<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by 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 Materials Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
SPAGHETTI WAREHOUSE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
SPAGHETTI WAREHOUSE, INC.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] 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 is calculated and state how it was determined:
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously by written 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
SPAGHETTI WAREHOUSE, INC.
402 WEST I-30
GARLAND, TEXAS 75043
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 28, 1997
To the Shareholders of Spaghetti Warehouse, Inc.:
NOTICE IS HEREBY GIVEN that the 1997 Annual Meeting of Shareholders (the
"Annual Meeting") of Spaghetti Warehouse, Inc., a Texas corporation (the
"Company"), will be held at 1815 N. Market Street, Dallas, Texas on the second
floor on the 28th day of October, 1997, at 10:00 a.m. (local time) for the
following purposes:
1. To elect ten (10) directors to hold office until the next annual
election of directors by shareholders or until their respective successors
shall have been duly elected and shall have qualified;
2. To transact any and all other business that may properly come
before the meeting or any adjournment(s) thereof.
The Board of Directors has fixed the close of business on September 12,
1997 as the record date (the "Record Date") for the determination of
shareholders entitled to notice of and to vote at such meeting or any
adjournment(s) thereof. Only shareholders of record at the close of business on
the Record Date are entitled to notice of and to vote at such meeting. The stock
transfer books will not be closed. A list of shareholders entitled to vote at
the Annual Meeting will be available for examination at the offices of the
Company for ten (10) days prior to the Annual Meeting.
You are cordially invited to attend the meeting; WHETHER OR NOT YOU EXPECT
TO ATTEND THE MEETING IN PERSON, HOWEVER, YOU ARE URGED TO MARK, SIGN, DATE, AND
MAIL THE ENCLOSED FORM OF PROXY PROMPTLY SO THAT YOUR SHARES OF STOCK MAY BE
REPRESENTED AND VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE
PRESENCE OF A QUORUM MAY BE ASSURED AT THE MEETING. Your proxy will be returned
to you if you should be present at the meeting and should request its return in
the manner provided for revocation of proxies on the initial page of the
enclosed proxy statement.
BY ORDER OF THE BOARD OF DIRECTORS
H. G. Carrington, Jr., Secretary
September 23, 1997
<PAGE>
SPAGHETTI WAREHOUSE, INC.
402 WEST I-30
GARLAND, TEXAS 75043
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD OCTOBER 28, 1997
---------------------------
SOLICITATION AND REVOCABILITY
OF PROXIES
The accompanying proxy is solicited by the Board of Directors on behalf of
Spaghetti Warehouse, Inc., a Texas corporation (the "Company"), to be voted at
the 1997 Annual Meeting of Shareholders of the Company (the "Annual Meeting") to
be held on October 28, 1997, at the time and place and for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders (the
"Notice") and at any adjournment(s) thereof. WHEN PROXIES IN THE ACCOMPANYING
FORM ARE PROPERLY EXECUTED AND RECEIVED, THE SHARES REPRESENTED THEREBY WILL BE
VOTED AT THE ANNUAL MEETING IN ACCORDANCE WITH THE DIRECTIONS NOTED THEREON; IF
NO DIRECTION IS INDICATED, SUCH SHARES WILL BE VOTED FOR THE ELECTION OF
DIRECTORS AND THE PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTERS
REFERRED TO IN PROPOSAL 2 SET FORTH IN THE NOTICE.
The executive offices of the Company are located at, and the mailing
address of the Company is, 402 West I-30, Garland, Texas 75043.
Management does not intend to present any business at the Annual Meeting
for a vote other than the matters set forth in the Notice and has no information
that others will do so. If other matters requiring a vote of the shareholders
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying form of proxy to vote the shares represented by the
proxies held by them in accordance with their judgment on such matters.
This proxy statement (the "Proxy Statement") and accompanying form of proxy
are being mailed on or about September 23, 1997. The Company's Annual Report on
Form 10-K, which serves as the Annual Report to Shareholders, covering the
Company's fiscal year ended June 29, 1997, is enclosed herewith, but does not
form any part of the materials for solicitation of proxies.
Any shareholder of the Company giving a proxy has the unconditional right
to revoke his proxy at any time prior to the voting thereof either in person at
the Annual Meeting by delivering a duly executed proxy bearing a later date or
by giving written notice of revocation to the Company addressed to H. G.
Carrington, Jr., Secretary, Spaghetti Warehouse, Inc., 402 West I-30, Garland,
Texas 75043; no such revocation shall be effective, however, until such notice
of revocation has been received by the Company at or prior to the Annual
Meeting.
In addition to the solicitation of proxies by use of the mail, officers and
regular employees of the Company may solicit the return of proxies, either by
mail, telephone, telegraph, or through personal contact. Such officers and
employees will not be additionally compensated but will be reimbursed for out-
of-pocket expenses. Brokerage houses and other custodians, nominees, and
fiduciaries will, in connection with shares of Common Stock, par value $.01 per
share (the "Common Stock"), registered in their names, be requested to forward
solicitation material to the beneficial owners of such shares of Common Stock.
<PAGE>
The cost of preparing, printing, assembling, and mailing the Annual Report,
the Notice, this Proxy Statement, and the enclosed form of proxy, as well as the
cost of forwarding solicitation materials to the beneficial owners of shares of
the Common Stock, and other costs of solicitation, will be borne by the Company.
QUORUM AND VOTING
The record date for the determination of shareholders entitled to notice of
and to vote at the Annual Meeting was the close on business of September 12,
1997 (the "Record Date"). On the Record Date, there were 5,655,494 shares of
Common Stock issued and outstanding.
Each shareholder of Common Stock is entitled to one vote on all matters to
be acted upon at the meeting and neither the Company's Amended and Restated
Articles of Incorporation, as amended, nor its Second Amended and Restated
Bylaws, as amended, allow for cumulative voting rights. The presence, in person
or by proxy, of the holders of a majority of the issued and outstanding Common
Stock entitled to vote at the meeting is necessary to constitute a quorum to
transact business. If a quorum is not present or represented at the Annual
Meeting, the shareholders entitled to vote thereat, present in person or by
proxy, may adjourn the Annual Meeting from time to time without notice or other
announcement until a quorum is present or represented. Assuming the presence of
a quorum, the affirmative vote of the holders of a plurality of the shares of
Common Stock voting at the meeting is required for the election of directors.
