SCHEDULE 14A - INFORMATION REQUIRED IN PROXY
STATEMENT
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.-14a-11(c)
or section 240.14a-12
HUDSON'S GRILL OF AMERICA, INC.
(Name of Registrant as Specified in its Charter)
HUDSON'S GRILL OF AMERICA, INC.
(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).
[ ] $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:
N/A
(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:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ] 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:
(2) Form, Schedule or Registration Statement No.
(3) Filing Party:
(4) Date Filed:
HUDSON'S GRILL OF AMERICA, INC.
16970 DALLAS PARKWAY
SUITE 402
DALLAS, TEXAS 75248
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of HUDSON'S GRILL OF AMERICA, INC.
(the "Company"), will be held at the Hudson's Grill restaurant located at
Carrollton Value Center at Old Denton Drive and Trinity Mills (2540 Old
Denton Drive, Suite 314), Carrollton, Texas, on May 29, 1998, at 10:00 a.m.
to act upon the following proposals:
1. To elect three (3) directors;
2. To ratify the selection of independent auditors;
3. To ratify and to approve the creation of a subsidiary to which most of
the Company's assets have been transferred and the possible registration
and distribution of the subsidiary's stock to the shareholders of the
Company; and
4. To consider such other business as may properly come before the meeting
and any adjournments or postponements thereof.
Details relating to the above matters are set forth in the attached
Proxy Statement. Your management is not aware of any other matters to come
before the meeting. The Board of Directors has fixed the close of business on
April 17, 1998, as the record date for shareholders entitled to notice of and
to vote at the Annual Meeting.
You are urged to fill in, date, sign and promptly return the Proxy in
the enclosed addressed envelope to which no postage need be affixed if mailed
in the United States. If you do not attend the Annual Meeting, you may
supersede your executed Proxy prior to voting by filing a Proxy bearing a
later date, by filing a written revocation of the Proxy or by attending the
meeting and voting in person. In order to be valid, the enclosed Proxy (or
any new proxy or proxy revocation) must be received by the Secretary not
later than 10:00 a.m., May 29, 1998.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, YOU ARE URGED TO DATE, SIGN
AND RETURN THE ENCLOSED PROXY WITHOUT DELAY. A BUSINESS REPLY ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE.
Mitzy Ferguson
Secretary
Dallas, Texas
May 6, 1998
PROXY STATEMENT
HUDSON'S GRILL OF AMERICA, INC.
16970 DALLAS PARKWAY
SUITE 402
DALLAS, TEXAS 75248
GENERAL INFORMATION
The enclosed Proxy is solicited by the Board of Directors (the "Board")
of HUDSON'S GRILL OF AMERICA, INC. (the "Company").
This Proxy Statement is furnished in connection with the solicitation of
the Proxies by the Company to be voted at its Annual Meeting of Shareholders
to be held May 29, 1998, and at any adjournment and postponement thereof.
The Annual Meeting is to be held at 10:00 a.m. at the Hudson's Grill
restaurant at the True Value Center at Old Denton Drive and Trinity Mills
(2540 Old Denton Drive, Suite 314), Carrollton, Texas.
A person giving the Proxy may revoke it at any time prior to the
exercise thereof by giving written notice to the Secretary of the Company,
attending the meeting and voting in person, or filing a duly executed Proxy
bearing a later date with the Secretary. The mailing to shareholders of this
Proxy Statement and the enclosed form of Proxy will commence on or about May
8, 1998.
All of the expenses involved in preparing, assembling and mailing this
Proxy Statement and the material enclosed herewith, will be paid by the
Company. Officers and employees of the Company may communicate with
shareholders personally or by mail, telegraph, telephone or otherwise, for
the purpose of soliciting such Proxies, but in such event no additional
compensation will be paid to any such persons for such solicitation.
Brokerage houses, nominees, fiduciaries and other custodians will be
requested to forward soliciting materials to the beneficial owners of shares,
in which case they will be reimbursed for their expenses.
