<PAGE>
================================================================================
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 [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Koo Koo Roo, 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] No fee required.
[_] 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:
Not Applicable.
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(2) Aggregate number of securities to which transaction applies:
Not Applicable.
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(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):
Not Applicable.
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
Not Applicable.
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(5) Total fee paid:
Not Applicable. 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:
Not Applicable.
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(2) Form, Schedule or Registration Statement No.:
Not Applicable.
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(3) Filing Party:
Not Applicable.
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(4) Date Filed:
Not Applicable.
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Notes:
<PAGE>
KOO KOO ROO, INC.
11075 Santa Monica Boulevard
Suite 225
Los Angeles, California 90025
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 17, 1997
--------------------
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders (the
"Meeting") of Koo Koo Roo, Inc. (the "Company") will be held at the Century
Plaza Hotel, 2025 Avenue of the Stars, Los Angeles, California 90067, on
Tuesday, June 17, 1997 at 9:00 a.m., local time, for the following purposes:
1. To elect a board of nine directors for the ensuing year or until the
election and qualification of their respective successors;
2. To ratify the appointment of BDO Seidman, LLP as independent
accountants for the fiscal year ending December 31, 1997; and
3. To transact such other business, if any, as may properly come before
the Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on May 12, 1997
as the record date for the determination of the stockholders entitled to notice
of, and to vote at, the Meeting or any adjournment or postponement thereof.
The enclosed proxy is solicited by the Board of Directors of the
Company, which recommends that stockholders vote FOR the directors nominated in
Proposal 1 and vote FOR Proposal 2. Please refer to the attached Proxy
Statement, which forms a part of this Notice and is incorporated herein by
reference, for further information with respect to the business to be transacted
at the Meeting.
Whether or not you plan to attend the Meeting in person, it is
important that you sign, date and return promptly the enclosed proxy in the
envelope provided to assure that your shares are represented at the Meeting. If
you subsequently decide to attend the Meeting and wish to vote your shares in
person, you may do so. Your cooperation in giving this matter your prompt
attention will be appreciated.
By Order of the Board of Directors
/s/RONALD D. GARBER
RONALD D. GARBER
Secretary
Los Angeles, California
May 19, 1997
2
<PAGE>
KOO KOO ROO, INC.
-----------
PROXY STATEMENT
-----------
INTRODUCTION
General
The enclosed proxy is solicited by and on behalf of the Board of
Directors of Koo Koo Roo, Inc. (the "Company") in connection with the Annual
Meeting of Stockholders of the Company (the "Meeting") to be held at 9:00 a.m.,
local time, at the Century Plaza Hotel, 2025 Avenue of the Stars, Los Angeles,
California 90067, on Tuesday, June 17, 1997, and any adjournment or postponement
thereof. At the Meeting, stockholders will be asked to vote upon the following
matters:
1. To elect a board of nine directors for the ensuing year or until the
election and qualification of their respective successors;
2. To ratify the appointment of BDO Seidman, LLP as independent
accountants for the fiscal year ending December 31, 1997; and
3. To transact such other business, if any, as may properly come before
the Meeting or any adjournment or postponement thereof.
Only stockholders of record of shares of Common Stock at the close of
business on May 12, 1997, the record date for the Meeting fixed by the Board of
Directors, are entitled to vote at the Meeting. On that date, there were
outstanding and entitled to vote at the Meeting 18,351,758 shares of Common
Stock, each of which is entitled to one vote at the Meeting. Holders of
outstanding shares of the Company's Series A 5% Adjustable Convertible Preferred
Stock (the "Series A Convertible Preferred Stock") and the Company's Series B 6%
Adjustable Convertible Preferred Stock (the "Series B Convertible Preferred
Stock") are not entitled to vote on any of the matters identified above. It is
expected that this Proxy Statement and accompanying proxy card will first be
mailed to stockholders on or about May 20, 1997.
The cost of soliciting proxies will be paid by the Company. Proxies may
be solicited by directors, officers and employees of the Company in person or by
mail, telephone or facsimile transmission, but such persons will not be
specially compensated therefor. Georgeson & Company Inc., 88 Pine Street, Wall
Street Plaza, 30th Floor, New York, New York 10005 (telephone: 212/440-9800),
has been retained to assist in soliciting proxies by mail, telephone or personal
solicitation for a fee of $5,000 plus expenses.
The Company's executive offices are located at 11075 Santa Monica
Boulevard, Suite 225, Los Angeles, California 90025, telephone (310) 479-2080.
References herein to the "Company" refer to Koo Koo Roo, Inc. and its
subsidiaries, unless the context otherwise requires.
1
<PAGE>
Voting and Revocation of Proxies
All shares represented by the accompanying proxy, if the proxy is
properly executed, returned and not revoked, will be voted as specified by the
stockholder. If no contrary instructions are given, such shares will be voted
FOR (i) election of the nine director nominees named herein and (ii)
ratification of the appointment of BDO Seidman, LLP as the independent
accountants of the Company for the fiscal year ending December 31, 1997. The
Board of Directors does not know of any other matter which will be brought
before the Meeting. However, if any other matter properly comes before the
Meeting, or any adjournment or postponement thereof, which may properly be acted
upon, unless otherwise indicated the proxies solicited hereby will be voted on
such matter in accordance with the discretion of the proxy holders named
therein.
Any stockholder has the power to revoke his or her proxy at any time
before it has been voted by filing with the Corporate Secretary of the Company
an instrument revoking it, by submitting a substitute proxy bearing a later date
or by voting in person at the Meeting.
A majority of the outstanding shares of the Company's Common Stock,
represented in person or by proxy, will constitute a quorum at the Meeting.
Shares represented by proxies that reflect abstentions or "broker non-votes"
will be counted as shares that are present and entitled to vote for purposes of
determining the presence of a quorum. However, proxies that reflect abstentions
as to a particular proposal will be treated as voted for purposes of determining
the approval of that proposal and will have the same effect as a vote against
that proposal, while proxies that reflect broker non-votes will be treated as
unvoted for purposes of determining approval and will not be counted as votes
for or against that proposal. The affirmative vote of a plurality of the votes
cast by the holders of shares entitled to vote thereon present in person or by
proxy at the Meeting is required to elect each director. The affirmative vote of
the holders of a majority of the shares of Common Stock entitled to vote present
in person or by proxy at the Meeting is required to authorize and approve
Proposal 2.
2
<PAGE>
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
General
Directors are elected at each Annual Meeting of Stockholders and hold
office until their resignation or removal and until their respective successors
are duly elected and qualified. The Company's Bylaws provide that the Board of
Directors shall consist of no fewer than four or more than ten directors, with
the exact number to be fixed by the Board of Directors. The authorized number of
members of the Board of Directors is presently ten. Since the last Annual
Meeting of Stockholders, the Board of Directors approved an increase in the
number of Directors from nine to ten. The Board of Directors has determined, in
accordance with the Company's Bylaws, to fix the number of Directors at nine
effective upon the expiration of the current term on June 17, 1997, and has
nominated the nine individuals identified below to serve as Directors. Proxies
cannot be voted for a greater number of persons than the number of nominees
named. Stockholders may not cumulate their votes.