Pursuant to the provisions of the Texas Business Corporation Act, the
Second Amended and Restated Bylaws, as amended, of the Company provide that
abstentions and broker non-votes will be counted for purposes of determining a
quorum, but shall not be counted as voting for purposes of determining whether a
proposal has received the necessary number of votes for approval of the
proposal.
2
<PAGE>
PRINCIPAL SHAREHOLDERS AND STOCK OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of Common Stock as of the Record Date by (i) each director of the
Company; (ii) each Named Executive Officer (as defined in "Election of
Directors--Compensation of Executive Officers"); (iii) all present executive
officers and directors of the Company as a group; and (iv) each other person
known to the Company to own beneficially more than five percent (5%) of the
Common Stock.
BENEFICIAL OWNERSHIP (1)
----------------------------------
NAME OF BENEFICIAL OWNER NUMBER OF SHARES PERCENTAGE
------------------------ ---------------- ----------
Private Capital Management, Inc. (2) 789,900 (3) 14.0%
Salem Investment Counselors, Inc. (4) 339,217 6.0%
Dimensional Fund Advisors Inc. (5) 375,642 (6) 6.6%
Fleet Financial Group, Inc. (7) 353,100 (8) 6.2%
Ryback Management Corporation (9) 842,800 (10) 14.9%
Phillip Ratner 232,303 (11)(12) 4.0%
H.G. Carrington, Jr. 81,060 (13)(14) 1.4%
K. Dieter Esch 44,752 (15) *
Gary J. Gay 19,587 (16) *
Robert L. Purple -0- *
Gary L. Suit 10,667 (17) *
C. Cleave Buchanan, Jr. 4,171 (18) *
Frank Cuellar, Jr. 14,140 (19) *
John T. Ellis 175,414 (20)(21) 3.1%
Robert R. Hawk 8,100 *
Peter Hnatiw 10,172 (22) *
James F. Moore 4,171 (18) *
Cynthia I. Pharr 10,202 (23) *
William B. Rea, Jr. 26,896 (24) *
All executive officers and directors
as a group (17 persons) 678,361 (12)(14)(20)(25) 11.1%
*Less than 1%
3
<PAGE>
(1) Unless otherwise indicated, each person or group has sole voting and
investment power with respect to all such shares.
(2) Private Capital Management, Inc. forms part of a group that consists of
Private Capital Management, Inc. and The Entrepreneurial Value Fund L.P.
The business address of both Private Capital Management, Inc. and The
Entrepreneurial Value Fund, L.P. is 3003 Tamiami Trail N, Suite 360,
Naples, Florida 34102.
(3) Includes 789,900 shares of which Private Capital Management, Inc. shares
investment power with Bruce S. Sherman.
(4) The business address of Salem Investment Counselors, Inc. is P.O. Box
25427, Winston-Salem, North Carolina 27114-5427.
(5) The business address of Dimensional Fund Advisors Inc. ("Dimensional") is
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
Dimensional, a registered investment advisor, is deemed to have beneficial
ownership of 375,642 shares of Spaghetti Warehouse stock as of June 30,
1997, all of which shares are held in portfolios of DFA Investment
Dimensions Group Inc., a registered open-end investment company, or in
series of The DFA Investment Trust Company, a Delaware business trust, or
the DFA Group Trust and the DFA Participating Group Trust, investment
vehicles for qualified employee benefit plans, all of which Dimensional
Fund Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such shares.
(6) Persons who are officers of Dimensional also serve as officers of DFA
Investment Dimensions Group Inc., (the "Fund") and The DFA Investment Trust
Company (the "Trust"), each an open-end management investment company
registered under the Investment Company Act of 1940. In their capacity as
officers of the Fund and the Trust, these persons vote 52,400 additional
shares which are owned by the Fund and 58,200 shares which are owned by the
Trust.
(7) The business address of Fleet Financial Group, Inc. ("Fleet") is One
Federal Street, Boston, Massachusetts 02211.
(8) Includes 89,800 shares of which Fleet shares voting power with Ohio Police
& Fireman's Pension Fund and 7,000 shares of which Fleet shares voting
power with United Methodist Church Endowment Fund.
(9) The business address of Ryback Management Corporation ("Ryback") is
7711 Carondelet Avenue, Suite 700, Saint Louis, Missouri 63105.
(10) Based on information furnished by Ryback to the Company. Ryback, as
investment advisor to Linder Growth Fund and Linder Dividend Fund, has sole
dispositive and voting power over 842,800 shares of Common Stock.
(11) Includes 225,000 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(12) Includes 7,303 shares of which Mr. Ratner shares both voting and investment
power with his wife, Dena Ratner.
(13) Includes 76,776 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(14) Includes 3,684 shares of which Mr. Carrington shares both voting and
investment power with his wife, Ricki L. Carrington, and 300 shares held in
each of the individual retirement accounts for H.G. Carrington, Jr. and
Ricki L. Carrington, respectively.
(15) Includes 42,692 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
4
<PAGE>
(16) Includes 17,367 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(17) Includes 10,667 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(18) Includes 4,171 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(19) Includes 12,672 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(20) Includes 81,758 and 82,984 shares held by the John T. Ellis Trust of 1989
and the Nancy M. Ellis Trust of 1989, respectively, of which John T. Ellis
is trustee.
(21) Includes 10,672 shares issuable pursuant to the exercise of stock options
within 60 days of the Record Date.
(22) Includes 8,172 shares issuable pursuant to the exercise of stock options
exercisable within 60 days of the Record Date.
(23) Includes 10,172 shares issuable pursuant to the exercise of stock options
exercisable within 60 days of the Record Date.
(24) Includes 6,896 shares issuable pursuant to the exercise of stock options
exercisable within 60 days of the Record Date.
(25) Includes an aggregate of 461,582 shares issuable pursuant to the exercise
of stock options within 60 days of the Record Date.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Second Amended and Restated Bylaws, as amended, of the Company provide
that the number of directors that shall constitute the whole board shall be not
less than three (3) nor more than ten (10). By resolution of the Board of
Directors, at its meeting on August 26, 1997, the number of directors comprising
the Board of Directors has been set at ten (10).
