<PAGE> 1
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
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
BACK BAY RESTAURANT GROUP, 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)(1) 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:
- - --------------------------------------------------------------------------------
<PAGE> 2
284 NEWBURY STREET
BOSTON, MASSACHUSETTS 02115
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
--------------------
Notice is hereby given that the Annual Meeting of Stockholders of Back Bay
Restaurant Group, Inc. will be held at Papa.Razzi restaurant, CambridgeSide
Galleria, Cambridge, Massachusetts, at 10:00 a.m. on Tuesday, June 3, 1997 for
the following purposes:
1. To elect two Class III Directors to serve until the 2000 annual
meeting of stockholders and until their successors are duly elected
and qualified.
2. To transact any other business that may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on April 11, 1997 are
entitled to notice of and to vote at the meeting.
If you are unable to attend the meeting in person, please sign and date the
enclosed proxy and return it promptly in the enclosed envelope.
By Order of the Board of Directors
FRANCIS P. BISSAILLON
Assistant Secretary
Boston, Massachusetts
May 1, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND
PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENVELOPE PROVIDED. IF YOU WISH TO VOTE
YOUR SHARES IN PERSON AT THE MEETING, YOUR PROXY MAY BE REVOKED.
<PAGE> 3
BACK BAY RESTAURANT GROUP, INC.
284 NEWBURY STREET
BOSTON, MASSACHUSETTS 02115
ANNUAL MEETING OF STOCKHOLDERS
JUNE 3, 1997
-------------------
PROXY STATEMENT
-------------------
This proxy statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Back Bay Restaurant Group, Inc., a Delaware
corporation (the "Company"), from holders of the Company's Common Stock for use
at the Company's 1997 Annual Meeting of Stockholders to be held on Tuesday, June
3, 1997, and at any adjournments or postponements thereof (the "Annual
Meeting"). At the Annual Meeting, stockholders will consider the matters set
forth in the accompanying Notice of Annual Meeting.
This proxy statement, the accompanying Notice of Annual Meeting and proxy
card are first being sent to stockholders on or about May 1, 1997. The Board of
Directors has fixed the close of business on April 11, 1997 as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting (the "Record Date"). Only stockholders of record at the close of
business on the Record Date will be entitled to notice of and to vote at the
Annual Meeting. As of the Record Date, there were outstanding and entitled to
vote 3,434,032 shares of the Company's Common Stock. Each share of Common Stock
entitles the holder thereof to one vote per share.
Stockholders of the Company are requested to complete, date, sign and
return the accompanying proxy card in the enclosed envelope. Shares represented
by a properly executed proxy received prior to the vote at the Annual Meeting
and not revoked will be voted at the Annual Meeting as directed in the proxy. If
a properly executed proxy is submitted and no instructions are given, the proxy
will be voted FOR the election of the two nominees for Director of the Company
named in this proxy statement. Abstentions will be counted as shares that are
present at the Annual Meeting for purposes of determining whether there is a
quorum, but will not affect the outcome of the vote for the election of a
nominee for Director. It is not anticipated that any matters other than those
set forth in this proxy statement will be presented at the Annual Meeting. If
other matters are presented, proxies will be voted in accordance with the
discretion of the proxy holders.
A stockholder of record may revoke a proxy at any time before it has been
exercised by filing a written revocation with the Secretary or any Assistant
Secretary of the Corporation at the address of the Corporation set forth above;
by filing a duly executed proxy bearing a later date; or by appearing in person,
notifying the Secretary or any Assistant Secretary and voting by ballot at the
Annual Meeting. Any stockholder of record as of the Record Date attending the
Annual Meeting may vote in person whether or not a proxy has been previously
given, but the presence (without further action) of a stockholder at the Annual
Meeting will not constitute revocation of a previously given proxy.
The cost of solicitation of proxies in the form enclosed herewith will be
borne by the Company. In addition to the solicitation of proxies by mail,
Directors, officers and employees of the Company may also solicit proxies
personally or by telephone without special compensation for such activities. The
Company will also request persons, firms and corporations holding shares in
their names or in the names of their nominees which are beneficially owned by
others to send proxy materials to, and obtain proxies from, such beneficial
owners. The Company will reimburse such holders for their reasonable expenses.
