<PAGE>
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
[x] Definitive Proxy Statement RULE 14C-5(D)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
CIATTI'S INC.
------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $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.
[_] $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:
(5) Total fee paid:
[_] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
CIATTI'S, INC.
5555 West 78th Street
Edina, Minnesota 55439-2702
(612) 941-0108
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 19, 1996
To the Shareholders of Ciatti's, Inc.:
Notice is hereby given that the Annual Meeting of the Shareholders of
Ciatti's, Inc. will be held on Tuesday, November 19, 1996, at 4:30 p.m., local
time, at Ciatti's Italian Restaurant/(R)/, 1625 Queens Drive, Woodbury,
Minnesota, for the following purposes:
1. To elect three directors to serve until the next annual meeting of
shareholders;
2. To ratify the selection by the Board of Directors of Grant Thornton LLP
as the Company's independent auditors for the fiscal year ending June 29, 1997;
and
3. To act upon any other matters that may properly be presented at the
meeting.
Accompanying this Notice of Annual Meeting are a Proxy Statement, a Form of
Proxy, and the Company's Annual Report to Shareholders for the fiscal year ended
June 30, 1996.
The Board of Directors has fixed the close of business on September 27,
1996, as the record date for the determination of shareholders entitled to
notice of, and to vote at, the meeting.
By Order of the Board of Directors:
/s/ Barney U. Uhlig
Secretary
Dated: October 10, 1996
PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE VOTED
AT THE MEETING. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES
AND VOTE IN PERSON IF THEY DESIRE.
<PAGE>
CIATTI'S, INC.
5555 West 78th Street
Edina, Minnesota 55439
(612) 941-0108
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 19, 1996
GENERAL MATTERS
This Proxy Statement is furnished to the shareholders of Ciatti's, Inc.
(the "Company") in connection with the solicitation of proxies by the Board of
Directors of the Company to be voted at the Annual Meeting of Shareholders on
Tuesday, November 19, 1996 at 4:30 p.m., local time, and any adjournment
thereof.
Any proxy may be revoked at any time before it is voted by receipt of a
proxy properly signed and dated subsequent to an earlier proxy, or by revocation
of a written proxy by request in person at the Annual Meeting. If not so
revoked, the shares represented by such proxy will be voted. The mailing of
this Proxy Statement to shareholders of the Company commenced on or about
October 10, 1996.
Shareholders of record as of the close of business on September 27, 1996
will be entitled to vote at the meeting. On that date, the Company had
outstanding 742,819 shares of common stock, the only class of stock outstanding,
$0.01 par value, each of which is entitled to one vote per share on each matter
to be voted upon at the meeting. There is no cumulative voting for directors.
The presence at the Annual Meeting in person or by proxy of the holders of
a majority of the outstanding shares of the Company's common stock entitled to
vote shall constitute a quorum for the transaction of business. If a broker
returns a "non-vote" proxy, indicating a lack of authority to vote on such
matter, then the shares covered by such non-vote shall be deemed present at the
meeting for purposes of determining a quorum, but shall not be deemed to be
represented at the meeting for purposes of calculating the vote on such matter.
If a shareholder abstains from voting on any matter, then the shares held by
such shareholder shall be deemed present at the meeting for purposes of
determining a quorum and for purposes of calculating the vote on such matter,
but shall not be deemed to have been voted in favor of such matter. Proxies
which are signed, but lack any such specification will be voted in favor of the
proposals set forth in the Notice of Annual Meeting and in favor of the number
and slate of directors proposed by the Board of Directors as listed herein.
PROPOSAL N/0/1
ELECTION OF DIRECTORS
Three directors will be elected at the Annual Meeting to serve until the
next Annual Meeting of Shareholders or until their successors are elected and
qualified. The Board of Directors has nominated for election the three persons
named below and the Company recommends that the shareholders vote "FOR" these
nominees. All the nominees are currently directors. Phillip R. Danford and
L.E. "Dan" Danford, Jr. are brothers. It is intended that proxies will be voted
"FOR" the named nominees. The Board of Directors believes that each nominee
named will be able to serve, but should any nominee be unable to serve as a
director, the persons named in the proxies have advised the Company that they
will vote for the election of such substitute nominee as the Board of Directors
may propose. To be elected as a director, a nominee must receive the
affirmative vote of a majority of the voting power of all shares entitled to
vote and present in person or by proxy at the meeting.
The names of the nominees, their principal occupations and other
information is set forth below, based upon information furnished to the Company
by the nominees. Ownership of the Company's common stock by these nominees is
shown in the table on page 3.