NOMINEES
Unless otherwise directed in the enclosed proxy, it is the intention of the
persons named in such proxy to nominate and to vote the shares represented by
such proxy for the election of the following named nominees for the office of
director of the Company, to hold office until the next annual meeting of
shareholders or until their respective successors shall have been duly elected
and shall have qualified. Each of the nominees is presently a director of the
Company.
5
<PAGE>
Information regarding each nominee is set forth in the table and text
below:
<TABLE>
<CAPTION>
PRINCIPAL YEAR FIRST
OCCUPATION & ELECTED PRESENT
NOMINEE AGE BUSINESS ADDRESS DIRECTOR OFFICE(S) HELD
------- --- ---------------- ---------- --------------
<S> <C> <C> <C> <C>
Phillip Ratner 53 Chairman of the Board, 1994 Chairman of the
President, Chief Executive Board, President,
Officer and Director Chief Executive
Spaghetti Warehouse, Inc. Officer and
402 West I-30 Director
Garland, Texas 75043
H. G. Carrington, Jr. 42 Executive Vice President, Chief 1990 Executive Vice
Financial Officer, Secretary President, Chief
and Director Financial
Spaghetti Warehouse, Inc. Officer,
402 West I-30 Secretary and
Garland, Texas 75043 Director
C. Cleave Buchanan, Jr. 52 President 1995 Director
Southbrook Capital
13111 North Central Expressway
Suite 300
Dallas, Texas 75243
Frank Cuellar, Jr. 67 President and Director 1985 Director
Frank Cuellar & Sons, Inc.
8315 Inwood Drive
Dallas, Texas 75209
John T. Ellis 73 Personal Investments 1981 Director
4488 S. Atlantic Ave.
Ponce Inlet, Florida 32127
Robert R. Hawk 70 Personal Investments 1972 Director
402 West I-30
Garland, Texas 75043
Peter Hnatiw 49 President 1992 Director
Esplanade Restaurants Ltd.
54 The Esplanade, Suite 201
Toronto, Ontario M5E 1A6
CANADA
James F. Moore 62 President 1995 Director
Moore Idea's, Inc.
1012 Creek Crossing
Coppell, Texas 75019
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL YEAR FIRST
OCCUPATION & ELECTED PRESENT
NOMINEE AGE BUSINESS ADDRESS DIRECTOR OFFICE(S) HELD
------- --- ---------------- ---------- --------------
<S> <C> <C> <C> <C>
Cynthia I. Pharr 48 President 1991 Director
C. Pharr & Company
3030 LBJ Freeway
Suite 1670
Dallas, Texas 75234
William B. Rea, Jr. 52 Chief Financial Officer 1984 Director
Texas Roadhouse Holdings, LLC
9000 Wessex Place, Suite 301
Louisville, Kentucky 40222
</TABLE>
Mr. Phillip Ratner entered into an employment agreement with the Company to
become President and Chief Executive Officer in June 1994. Mr. Ratner was
elected as a director of the Company in August 1994 and was elected Chairman of
the Board in January 1996. Prior to that time, Mr. Ratner served as President
(from 1985) and Chief Executive Officer (from 1987) of Acapulco Restaurants,
Inc. ("Acapulco"), a 50-unit casual Mexican dinner-house chain based in Long
Beach, California. Acapulco is a division of Restaurant Associates Corp. Mr.
Ratner served as Executive Vice President of Operations of Acapulco from 1984
until 1985. Prior to his association with Acapulco, Mr. Ratner was employed by
El Torito, a Mexican dinner-house chain, from 1979 until 1984, serving most
recently as Executive Vice President of Operations from 1982 to 1984. Mr.
Ratner is a director of Roadhouse Grill, Inc., which operates and franchises
Roadhouse Grill restaurants.
Mr. H. G. Carrington, Jr., a director since March 1990, became Senior Vice
President, Chief Financial Officer and Secretary of the Company in August 1993.
Mr. Carrington was elected Executive Vice President in March 1996. Mr.
Carrington was Senior Vice President of NationsBank Investment Banking from
January 1993 to August 1993. He was Managing Director-Corporate Finance of Price
Waterhouse, an accounting firm, from May 1990 to January 1993.
Mr. C. Cleave Buchanan, Jr., a director since July 1995, has served as
President of Southbrook Capital, a privately-held investment company, since
August 1996. In June 1997, Mr. Buchanan became Chairman and Chief Executive
Officer of USA Connect, a privately-held company that provides internet services
to the public. From February 1993 to August 1996, Mr. Buchanan served as
Executive Vice President of FFSC, Inc., a privately-held company that designs,
manufactures and sells consumer products to the wholesale market. FFSC, Inc.
filed a petition under Chapter 11 of the Bankruptcy code in March 1996. Prior
to joining FFSC, Inc., Mr. Buchanan was a shareholder in Jenkens and Gilchrist,
a Dallas-based law firm from 1971 through 1993. Since 1993 Mr. Buchanan has
served as a managing member of FF Tower L.C., a Texas limited liability company
that owns and manages commercial real estate in Dallas Texas. Since 1985, Mr.
Buchanan has served as General Partner of Ogre Partners, Ltd., a limited
partnership that owns and markets proprietary computer software programs to the
oil and gas industry under the tradename DPC&A.
Mr. Frank Cuellar, Jr., a director since August 1985, has served as
President, since 1994, and as a director, since 1977, of Frank Cuellar & Sons,
Inc., a Dallas, Texas real estate investment company. From 1977 to 1994,
Mr. Cuellar served as Secretary and Treasurer of Frank Cuellar & Sons, Inc. Mr.
Cuellar served as Senior Vice President, Secretary and Treasurer of El Chico
Corporation from 1966 to 1977.
7
<PAGE>
Mr. John T. Ellis, a director since September 1981, was the Director of
Leasing for the Tandy Center of Tandy Corporation, Fort Worth, Texas, a retail
and computer company, from August 1975 until his retirement in June 1983. Mr.
Ellis, a founding investor of the Company, has a total of 16 years of retail
management experience with Tandy Corporation and Pier One Imports. Since the
time of his retirement, Mr. Ellis has been engaged in personal investments as
his principal occupation. Mr. Ellis has been engaged as a consultant to the
Company since October 1996.