The Company's Annual Report, including financial statements for the fiscal
year ended December 29, 1996, is being mailed to stockholders concurrently with
this proxy statement. The Annual Report, however, is not part of the proxy
solicitation material.
<PAGE> 4
1. ELECTION OF DIRECTORS
The Directors of the Company are divided into three classes (I, II and
III). The members of each class are elected for terms to continue until the
third annual meeting of stockholders following their election and until their
successors are duly elected and qualified. Consequently, the term of office of
the Class III Directors elected at the Annual Meeting will continue until the
2000 annual meeting of stockholders and until their successors are duly elected
and qualified.
The nominees for the two Class III Directorships to be voted upon at the
Annual Meeting are Charles F. Sarkis and Robert S. Parker, the current holders
of the Class III Directorships. PROXIES WILL BE VOTED FOR THESE NOMINEES UNLESS
OTHERWISE SPECIFIED IN THE PROXY. The Board of Directors does not contemplate
that any of the nominees will be unable to serve, but in such an event, proxies
solicited hereby will be voted for the election of another person or persons, if
any, to be designated by the Board of Directors. The affirmative vote of a
plurality of the outstanding shares of the Company's Common Stock present or
represented at the Annual Meeting is required for the election of Directors.
Abstentions will be counted as shares that are present at the Annual Meeting for
purposes of determining whether there is a quorum, but will not affect the
outcome of the vote for the election of a nominee for Director.
DIRECTORS
<TABLE>
The following table sets forth information regarding Messrs. Sarkis and
Parker, the Board of Directors' nominees for election as Directors, as well as
information regarding each Director whose term does not expire until the 1998 or
1999 annual meeting of stockholders.
<CAPTION>
BUSINESS EXPERIENCE AND DIRECTOR
NAME CURRENT DIRECTORSHIPS AGE SINCE
- - ---- --------------------- --- -----
NOMINEES
(Class III - Term to Expire 2000)
<S> <C> <C> <C>
Charles F. Sarkis President, Chief Executive Officer and 57 1983
Chairman of the Board of Directors of
the Company since 1983 and Chairman of
the Board of The Westwood Group, Inc.
("WGI") since 1978. Prior to October
1992, served as President and Chief
Executive Officer of WGI.
Robert S. Parker Dean and Professor of the School of 59 1992
Business Administration at Georgetown
University since 1986. Prior to that
time, he was a partner at McKinsey &
Company, Inc., an international
management consulting firm. Mr. Parker
is also a Director of Middlesex Mutual
Assurance Co., Inc. and Excel Limited,
which are insurance companies.
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
OTHER DIRECTORS
(Class II - Term to Expire 1999)
<S> <C> <C> <C>
Richard K. Howe President and Co-owner of Penobscot Bay 53 1992
Provisions Co. Consultant to John
Hancock Freedom Securities Corporation
and its subsidiary, Tucker Anthony, Inc.
from July 1992 to March 1996. Prior to
July 1992, Mr. Howe was an Executive Vice
President and Director of Tucker Anthony,
Inc. and an officer and/or Director of
its parent corporation and affiliates.
Mr. Howe is also a Director of Chic
by H.I.S., Inc.
Francis P. Bissaillon Chief Financial Officer of the Company 48 1994
since March 1993. Executive Vice
President since October 1995 and Vice
President from March 1993 to October 1995.
Prior to working for the Company,
Mr. Bissaillon served as Chief Operating
Officer of La Quinta Motor Inns, Inc.
("La Quinta"). Prior to July 1991,
Mr. Bissaillon served as Senior Vice
President-Administration and Treasurer
of La Quinta.
(Class I - Term to Expire 1998)
Joseph M. Cassin Partner in the New York law firm 57 1992
Cassin, Cassin & Joseph.
Richard P. Dalton President and Chief Executive Officer 49 1992
of WGI since October 1992, Executive
Vice President of WGI from 1988 to 1992
and Chief Operating Officer of WGI since
1989. From 1988 until 1989 he served as
Chief Financial Officer of WGI, from 1984
until 1988 he served as Vice President of
WGI and from 1974 to 1989 he served as
Treasurer of WGI. Mr. Dalton is also a
Director of WGI.
Irwin Chafetz President and principal of Interface 61 1995
Group-Massachusetts, Inc., the operator
of GWV International, New England's
largest charter tour operator. Until
April 1995, he was Vice President and
a principal of Interface Group-Nevada, Inc.,
which operated COMDEX, the largest American
trade show. Mr. Chafetz is also a Director
of Syratech Corporation.
