Offering.
4.2 MAXIMUM NUMBER OF SHARES AVAILABLE TO PARTICIPANTS.
Not less than fifteen (15) days prior to any Offering Commencement
Date, the Board may, in its sole discretion, set a maximum number
of shares which may be purchased by any participant for such Offering
(the "Maximum Share Amount"). Initially, there shall be no Maximum
Share Amount (except as provided under Section 3.4(b)). If a Maximum
Share Amount is set, then all participants must be notified of such
Maximum Share Amount no less than five (5) days prior to the Offering
Commencement Date on which such Maximum Share Amount first is applicable.
Once a Maximum Share Amount is set, such Maximum Share Amount shall
continue to apply with respect to all succeeding Offerings unless
revised by the Board as set forth above.
ARTICLE 5
PAYROLL DEDUCTIONS
5.1 AMOUNT OF DEDUCTION. The participant's Enrollment Form
shall designate, in even percentages or dollar amounts, the
amount the participant elects to have deducted from his or her
pay on each Payroll Date during the time he or she is a participant
in an Offering and such designation shall be based on the participant's
Base Pay in effect at the Offering Commencement Date of such Offering.
The minimum amount which a participant may elect to have deducted from
his or her Base Pay is $2.00 for each Payroll Date.
5.2 PARTICIPANT'S ACCOUNT. All payroll deductions made for
a participant shall be credited to the participant's account
under the Plan. A participant may not make any separate cash
payment into such account except when on leave of absence and
then only as provided in Section 5.4.
5.3 CHANGES IN PAYROLL DEDUCTIONS. A participant may
discontinue his or her participation in the Plan as provided in
Article 8, but no other change can be made during an Offering and,
specifically, a participant may not alter the amount of his or her
payroll deductions for that Offering.
5.4 LEAVE OF ABSENCE. If a participant goes on a leave of
absence, such participant shall have the right to elect: (a) to
withdraw the balance in his or her account pursuant to Section
8.1, or (b) to discontinue contributions to the Plan but remain a
participant in the Plan, or remain a participant in the Plan
during such leave of absence, authorizing deductions to be made
from payments by the Company to the participant during such leave
of absence and undertaking to make cash payments to the Plan at
the end of each payroll period to the extent that amounts payable
by the Company to such participant are insufficient to meet such
participant's authorized Plan deductions.
ARTICLE 6
GRANTING OF OPTION
6.1 MAXIMUM NUMBER OF OPTION SHARES. On the Commencement
Date of each Offering, a participating employee shall be deemed
to have been granted an option to purchase a maximum number of
shares of VICORP Stock equal to an amount determined as follows:
an amount equal to (a) the sum of the employee's Base Pay which
the employee has elected to have withheld during any Offering,
divided by (b) the Option Price.
6.2 MARKET VALUE. The Market Value of a share of VICORP
Stock shall be the closing price of the VICORP Stock on the
Offering Termination Date (or on the first business day following
the Offering Termination Date if the Offering Termination Date is
not a business day) or the next following business day on which
trading occurred on the NASDAQ National Market System. If the
VICORP Stock is not traded on the NASDAQ National Market System,
the Market Value will be the average of the bid and ask prices for
the VICORP Stock as reported on the NASDAQ over-the-counter quotation
system on the Offering Termination Date (or on the first business
day following the Offering Termination Date if the Offering Termination
Date is not a business day). If the VICORP Stock is not so quoted or
listed, the Market Value will be the fair market value of the VICORP
Stock on such determination date, as determined on such basis as
shall be established or specified for the purpose by the Committee.
6.3 DISCOUNT RATE. The Discount Rate is the amount,
determined by the Committee in its discretion, of the discount to
be applied to the Market Value to determine the Option Price for
the purchase of a share of VICORP Stock. The Discount Rate for
any Offering shall be determined by the Committee prior to the
Offering Commencement Date and shall not be more than 15% off
the Market Value of a share of VICORP Stock. Initially, the
Discount Rate will be 15% off the Market Value of a share of
VICORP Stock and such Discount Rate will remain in effect until
the Committee revises the Discount Rate as provided in this Section.
6.4 OPTION PRICE. The option price of a share of VICORP
Stock purchased with payroll deductions made during any Offering
shall be the Market Value of a share of VICORP Stock reduced by
the Discount Rate.