Mr. Robert R. Hawk, founder of the Company, served as Chairman of the Board
from the Company's organization in 1972 until October 1993. At the 1993 Annual
Meeting in October 1993, Mr. Hawk retired as Chairman of the Board. In January
1994 he was reappointed Chairman of the Board and served in such capacity until
January 1996. Mr. Hawk served as President of the Company from the Company's
organization in 1972 until July 1991 and then as interim President and interim
Chief Executive Officer from January 1994 until August 1994 when Mr. Phillip
Ratner was elected President and Chief Executive Officer. Mr. Hawk was one of
the founders of Pier One Imports and served in various capacities from
Merchandising Manager to Vice President from 1962 to 1973. Since January 1996,
Mr. Hawk has been engaged as a consultant to the Company. His principal
occupation is personal investments.
Mr. Peter Hnatiw, a director since 1992, has been, since 1981, the
President of Esplanade Restaurants Ltd., a Canadian restaurant corporation that
operates several restaurant concepts, one of which is The Old Spaghetti Factory
restaurant in Toronto, Canada, which is a franchisee of Old Spaghetti Factory
Canada Ltd., the Company's wholly owned Canadian subsidiary.
Mr. James F. Moore, a director since July 1995, has been the President of
Moore Idea's, Inc., a company that specializes in professional speaking and
leading seminars, since January 1994. Mr. Moore also serves as a consultant to
the hospitality industry. Prior to founding Moore Idea's Inc., Mr. Moore was
employed by Restaurant Enterprises Group, Inc. from 1980 to 1994, most recently
serving as President of its Far West Concepts restaurants.
Ms. Cynthia I. Pharr, a director since August 1991, has been President of
C. Pharr & Company since February 1993. Ms. Pharr was President of Tracy
Locke/Pharr Public Relations from April 1989 to January 1993. Through her
current firm and other public relations firms she has served as President, Ms.
Pharr has provided communications, marketing, financial relations and issues
management counsel to numerous restaurant companies, as well as clients in other
industries. Ms. Pharr is a director of Showbiz Pizza Time, Inc.
Mr. William B. Rea, Jr., a director since 1984, has been, since August
1997, Chief Financial Officer for Texas Roadhouse Holdings, LLC, which operates
Texas Roadhouse restaurants. He served as Controller of Main Waters Management,
Inc., a restaurant and outdoor advertising company, from January 1996 to July
1997. From August 1993 to December 1995, Mr. Rea served as Vice President,
Chief Financial Officer and a director of Pollo Tropical, Inc., a restaurant
chain. Mr. Rea served as Vice President-Finance of the Company from September
1984 to August 1993, and served as Secretary of the Company from October 1985 to
August 1993.
If elected as a director of the Company, each director will hold office
until next year's annual meeting of shareholders, expected to be held in October
1998, or until his or her respective successor is elected and has qualified.
8
<PAGE>
The Board of Directors does not contemplate that any of the above-named
nominees for director will refuse or be unable to accept election as a director
of the Company, or be unable to serve as a director of the Company. Should any
of them become unavailable for nomination or election or refuse to be nominated
or to accept election as a director of the Company, then the persons named in
the enclosed form of proxy intend to vote the shares represented in such proxy
for the election of such other person or persons as may be nominated or
designated by the Board of Directors. No nominee is related by blood, marriage,
or adoption to another nominee or to any executive officer of the Company or its
subsidiaries or affiliates.
BOARD COMMITTEES AND MEETINGS
The Board of Directors has a standing Audit Committee currently comprised
of Frank Cuellar, Jr., Cynthia I. Pharr and William B. Rea, Jr. The Audit
Committee is responsible for consulting with the Company's independent auditors
with regard to the adequacy of internal controls and the plan of audit, and also
for reviewing the audit report and management letter. The Audit Committee held
two meetings during the fiscal year ended June 29, 1997.
The Board of Directors has a standing Compensation Committee currently
comprised of Frank Cuellar, Jr., C. Cleave Buchanan, Jr., Peter Hnatiw,
Cynthia I. Pharr and William B. Rea, Jr. The Compensation Committee is
responsible for the review and approval of the compensation levels of executive
officers of the Company, the evaluation of the performance of the executive
officers, the consideration of senior management succession issues and any
related matters for the Company. The Compensation Committee held one meeting
during the fiscal year ended June 29, 1997.
The Board of Directors has a standing Incentive Stock Option Committee
composed of James F. Moore, Frank Cuellar, Jr. and Cynthia I. Pharr. The
Incentive Stock Option Committee is responsible for the granting of stock
options under the 1990 Incentive Stock Option Plan and the Spaghetti Warehouse,
Inc. 1992 Bonus Stock Option Plan (the "1992 Bonus Plan"), as well as the
interpretation of such plans. The Incentive Stock Option Committee held four
meetings during the fiscal year ended June 29, 1997.
The Board of Directors does not have a standing Nominating Committee.
The Board of Directors held 10 meetings during the fiscal year ended
June 29, 1997, including four regularly scheduled quarterly meetings and six
special telephonic meetings. During fiscal 1997, each director attended all of
the meetings of the Board of Directors during the time that he or she served as
director with the exceptions of Mr. Robert Hawk and Mr. C. Cleave Buchanan who
each attended nine of the 10 meetings. All directors attended all meetings of
the Board Committees on which they served.
DIRECTOR COMPENSATION
The Company pays each nonemployee director a $3,000 annual retainer, plus a
$3,000 fee for each regularly scheduled quarterly meeting of the Board of
Directors attended, and a $150 fee per hour for each meeting of a Board
Committee attended (if such Board Committee meeting is not on the same day as a
Board of Directors meeting), and reimburses such persons for their out-of-pocket
expenses. Directors are not compensated for attending special telephonic
meetings. Directors who are also employees of the Company are not compensated
for their services as directors, but are reimbursed for travel expenses incurred
in attending meetings.
9
<PAGE>
Pursuant to the 1991 Nonemployee Director Plan of Spaghetti Warehouse,
Inc., upon being elected a director to the Company, each nonemployee director of
the Company receives an initial nonqualified stock option exercisable for 5,000
shares of Common Stock at the fair market value thereof on the date of grant.
Subsequently, on the date of each annual meeting of shareholders after such
directors' initial option shall have fully vested, each such director shall
receive a nonqualified option to purchase 1,000 shares of Common Stock at the
fair market value thereof on the date of grant. Initial options vest 20% on the
date of each annual meeting of shareholders. Subsequent options vest in full on
their date of grant.