</TABLE>
3
<PAGE> 6
During 1996, the Board of Directors held three meetings. Each Director who
is not an officer or employee of the Company is entitled to receive $1,500 for
each meeting of the Board of Directors he attends and $1,500 for each committee
meeting he attends that takes place on a date other than the date of a Board of
Directors meeting. In addition, each Director receives a retainer fee of
$10,000. All of the Directors attended at least 75% of the aggregate of the
Board and relevant committee meetings during 1996.
The Audit Committee, composed of Richard K. Howe and Robert S. Parker, held
three meetings during 1996. The Audit Committee recommends to the Board of
Directors the independent public accountants to be engaged by the Company;
reviews with the independent public accountants and management the Company's
internal accounting procedures and controls; and reviews with the independent
public accountants the scope and results of the auditing engagement.
The Compensation Committee, composed of Joseph M. Cassin, Irwin Chafetz,
Richard P. Dalton and Robert S. Parker, held four meetings during 1996. The
Compensation Committee administers the Company's compensation plans and makes
decisions regarding the compensation of senior management and other matters
relating to compensation.
The Company does not have a nominating committee.
EXECUTIVE OFFICERS
Certain information regarding the identity and background of the Company's
executive officers is set forth below. All of the Company's executive officers
have been elected for terms continuing until their successors are duly elected
and qualified.
Charles F. Sarkis, age 57, is Chairman of the Board, President and Chief
Executive Officer of the Company and has served in such capacities for the
Company and its predecessors since 1964.
Francis P. Bissaillon, age 48, has served as Chief Financial Officer of the
Company since March 1993. Mr. Bissaillon has served as an Executive Vice
President of the Company since October 1995 and served as Vice President from
March 1993 to October 1995.
Mark L. Hartzfeld, age 50, has served as an Executive Vice President and
Chief Operating Officer of the Company since October 1995. He served as Senior
Vice President of Real Estate and Development of the Company from 1992 to
October 1995, and prior to that served as Vice President of Development since
1986.
Robert J. Ciampa, age 41, has served as Vice President, Chief Accounting
Officer and Treasurer of the Company since October 1992. Mr. Ciampa has served
as Chief Accounting Officer of the Company and its predecessors since 1978.
4
<PAGE> 7
BENEFICIAL OWNERSHIP OF SHARES
<TABLE>
The following table sets forth certain information regarding beneficial
ownership (as defined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934) as of May 1, 1997, except as otherwise indicated below, of
the Company's Common Stock by each person known by the Company to own
beneficially more than 5% of the Company's Common Stock, by each of the
Company's Directors and named executive officers and by all of the Company's
Directors and executive officers as a group.
<CAPTION>
COMMON STOCK
BENEFICIALLY OWNED(1)
---------------------------
DIRECTORS, EXECUTIVE OFFICER NUMBER PERCENT OF
AND 5% BENEFICIAL OWNERS(2) OF SHARES COMMON STOCK
- - ------------------------------ --------- ------------
<S> <C> <C>
Charles F. Sarkis 263,233(3)(4) 7.7%
Francis P. Bissaillon 51,833(5) 1.5%
Joseph M. Cassin 16,000(6) *
Irwin Chafetz 98,000(7) 2.9%
Richard P. Dalton 30,000(3)(8) *
Richard K. Howe 16,000(9) *
Robert S. Parker 15,000(8) *
Mark L. Hartzfeld 27,500(10) *
Robert J. Ciampa 23,250(8) *
All Directors and executive officers
as a group (9 persons) 540,816(3) 15.7%
5% Beneficial Owners
William B. Finneran 782,486(11) 22.8%
c/o Oppenheimer & Co., Inc.
Oppenheimer Tower
World Financial Center
New York, NY 10281
The Westwood Group, Inc. 673,451(12) 19.6%
190 V.F.W. Parkway
Revere, MA 02151
</TABLE>
5
<PAGE> 8
(Footnotes)
* Less than one percent
(1) Except as otherwise noted, persons in the table have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(2) Unless otherwise indicated, the address of each beneficial owner is
284 Newbury Street, Boston, Massachusetts 02115.
(3) Does not include 673,451 shares owned by WGI. Mr. Sarkis owns
securities representing approximately 88.63% of the voting power of
WGI's outstanding shares of Common Stock and approximately 66.85% of
the outstanding shares and is Chairman of the Board of WGI. Mr. Dalton
is President and a Director of WGI.