Each nominee for director has indicated his willingness to serve if
elected. Proxies received by the Board of Directors will be voted for the
nominees. Although the Board of Directors does not anticipate that any nominee
will be unavailable for election, in the event of such occurrence the proxies
will be voted for such substitute, if any, as the Board of Directors may
designate.
Each of the Company's nominees for election to the Board of Directors
currently serves as a director of the Company. The following table sets forth
the names of, and certain information with respect to, the nine persons
nominated by the Company for election at the Meeting.
<TABLE>
<CAPTION>
DIRECTOR POSITIONS CURRENTLY
NOMINEES FOR DIRECTOR SINCE HELD WITH THE COMPANY
--------------------- ----- ---------------------
<S> <C> <C>
Kenneth Berg(4) 1990 Chairman of the Board and Chief Executive Officer;
Born 1926
Robert F. Kautz 1995 President, Chief Financial Officer and Director;
Born 1958
Michael D. Mooslin 1992 President, Koo Koo Roo International and Director;
Born 1947
John S. Kaufman 1996 President, Koo Koo Roo USA and Director;
Born 1962
Morton J. Wall(1) 1994 Treasurer and Director; Born 1938
Kory L. Berg 1990 President of the Arrosto Division and Director;
Born 1960
Lee A. Iacocca(2) (3) (4) 1995 Director; Born 1924
Don Wohl(1) (2) (3) (4) 1993 Director; Born 1932
Mel Harris(1) 1996 Director; Born 1940
</TABLE>
- -----------
(1) Member of the Audit Committee
(2) Member of the Stock Awards Committee
(3) Member of the Compensation Committee
(4) Member of the Finance Committee
3
<PAGE>
Kenneth Berg, Chairman, has been a director since August 1990 and has
been Chairman of the Board and Chief Executive Officer since July 1992. He was
Co-Chairman of the Board and Co-Chief Executive Officer from March 1992 until
July 1992. From August 1990 until March 1992, he served as Chairman of the Board
of the Company. Since January 1990, Mr. Berg has served as Chairman of the Board
and President of Berg Enterprises, Inc. ("Berg Enterprises"), a holding company
of which Mr. Berg is the sole stockholder. From 1969 to December 1989, Mr. Berg
served as Chairman of the Board and President of the original Berg Enterprises,
Inc., a company chiefly involved in the mortgage banking business (renamed
Margco Holdings, Inc. in 1990), which was listed on the New York Stock Exchange
until May 1985 and which subsequently became a subsidiary of Primerica
Corporation. Mr. Berg presently works full-time for the Company. Kenneth Berg is
the father of Kory L. Berg.
Robert F. Kautz has been Chief Financial Officer of the Company since
February 1995, became Assistant Secretary and a Director in November 1995,
President of Corporate Development in September 1996, and President, Koo Koo
Roo, Inc. in March 1997. Prior to joining the Company, Mr. Kautz managed due
diligence and business plan development projects at Archon Capital Partners,
L.P. and InterActive Partners, L.P. as a consultant and associate for one year.
Prior to Archon, for two years he was Vice President of Marketing and Business
Development for Integrated Voice Solutions, Inc., a software developer of
automated scheduling systems. For five years prior to that, and on an interim
basis in early 1994, he led U.S. and international consulting engagements as a
Senior Manager, Manager and Senior Consultant for the Price Waterhouse Strategic
Consulting Group specializing in business strategy and cost and quality
improvement. He has an MBA degree from Harvard Business School.
John Kaufman joined the Company in August, 1996, and is directly
responsible for domestic restaurant operations, marketing, human resources,
training, real estate and profitability. Prior to joining the Company, Mr.
Kaufman was Chief Executive Officer of Rosti, a small Italian restaurant chain
based in California. He joined Rosti in December 1994, responsible for
overseeing all operations. Mr. Kaufman was also with California Pizza Kitchen,
starting in June 1986 with its first restaurant and promoted to Vice President
Operations, overseeing the opening of an additional 64 restaurants over a
nine-year period.
Michael D. Mooslin was President and Chief Operating Officer of the
Company from March 1992 until September 1996 when he became President and Chief
Operating Officer of Koo Koo Roo International. He has also been a director of
the Company since September 1992. He is a director of Humphrey Yogart, Arden
Wood Nursing Facility and F & M Food Service, all of which are private
companies. Mr. Mooslin has been involved in various capacities in the food
business since 1962. From 1986 until March 1992, Mr. Mooslin owned and operated
MDM Restaurant Group, a management company which facilitated the growth of
small, development stage fast-food chains. From 1972 to 1986, he served as
President of Naugles, Inc., a fast-food chain featuring freshly prepared Mexican
food.
Morton J. Wall has been Treasurer of the Company since August 1990 and
a director since June 30, 1994. He also served as Secretary from August 1990 to
May 1996. Since March 1990, Mr. Wall has served as Vice President and Treasurer
of Berg Enterprises.
Kory L. Berg has been a director and employee of the Company since
August 1990. He established the first Koo Koo Roo in Florida and served as its
general manager from November 1990 to November 1994. He became President of
Arrosto Coffee Company in December 1994.
Lee A. Iacocca, retired Chairman of Chrysler Corporation, was named to
the Board of Directors in August 1995. He is also a director of Consolidated
Cigar Holdings, Inc. In addition, Mr. Iacocca is Chairman of the Committee for
Corporate Support of the Joslin Diabetes Foundation and a member of the advisory
board of Reading is Fundamental.
4
<PAGE>
Mel Harris has been a director of the Company since November 1996.
Since 1988 Mr. Harris has been Chairman and since 1993 Chief Executive Officer
of Preferred Employers Holdings, Inc., a public company, and President of
International Insurance Group, Inc. since 1984. Both of these entities are
insurance agencies. Mr. Harris is CEO and director of Restaurant Marketing
Corporation ("RMC"), and Restaurant Acquisition Corporation ("RAC"), entities
with which the Company has service agreements. RAC is also the Company's joint
venture partner in two stores in Florida. Mr. Harris is a director of Marketing
Corporation International, a private company. Mr. Harris is CEO of Ceramics
Acquisition Corporation which is the joint venture partner of Color Me Mine,
Inc. in three stores in Florida. He also serves on the board of directors of the
national Parkinson Foundation, Hebrew Home for the Aged in Riverdale, New York,
and the Yeshiva University Sy Syms School of Business. He is a founder of the
United States Holocaust Memorial Museum, Washington, DC, and a 1994 recipient of
the Ellis Island Medal of Honor Award.