Mr. Robert Hawk and the Company have entered into an employment agreement.
Under such agreement, Mr. Hawk is paid an annual salary of approximately
$26,780, and pursuant to which he provides certain advisory and consulting
services to the Company. The agreement expires on the death of Mr. Hawk and is
otherwise terminable upon the agreement of Mr. Hawk and the Company. Under the
terms of such agreement, Mr. Hawk has agreed not to become, during the term of
the agreement, an employee, director, independent contractor or agent of any
entity that owns, operates or manages a restaurant business similar to the
Company.
Mr. John T. Ellis and the Company have entered into an employment
agreement. Under such agreement, Mr. Ellis is paid an annual salary of $7,000.
Pursuant to such agreement, Mr. Ellis provides certain advisory and consulting
services to the Company. This agreement terminates upon (i) the date Mr. Ellis
is no longer serving as a director of the Company, (ii) the end of a given
fiscal year of the Company, so long as the Company has given Mr. Ellis at least
30 days' notice of such termination prior to the end of such fiscal year, or
(iii) immediately upon notice of termination of the agreement by Mr. Ellis.
Under such agreement, Mr. Ellis agreed not to become, during the term of such
agreement, an employee, director, independent contractor or agent of any entity
that owns, operates or manages a restaurant business similar to the Company.
EXECUTIVE OFFICERS
The table below sets forth the name, age, current position with the
Company, and the principal occupation during the last five years of each
executive officer of the Company and the year he or she first became an
executive officer of the Company. Information with respect to Messrs. Phillip
Ratner and H. G. Carrington, Jr. is set forth above under the caption
"Nominees."
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER PRINCIPAL OCCUPATION
NAME AGE CURRENT POSITION SINCE DURING LAST FIVE YEARS
---- --- ---------------- --------- ----------------------
<S> <C> <C> <C> <C>
Peter Buckley 41 President - OSF 1992 President - OSF Canada.
Canada Previously, President of
Old Spaghetti Factory
(Western), Ltd. (1990-1992).
K. Dieter Esch 59 Vice President - 1995 Vice President - Purchasing
Purchasing and & Development. Previously,
Development Vice President - Operations
of the Company (1995-1996),
Director of Operations of
the Company (1994-1995),
and Director of Old
Merchandise Company
(1992-1994).
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE
OFFICER PRINCIPAL OCCUPATION
NAME AGE CURRENT POSITION SINCE DURING LAST FIVE YEARS
---- --- ---------------- --------- ----------------------
<S> <C> <C> <C> <C>
Garry J. Gay 42 Vice President- 1996 Vice President - Human
Human Resources Resources. Previously,
Director of Human Resources
of the Company (1996),
Director of Operations of
the Company (1994-1996),
and Regional Operations
Director of the Company
(1990-1994).
Gary L. Suit 47 Vice President- 1996 Vice President -
Operations Operations. Previously,
Director of Operations of
the Company (1996),
Regional Operations
Director of the Company
(1995-1996), Regional
Director of Operations for
Acapulco Restaurants
(1994-1995), President of
Loli's Restaurant
(1989-1993), and Regional
Vice President for El
Torito (1985-1989).
Thomas C. Walker, Jr. 39 Vice President - 1997 Vice President - Marketing.
Marketing Previously, Field Marketing
Manager of El Chico
Restaurants, Inc.
(1993-1997), Account
Supervisor for Admark
(1993), and Account
Supervisor for Wells, Rich,
Green/BDDP (1991-1993).
Robert E. Bodnar 30 Treasurer and 1996 Treasurer and Controller.
Controller Previously, Director of
Financial Planning of the
Company (1993-1996),
Assistant Controller of the
Company (1992-1993), and
auditor for KPMG Peat
Marwick LLP (1989-1992).
</TABLE>
11
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The total compensation paid for each of the three fiscal years ended
June 29, 1997, June 30, 1996, and July 2, 1995 to the Chief Executive Officer,
Mr. Phillip Ratner, and to the other most highly paid executive officers who
received cash compensation in excess of $100,000 for the fiscal year ended
June 29, 1997 (collectively, the "Named Executive Officers"), is set forth below
in the following Summary Compensation Table:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
---------------------- --------------
SECURITIES
NAME & PRINCIPAL FISCAL OTHER ANNUAL UNDERLYING ALL OTHER
POSITION YEAR SALARY BONUS (1) COMPENSATION OPTIONS(#) (2) COMPENSATION
- ---------------------- ------ ----------------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Phillip Ratner 1997 $254,200 $79,068 (3) 100,000 $20,800 (5)
Chairman of the 1996 239,200 33,000 (3) 300,000 (4) 20,800 (5)
Board, President, 1995 249,600 50,000 (3) -0- 26,495 (5)
Chief Executive
Officer and Director
H.G. Carrington, Jr. 1997 127,000 51,000 (3) 7,500 23,000 (7)
Executive Vice 1996 122,315 17,000 (3) 80,000 (6) 15,700 (7)
President, Chief 1995 118,500 26,500 (3) 23,000 6,500 (7)
Financial Officer
and Director
K. Dieter Esch (8) 1997 104,900 18,000 (3) -0- 5,100 (10)
Vice President - 1996 101,100 9,000 (3) 47,025 (9) 3,900 (10)
Purchasing and 1995 79,433 22,000 (3) 23,000 1,950 (10)
Development
Garry J. Gay (11) 1997 94,231 20,000 (3) 6,500 -0-
Vice President - 1996 90,000 9,000 (3) 22,700 (12) -0-
Human Resources 1995 85,000 15,303 (3) 13,000 -0-
Gary L. Suit (13) 1997 97,600 43,000 (3) 15,000 2,400 (14)
Vice President - 1996 70,658 22,320 (3) 18,000 -0-
Operations 1995 23,400 7,755 (3) 2,000 -0-
Robert L. Purple (15) 1997 118,442 10,000 (3) -0- 1,650 (17)
Vice President - 1996 113,050 9,000 (3) 25,000 (16) 26,950 (17)
Marketing 1995 15,481 -0- (3) 25,000 -0-
</TABLE>
_______________________
(1) Pursuant to the 1992 Bonus Plan, each employee of the Company that is
eligible for a bonus under the Company's bonus plan may elect, generally
prior to the fiscal year during which the bonus accrues, to receive
nonqualified stock options with a "spread" value of up to 50% of the bonus
such employee becomes entitled to receive in lieu of the bonus amount equal
to the "spread" value. The eligible employee receives in cash the balance
of the annual bonus that is not foregone as a result of the grant of the
stock option. The exact percentage, up to 50%, of the bonus that an
eligible employee forgoes to receive a stock option is in the discretion of
the eligible employee. The "spread" value of a stock option is the number
of shares subject to such option multiplied by the difference between the
fair market value of the Common Stock on the date of grant and the exercise
price per share of the stock option. The Company's Board of Directors
adopted the 1992 Bonus Plan on August 20, 1992 and on October 27, 1992 the
Company's shareholders approved the 1992 Bonus Plan.