ARTICLE 7
EXERCISE OF OPTION
7.1 AUTOMATIC EXERCISE. Except as provided in Section 8.1,
the participant's option for the purchase of VICORP Stock with
payroll deductions made during any Offering shall be deemed to
have been exercised automatically on the Offering Termination
Date applicable to such Offering, for the purchase of the number
of shares (including fractional interests in shares) of VICORP
Stock which the accumulated payroll deductions in the participant's
account at that time shall purchase at the applicable Option Price
(but not in excess of the number of shares for which options have been
granted to the employee pursuant to Section 6.1). No fractional
shares of VICORP Stock will be issued by VICORP.
7.2 TRANSFERABILITY OF OPTION. During a participant's lifetime,
options held by such participant shall be exercisable only by that participant.
7.3 PARTICIPANT'S OWNERSHIP OF VICORP STOCK AFTER EXERCISE.
Except as provided in Section 7.5 with respect to the Holding
Period applicable to the VICORP Stock acquired under this Plan,
after the automatic exercise of the participant's option for any
Offering, as described in Section 7.1, the participant will have
full ownership rights in the full shares of VICORP Stock
purchased with the participant's payroll deductions made during
the Offering and to a fractional interest in any shares of VICORP
Stock to the extent such participant's payroll deduction amount
results in the purchase of less than a full share of VICORP
Stock. Upon the participant's election after the expiration of
the Holding Period to receive his or her entire VICORP Stock
account held by the Administrator, the participant will receive
certificates for the full shares of VICORP Stock and a single
cash payment for the participant's fractional interest in any
share of VICORP Stock equal to the participant's fractional
interest multiplied by the Market Value of the VICORP Stock on
the date the Administrator transfers such stock certificates to
the participant.
7.4 ADMINISTRATOR TO HOLD STOCK. The certificates representing
the whole shares of VICORP Stock purchased upon the exercise of the
participant's option and the participant's fractional interest in any
share of VICORP Stock shall be held by the Administrator during any
Holding Period imposed by the Committee.
7.5 HOLDING PERIODS FOR STOCK. In order to qualify for
favorable tax treatment under Code Section 423, the participant
must hold the VICORP Stock obtained in any Offering until the
date which is later of (a) two years after the Offering
Commencement Date applicable to such Offering, or (b) one year
after the date the VICORP Stock subject to such Offering is
purchased. In addition, except as provided in Section 11.1 for
a deceased participant, the VICORP Stock may not be sold,
transferred, or otherwise disposed of prior to the expiration of
the Holding Period. Initially, the Holding Period for the VICORP
Stock will be two years from the date the VICORP Stock is purchased
under the Plan. Any attempt to sell, transfer, or otherwise dispose
of such shares of VICORP Stock during the Holding Period will be void
and of no force and effect. This Holding Period will remain in effect
until such time as the Committee determines otherwise.
ARTICLE 8
WITHDRAWAL
8.1 WITHDRAWAL OF ACCOUNT UPON TERMINATION OF EMPLOYMENT OR DEATH.
Upon termination of the participant's employment (including a termination
because of the participant's death), the participant (or, if applicable,
the participant's beneficiary as defined in Section 11.1) shall receive all
of the payroll deductions credited to the participant's account under the Plan
as of such termination date.
8.2 EFFECT ON SUBSEQUENT PARTICIPATION. A participant's withdrawal
from any Offering shall not have any effect upon the participant's
eligibility to participate in any succeeding Offering or in any similar plan
that hereafter may be adopted by the Company if such participant becomes
reemployed by the Company.
8.3 NO INTEREST TO BE PAID. No interest shall be paid or allowed on
any money paid into the Plan or credited to the account of any participant
employee.
8.4 LEAVE OF ABSENCE. A Participant on leave of absence shall, subject
to the election made by such Participant pursuant to Section 5.4, continue to
be a participant in the Plan so long as such participant is on continuous leave
of absence. A participant who has been on leave of absence for more than 180
days shall not be entitled to participate in any Offering commencing after the
180th day of such leave of absence. Notwithstanding any other provision of the
Plan, unless a participant on leave of absence returns to regular full time or
part time employment with the Company at the earlier of: (a) the termination of
such leave of absence or (b) the date after the 180th day of such leave of
absence, such participant's participation in the Plan shall terminate on
whichever of such dates first occurs.
ARTICLE 9
STOCK ISSUED UNDER PLAN
9.1 MAXIMUM SHARES. The maximum number of shares of VICORP
Stock which shall be issued under the Plan, subject to adjustment
upon changes in capitalization of the Company as provided in
Section 11.4, shall be 500,000 shares. All unissued shares from
prior Offerings, whether offered or not, will be available for
issuance in subsequent Offerings. If the total number of shares
for which options are exercised on any Offering Termination Date
in accordance with Article 7 exceeds the maximum number of shares
for the applicable Offering, the Company shall make a pro rata
allocation of the shares available for delivery and distribution
in as nearly a uniform manner as shall be practicable and as it
shall determine to be equitable, and the balance of payroll
deductions credited to the account of each participant under the
Plan shall be returned to him or her as promptly as possible.