Shares represented by valid Proxies will be voted in accordance with the
instructions indicated thereon. Unless otherwise directed, votes will be cast
for the election of directors herewith named, for the ratification of the
Company's selection of Hein + Associates, LLP, as independent auditors for
the Company, and for the ratification of the creation and spinning off of a
subsidiary to the shareholders of the Company.
VOTING SHARES
Shareholders of record as of the close of business on April 17, 1998,
will be entitled to vote at the Annual Meeting and at any adjournments
thereof. At such date there were Six Million, Fifty-Six Thousand, Nine
Hundred Eighty Six (6,056,986) shares of Common Stock. Each shareholder of
record is entitled to one (1) vote for each share of stock owned, except that
shareholders may have cumulative voting rights with respect to the election
of directors. See "Cumulative Voting."
CUMULATIVE VOTING
Pursuant to California law, no shareholder may cumulate votes unless the
candidate's or candidates' name(s) for which such votes are to be cast have
been placed in nomination prior to the voting and a shareholder who is
present in person at the Annual Meeting has given notice at the Annual
Meeting and prior to voting of the shareholder's intention to cumulate the
shareholder's votes. If any shareholder has given such notice, all
shareholders may cumulate their votes for candidates in nomination.
Management does not, at this time, intend to give such notice nor to cumulate
the votes it may hold pursuant to the proxies solicited hereby, unless the
required notice by a shareholder is given in proper form at the Annual
Meeting, in which instance management intends to cumulatively vote all the
proxies held by it in favor of the nominees for office as set forth herein in
such a way as to maximize the possibility that the nominees will be elected.
In the event cumulative voting shall be utilized, each shareholder may
give one candidate a number of votes equal to the number of directors to be
elected (three) multiplied by the number of votes to which the shareholder's
shares are entitled, or distribute the shareholder's votes on the same
principle among as many candidates as the shareholder desires. The three (3)
candidates receiving the highest number of votes are elected.
COMMITTEES OF THE BOARD
The Board held five meetings during fiscal 1997. Each incumbent
director during the fiscal year ended December 28, 1997, attended more than
seventy-five percent (75%) of all meetings of the Board during the time he
was a member and of the Committees of which he was a member.
The Board does not have an Audit Committee . The whole board acts as an
audit committee and whenever necessary supervises and reviews the fiscal and
accounting procedures and practices of the Company, and reviews the audit
and financial statements with the Company's independent accountants.
The Board does not have a Nominating Committee, and it does not have a
Compensation Committee. Nominees may be recommended to the Board in writing
by any shareholder. Compensation matters are considered by the whole Board
of Directors.
Each of the nominees has consented to be named herein and to serve if
elected. However, if any nominee at the time of election is unable or
unwilling to serve as a director, or is otherwise unavailable for election,
the shares represented by proxies will be voted for the election of such
other person as the Board may designate or, in the absence of such
designation, for a nominee selected by the persons named in the enclosed form
of Proxy, or, if there is no qualified nominee willing to serve, the position
will be left vacant.
Certain information concerning the director nominees is set forth below:
Name Age Position
DAVID L. OSBORN 50 Chairman of the Board,
President & Chief Executive Officer
THOMAS A. SACCO 44 Senior Vice President
ROBERT W. FISCHER 47 Director
David L. Osborn was elected as a Director in May 1990 and has served
continuously since then. He was elected Chairman of the Board, President and
Chief Executive Officer in August 1993. Since 1988, Mr. Osborn has been the
Chief Executive Officer of Southpoint Management Corporation, which owns and
operates restaurants, and is Chief Executive Officer of Famous Bars, Grills
& Cafes of America, Inc., which has been a franchisee of Hudson's Grill. He
is also a partner in D.A.C. Associates, which has been a franchisee of
Hudson's Grill since 1986, and he is a partner in Wood, Osborn and Osborn,
which is the landlord of the premises that the Company leases as its
headquarters.