(2) The column for 1996 includes all options repriced for such Named Executive
Officer during fiscal 1996. As a result, the number of options shown as
granted during fiscal 1996 to such Named Executive Officer may be
duplicative since these numbers include options that are also reported as
being granted to such Named Executive Officer during prior fiscal years.
(3) This executive officer received certain personal benefits in addition to
salary and bonus. The aggregate amounts of such personal benefits,
however, did not exceed the lesser of $50,000 or 10% of the total of the
annual salary and bonus of such executive officer.
(4) Includes options exercisable for 300,000 shares that were repriced during
fiscal 1996.
(5) The fiscal 1995 amount includes $16,095 of moving expenses reimbursed to
Mr. Ratner in connection with his relocation to Dallas. In addition,
Mr. Ratner contributed $10,400, $20,800 and $20,800 to the Company's
Deferred Compensation Plan in fiscal 1995, fiscal 1996 and fiscal 1997,
respectively, which may be payable in stock at the time of retirement.
(6) Includes options exercisable for 15,000 shares that were granted during
fiscal 1996 and options exercisable for 65,000 shares that were repriced
during fiscal 1996.
12
<PAGE>
(7) Mr. Carrington contributed $6,500, $15,700 and $23,000 to the Company's
Deferred Compensation Plan in fiscal 1995, fiscal 1996 and fiscal 1997,
respectively, which amounts may be payable in stock at the time of
retirement.
(8) Mr. Esch was elected Vice President-Operations in January 1995.
(9) Includes options exercisable for 47,025 shares that were repriced during
fiscal 1996.
(10) Mr. Esch contributed $1,950, $3,900 and $5,100 to the Company's Deferred
Compensation Plan in fiscal 1995, fiscal 1996 and fiscal 1997,
respectively, which may be payable in stock at the time of retirement.
(11) Mr. Gay was elected Vice President-Human Resources in August 1996.
(12) Includes options exercisable for 22,700 shares that were repriced during
fiscal 1996.
(13) Mr. Suit was elected Vice President-Operations in August 1996.
(14) Mr. Suit contributed $2,400 to the Company's Deferred Compensation Plan in
fiscal 1997 which may be payable in stock at the time of retirement.
(15) Mr. Purple was elected Vice President-Marketing in May 1995 and resigned
from the Company in April 1997.
(16) Includes options exercisable for 25,000 shares that were repriced during
fiscal 1996.
(17) The fiscal 1996 amount includes $25,000 of moving expenses reimbursed to
Mr. Purple in connection with his relocation to Dallas. In addition, Mr.
Purple contributed $1,950 and $1,650 to the Company's Deferred Compensation
Plan in fiscal 1996 and fiscal 1997, respectively, which was paid in cash
at the time Mr. Purple resigned from the Company.
The following table discloses, for each of the Named Executive Officers,
options granted during the fiscal year ended June 29, 1997 and the potential
realizable values for such options:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
----------------------------------------------------------- ------------------------------
% OF TOTAL
SECURITIES OPTIONS/SHARES
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED (#) FISCAL YEAR (2) PRICE (3) DATE 5% 10%
- ---- ----------- --------------- --------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Phillip Ratner 100,000 51.1% $5.375 10/28/07 $338,031 $856,637
H.G. Carrington, 7,500 3.8% 4.875 4/28/07 22,994 58,271
Jr.
K. Dieter Esch -- -- -- -- -- --
Garry J. Gay 5,000 2.6% 5.000 8/26/06 15,722 39,844
1,500 * 4.875 4/29/07 4,599 11,654
Gary L. Suit 10,000 5.1% 5.000 8/26/06 31,445 79,687
5,000 2.6% 4.875 4/28/07 15,329 38,847
Robert L. Purple -- -- -- -- -- --
</TABLE>
- --------------------
* Less than 1%
(1) These dollar amounts represent the value of the option assuming certain
rates of appreciation from the market price of the Common Stock at the date
of grant. Actual gains, if any, on stock option exercises are dependent on
the future performance of the Common Stock and overall market conditions.
There can be no assurance that the amounts reflected in this column will be
achieved.
(2) Represents the percentage of options/shares granted to all employees during
fiscal 1997.
(3) Pursuant to the option plan under which these options were granted, the
market price at the date of grant was the closing price of a share of
common stock on the New York Stock Exchange on the date of grant.
13
<PAGE>
The following table describes for each of the Named Executive Officers
options and the potential realizable values for their options at June 29, 1997:
OPTION VALUES AT JUNE 29, 1997
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF SECURITIES UNDERLYING IN-THE MONEY
UNEXERCISED OPTIONS AT OPTIONS AT
JUNE 29, 1997 (#) JUNE 29, 1997 (1)
--------------------------------- -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Phillip Ratner 225,000 175,000 $168,750 $131,250
H.G. Carrington, Jr. 60,109 35,167 40,500 30,750
K. Dieter Esch 39,359 7,666 29,519 5,750
Garry J. Gay 15,700 13,500 11,775 11,125
Gary L. Suit 7,334 27,666 6,584 25,666
Robert L. Purple -0- -0- -0- -0-
</TABLE>
- --------------------
(1) Based on $5.875 per share of Common Stock, which was the closing price per
share of Common Stock on June 29, 1997 on the New York Stock Exchange.