9.2 PARTICIPANT'S INTEREST IN OPTION STOCK. The participant shall
have no interest in VICORP Stock covered by his or her option until such
option has been exercised.
9.3 REGISTRATION OF STOCK. Any shares of VICORP Stock purchased
under the Plan, whether such VICORP Stock is held by the Administrator
of the Plan or delivered to a participant upon request under the Plan,
shall be registered in the name of the participant.
9.4 RESTRICTIONS ON EXERCISE. The Board of Directors may, in its
discretion, require as conditions to the exercise of any option that the
shares of VICORP Stock reserved for issuance upon the exercise of the option
shall have been duly listed, upon official notice of issuance, upon a stock
exchange, and that either:
(a) Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of purchase,
in form and substance satisfactory to the Company, that it is the participant's
intention to purchase the shares for investment and not for resale or
distribution.
ARTICLE 10
ADMINISTRATION
10.1 APPOINTMENT OF COMMITTEE. The Benefits Committee appointed by
the Board of Directors shall constitute the committee (the "Committee")
which shall perform all administrative duties under this Plan, except those
expressly delegated to the Administrator under this Plan. If no Benefits
Committee has been appointed, the Board of Directors shall constitute the
Committee.
10.2 AUTHORITY OF COMMITTEE. Subject to the express provisions of the
Plan, the Committee shall have plenary authority in its discretion to
interpret and construe any and all provisions of the Plan, to adopt rules and
regulations for administering the Plan, and to make all other determinations
deemed necessary or advisable for administering the Plan. The Committee's
determination on the foregoing matters shall be conclusive.
10.3 RULES GOVERNING THE ADMINISTRATION OF THE COMMITTEE.
The Board of Directors may from time to time appoint members of the Committee
in substitution for or in addition to members previously appointed and may
fill vacancies, however caused, in the Committee. The Committee may select
one of its members as its Chairman and shall hold its meetings at such times
and places as it shall deem advisable and may hold telephonic meetings. A
majority of its members shall constitute a quorum. All determinations of the
Committee shall be made by a majority of its members. The Committee may
correct any defect or omission or reconcile any inconsistency in the Plan, in
the manner and to the extent it shall deem desirable. Any decision or
determination reduced to writing and signed by a majority of the members of the
Committee shall be as fully effective as if it had been made by a majority vote
at a meeting duly called and held. The Committee may appoint a secretary and
shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
ARTICLE 11
MISCELLANEOUS
11.1 DESIGNATION OF BENEFICIARY. Upon the death of a participant, the
Holding Period applicable to any VICORP Stock purchased with such participant's
payroll deductions will be deemed to have expired. A participant must file a
written designation of a beneficiary who is to receive any VICORP Stock
and/or cash. Such designation of beneficiary may be changed by the participant
at any time by written notice to the Benefits Department. Upon the death of a
participant and upon receipt by the Administrator of proof of identity and
existence at the participant's death of a beneficiary validly designated by him
or her under the Plan, the Administrator shall deliver such VICORP Stock and/or
cash to such beneficiary. In the event of the death of a participant and in the
absence of a beneficiary validly designated under the Plan who is living at the
time of such Participant's death, the Administrator shall deliver such VICORP
Stock and/or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed (to the
knowledge of the Administrator), the Administrator, in its discretion, may
deliver such VICORP Stock and/or cash to the spouse or to any one or more
dependents of the participant as the Administrator may designate. No
beneficiary shall, prior to the death of the participant by whom he or she
has been designated, acquire any interest in the VICORP Stock or cash credited
to the participant under the Plan.
11.2 TRANSFERABILITY. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option
or to receive VICORP Stock under the Plan may be assigned, transferred, pledged,
or otherwise disposed of in any way by the participant other than by the laws
of descent and distribution. Any such attempted assignment, transfer, pledge
or other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds in accordance with Section 8.1.
11.3 USE OF FUNDS. All payroll deductions received or held by the Company
under this Plan may be used by the Company for any corporate purpose and the
Company shall not be obligated to segregate such payroll deductions.