Thomas A. Sacco was elected Senior Vice President of the Company in May
1995. He has been a director since 1996. In addition, he currently serves
as Chairman of the Board of Directors of Triangle Food Service Corporation,
which operates 11 cafeterias and is based in Dallas, Texas. From 1988 to
1993 he was associated with WesterN SizzliN Steakhouses, where he was Vice
President-Operations and then President and Chief Operations Officer of its
Canadian operations. From 1993 to 1995, he was Director of Operations for
Country Harvest Buffet.
Robert W. Fischer was elected a director in 1997. He is a partner in
Fischer & Sanger, attorneys, in Dallas, Texas. He has practiced law for the
last twenty years in the State of Texas and has been an outside counsel for
the Company for the last five years.
No director currently receives any direct compensation as a director,
except for reimbursement of expenses. Mr. Sacco is the principal owner of
Dalms, which the Company has paid $117,715.44 for consulting work (mostly
performed by Mr. Sacco), and travel and related expenses (mostly incurred by
Mr. Sacco). This consulting agreement was terminated on December 31, 1997.
Mr. Sacco continues to consult with the Company on behalf of Dalms, Inc., but
the consulting fees are based on the franchise fee paid by new franchisees
signed by him.
All directors are elected for a term of one (1) year and serve until
their successors have been duly elected and qualified.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
shares of Common Stock beneficially owned, directly or indirectly, by (i)
persons owning, to the Company's knowledge, five percent (5%) or more of the
outstanding shares of Common Stock, (ii) each director of the Company, and
(iii) all directors and executive officers of the Company as a group, in each
case as of December 28, 1997.
Number of
Shares Percentage of
Beneficially Total Shares
Name and Address Owned Outstanding
Directors/Officers:
DAVID L. OSBORN 1,956,368 (1) 32.3%
16970 Dallas Parkway, Suite 402
Dallas, Texas 75248
THOMAS A. SACCO 2,000 (2) 0.0%
16970 Dallas Parkway, Suite 402
Dallas, Texas 75248
ROBERT W. FISCHER 47,615 (1) 0.7%
5956 Sherry Lane, Suite 1204
Dallas, Texas 75225
MITZY FERGUSON 220 (1) 0.0%
16970 Dallas Parkway, Suite 402
Dallas, Texas 75248
JANE TAYLOR 0 0.0%
16970 Dallas Parkway, Suite 402
Dallas, Texas 75248
All directors and executive
officers as a group
(4 persons) 2,006,203 33.1%
Others Owning 5% or More
Of the Company's Common Stock:
ANTHONY B. DUNCAN 1,044,311 (1) 17.2%
10732 Alta Lomo
El Paso, TX 79935
CLIFFORD J. OSBORN 745,618 (1) 12.3%
5581 East Finisterra Drive
Tucson, Arizona 85715
D. MARION WOOD 513,895 (1) 8.5%
16970 Dallas Parkway, Suite 500
Dallas, TX 75248
ROY J. MILLENDER, JR. 500,000 (1) 8.3%
129 Calle Bello
Santa Barbara, CA 93108
CHARLES L. BOPPELL 495,556 (1) 8.1%
1010 Hot Springs Road
Santa Barbara, CA 93108
TRAVIS B. BRYANT 4,000,000 (3) 37.5%
Big Sur, California
(1) Shared voting and investment power is held for these shares.
(2) Mr. Sacco received options to purchase 400,000 shares of the Company's
stock in May 1995. On May 1, 1995, an option to purchase 100,000 of these
shares vested; on May 1, 1996, an option to purchase another 100,000 of these
shares also vested; on May 1, 1997, an option to purchase another 100,000 of
these shares vested; and the remaining options to purchase 100,000 shares
were terminated on December 31, 1997. As of December 28, 1997, Mr. Sacco
owned 300 shares of the Company's stock, and 1,700 are in various custodial
accounts controlled by him for the benefit of his relatives.
(3) In 1994 Mr. Bryant received warrants for the purchase of 4,000,000
shares of the Company's stock in exchange for the restructuring and
cancellation of obligations owed by the Company to Mr. Bryant. These
warrants terminate in 2004 and have an exercise price of $0.0625 per share.
Currently none of these warrants have been exercised.