COMPENSATION AND EMPLOYMENT AGREEMENTS
On October 28, 1996, Mr. Phillip Ratner and the Company entered into an
Employment Agreement that supersedes a prior employment agreement by and between
the Company and Mr. Ratner, dated June 25, 1994. The Employment Agreement
provides for the employment of Mr. Ratner as President and Chief Executive
Officer at an annual base compensation of $275,000. The agreement also provided
for the grant to Mr. Ratner of stock options to acquire 100,000 shares of Common
Stock ("Options"). The Options consist of incentive stock options and
nonqualified stock options. The options vest in four equal installments of
twenty-five percent (25%) on each of June 25, 1999, 2000, 2001 and 2002. The
vesting of all or a portion of the options may be accelerated under certain
circumstances. Mr. Ratner may resign from the Company by providing 60 days'
advance written notice, in which event, the Company's sole obligation shall be
to pay him, in cash, an amount equal to his unreimbursed expenses, four weeks
base compensation and any specifically declared but unpaid bonuses. The Company
may terminate Mr. Ratner's employment without notice and without "cause" (as
defined in the agreement) and he may, with 60 days' notice, terminate his
employment for "good reason" (as defined in the agreement). In either event,
the Company's sole obligation shall be to pay him, in cash, his monthly base pay
in effect at the time of termination for six months; provided, however, that
such monthly payments shall continue for an additional six months, unless Mr.
Ratner has obtained employment during such period, in which case such monthly
payments shall be reduced by the amount of monthly base received by him under
such new employment.
14
<PAGE>
Under the terms of a letter dated August 18, 1993, regarding the
compensation of Mr. H. G. Carrington, Jr., Mr. Carrington is entitled to payment
of six-month's salary upon the event of his resignation or termination of
employment within the six-month period immediately following a change of control
or sale of the Company. Mr. Carrington is not required to give any advance
notice to the Company of his intention to terminate employment, and the Company
is not required to give Mr. Carrington any advance notice of the Company's
intention to terminate his employment. The Company and Mr. Carrington
negotiated the terms of Mr. Carrington's employment with the Company at arm's
length.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has established a Compensation Committee to review
and approve the compensation levels of executive officers of the Company,
evaluate the performance of the executive officers, consider senior management
succession issues and any related matters for the Company. The Compensation
Committee is charged with reviewing with the Board of Directors in detail all
aspects of the cash compensation for the executive officers of the Company.
Stock option compensation for the executive officers is considered by the
Incentive Stock Option Committee.
The philosophy of the Company's compensation program is to employ, retain
and reward executives capable of leading the Company in achieving its business
objectives. These objectives include preserving a strong financial posture,
increasing the assets of the Company, positioning the Company's assets and
business operations in geographic markets and industry segments offering long
term growth opportunities, enhancing shareholder value and ensuring the survival
of the Company. The accomplishment of these objectives is measured against
conditions prevalent in the industry within which the Company operates. In
recent years these conditions reflect a highly competitive market environment
and rapidly changing regional, geographic and overall industry market
conditions.
The available forms of executive compensation include base salary, cash
bonus awards and incentive stock options. Performance of the Company is a key
consideration (to the extent that such performance can fairly be attributed or
related to such executive's performance), as well as the nature of each
executive's responsibilities and capabilities. The Company's compensation
policy recognizes, however, that stock price performance is only one measure of
performance and, given industry business conditions and the long term strategic
direction and goals of the Company, it may not necessarily be the best current
measure of executive performance. Therefore, the Company's compensation policy
also gives consideration to the Company's achievement of specified business
objectives when determining executive officer compensation. Compensation paid
to executive officers is based upon a Company-wide salary structure consistent
for each position relative to its authority and responsibility compared to
industry peers.
An additional objective of the Compensation Committee and the Incentive
Stock Option Committee in determining compensation is to reward executive
officers with equity compensation in addition to salary in keeping with the
Company's overall compensation philosophy, which attempts to place equity in the
hands of its employees in an effort to further instill shareholder
considerations and values in the actions of all the employees and executive
officers. In making its determination, some consideration is given by the
Incentive Stock Option Committee to the number of options already held by such
persons. Incentive stock option awards in fiscal 1997 were used to reward seven
executive officers and to retain them through the potential of capital gains and
equity buildup in the Company. The number of stock options granted was
determined by the subjective evaluation of each executive's ability to influence
the Company's long term growth and profitability. The Compensation Committee
believes that the award of options represents an effective incentive to create
value for the shareholders.
15
<PAGE>
Based on comparative industry data, and as the result of arm's-length
negotiations, on October 28, 1996, the Company entered into an employment
agreement with Mr. Phillip Ratner (which supplements a previous employment
agreement dated as of June 25, 1994) that provides for the employment of Mr.
Ratner as President and Chief Executive Officer at an annual base compensation
of $275,000. The Employment Agreement also provided for the grant to Mr. Ratner
of a combination of incentive and nonqualified stock options to acquire 100,000
shares of Common Stock. The Employment Agreement was unanimously approved by
the Board of Directors, and the Compensation Committee and the Incentive Stock
Option Committee.
The Compensation Committee believes that the compensation of the Company's
other executive officers was reasonably related to the performance of the
Company and those individuals during fiscal 1996.
COMPENSATION COMMITTEE INCENTIVE STOCK OPTION COMMITTEE
Frank Cuellar, Jr. Frank Cuellar, Jr.
C. Cleave Buchanan, Jr. James F. Moore
Peter Hnatiw Cynthia I. Pharr
Cynthia I. Pharr
William B. Rea, Jr.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, the Compensation Committee has been comprised of Frank
Cuellar, Jr., C. Cleave Buchanan, Jr., Peter Hnatiw, Cynthia I. Pharr and
William B. Rea, Jr. No member of the Compensation Committee is, or was during
fiscal 1997, an officer or employee of the Company or any of its subsidiaries or
had any relationship requiring disclosure pursuant to Item 404 of Commission
Regulation S-K. No executive officer of the Company served as a member of the
Compensation Committee (or other board committee performing similar functions
or, in the absence of any such committee, the entire board of directors) of
another corporation, one of whose executive officers served on the Compensation
Committee. No executive officers of the Company served as a director of another
corporation, one of whose executive officers served on the Compensation
Committee. No executive officer of the Company served as a member of the
Compensation Committee (or other board committee performing equivalent functions
or, in the absence of any such committee, the entire board of directors) of
another corporation, one of whose executive officers served as a director of the
Company.