Don Wohl has been a director of the Company since December 1993. He has
been a private investor as well as a business and individual consultant for over
five years. Mr. Wohl is also a director of Vitafort International Corporation, a
public, specialty food manufacturer.
Board of Directors and Committees
During the twelve-month period ended December 31, 1996, the Board of
Directors held two meetings. Messrs. Wall and Wohl attended fewer than 75% of
the total meetings of the Board of Directors and committees of which they were
members during the twelve-month period ended December 31, 1996.
The Audit Committee of the Board of Directors is presently composed of
Messrs. Wall, Harris and Wohl. Mr. Wall chairs the committee. The functions of
the Audit Committee are to review and approve the selection of, and all services
performed by, the Company's independent accountants, to meet and consult with,
and to receive reports from, the Company's independent accountants and its
financial and accounting staff and to review and act with respect to the scope
of audit procedures, accounting practices and internal accounting and financial
controls of the Company. The Audit Committee had one formal meeting independent
of full Board meetings during the twelve months ended December 31, 1996.
The Stock Awards Committee of the Board of Directors is presently
composed of Messrs. Iacocca and Wohl. Mr. Wohl chairs the Committee. The
function of the Stock Awards Committee is to administer the Company's Stock
Awards Plan. Although the Stock Awards Committee had no formal meetings
independent of full Board meetings during the twelve months ended December 31,
1996 the members consulted by phone and executed unanimous written consents with
respect to action taken during the year.
The Compensation Committee for the Board of Directors was formed in
November 1995 and is presently composed of Messrs. Iacocca and Wohl. Mr. Wohl
chairs the Committee. The Compensation Committee reviews and approves executive
salaries and performs other related functions upon the request of the Board of
Directors. See "Executive Compensation--Employment Arrangements." Although the
Compensation Committee had no formal meetings independent of full Board meetings
during the twelve months ended December 31, 1996 the members consulted by phone
and executed unanimous written consents with respect to action taken during the
year.
The Company does not maintain a standing nominating committee.
Stockholders wishing to nominate new directors may do so only by giving timely
written notice to the Corporate Secretary at 11075 Santa Monica Boulevard, Suite
225, Los Angeles, California 90025, which notice must comply with the procedures
prescribed in the Company's Bylaws.
5
<PAGE>
The Finance Committee of the Board of Directors is presently composed
of Messrs. Berg, Iacocca and Wohl. The function of the Finance Committee is to
approve the Company's budget, financing plans and capital structure. The Finance
Committee had no formal meetings independent of full Board meetings during the
twelve months ended December 31, 1996.
The compensation of directors is described under "Executive
Compensation--Directors' Compensation."
Limitation of Liability and Indemnification Matters
The Company's Certificate of Incorporation, as amended (the
"Certificate of Incorporation"), provides that a director of the Company will
not be personally liable to the Company or its stockholders for monetary damages
for any breach of fiduciary duty as a director, except in certain cases where
liability is mandated by the Delaware General Corporation Law. This provision
has no effect on any non-monetary remedies that may be available to the Company
or its stockholders, nor does it relieve the Company or its directors from
compliance with federal or state securities laws. The Certificate of
Incorporation also provides that each person who is or was or had agreed to
become a director or officer of the Company or of certain affiliated entities
shall be indemnified by the Company, in accordance with its Bylaws, to the full
extent permitted from time-to-time by the Delaware General Corporation Law and
that the Company may enter into one or more agreements with any person which
provide for indemnification greater or different therefrom. The Bylaws provide
that each person who was or is made a party or is threatened to be made a party
to or is involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she or a
person of whom he or she is the legal representative is or was a director,
officer or employee of the Company or is or was serving at the request of the
Company as a director, officer, employee or agent of another enterprise,
including service with respect to employee benefit plans, whether the basis of
such proceeding is alleged action in an official capacity as a director,
officer, employee or agent, or in any other capacity while serving as a
director, officer, employee or agent, shall be indemnified and held harmless by
the Company to the fullest extent authorized by the Delaware General Corporation
Law. The Bylaws also provide for advancement of expenses. Following any "change
in control" of the Company of the type required to be reported under Item 1 to
Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), any determination of entitlement to indemnification under the
Company's Bylaws must be made by independent legal counsel.
Vote Required
The election of each director requires a plurality of the votes cast by
the holders of shares of Common Stock entitled to vote thereon present in person
or by proxy at the Meeting. The Company's Board of Directors recommends that
stockholders vote FOR each of the directors nominated in Proposal 1.
6
<PAGE>
PROPOSAL NO. 2:
RATIFICATION OF SELECTION OF
BDO SEIDMAN, LLP
BDO Seidman, LLP has been the Company's independent auditors for all
periods presented in the Annual Report to Stockholders which accompanies this
Proxy Statement. The Audit Committee and the Board of Directors have selected
BDO Seidman, LLP to continue in such role and are seeking stockholder
ratification of such determination. A representative of BDO Seidman, LLP will be
present at the Meeting, will have an opportunity to make a statement if he so
desires and is expected to be available to respond to appropriate questions.
Vote Required
Stockholder approval of Proposal 2 requires the affirmative vote of the
holders of a majority of the shares of Common Stock entitled to vote thereon
present in person or by proxy at the Meeting. The Company's Board of Directors
recommends that stockholders vote FOR Proposal 2.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
The following table sets forth certain information as of April 30, 1997
with respect to the beneficial ownership of the Company's Common Stock, which
constitutes the Company's only outstanding class of voting securities, by (i)
each person who, to the knowledge of the Company, beneficially owned more than
5% of the Common Stock, (ii) each director and nominee for director of the
Company, (iii) the Named Executive Officers (as defined below) and (iv) all
Named Executive Officers and directors of the Company as a group:
<TABLE>
<CAPTION>
Amount of Percent
Name of Beneficial Owner(1) Beneficial Ownership of Class(2)
------------------------ -------------------- --------
<S> <C> <C>
Kenneth Berg 3,984,116 (3) 20.6%
Robert F. Kautz 280,000 (4) 1.5%
Michael D. Mooslin 317,450 (5) 1.7%
John S. Kaufman 50,660 (6) *
Morton J. Wall 21,700 (7) *
Kory L. Berg 176,000 (8) 1.0%
Lee A. Iacocca 386,500 (9) 2.1%
Don Wohl 394,166 (10) 2.1%
Jess M. Ravich 28,611 (11) *
Mel Harris 1,331,000 (12) 6.9%
Ronald D. Garber 11,000 (13) *
All Directors and Named 6,981,203 (14) 31.6%
Executive Officers
as a Group (11 persons)
</TABLE>
- ----------------------
* Represents less than 1% of the outstanding shares of Common Stock.