In August 1993, David L. Osborn purchased control of the Company from
Roy J. Millender, Jr. Mr. Osborn bought 2,679,000 shares of common stock
from Mr. Millender for $1 (paid by Mr. Osborn without any financing) and Mr.
Osborn's efforts to revitalize and reorganize the Company. Prior to this
purchase, Mr. Osborn beneficially owned, either directly, indirectly or
through a voting trust, 1,398,652 shares of stock, of which 913,235 shares
were in a voting trust that terminated May 4, 1994. On August 28, 1995, Mr.
Osborn distributed 1,297,000 shares to certain parties to whom he had
promised shares without receiving any monetary consideration for the
transfer. D. Marion Wood received 505,000 shares from Mr. Osborn; Clifford
J. Osborn received 200,000 shares; and Anthony B. Duncan received 592,000
shares. As of December 29, 1996, Mr. Osborn was the beneficial owner of
1,956,368 shares of stock, which is 32.3% of the Company's outstanding
shares. Mr. Osborn directly owns 1,439,856 shares of stock, which is 23.8%
of the Company's outstanding shares.
Effective January 27, 1994, the Company, as part of an agreement to
reduce its secured debt, agreed with Travis Bryant, its largest creditor, to
grant Mr. Bryant a stock warrant for four (4) million shares exercisable at
a price of one-sixteenth (1/16th) of a dollar for a period of ten (10) years.
In exchange, Mr. Bryant forgave most of the Company's secured debt owed to
him. If Mr. Bryant exercises a substantial portion of his stock warrant, he
could become the Company's largest shareholder; in addition, Mr. Osborn's
control of the Company would be greatly reduced.
REMUNERATION AND RELATED INFORMATION
The following table sets forth for the year ended December 28, 1997,
certain information as to each of the Company's five (5) most highly
compensated executive officers and as to all executive officers as a group:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Annual Compensation Other Annual
Compensation
Salary ($) Bonus ($) ($)
Name and
Principal Year
Position
(a) (b) (c) (d) (e)
David L. Osborn 1997 0(1) 0 0
President 1996 0(1) 0 0
CEO 1995 0(1) 0 0
Thomas A. Sacco 1997 0(2) 0 0
Senior Vice 1996 1000(2) 0 0
President 1995 1000(2) 0 0
Mitzy Ferguson 1997 18,900(1) 0 0
Secretary 1996 36,000(1) 0 0
1995 47,500 0 0
Jane Taylor 1997 20,535(1) 0 0
Treasurer 1996 12,895(1) 0 0
1995 0 0 0
All executive 39,435 0 0
officers as a
group (4
persons)
</TABLE>
SUMMARY COMPENSATION TABLE, Continued
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Long Term Compensation
Restricted Securities LTIP Other
Stock Underlying Payouts Annual
Awards($) Options/SARs ($) Compensa
(#) tion ($)
Name and
Principal Year
Position
(a) (b) (f) (g) (h) (i)
David L. Osborn 1997 0(1) 0 0 0
President 1996 0(1) 0 0 0
CEO 1995 0(1) 0 0 0
Thomas A. Sacco 1997 0(2) 100,000 0 0
Senior Vice 1996 0(2) 100,000 0 0
President 1995 0(2) 100,000 0 0
Mitzy Ferguson 1997 0(1) 0 0 0
Secretary 1996 0(1) 0 0 0
1995 0 0 0 0
Jane Taylor 1997 0(1) 0 0 0
Treasurer 1996 0 0 0 0
1995 0 0 0 0
All executive
officers as a
group (4 0 100,000 0 0
persons)
</TABLE>
Option/SAR Grants in the Last Fiscal Year
(Individual Grants)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Number of Percent of
Securities total
underlying options/SARs Exercise or
options/SARs granted to base price
Name granted (#) employees in ($/Sh) Expiration
(a) (b) fiscal year (d) date
(c) (e)
David L.
Osborn,
President,
CEO
Thomas A. 100,000 100.0 .14 5/1/03
Sacco,
Sr. V.P.