<PAGE>
<TABLE>
<CAPTION>
Director
Name and Age Principal Occupation Since
- ------------ -------------------- -----
<S> <C> <C>
L. E. Dan Danford, Jr. Chairman of the Board since 1981 1981
(52) (except from May 1990 until May 1992);
Managing Director, Piper Jaffray Inc.
since 1988; President of the Company
from 1981 to 1988; co-founder of
the Company.
Phillip R. Danford President since May 1992; Vice 1981
(47) President from 1983 until May 1992;
co-founder of the Company.
Thomas A. Kelm President and CEO of North State Advisors, 1981
(66) Inc. (a Minnesota political (except for 1987/88)
consulting group) since 1980.
</TABLE>
Meetings. The Board of Directors met four times during fiscal year 1996.
--------
Each director attended 75% or more of the meetings of the Board of Directors and
any Board committees on which he served.
Board Committees. The Audit Committee, currently comprised of Mssrs. Dan
----------------
Danford and Kelm, reviews and evaluates significant matters relating to the
annual audit and internal controls of the Company, determines the scope, and
reviews the results of audits by, and the recommendations of, the Company's
independent auditors and approves additional services to be provided by the
auditors. The Audit Committee met once in fiscal year 1996.
The Compensation and Stock Option Committee administers the Company's Stock
Option Plan (as described below under "Stock Options"). It is currently
comprised of Mssrs. Dan Danford and Kelm. This committee determines the
employees to whom options are to be granted, the type of option to be granted,
and the number of shares and purchase price of common stock covered by each
option. The committee also determines the terms and provisions of the
respective option agreements, and construes and interprets the Company's Plan.
The Committee also determines the compensation of all of the Company's officers.
The Committee met once in fiscal year 1996.
Remuneration of Directors. Non-employee directors, currently consisting of
-------------------------
Mssrs. Dan Danford and Kelm, are paid a fee of $1,000 per month for all of their
services. No additional compensation for serving as a director is paid to Mr.
Phillip Danford. Directors may also be reimbursed for out-of-pocket expenses,
if any, incurred in connection with attending meetings of the Board of
Directors. Each director also receives a food charge allowance of $220 per
month at the Company's restaurants. As provided in Ciatti's 1993 Stock Option
Plan, on the date of the Company's 1996 Annual Shareholder Meeting, each elected
non-employee director will receive options to purchase the Company's common
stock at a price equal to its fair market value on that date. Options to
purchase a total of 1,500 shares will be issued. Accordingly, if two non-
employee directors are elected, each non-employee director will receive options
to purchase 750 shares. During fiscal year 1996, each of the two non-employee
directors received options to purchase 750 shares.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table provides information as of October 1, 1996 concerning
the beneficial ownership of common stock of the Company by the only shareholders
known to the Company to hold more than five percent (5%) of the common stock of
the Company, and by all officers and directors of the Company as a group.
Unless otherwise indicated, all beneficial owners have sole voting and
investment power over the shares held.
2
<PAGE>
<TABLE>
<CAPTION>
Name and Address Exercisable Stock Percent Position in
of Beneficial Owner Shares Owned Options/(1)/ of Class Company
- ------------------- ------------- ------------ -------- -------
<S> <C> <C> <C> <C>
L. E. "Dan" Danford, Jr. 170,796 /(2)/ 3,725 22.4 Chairman,
c/o Ciatti's, Inc. Director
5555 West 78th St.
Edina, MN 55436-2702
Phillip R. Danford 157,037 /(3)/ 12,993 22.5 President,
c/o Ciatti's, Inc. Director
5555 West 78th St.
Edina, MN 55436-2702
Thomas A. Kelm 87,650 /(4)/ 2,475 12.1 Vice
Chairman,
c/o North State Advisors Director
43 Main Street, N/0/ E 8-500
Minneapolis, MN 55414
Leslie E. Danford, Sr. 60,319 /(5)/ 0 8.1 None
as trustee of the Leslie
E. Danford, Sr. Trust
1484 Deverly Dr.
Lakeland, FL 33801
All officers and directors 425,483 22,281 58.5
as a group (4 persons)
</TABLE>
- --------------------------------------
/(1)/ Number of shares subject to stock options exercisable within 60
days of September 1, 1996.
/(2)/ Includes 2,125 shares held by Mr. L.E. Danford's wife to which
Mr. Danford disclaims beneficial ownership.
/(3)/ Includes 125 shares held by Mr. P.R. Danford's wife to which Mr.