(1) The address of Kenneth Berg, Robert F. Kautz, Michael D. Mooslin, John S.
Kaufman, Kory L. Berg and Ronald D. Garber is in care of the Company, 11075
Santa Monica Boulevard, Suite 225, Los Angeles, California 90025. The
address of Lee A. Iacocca is 1440 South Sepulveda Blvd., Third Floor, Los
Angeles, California 90025. The address of Morton J. Wall is in care of the
Company, 75 Route #27, Iselin, New Jersey 08830-0411. The address of Jess
M. Ravich is 11766 Wilshire Boulevard, Suite 870, Los Angeles, California
90025. The address of Don Wohl is 1800 Avenue of the Stars, Suite 1114, Los
Angeles, California 90067. The address of Mel Harris is 10800 Biscayne
Blvd., Penthouse Floor, North Miami, Florida 33161.
(2) Unless otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them. A person is deemed to be the
beneficial owner of securities that can be acquired by such person within
60 days of a specified date as provided in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended. Each beneficial owner's percentage is
determined by assuming that options or warrants that are held by such
person (but not those held by any other person) and which are exercisable
within 60 days of the date of the above table have been exercised. Further,
the amounts do not give effect to any conversion of shares of the Series A
Convertible Preferred Stock or Series B Convertible Preferred Stock because
the number of shares of Common Stock deemed to be beneficially owned by
such persons cannot be determined. The number of shares of Common Stock
issuable upon conversion of such shares is dependent on factors which
cannot be predicted by the Company at this time, including, among others,
the future trading prices of the Common Stock. As of the date of the table,
there were outstanding 762,545 shares of Series A Convertible Preferred
Stock and 290,000 shares of Series B Convertible Preferred Stock.
8
<PAGE>
(3) Kenneth Berg's holdings include: (a) 815,000 shares of Common Stock in
respect of which Mr. Berg has only the right to vote pursuant to a proxy,
and over which he does not posses any control over disposition and
transfers (Mr. Berg disclaims beneficial ownership of such shares) and (b)
1,236,666 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of the date of the table.
(4) Includes 280,000 shares of Common Stock issuable upon exercise of options
within 60 days of the date of the table.
(5) Includes 316,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of the date of the table.
(6) Includes 50,000 shares of Common Stock issuable upon exercise of options
exercisable within 60 days of the date of the table.
(7) Includes (a) 2,050 shares of Common Stock held by his spouse (Mr. Wall
disclaims beneficial ownership of such shares) and (b) 19,600 shares of
Common Stock issuable upon exercise of options within 60 days of the date
of the table.
(8) Includes 32,000 shares of Common Stock issuable upon exercise of options
within 60 days of the date of the table.
(9) Includes 327,500 shares of Common Stock issuable upon exercise of options
within 60 days of the date of the table.
(10) Includes 374,166 shares of Common Stock issuable upon exercise of warrants
and options within 60 days of the date of the table.
(11) Includes (a) 27,400 shares of Common Stock issuable upon exercise of
warrants to purchase Common Stock, (b) 89,425 shares of Common Stock
issuable upon the conversion of 10,000 shares of Series A Convertible
Preferred Stock owned by Mr. Ravich, (c) 160,966 shares of Common Stock
issuable upon the exercise of warrants to purchase 18,000 shares of Series
A Convertible Preferred Stock (assuming the immediate conversion of such
shares) owned by a trust of which Mr. Ravich is the beneficiary, and (d)
160,966 shares of Common Stock issuable upon the exercise of warrants to
purchase 18,000 shares of Series A Convertible Preferred Stock (assuming
the immediate conversion of such shares) owned by Libra Investments, Inc.,
which Mr. Ravich may be deemed to own in his capacity as majority
stockholder of such firm. All such warrants and shares of Series A
Convertible Preferred Stock are exercisable as of the date of this table.
The number of common shares issuable upon conversion of shares of Series A
Convertible Preferred Stock was determined using a price per share of
Common Stock of $3.9375, the closing price per share of Common Stock as
reported on the Nasdaq National Market on May 15, 1997.
(12) Includes 1,331,000 shares of Common Stock issuable upon exercise of options
and warrants within 60 days of the date of the table.
(13) Includes 10,000 shares of Common Stock issuable upon exercise of options
within 60 days of the date of the table.
(14) Includes 1,504,266 shares of Common Stock reserved for issuance pursuant to
the Company's Stock Awards Plan and non-plan options and warrants to
purchase 2,500,066 shares of Common Stock all of which are exercisable
within 60 days of the date of the table.
9
<PAGE>
CERTAIN INFORMATION WITH RESPECT TO EXECUTIVE OFFICERS
The Company's executive officers presently are Messrs. Kenneth Berg,
Garber, Kautz, Mooslin, Kaufman, and Wall. Information for Messrs. Berg, Kautz,
Kaufman, Mooslin and Wall is provided in respect of each such person under
"Proposal No. 1: Election of Directors."
Ronald D. Garber, General Counsel and Corporate Secretary. Mr. Garber
has been General Counsel and Corporate Secretary since May of 1996. From 1993
until April 1996, Mr. Garber was a partner at the law firm of Richman, Lawrence,
Mann, Greene & Chizever in Beverly Hills, where he represented the Company.
Prior thereto, he was Of Counsel for the law firm of Cooper, Epstein & Horowitz.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table provides certain
summary information concerning compensation paid to or accrued by the Company's
Chief Executive Officer and the two other executive officers of the Company who
earned more than $100,000 (salary and bonus) (the "Named Executive Officers")
for all services rendered in all capacities to the Company during the twelve
months ended December 31, 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
----------------------------------------- --------------------------------
Name and Principal Other Annual Restricted Stock Options/
Position Year Salary Bonus Compensation(1) Awards SARs (#)
- ---------------------------- --------- -------------- --------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth Berg(2)............. 1996 $207,700 $ -- $ $ 500,000
(Chief Executive Officer 1995 172,500 -- -- -- 900,000
and Chairman of the Board) 1994 150,000 -- -- 1,050,000(2) --
Robert F. Kautz(3).......... 1996 176,300 -- 27,400 -- --
(President and Chief 1995 116,109 -- -- -- 250,000
Financial Officer)
Michael D. Mooslin.......... 1996 161,500 -- 41,900 -- --
(President and Chief 1995 143,700 -- 30,121 -- --
Operating Officer of Koo Koo 1994 125,000 -- 44,900 -- --
Roo International)
</TABLE>
- -----------
(1) With respect to each of the executive officers named in the table, if not
separately reported the aggregate amount of perquisites and other personal
benefits, securities or property received was less than the lesser of
$50,000 or 10% of the total annual salary and bonus reported for such
executive officer.