Mitzy
Ferguson,
Secretary
Jane Taylor,
Treasurer
All executive 100,000 .14
officers as a
group (4
persons)
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal
Year and FY-End Option/SAR Values
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> Number of
securities Value of
underlying unexercised
unexercised in-the-money
options/SARs options/SARs
Shares at FY-end (#) at FY-end ($)
acquired on Value exercisable/u exercisable/u
Name exercise (#) realized ($) n-exercisable n-exercisable
(a) (b) (c) (d) (e)
David L.
Osborn,
President,
CEO
Thomas A. 300,000/ 0
Sacco, 0
Sr. V.P.
Mitzy
Ferguson,
Secretary
Jane Taylor,
Treasurer
All executive 300,000/
officers as a 0
group (4
persons)
</TABLE>
(1) Mr. Osborn and/or companies affiliated with him were reimbursed for
travel expenses incurred on behalf of the Company, but received no
remuneration for his work. In 1997 he or his affiliated companies were
reimbursed $4,248.27 for his travel. Ms. Ferguson was reimbursed $2,779.21
for her travel expenses, and Ms. Taylor was reimbursed $730.14 for her travel
expenses.
(2) Mr. Sacco works for Dalms, Inc., which was paid consulting fees to
provide his services to the Company. In 1997, Dalms, Inc., was paid
$117,715.44 for Mr. Sacco's services and travel. In addition, over a period
from 1995 to 1997 Mr. Sacco received vested options to purchase 300,000
shares of the Company's common stock. The vested options are exercisable at
the market price as of the date of their granting.
Under the Company's Amended and Restated Incentive Stock Option Plan
adopted in 1989, and approved by the shareholders (the "Plan"), the Company
is authorized to grant options to selected officers and employees to purchase
up to an aggregate of Eight Hundred Twenty Five Thousand (825,000) shares of
Common Stock. As of December 28, 1997, there were no outstanding options to
purchase shares of Common Stock under the Plan. Under the terms of the Plan,
options are granted at not less than the fair market value on the date of
grant, become exercisable in increments of twenty percent (20%) per year for
each year of employment after the date of grant (except the final twenty
percent (20%) increment becomes exercisable four (4) years and six (6) months
after the date of the grant) and remain exercisable for a period of five (5)
years from the date of grant. The options terminate once employment
terminates.
CERTAIN TRANSACTIONS
As of February 1994, the Company's headquarters were moved from
California to Dallas, Texas. The Company is now leasing space for its
headquarters from Wood, Osborn and Osborn, a company partially owned by David
Osborn, one of the Company's directors, for $1,440 per month plus its share
of utilities expenses. The Company considers this rental a fair market value
for the space it is renting. This space is in the same office building that
leases space to the Company's President and the companies controlled by him,
including companies that are franchisees of the Company; thus the management
of the Company is more efficient because its executives work near the
headquarters, and travel costs are reduced.
Mr. David L. Osborn is affiliated with Southpoint Management
Corporation, DAC Associates and Famous Bars, Grills & Cafes of America, Inc.
("FGA"). These companies, in turn, are affiliated with owning and operating
several Hudson's restaurants in Texas, which are franchises granted by the
Company. During the past year, these companies paid no franchise fees to the
Company, and did not purchase any new franchises. The franchise agreement
for Texas was entered into before Mr. Osborn became involved in the
management of the Company, and that agreement provides that Mr. Osborn does
not have to pay royalties. In March 1997, FGA agreed to assign most of its
exclusive franchise rights to Texas to a company controlled by Mr. Travis
Bryant. Mr. Bryant's company will have the rights to develop Hudson's Grills
in Texas, excluding areas in or around El Paso, Austin and Dallas/Fort Worth.
Mr. Bryant has more capital available to him than FGA does, and thus, FGA and
Mr. Bryant decided that Mr. Bryant would be able to develop these markets
more rapidly. In November 1997, Mr. Osborn transferred his interest in two
Hudson's Grills in El Paso, Texas, to Anthony Duncan, who is affiliated with
the same companies that Mr. Osborn is.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ELECTION OF THE THREE(3) NOMINEES FOR DIRECTORS NAMED IN THIS
PROXY STATEMENT.