16
<PAGE>
COMMON STOCK PERFORMANCE GRAPH
The following performance graph compares the five-year cumulative return of
the Common Stock with that of the Broad Market (New York Stock Exchange Market
Value Index) and a group of the Company's peer corporations. Each index assumes
$100 invested at July 4, 1992 and is calculated assuming quarterly reinvestment
of dividends and quarterly weighting by market capitalization.
COMPARATIVE FIVE-YEAR TOTAL RETURNS
SPAGHETTI WAREHOUSE, INC., PEER GROUP AND BROAD MARKET
(PERFORMANCE RESULTS THROUGH 6/29/97)
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
July 4, July 4, July 3, July 2, June 30, June 29,
Fiscal Year Ending 1992 1993 1994 1995 1996 1997
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Spaghetti Warehouse, Inc. 100.00 56.50 32.77 23.73 24.29 26.55
- --------------------------------------------------------------------------------------------------
Peer Group 100.00 124.17 112.26 98.81 103.83 98.98
- --------------------------------------------------------------------------------------------------
Broad Market 100.00 113.41 117.36 140.09 175.27 228.94
- --------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
The Broad Market (New York Stock Exchange Market Value Index) comprises all
companies with common stock listed on the New York Stock Exchange. The Peer
Group is composed of the following companies:
Brinker International, Family Steak Houses of Piccadilly Cafeterias,
Inc. Florida, Inc. Inc.
Buffets, Inc. Frisch's Restaurants, Inc. Ryans Family Steak Houses,
Ciatti's, Inc. Luby's Cafeterias, Inc. Inc.
Cracker Barrel Old Marcus Corp. Shoney's, Inc.
Country Store Pancho's Mexican Buffet, Uno Restaurant CP
Cucos, Inc. Inc. Vicorp Restaurants, Inc.
El Chico Restaurants, Perkins Family Restaurants,
Inc. L.P.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There were no transactions during fiscal 1997 that are reportable under
this item.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equity securities (the
"10% Shareholders"), to file reports of ownership and changes of ownership with
the Commission and the New York Stock Exchange. Officers, directors and 10%
Shareholders of the Company are required by Commission regulation to furnish the
Company with copies of all Section 16(a) forms so filed.
Based solely on review of copies of such forms received, the Company
believes that, during the last fiscal year, all filing requirements under
Section 16(a) applicable to its officers, directors and 10% Shareholders were
timely, except that Mr. Bodnar, Mr. Buchanan, Mr. Carrington, Mr. Ellis,
Mr. Gay, Mr. Ratner, Ms. Pharr and Mr. Suit each filed one Form 4 late.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
OF THE INDIVIDUALS NOMINATED FOR ELECTION AS A DIRECTOR.
18
<PAGE>
OTHER BUSINESS
The Board knows of no other business to be brought before the Annual
Meeting. If, however, any other business should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote the proxy as in
their discretion they may deem appropriate, unless they are directed by the
proxy to do otherwise.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants since October 26, 1994 have
been the firm of Arthur Andersen LLP. It is expected that one or more
representatives of such firm will attend the Annual Meeting and be available to
respond to any questions. Such representatives will be given an opportunity to
make statements at the Annual Meeting, if they so desire, and are expected to be
available to respond to appropriate questions.
DATE FOR RECEIPT OF SHAREHOLDER PROPOSALS
Shareholder proposals to be included in the proxy statement for the 1998
Annual Meeting must be received by the Company no later than May 25, 1998.
BY ORDER OF THE BOARD OF DIRECTORS
H. G. Carrington, Jr., Secretary
September 23, 1997
Garland, Texas
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS WHO DO NOT
EXPECT TO ATTEND THE ANNUAL MEETING AND WISH THEIR STOCK TO BE VOTED ARE URGED
TO DATE, SIGN AND RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED SELF-ADDRESSED
ENVELOPE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
19
<PAGE>
PROXY
SPAGHETTI WAREHOUSE, INC.
402 West I-30
GARLAND, TEXAS 75043
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Phillip Ratner and H.G. Carrington, Jr.,
and each of them, as proxies, each with the power to appoint his substitute, and
hereby authorizes them to represent and vote, as designated on the reverse side,
all of the shares of the common stock of Spaghetti Warehouse, Inc. (the
"Company"), held of record by the undersigned on September 12,1997, at the
Annual Meeting of Shareholders of the Company to be held on October 28,1997, and
any adjournment(s) thereof.
THIS PROXY, WHEN PROPERLY EXECUTED AND DATED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES UNDER PROPOSAL 1 AND THE
PROXIES WILL USE THEIR DISCRETION WITH RESPECT TO ANY MATTERS REFERRED TO IN
PROPOSAL 2.
[To Be Dated And Signed On Reverse Side]
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as
indicated in
this example [X]
1. PROPOSAL TO ELECT AS DIRECTORS OF THE COMPANY THE FOLLOWING PERSONS TO HOLD
OFFICE UNTIL THE NEXT ANNUAL ELECTION OF DIRECTORS BY SHAREHOLDERS OR UNTIL
THEIR SUCCESSORS HAVE BEEN DULY ELECTED AND HAVE QUALIFIED.
FOR all nominees WITHHOLD
listed to the right AUTHORITY
(except as marked to vote for all nominees
to the contrary) listed to the right
[ ] [ ]
NOMINEES: C. Cleave Buchanan, Jr., H. G. Carrington, Jr., Frank Cuellar, Jr.,
John T. Ellis, Robert R. Hawk, Peter Hnatiw, James F. Moore, Cynthia I. Pharr,
Phillip Ratner, William B. Rea, Jr.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
than nominee's name in the space provided below.)
- --------------------------------------------------------------------------------
2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
___
| Dated: , 1997
-------------------------------------
-------------------------------------------------
Signature
-------------------------------------------------
Signature, If Held Jointly
Please execute this proxy as you mane appears
hereon. When shares are held by joint tenants,
both sould sign. When signing as attorney,
executor, administrator, trustee, or guardian,
please give full title as such. If a corporation,
please sign in full corporate name by President
or other authorized officer. If a partnership,
please sign in partnership name by authorized
person. PLEASE, MARK, SIGN, DATE AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