(2) Mr. Berg commenced his employment with the Company on August 16, 1990. Mr.
Berg received 200,000 shares of restricted Common Stock in March 1995 as
consideration for the extension of the term of his employment
agreement.Such Common Stock vests pro rata over the term of Mr. Berg's
Amended and Restated Employment Agreement which terminates on January 9,
2001. As of December 31, 1996, Mr. Berg owned 200,000 shares of restricted
Common Stock which had an aggregate market value of $1,450,000 based on
the last reported sales price of the Common Stock on the Nasdaq National
Market on December 31, 1996. Mr. Berg also received options to purchase
500,000 restricted shares of Common Stock at $8.50 per share. All of such
shares upon issuance thereof are eligible to receive dividends if and when
declared thereon. See "--Employment Arrangements."
(3) Mr. Kautz commenced his employment with the Company on February 24, 1995.
See "--Employment Arrangements."
10
<PAGE>
Option/SAR Grants in Last Fiscal Year
The following table sets forth certain information regarding stock
options granted to the Named Executive Officers during the twelve months ended
December 31, 1996:
<TABLE>
<CAPTION>
Individual Grants Potential Realizable
-----------------------------------------------------------
Number of % of Total Value at Assumed
Securities Options/SARs Annual Rates of Stocks
Underlying Granted to Exercise Price Appreciation
Options/SARs Employees in or Base Expiration for Option Term
Name Granted (#) Fiscal Year Price ($/Sh) Date ----------------------
---- -------------- -------------- --------------- ------------- 5% ($) 10% ($)
---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Kenneth Berg 500,000 32.4% $8.50 Apr. 16, 2006 $2,672,800 $6,773,400
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-End
Option/SAR Values
The following table sets forth certain information regarding exercises
of stock options by the Named Executive Officers during the twelve months ended
December 31, 1996 and the value of unexercised options at December 31, 1996:
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options/SARs at In-the-Money Options/SARs at
FY-End FY-End
------------------------------- ----------------------------
Shares
Acquired on Value ($) ($)
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Kenneth Berg -- -- 846,666 853,334 $3,132,499 $667,502
Robert F. Kautz -- -- 90,000 160,000 $83,700 $284,800
Michael D. Mooslin -- -- 262,800 53,200 $1,511,100 $305,900
</TABLE>
Repricing of Options
During the twelve months ended December 31, 1996, there were no
adjustments or amendments of the exercise prices of stock options previously
awarded to the Named Executive Officers.
Directors' Compensation
Directors who are officers of the Company receive no additional
compensation for serving on the Board of Directors, other than reimbursement of
reasonable expenses incurred in attending meetings. Non-employee directors
receive annual compensation of $3,000, a fee of $300 for each meeting attended
(and $250 for each committee meeting attended) and reimbursement of reasonable
expenses incurred in attending meetings.
Directors' Stock Option Plan
The Company's Directors' Stock Option Plan (the "Directors' Plan") was
adopted by the Board of Directors and approved by the stockholders to enable the
Company to attract and retain the services of non-employee members of the Board
and to provide them with increased motivation and incentive to exert their best
efforts on behalf of the Company by enlarging their personal stake in the
Company. The Directors' Plan covers an aggregate of 60,000 shares of Common
Stock and will expire in 2001. The Directors' Plan, as amended, provides that
each non-employee person who becomes a director will receive an option to
purchase a minimum of 10,000 shares and up to a maximum of 20,000 shares of
Common Stock at an exercise price equal to the fair market value of the
Company's Common Stock on the date the option is granted.
11
<PAGE>
During the twelve months ended December 31, 1996, Mr. Ravich and Mr.
Harris were each granted 10,000 options under the Director's Plan at an exercise
price of $9.50 and $7.13, respectively, upon election to the Board of Directors.
Employment Arrangements
Kenneth Berg
On January 9, 1995, Kenneth Berg entered into an Amended and Restated
Employment Agreement with the Company (the "Agreement"). The Agreement provides
for an annual base salary of $150,000 (or at such higher rate as may be
determined by the Board of Directors or the Compensation Committee of the
Company) and for an incentive bonus equal to 3% of the Company's earnings before
interest, taxes, depreciation and amortization ("EBITDA") to the extent such
EBITDA exceeds $1,000,000. As of January 1, 1997, Mr. Berg's base compensation
was $200,000 per year. Under the Agreement, the termination date of the original
employment agreement was extended from October 14, 1996 to January 9, 2001. In
consideration for the extension of the term of the Agreement, the Company issued
Mr. Berg 200,000 shares of Common Stock on March 21, 1995; provided, however,
that (i) such shares of Common Stock vest pro rata over the term of Mr. Berg's
Agreement, (ii) Mr. Berg may not dispose of any such Common Stock prior to
January 9, 1998 and (iii) beginning on January 9, 1998, Mr. Berg may only
dispose of such Common Stock at a rate of 50,000 shares per year.
Mr. Berg is entitled to participate in the Company's fringe benefits,
bonus, profit-sharing and incentive plans. He is also entitled to reimbursement
for medical expenses not covered by the Company's or other health plans and for
certain Company-related travel expenses, including use of an automobile and
related expenses. The Company has agreed to provide Mr. Berg with such financial
and accounting services as he may reasonably request.
The Agreement provides that Mr. Berg is obligated to devote his
full-time services to the Company, although he is permitted to continue to
engage in other business activities so long as such activities do not conflict
with, or otherwise unreasonably interfere with, the performance of his services
to the Company. Under the Agreement, in the event of disability preventing his
performance of full-time duty for nine consecutive months, the Company may
discontinue payment of his base salary after such nine-month period; provided
that the base salary will be reinstated if he returns to full-time duty within
18 months (and during the term of the Agreement following the nine-month
disability period). The Agreement also provides that in the event of Mr. Berg's
death, the Company shall pay to Mr. Berg's estate or designated beneficiaries a
death benefit equal to one year's base salary and the pro rata portion of any
incentive bonus to which he would be entitled.
Under the Agreement, the Board of Directors of the Company may only
terminate Mr. Berg for "cause," which is defined in the Agreement as the
conviction of Mr. Berg for a felony. Upon such termination of Mr. Berg for
cause, the Company will pay Mr. Berg his base salary through the date of
termination at the rate in effect on such date of termination; provided,
however, that all of Mr. Berg's entitlements, other compensation or fringe
benefits will immediately terminate (to the maximum extent permitted by law).