Danford disclaims beneficial ownership. Also includes 42,900 shares
held by the L.E. Danford, Sr. & Phillip R. Danford Trust, over which
Mr. Phillip Danford shares dispositive and voting power (see also
footnote /(5)/ below).
/(4)/ Includes 7,500 shares held by Kelm & Associates, Inc., which is
wholly owned by Mr. Kelm.
/(5)/ Includes 42,900 shares (see also footnote /(3 )/ above) held by the
L.E. Danford, Sr. & Phillip R. Danford Trust, over which Mr. Leslie
E. Danford, Sr. shares dispositive and voting power.
EXECUTIVE COMPENSATION
The following table depicts the compensation paid to the Company's
President, the sole officer qualifying for such reporting requirements under the
rules of the Securities and Exchange Commission, for services rendered to the
Company in all capacities during each of the past three fiscal years:
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
--------------------------------------------- ------------
Name and Other Annual Stock
principal position Year Salary Bonus Compensation Options
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Phillip R. Danford, 1996 $96,000 $ 800 - /(1)/ 0
President 1995 $92,880 $15,060 - /(1)/ 2,500 shares
1994 $92,880 $15,248 - /(1)/ 9,339 shares/ (2)/
- --------------------
</TABLE>
/(1)/ Amount is less than reportable under the rules of the Securities
and Exchange Commission.
/(2)/ Includes 3,099 previously granted options which were repriced as
described in the Company's 1994 Proxy Statement under "Repricing of
Stock Options".
3
<PAGE>
Stock Options
Under Ciatti's 1984 Stock Option Plan (the "'84 Plan"), which was closed
for new option grants on November 9, 1993, a total of 47,672 options were, at
the end of fiscal year 1996, outstanding to current employees and non-employee
directors of the Company at prices ranging from $1.50 to $18.00 per share.
Shares of options granted under the '84 Plan, when cancelled for any reason, are
no longer available for subsequent option grants.
Under the Company's current 1993 Stock Option Plan (the "'93 Plan"), a
total of 18,500 options were outstanding at the end of fiscal year 1996 to
current employees and to non-employee directors of the Company at prices ranging
from $2.00 to $5.50 per share.
Under the '93 Plan, incentive stock options may be granted to key full-
time, salaried employees of the Company, including officers, to encourage their
continued association with the Company and to enhance their economic interest in
the Company. In addition, under the terms of the '93 Plan, each year on the
date of the Company's annual Shareholder Meeting, non-statutory options to
purchase a total of 1,500 shares are issued to the Company's non-employee
directors (see "Election of Directors - Remuneration of Directors").
The '93 Plan is administered by two non-employee directors of the Company
who together serve as the Plan Administrator through the Compensation and Stock
Option Committee. The Committee has complete discretion to select employee
optionees and to establish the terms and conditions of each option to an
employee, subject in all cases to the applicable provisions of the Internal
Revenue Code.
The '93 Plan provides a total of 100,000 shares of the Company's common
stock be made subject to options granted thereunder (subject, however, to the
provisions of Minnesota Statutes which currently limit the total number of
shares available for stock option grants to 20% of the total number of
outstanding shares; the '84 and the '93 Plans are therefore, as of September
28, 1996, collectively limited to a maximum of 148,564 shares subject to stock
option grants). The '93 Plan provides further that the exercise price of each
option granted is fixed by the Committee; provided, however, that the option
price of each incentive stock option granted may not be less than 100% of the
fair market value of the Company's common stock on the date the option is
granted (110% if granted to a person owning 10% or more of the Company's
outstanding stock) and that the term of an incentive stock option may not exceed
ten years (five years if granted to a shareholder owning 10% or more of the
Company's outstanding stock). Options granted under the '93 Plan are not
transferable and are subject to various other conditions and restrictions.
Shares of cancelled options are available for subsequent option grants under the
'93 Plan.
The Committee also may grant options on terms and conditions inconsistent
with those of the Internal Revenue Code applicable to incentive stock options.
However, such grants will be identified as "non-statutory" stock options and are
treated differently for tax purposes than incentive stock options.
Option Grants in Last Fiscal Year
No stock options were granted to the President of the Company during the
fiscal year ended June 30, 1996.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
The following table reflects certain information regarding stock options
exercised by the President of the Company during the fiscal year ended June 30,
1996, and unexercised options held as of the end of that fiscal year:
4
<PAGE>
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised /(2)/
Options at Fiscal In-the-Money Options at
Year-End Fiscal Year-End
Shares ----------- --------------------------
Acquired Value /(1)/
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- -------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Phillip R. Danford 411 $945 9,558 6,870 $20,340 $2,340
</TABLE>
- --------------------
/(1)/ Market value of underlying securities on date of exercise minus
exercise price.