11.4 ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) If, while any options are outstanding, the
outstanding shares of VICORP Stock have increased, decreased,
changed into, or been exchanged for a different number or kind of
shares or securities of the Company through reorganization,
merger, recapitalization, reclassification, stock split, reverse
stock split or similar transaction, appropriate and proportionate
adjustments may be made by the Committee in the number and/or
kind of shares which are subject to purchase under outstanding
options and on the Option Price or prices applicable to such
outstanding options. In addition, in any such event, the number
and/or kind of shares which may be offered in the Offerings
described in Article 4 hereof shall also be proportionately
adjusted. No adjustments shall be made for stock dividends. For
the purposes of this Section 11.4(a), any distribution of shares
to shareholders in an amount aggregating 20% or more of the
outstanding shares shall be deemed a stock split and any
distributions of shares aggregating less than 20% of the
outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the
Company, or upon a reorganization, merger or consolidation of the
Company with one or more corporations as a result of which the
Company is not the surviving corporation, or upon a sale of
substantially all of the property or stock of the Company to
another corporation, the holder of each option then outstanding
under the Plan shall thereafter be entitled to receive at the
next Offering Termination Date upon the exercise of such option
for each share as to which such option shall be exercised, as
nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the VICORP Stock
was entitled to receive upon and at the time of such transaction.
The Board of Directors shall take such steps in connection with
such transactions as the Board shall deem necessary to assure
that the provisions of this Section 11.4 shall thereafter be
applicable, as nearly as reasonably may be determined, in
relation to the said cash, securities and/or property as to which
such holder of such option might thereafter be entitled to receive.
11.5 AMENDMENT AND TERMINATION. The Board of Directors
shall have complete power and authority to terminate or amend the
Plan; provided, however, that the Board of Directors shall not,
without the approval of the stockholders of the Corporation (i)
increase the maximum number of shares which may be issued under
any Offering (except pursuant to Section 11.4); (ii) amend the
requirements as to the class of employees eligible to purchase
VICORP Stock under the Plan. No termination, modification, or
amendment of the Plan may, without the consent of an employee
then having an option under the Plan to purchase VICORP Stock,
adversely affect the rights of such employee under such option.
11.6 EFFECTIVE DATE. The Plan shall become effective as of
October 1, 1996, subject to approval by the holders of the majority
of the Common Stock present and represented at a special or annual
meeting of the shareholders held on or before September 30, 1997.
If the Plan is not so approved, the Plan shall not become effective.
11.7 NO EMPLOYMENT RIGHTS. The Plan does not, directly or
indirectly, create any right for the benefit of any employee or
class of employees to purchase any shares of VICORP Stock under
the Plan, or create in any employee or class of employees any
right with respect to continuation of employment by the Company,
and it shall not be deemed to interfere in any way with the
Company's right to terminate, or otherwise modify, an employee's
employment at any time.
11.8 EFFECT OF PLAN. The provisions of the Plan, shall in
accordance with its terms, be binding upon, and inure to the
benefit of all successors of each employee participating in the
Plan, including, without limitation, such employee's estate and
the executors, administrators or trustees thereof, heirs and
legatees, and any receiver, trustee in bankruptcy or
representative of creditors of such employee.
11.9 GOVERNING LAW. The law of the State of Colorado shall
govern all matters relating to this Plan except to the extent it
is superseded by the laws of the United States.
(Front)
PROXY PROXY
VICORP RESTAURANTS, INC.
PROXY SOLICITED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints Charles R. Frederickson, J. Michael
Jenkins, or either of them, with full power of substitution, proxies to vote
at the Annual Meeting of Shareholders of VICORP Restaurants, Inc. (the
"Company") to be held on April 18, 1997 at 11:00 a.m., New York, New York,
and at any adjournment or adjournments thereof, hereby revoking any proxies
heretofore given, to vote all shares of common stock of the Company held or
owned by the undersigned as directed below, and in their discretion upon such
other matters as may come before the meeting.
(To be Signed on Reverse Side)
(Back)
X Please mark your
votes as in this
example.
1. Election of FOR WITHHELD
Directors
Nominees: Carole Lewis Anderson, Bruce B. Brundage, Charles R.
Frederickson, John C. Hoyt, J. Michael Jenkins,
Robert T. Marto, Dudley C. Mecum, Dennis B. Robertson,
Hunter Yager, Arthur Zankel
For, except vote withheld from the following nominee(s):
-------------------------
2. Approval of Independent Accountants. FOR AGAINST WITHHELD
3. Approval of the VICORP Restaurants,
Inc. Employee Stock Purchase Plan FOR AGAINST WITHHELD
SIGNATURE(S) DATE
------------------------------------- ----------------------
NOTE: Please sign name exactly as it appears hereon. Joint owners should
each sign. When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such.