12
<PAGE>
The Agreement also provides that if the Company terminates Mr. Berg's
employment without cause, the Company shall pay to Mr. Berg in one lump sum
(less applicable tax withholding but adjusted for any surtax under Section 280G
of the Internal Revenue Code of 1986, as amended) an amount in cash equal to two
times the sum of Mr. Berg's base salary and incentive bonus that would otherwise
be payable to Mr. Berg during the full remaining contract term of his employment
under the Agreement (the "Severance Payments"). In addition, if Mr. Berg's
employment is terminated without cause, all stock options granted by the Company
to Mr. Berg which are not vested will vest concurrently with the effective date
of termination and the exercise period of such options will be extended by five
years. The Agreement also provides that Mr. Berg may terminate his employment
agreement with "good reason" (as defined in the Agreement) and in such event
would be entitled to the Severance Payments described above. Good reason is
defined in the Agreement to include, but is not limited to, a (i) "change in
control" of the Company (as defined in the Agreement to occur when, among other
things, any person or entity beneficially owns, directly or indirectly, 20% or
more of the combined voting power of the Company's then outstanding securities,
(ii) a relocation of Mr. Berg's principal office or (iii) a material reduction
in the nature and scope of Mr. Berg's duties to the Company.
Robert F. Kautz
Robert F. Kautz was appointed President of Koo Koo Roo, Inc. in March
1997 and has served as Chief Financial Officer of the Company since February
1995. Pursuant to a February 29, 1996 amendment to his February 24, 1995
employment agreement with the Company, he receives a base salary at an annual
rate of $175,000, to be increased annually in accordance with the recommendation
of the Compensation Committee. Mr. Kautz is entitled to participate in such
fringe benefits, bonus, profit sharing and incentive plans as determined by the
Board of Directors. He also receives automobile and other allowances of $2,100
per month in the aggregate. Pursuant to Mr. Kautz's agreement with the Company,
the Company has loaned to Mr. Kautz $25,000 in 1995 and $35,000 in 1996. Mr.
Kautz's employment agreement terminates February 28, 1999, subject to two annual
renewal options which may be exercised by the Company. The Company has the right
to terminate Mr. Kautz's agreement without cause and in such event the $60,000
in loans referred to above would be forgiven.
In February 1995 the Company granted Mr. Kautz an option to purchase
200,000 shares of the Company's Common Stock. The option has a term of ten years
and 20% of such options vest each year over the first five years of Mr. Kautz's
employment. In November 1995, the Company granted Mr. Kautz an option to
purchase 50,000 shares of the Company's Common Stock. The option became
exercisable on February 24, 1996 and has a term of ten years. In the event of a
change in control of the Company, all of Mr. Kautz's options which are not
vested as of the effective date of such sale or change in control will
immediately and automatically become vested and exercisable.
13
<PAGE>
Michael D. Mooslin
Michael D. Mooslin joined the Company as President and Chief Operating
Officer on March 16, 1992 and in September 1996 was named President and Chief
Operating Officer of Koo Koo Roo International. Pursuant to Mr. Mooslin's
Amended and Restated Employment Agreement ("Agreement") with the Company, he
receives a base salary at an annual rate of $150,000 (or such higher rate as may
be determined by the Board of Directors of the Company). In 1993 and 1994, Mr.
Mooslin accepted a temporary reduction in current salary to $125,000 per annum
in return for certain loans. As such loans were forgiven, the amount thereof was
reported as "Other Annual Compensation." Mr. Mooslin is entitled to participate
in fringe benefits and bonus, profit sharing and incentive plans as determined
by the Board of Directors. Mr. Mooslin is reimbursed for certain Company-related
travel expenses. The Company makes annual payments for an automobile and
reimbursement of up to $1,500 per month for rent and related housing expenses.
The Company may terminate the Agreement in the event that Mr. Mooslin is
disabled and unable to perform his full-time duties for a consecutive period of
90 days or for a total of 120 days in any consecutive twelve-month period. The
Agreement expired on March 17, 1997, but provides that it shall continue from
year-to-year thereafter unless terminated by either the Company or by Mr.
Mooslin upon notice to the other provided not less than 90 nor more than 120
days prior to the end of the term. No such notice has been given. The Company
may terminate the Agreement for cause if Mr. Mooslin willfully breaches or
habitually neglects his duties. The Company may also terminate the Agreement
without cause. In the latter event, the Company would be required to pay to Mr.
Mooslin the amount of his base salary for the remainder of the term plus an
additional amount equal to his annual base salary. The Agreement also provides
that Mr. Mooslin may terminate his employment with the Company if, among other
things, (i) Mr. Mooslin is not reelected or reappointed to (other than by his
own choice) the office and position of President or such additional office or
position to which Mr. Mooslin may subsequently be elected or (ii) there is a
material reduction in the nature and scope of Mr. Mooslin's duties to the
Company. In such event, the Company will pay Mr. Mooslin his base salary through
the period ending on the date of his termination and an amount equal to no less
than six months of his base salary.
John S. Kaufman
Mr. Kaufman has been President of Koo Koo Roo USA since August 1996.
Pursuant to an employment agreement dated July 31, 1996 he receives a base
salary at an annual rate of $200,000 as well as a $25,000 guaranteed bonus
payable on the one year anniversary date of his employment with the Company. He
also receives an auto allowance of $600 per month and family health insurance
coverage. In addition, at the Company's discretion he may be granted options to
purchase an additional $250,000 worth of the Company's Common Stock; such grant
is based on performance. A severance clause provides that if termination occurs
for any reason other than cause, Mr. Kaufman will receive a $100,000 payment and
a one year acceleration in vesting on any unvested stock options.
Ronald D. Garber
Mr. Garber has been Corporate Secretary and General Counsel since May
1996. Pursuant to an Employment Agreement dated May 3, 1996 he receives a base
salary at an annual rate of $150,000 and an auto allowance of $500 per month and
family health insurance coverage. In the event of a change in control in the
Company, all of Mr. Garber's options which are not vested as of the effective
date of such sale or change in control will immediately become vested and
exercisable. Mr. Garber received a $25,000 loan from the Company in 1996.
14
<PAGE>
Compensation Committee Interlocks and Insider Participation
Prior to November 1995, the Company did not have a Compensation
Committee. Prior to the creation of the Compensation Committee, Kenneth Berg,
Chairman of the Board and Chief Executive Officer, and Don Wohl, the Company's
only outside director from January to July 1995, participated in deliberations
concerning executive compensation. In November 1995, the Board of Directors
formed a Compensation Committee. The Compensation Committee is composed of Lee
Iacocca and Don Wohl. The Compensation Committee did not meet formally during
1996. The Compensation Committee carried out its duties by written resolution
and informal discussions by phone and at the time of full Board meetings. None
of the executive officers served as a director or member of the compensation
committee of another entity during the year ended December 31, 1996.
Report on Executive Compensation
The Report on Executive Compensation shall not be deemed incorporated
by reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or the Exchange Act and shall
not otherwise be deemed filed under such Acts.