Three (3) directors are to be elected, with each director to hold office
until the next Annual Meeting or until his successor is elected and
qualified. The persons named as proxies in the enclosed Proxy have been
designated by management and intend to vote for the election of the three
persons named as nominees in this proxy statement ("Nominees"), except where
authority is withheld by the shareholder or specifically requested to be
voted for someone else. If no one is written in to be voted for as a
director who is willing to serve and no vote is specifically withheld, then
the persons holding the proxies will vote for the three Nominees. If one
person other than a Nominee is voted for on the proxy, then the persons
holding the proxy will vote for the one requested person, provided he(she) is
willing to serve as a director, and will decide which of the three Nominees
to vote for. If two persons are voted for on the proxy, then the person's
holding the proxy will vote for the two requested persons, provided they are
willing to serve as a director, and will decide which of the three Nominees
to vote for. If three persons other than Nominees are voted for on the
proxy, then the persons holding the proxy will vote for the three requested
persons, provided they are willing to serve as a director. If more than
three persons are voted for on the proxy, then the persons holding the
proxies will vote for the Nominees regardless of those requested.
PROPOSAL NO. 2
RATIFICATION OF THE SELECTION OF
INDEPENDENT AUDITORS
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
Hein + Associates, LLP, has been selected as the Company's independent
auditors for the fiscal year ending December 27, 1998. This firm served as
the Company's independent auditors for the period ended December 28, 1997.
PROPOSAL NO. 3
PROPOSAL TO RATIFY THE CREATION OF A SUBSIDIARY AND THE
TRANSFER OF MOST OF THE COMPANY'S ASSETS TO THE SUBSIDIARY AND
TO ADOPT A PLAN TO REGISTER THE SUBSIDIARY'S STOCK AND
DISTRIBUTE IT TO THE COMPANY'S SHAREHOLDERS
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS PROPOSAL.
DESCRIPTION OF THE PROPOSED AMENDMENT AND VOTE REQUIRED
On March 17, 1998, the Board of Directors unanimously adopted
resolutions approving a proposal of a plan to ratify the creation of a
subsidiary named Hudson's Grill International, Inc., a Texas corporation, and
the transfer of most of the Company's assets to the subsidiary. The plan
would also involve the possible registration of the stock of the subsidiary
if the directors elect to do so and if funds permit, and, whether or not the
stock is registered, the distribution of the stock of the subsidiary to the
then existing shareholders of the Company according to a ratio to be set by
the directors.
The affirmative vote of the holders of a two-thirds majority of the
outstanding shares of Common Stock of the Company is required to approve the
proposed amendment.
PURPOSES AND EFFECTS OF AUTHORIZING THE ISSUANCE OF PREFERRED STOCK
The directors may decide to issue shares of the subsidiary to the
Company's shareholders according to a ratio that might not be one to one.
For example, they might decide to distribute one share of the subsidiary for
every 500 shares owned of the Company's stock. Although most shareholdings
will remain approximately the same relative to each other, those shareholders
holding less than 500 shares or having a total of shares that is not a
multiple of 500, would end up with fractional shares. If the directors vote
to distribute the subsidiary's stock in such a way, then the subsidiary would
purchase such fractional shares according to the laws applicable to such
purchase. In this example, those shareholders holding less than 500 shares
would not become shareholders of the subsidiary. Instead, they would receive
some compensation for the value of their fractional share. Depending on the
ratio voted by the directors, many current shareholders may not become
shareholders of the subsidiary.
In spinning the subsidiary off in such a way, the Company can
essentially move its corporate home to Texas, change its name to reflect a
more international scope, escape the burdens of being incorporated in
California, and have a fresh start, too. The resulting entity may become a
private company, which would save the subsidiary the expenses associated with
being a public company.