(4) Includes 52,500 shares Mr. Sarkis has the right to acquire within 60
days under options granted to him pursuant to the Company's Amended
and Restated Stock Option Plan (the "Stock Option Plan").
(5) Includes 45,833 shares Mr. Bissaillon has the right to acquire within
60 days under options granted to him pursuant to the Stock Option
Plan.
(6) Includes 15,000 shares Mr. Cassin has the right to acquire within 60
days under options granted to him pursuant to the Stock Option Plan.
Excludes 2,000 shares of Common Stock owned by Mr. Cassin's wife. Mr.
Cassin disclaims beneficial ownership of the shares owned by his wife.
(7) Includes 15,000 shares Mr. Chafetz has the right to acquire within 60
days under options granted to him pursuant to the Stock Option Plan
and 5,000 shares Mr. Chafetz has the right to acquire within 60 days
pursuant to a stock option grant (not under the Stock Option Plan).
(8) Represents shares such Director or officer has the right to acquire
within 60 days under options granted to such Director or officer
pursuant to the Stock Option Plan.
(9) Consists of 1,000 shares Mr. Howe owns jointly with his wife and
15,000 shares Mr. Howe has the right to acquire within 60 days under
options granted to him pursuant to the Stock Option Plan.
(10) Includes 27,000 shares Mr. Hartzfeld has the right to acquire within
60 days under options granted to him pursuant to the Stock Option
Plan.
(11) Shareholdings information is based on Mr. Finneran's Schedule 13D
dated September 14, 1995.
(12) Shareholdings information is based on WGI's Schedule 13G dated June 1,
1994.
6
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The Summary Compensation Table shows certain compensation information for
the fiscal years ended 1996, 1995 and 1994 for the Company's Chief Executive
Officer and to each of the Company's other executive officers whose annual
compensation exceeds $100,000. This information includes the dollar value of
base salaries and bonus awards and the number of stock options granted.
<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
LONG-TERM
NAME AND ANNUAL COMPENSATION COMPENSATION ALL OTHER
PRINCIPAL POSITION YEAR SALARY($) BONUS($)(1) AWARDS-OPTIONS(2) COMPENSATION($)
- - ------------------ ---- --------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Charles F. Sarkis, 1996 338,979 - - 35,650
President and 1995 338,395 - 52,500 28,600
Chief Executive Officer 1994 337,909 - 40,000 13,421
Francis P. Bissaillon, 1996 187,664 - - -
Executive Vice President 1995 173,405 - 40,000 -
and Chief Financial Officer 1994 174,071 - 15,000 -
Mark L. Hartzfeld, 1996 199,534 - - 6,100
Executive Vice President 1995 146,617 16,000 45,000 1,350
and Chief Operating Officer 1994 146,469 32,000 - 6,128
Robert J. Ciampa, 1996 101,233 - - -
Vice President, Chief 1995 97,751 - 23,250 -
Accounting Officer and 1994 97,781 - - -
Treasurer
- - ---------------
(1) Cash bonuses and option grants are included in compensation for the year
for which they were earned, even if actually paid or granted in the
subsequent year.
(2) Represents the number of shares of the Company's Common Stock subject to
options.
</TABLE>
7
<PAGE> 10
OPTION GRANTS IN FISCAL YEAR 1996 AND YEAR-END OPTION VALUES
The following table provides certain information regarding options to
purchase shares of the Company's Common Stock granted to the named executive
officers in fiscal year 1996.