General. The Company's executive compensation program is administered
by the Compensation Committee of the Board of Directors (the "Committee"). Prior
to the creation of the Committee in November 1995, executive compensation was
determined through discussions between the Chief Executive Officer and Mr. Wohl,
the Company's sole outside Director from January to July 1995. Robert Muh and
Don Wohl were elected to the Committee in November 1995, each of whom was an
independent non-employee director of the Company. In March 1996, Robert Muh
resigned from the Company's Board of Directors and was replaced on the Committee
by Lee Iacocca. The Compensation Committee composed of Don Wohl and Robert Muh
did not meet or take any action prior to Mr. Muh's resignation and Mr. Muh did
not take part in any discussions of executive compensation. During 1996,
executive contracts involving stock options or stock awards were authorized by
written resolution of the Stock Awards Committee. Given the company's continued
losses no general incentive bonus program beyond existing stock option awards
were initiated during the year. The committee believes existing salary levels
are in line with industry norms. At such time as the Company becomes profitable,
it is the intention of the Board of Directors that the Compensation Committee
shall establish an incentive compensation program in accordance with the
philosophy outlined in this report.
Compensation Philosophy. The Company's executive compensation program
is designed to (i) attract and retain qualified executives and to reward them
for superior performance in achieving the Company's business goals and enhancing
stockholder value and (ii) provide incentives for creation of long-term
stockholder value and align management's interests with those of the
stockholders. The key elements of executive compensation are base salary, annual
performance bonus and stock options. The Committee reviews and approves policies
and practices relating to executive compensation including (i) base salary
levels, (ii) incentive compensation plans and related performance objectives and
awards and (iii) long-term incentives, principally stock option awards.
Base Salaries. Base salaries for executive officers are set at levels
which reflect base salaries for positions of similar responsibility at other
public companies and also take into account the unique talents and skills which
may be required in particular positions. Base salaries are adjusted annually to
account for such factors as individual past performance, changes in
responsibilities, changes in competitive pay levels and inflation. These
conclusions have generally been reached on a subjective basis. In addition, the
Board has from time-to-time, as it deemed appropriate, referred to outside
survey data including the National Restaurant Association's "Compensation for
Salaried Personnel in Foodservice" prepared in cooperation with the HayGroup.
Aspects of the compensation payable to certain executive officers of the Company
are also governed by employment contracts with such persons. See "--Employment
Arrangements."
15
<PAGE>
During 1996, the Chief Executive Officer, Mr. Kenneth Berg, was paid
base compensation of $207,700 which represented a 20% increase over the prior
year. This increase reflects, among other things, increased responsibility as
the Company continues to grow. During 1996, revenues of the Company were $40
million, a 90% increase over the prior year. The determination of base salaries
involves subjectivity on the part of the Board, however considerable weight is
given by the Board to the vision and unique abilities possessed by the
executives as well as to the Company's overall achievement and financial
performance. In addition, Mr. Berg has a strong incentive under his employment
agreement to guide the Company to reach positive cashflow, as measured by
earnings before interest, taxes, depreciation and amortization ("EBITDA"), which
will be a milestone in the Company's progress and which is a component of the
compensation provided for in his employment agreement as described above. See
"--Employment Arrangements--Kenneth Berg."
Incentive Compensation Plan. No incentive bonuses were awarded in 1996
as the Company was not profitable. However, the Committee does plan to establish
an incentive bonus program at such time as the Company becomes profitable.
Long-Term Incentives. The Company uses stock option grants to provide
additional incentives for creation of, and increase in, long-term stockholder
value and to link management and stockholder interests. See "Executive
Compensation."
The Stock Awards Committee administers the Company's stock option plan
and is responsible for determining, among other things, eligibility to
participate, the terms of the options and the number of shares subject to option
grants. Option grants to executives are based primarily on their assessment of
the contribution by each executive to the Company's success, as well as such
executive's prospects for the future and value to the Company, and also take
into account the amount of options or stock already owned by the executive. The
Company also has awarded options to its store-level management in recognition of
their contribution to stockholder value through the financial performance of
their individual stores.
May 19, 1997
Don Wohl, Chairman
Lee A. Iacocca
16
<PAGE>
Stock Performance Graph
The Stock Performance Graph below shall not be deemed incorporated by
reference by any general statement incorporating by reference this Proxy
Statement into any filing under the Securities Act or under the Exchange Act,
except to the extent the Company specifically incorporates this information by
reference, and shall not otherwise be deemed filed under such Acts.
The following graph compares the Company's cumulative total stockholder
return on its Common Stock (no dividends have been paid thereon) with the
cumulative total return, assuming reinvestment of dividends, of (i) the Nasdaq
Stock Market Index and (ii) a peer index of 243 restaurant companies prepared by
an independent third party. The presentation assumes $100 was invested on
October 15, 1991 (the date the Common Stock commenced trading on the Nasdaq
SmallCap Market System) to December 31, 1996.
The historical stock price performance of the Common Stock shown on the
Performance Graph set forth below is not necessarily indicative of future price
performance.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
AMONG KOO KOO ROO, INC., NASDAQ MARKET INDEX AND PEER GROUP
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
Measurement Period KOO KOO NASDAQ
(Fiscal Year Covered) ROO, INC. MKT INDEX Peer Group
- -------------------- --------- --------- ----------
<S> <C> <C> <C>
FYE 12/1991 $100.00 $100.00 $100.00
FYE 12/1992 $ 26.32 $100.98 $122.90
FYE 12/1993 $257.89 $121.13 $134.29
FYE 12/1994 $168.42 $127.17 $120.90
FYE 12/1995 $273.68 $164.96 $165.23
FYE 12/1996 $315.79 $204.98 $167.06
</TABLE>
17
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 8, 1996 the Company entered into a business development
agreement with an entity associated with Restaurant Marketing Corp., which is
owned by Mr. Harris, to provide business development services. In consideration
for the agreement, the Company issued options to purchase 1.0 million shares of
common stock at an exercise price of $8.00 per share. The options will become
exercisable ratably over a three-year period beginning on the first anniversary
of the date of issuance, so long as the business development agreement remains
in place. The business development agreement may be canceled with six months
notice by the Company's Chief Executive Officer in his sole discretion. The
options also will vest upon a change in control (as defined).
On May 8, 1996 the Company amended its area development agreement with
Restaurant Acquisition Corp., which is owned by Mr. Harris, covering Florida and
certain counties in Southern Georgia. Under this amendment, the area developer's
rights to open franchise restaurants were terminated, and all stores will be
developed as joint ventures through newly-formed partnerships of which the
Company will own a 50% interest. In consideration for this amendment, the
Company granted the area developer options to purchase 350,000 shares of the
Company's common stock at an exercise price of $8.00 per share. The options
vested and became exercisable immediately upon grant.