/(2)/ Market value of underlying securities at year end minus exercise
price.
PROPOSAL N/0/ 2
INDEPENDENT AUDITORS
The Company's Board of Directors appointed Grant Thornton LLP as
independent accountants to audit the Company's financial statements for the
fiscal year ending June 29, 1997, subject to ratification of that appointment by
the shareholders.
A representative of Grant Thornton LLP is expected to be present at the
Annual Meeting of the Shareholders and will be given the opportunity to make a
statement and will also be available to answer appropriate questions.
The Board of Directors recommends that the shareholders vote "FOR" the
proposal to approve the engagement of Grant Thornton LLP, and the enclosed proxy
will be so voted unless a contrary vote is indicated. In the event the
appointment of Grant Thornton LLP should not be approved by the shareholders,
the Board of Directors will make another appointment to be effective at the
earliest possible time.
SHAREHOLDER PROPOSALS
The proxy rules of the Securities and Exchange Commission permit
shareholders, after timely notice to the Company, to present proposals for
shareholder action in a company's proxy statement where such proposals are
consistent with applicable law, pertain to matters appropriate for shareholder
action and are not properly omitted by issuer action in accordance with the
proxy rules. Shareholder proposals for the next Annual Meeting of Shareholders,
prepared in accordance with the proxy rules, must be received by the Company on
or before June 11, 1997.
OTHER INFORMATION
The Annual Report of the Company for the fiscal year ended June 30, 1996 is
enclosed herein, and includes the audited financial statements and other
financial information relating to the Company.
SOLICITATION
The cost of soliciting proxies, including the cost of preparing,
assembling, and mailing the proxies and soliciting material, as well as the cost
of forwarding the material to the beneficial owners of the stock, will be borne
by the Company. Directors, officers and other employees of the Company may,
without compensation other than their regular remuneration, solicit proxies
personally or by telephone.
5
<PAGE>
OTHER BUSINESS
The management of the Company does not know of any other business to be
presented at the Annual Meeting of the Shareholders. If any matter properly
comes before the meeting, however, it is intended that the persons named in the
enclosed Proxy Form will vote this proxy in accordance with their best judgment.
ALL PROXIES PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
SHAREHOLDERS. IF NO DIRECTION IS MADE, PROXIES WILL BE VOTED "FOR" THE ELECTION
OF MANAGEMENT'S NOMINEES FOR DIRECTORS AND "FOR" PROPOSAL N/0/ 2.
By Order of the Board of Directors:
/s/ Barney U. Uhlig
Secretary
Dated: October 10, 1996
<PAGE>
CIATTI'S, INC.
PROXY
Solicited on Behalf of the Board of Directors for the Annual Meeting of
Shareholders to be Held on
November 19, 1996
The undersigned hereby constitutes and appoints Phillip R. Danford and Barney U.
Uhlig, and each of them, with power of substitution, as attorneys and proxies to
vote all of the shares standing in the name of the undersigned at the Annual
Shareholder Meeting of Ciatti's, Inc., to be held on November 19, 1996, at 4:30
p.m. local time, at Ciatti's Italian Restaurant(R) in Woodbury, MN, and at any
adjournment thereof:
1. ELECTION OF DIRECTORS: [_] FOR all nominees listed [_] WITHHOLD AUTHORITY
(except as marked to vote for all
the contrary below) nominees listed
below
(INSTRUCTIONS: To withhold authority to vote for an individual nominee, mark
the box next to the nominee's name below.)
[_] L.E. Dan Danford, Jr. [_] Phillip R. Danford [_] Thomas A. Kelm
2. PROPOSAL TO APPROVE THE APPOINTMENT OF GRANT THORNTON LLP AS THE INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY.
[_] FOR [_] WITHHELD
3. IN THEIR DISCRETION, THE PROXIES ARE DIRECTED TO VOTE UPON OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED ON PROPOSALS N/0/ 1. AND
N/0/ 2. IN ACCORDANCE WITH THE SPECIFICATIONS MADE, AND "FOR" THESE PROPOSALS IF
THERE IS NO SPECIFICATION.
DATE: , 1996
--------------------- ------------------------------
Signature
------------------------------
Signature (if held jointly)
[_] I plan to attend the meeting.
PLEASE RETURN PROMPTLY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED WITHIN THE UNITED STATES.