Granting the Company authority to execute this plan will not cost the
Company, except to the extent that its subsidiary incurs stock transfer
agent's fees to distribute the subsidiary's stock, and if the subsidiary's
stock is registered, then to the extent of legal fees, filing fees and
accounting fees incurred in the registration process. In order that the
Company essentially get a fresh start in another state through the spinning
off of the subsidiary with most of the Company's assets, the Directors
proposed the matter be put to a vote and recommend that the shareholders of
the Company vote for the above proposed plan.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has invited its accountants from Hein + Associates, LLP, to
be present at the Annual Meeting; therefore they may be present. If a
representative of Hein + Associates, LLP, is present at the Annual Meeting of
Shareholders, the representative will be allowed to answer appropriate
questions, and will be afforded an opportunity to make a statement if so
desired. Prior to the appointment in December 1993 of Hein + Associates,
LLP, Deloitte & Touche was dismissed in December 1993 as the Company's
accountants and replaced by Hein + Associates, LLP. Neither of Deloitte &
Touche's reports for the previous two fiscal years contained an adverse
opinion or disclaimer of opinion, or was modified as to uncertainty, audit
scope, or accounting principles. The Audit Committee of the Board of
Directors recommended to the Board that Hein + Associates, LLP, be hired
instead of Deloitte & Touche, and the Directors so decided. The Company did
not have any disagreements with Deloitte & Touche about any accounting
matters, financial statement disclosure, or scope of audit or procedure.
Prior to hiring Hein + Associates, LLP, the Company had not contacted them
about what types of opinions they might make about the Company's financial
statements or about any specific transactions.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Securities and Exchange
Commission (the "SEC"). Officers, directors and ten-percent shareholders are
required by SEC regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no
Forms 5 were required, the Company believes that filing requirements
applicable to its officers and directors were complied with during the 1997
fiscal year.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 1999
Stockholder proposals to be presented at the 1999 Annual Meeting must be
received by the Company on or before February 1, 1999, for inclusion in the
proxy statement and form of proxy relating to that meeting.
OTHER MATTERS
Management of the Company does not know of any other matters to be
presented for action at the Annual Meeting. However, if any other matters
should be properly presented at the Annual Meeting, it is the intention of
the persons named in the accompanying Proxy to vote said Proxy in accordance
with their best judgment.
OTHER INFORMATION
The Annual Report to Shareholders of the Company for the year ended
December 28, 1997, is mailed herewith to shareholders of record at the close
of business on April 17, 1998.
IF YOU WOULD LIKE A COPY OF THE COMPANY'S ANNUAL REPORT OR FORM 10-KSB,
PLEASE CONTACT THE SECRETARY AT (972) 931-9237.
Mitzy Ferguson
Secretary
Dallas, Texas
May 4, 1998
f\sec\980430.O01
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS
The undersigned hereby appoints DAVID L. OSBORN or THOMAS SACCO, each with
the power to appoint his or her substitute and hereby authorizes them to
represent and to vote, as designated below, all shares of common stock of
HUDSON'S GRILL OF AMERICA, INC., held on record by the undersigned on April
17, 1998, at the annual meeting to be held May 29, 1998.*
1. ELECTION OF DIRECTORS
FOR ALL NOMINEES PRINTED BELOW (except as marked to the
contrary below).
FOR THE FOLLOWING DIRECTORS (name up to three):
WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED.
D.L. Osborn , T.A. Sacco, and R.W. Fischer. (Instructions: To
withhold authority to vote for any individual nominees, line out
that nominee's name).
2. RATIFICATION OF SELECTION OF HEIN + ASSOCIATES, LLP
FOR AGAINST ABSTAIN
3. RATIFICATION OF THE CREATION OF A SUBSIDIARY TO WHICH MOST OF THE
COMPANY'S ASSETS WERE TRANSFERRED AND ADOPTION OF A PLAN TO REGISTER AND
DISTRIBUTE THE SUBSIDIARY'S SHARES TO THE COMPANY'S SHAREHOLDERS
FOR AGAINST ABSTAIN
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting. This proxy, when properly
executed, will be voted in the manner directed by the undersigned
stockholder. If no direction is made, this proxy will be voted for the
Nominees and for Proposals 2 and 3.
Date:
Signature
Signature
* Cumulative voting is permitted. See the proxy statement for
details.