On August 21, 1996, the Company entered into a Non-Qualified Stock
Option Agreement with Mr. Kaufman, whereby the Company granted him an option to
purchase 250,000 shares of the Company's Common Stock at an exercise price of
$7.69 per share. Fifty thousand of these options became exercisable immediately
and the remaining are exercisable at the rate of 20% per year over the five year
period beginning on the first anniversary of the date of issuance and expire ten
years from the date of grant.
During the year ended December 31, 1996, the Company paid insurance
premiums amounting to approximately $152,000 to Preferred Employers Group, an
insurance agency of which Mr. Harris is the Chairman and Chief Executive
Officer.
During the twelve months ended December 31, 1996, the Company obtained
certain accounting, bookkeeping, occupancy and other office services from a
corporation controlled by Kenneth Berg in return for aggregate payments of
$82,000.
Mr. Ravich is the Chief Executive Officer of Libra Investments, Inc.,
which acted as a Placement Agent in connection with private placement of
1,200,000 shares of the Company's Series A Convertible Preferred Stock and
450,000 shares of the Company's Common Stock and which received compensation of
$1.25 million related to this placement. In addition, in connection with the
private placement, Libra Investments, Inc. and certain of its officers received
options to purchase 20,250 shares of the Company's Common Stock at an exercise
price of $7.25 per share, 18,250 of which are owned directly by Mr. Ravich, and
options to purchase 54,000 shares of the Company's Series A Convertible
Preferred Stock at an exercise price of $25.00 per share, 18,000 of which are
owned directly by Mr. Ravich.
In connection with the acquisition of the Hamburger Hamlet restaurants,
Libra Investments will receive $487,500 in cash and five year warrants to
purchase 100,000 shares of the Common Stock at an exercise price equal to the
closing price of the Common stock on the closing date of the acquisition.
18
<PAGE>
COMPLIANCE WITH SECTION 16(a) UNDER THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities ("Insiders"), to file with the
Commission initial reports of ownership and reports of changes in ownership of
Common Stock. Insiders are required by the Commission's regulations to furnish
the Company with copies of all Section 16(a) reports filed by such persons.
To the Company's knowledge, based solely on its review of the copies of
such reports furnished to the Company, during the year ended December 31, 1996
all Section 16(a) filing requirements applicable to Insiders were complied with,
except for two late filings relating to transactions by Ronald D. Garber.
ANNUAL REPORT
The Company's Annual Report to Stockholders for the year ended December
31, 1996 (the "1996 Annual Report") is being mailed to stockholders with this
proxy statement. The 1996 Annual Report contains consolidated financial
statements for the Company and its subsidiaries and the report thereon of BDO
Seidman, LLP, independent accountants.
STOCKHOLDER PROPOSALS
In order for a stockholder proposal to be included in the Board of
Directors' Proxy Statement for the 1998 Annual Meeting of Stockholders, such
proposal must be received at 11075 Santa Monica Boulevard, Los Angeles,
California 90025, Attention: Corporate Secretary, no later than the close of
business on December 16, 1997 and must otherwise comply with the applicable
provisions of the Exchange Act. In addition, the Company's Bylaws also contain
provisions requiring advance notice of any nominations or other matters to be
brought before an annual meeting by a stockholder.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and, in accordance therewith, files reports, proxy statements and
other information with the Commission. Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices located at Seven World Trade Center, New York, New York 10048 and 500
West Madison Street, Chicago, Illinois 60621. Copies of such materials may be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission
also maintains a web page on the Internet at www.SEC.GOV.
The Company will provide without charge to each person to whom a copy of the
Proxy Statement is delivered, upon the written or oral request of any such
persons, a copy (without exhibits) of the Company's Form 10-K, as amended, for
the year ended December 31, 1996. Requests for such copies should be addressed
to: Corporate Secretary, Koo Koo Roo, Inc., 11075 Santa Monica Boulevard, Suite
225, Los Angeles, California 90025, telephone (310) 479-2080.
19
<PAGE>
OTHER MATTERS
The Board of Directors does not know of any other matter which will be
brought before the Meeting. However, if any other matter properly comes before
the Meeting, or any adjournment or postponement thereof, which may properly be
acted upon, the proxies solicited hereby will be voted on such matter in
accordance with the discretion of the proxy holders named therein.
You are urged to sign, date and return the enclosed proxy in the
envelope provided. No further postage is required if the envelope is mailed
within the United States. If you subsequently decide to attend the Meeting and
wish to vote your shares, you may do so. Your cooperation in giving this matter
your prompt attention will be appreciated.
By Order of the Board of Directors
/s/ RONALD D. GARBER
RONALD D. GARBER
Secretary
May 19, 1997
20
<PAGE>
KOO KOO ROO, INC.
ANNUAL MEETING OF STOCKHOLDERS
JUNE 17, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of Koo Koo Roo, Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated May 19, 1997, and appoints Kenneth Berg, Robert F.
Kautz and Ronald D. Garber, or any of them, proxies with full power of
substitution, on behalf and in the name of the undersigned, to represent the
undersigned at the Annual Meeting of Stockholders of Koo Koo Roo, Inc. to be
held Tuesday, June 17, 1997, at 9:00 A.M. (local time) at the Century Plaza
Hotel, 2025 Avenue of the Stars, Los Angeles, California,, and at any
adjournment or postponement thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if personally present on the
matters set forth below:
1. Election of Directors:
[_] FOR the nominees listed below (except as indicated)
[_] WITHHOLD AUTHORITY to vote for the nominees listed below
If you wish to withhold authority to vote for an individual nominee, strike
a line through that nominee's name below:
Kenneth Berg John S. Kaufman Lee A. Iacocca
Michael D. Mooslin Morton J. Wall Don Wohl
Robert F. Kautz Kory L. Berg Mel Harris
2. Ratification of the appointment of BDO Seidman, LLP as independent
accountants:
[_] FOR [_] AGAINST [_] ABSTAIN
In their discretion, the proxies are authorized to vote upon any other
matters which may properly come before the Annual Meeting or at any adjournment
or postponement thereof. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
ELECTION OF THE DIRECTORS IN PROPOSAL 1 AND FOR APPROVAL OF PROPOSAL 2.
(Continued on other side)
<PAGE>
This proxy will be voted as directed or, if no contrary direction is
indicated, will be voted FOR the election of the directors in Proposal 1 and FOR
approval of Proposal 2.
Date: , 1997
----------------
---------------------------
(Signature)
NOTE: Please sign exactly as shown at left. If stock is jointly held, each
owner should sign. Executors, administrators, trustees, guardians, attorneys and
corporate officers should indicate their fiduciary capacity or full title when
signing.
[_] Please check if you have had a change of address and print your new
address and phone number below:
---------------------------
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PLEASE COMPLETE, DATE, SIGN
AND MAIL THIS PROXY CARD
PROMPTLY IN THE ENCLOSED
ENVELOPE.