<TABLE>
OPTIONS GRANTED IN FISCAL YEAR 1996
<CAPTION>
PERCENT POTENTIAL REALIZABLE
OF TOTAL VALUE AT ASSUMED
NUMBER OPTIONS ANNUAL RATES OF
OF GRANTED MARKET STOCK PRICE
SECURITIES TO EXERCISE PRICE ON APPRECIATION FOR
UNDERLYING EMPLOYEE OR BASE DATE OF OPTION TERM
OPTIONS IN FISCAL PRICE GRANT EXPIRATION --------------------
NAME GRANTED(#) YEAR 1996 ($/SHARE) ($/SHARE) DATE 0%($) 5%($) 10%($)
- - ---- ---------- --------- --------- --------- ---- ----- ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Francis P. Bissaillon 10,000 9.4 3.8125 3.8125 02/01/06 0 23,975 60,763
Mark L. Hartzfeld 15,000 14.0 3.8125 3.8125 02/01/06 0 35,962 91,143
</TABLE>
The table below summarizes for each of the named executive officers the
total number of unexercised options, if any, held at December 29, 1996 and the
aggregate dollar value of in-the-money unexercised options held at December 29,
1996. The value of unexercised in-the-money options at fiscal year-end is the
difference between the exercise or base price and the fair market value of the
underlying stock on December 29, 1996, which was $2.625 per share, the closing
price of the Company's stock on the Nasdaq national market system. These values
have not been, and may never be, realized. The underlying options have not been,
and may not be, exercised; and actual gains, if any, on exercise will depend on
the value of the Company's Common Stock on the date of exercise. None of the
named individuals in the following table exercised options in the fiscal year
ended December 29, 1996.
<TABLE>
FISCAL YEAR-END OPTION VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Charles F. Sarkis 52,500 - 0 -
Francis P. Bissaillon 42,500 12,500 0 0
Mark L. Hartzfeld 22,000 23,000 0 0
Robert J. Ciampa 23,250 - 0 -
(1) In-the-Money Options are those where the fair market value of the
underlying securities exceeds the exercise price of the option.
</TABLE>
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the Company's fiscal year ended December 29, 1996 and during its
current fiscal year, Charles F. Sarkis has served as an executive officer of the
Company and as Chairman of the Board of WGI, and Richard P. Dalton has served as
a member of the Company's Compensation Committee and as an executive officer of
WGI.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is composed solely of
non-employee Directors. The Compensation Committee determines all aspects of the
compensation to be paid to Charles F. Sarkis, the Chief Executive Officer,
Francis P. Bissaillon, the Chief Financial Officer, and Mark L. Hartzfeld, the
Chief Operating Officer, and determines all aspects of the compensation of the
Company's other executive officers, except their base salaries which are
determined by senior management. The objectives of the Compensation Committee in
determining the type and amount of executive officer compensation are to provide
a level of compensation which allows the Company to attract and retain superior
talent and to align the executive officers' interests with those of the
Company's stockholders. The compensation of the Company's executive officers
includes (i) cash compensation, consisting of a base salary and, if earned, a
performance bonus, (ii) long-term incentive compensation in the form of stock
options, and (iii) participation in various benefit plans, most of which are
generally available to employees of the Company.
Cash Compensation. Cash compensation of the Company's executive officers
consists of a base salary and, if earned, an annual performance bonus. The
Compensation Committee sets the base salaries of Messrs. Sarkis, Bissaillon and
Hartzfeld at levels competitive with those of executive officers at similarly
situated restaurant companies, taking into consideration the individual
experience of these officers. Mr. Sarkis' base salary has not changed since
1994. In determining Mr. Sarkis' base salary, the Compensation Committee
reviewed national and regional compensation information for executives in the
restaurant industry, including surveys regarding the compensation of restaurant
executives prepared by ADQ, Inc. and Towers, Perrin, Forster & Crosby, Inc. and
information contained in proxy statements filed by other restaurant companies.
Management level employees, including executive officers, are eligible to
receive cash bonuses based on the Company's performance. Mr. Sarkis and the
other executive officers did not receive cash bonuses for 1996, because the
Committee did not feel they were warranted based on the financial performance of
the Company.
Stock Options. The executive officers, as well as other key employees, are
eligible to participate in the Company's Stock Option Plan. The purpose of the
Stock Option Plan is to provide increased incentives to salaried employees, to
encourage new employees to become affiliated with the Company and to align the
interests of such persons with those of the Company's stockholders. The Stock
Option Plan is administered by the Compensation Committee. The Compensation
Committee has the authority to determine the individuals to whom the stock
options are awarded, the terms upon which option grants shall be made and the
number of shares subject to each option, all subject to the terms and conditions
of the Stock Option Plan.
Other Compensation. The Company provides certain other benefits to the
executive officers, such as health insurance, that are generally available to
Company employees. In addition, officers and key employees of the Company
(including the named executive officers) may be eligible to receive supplemental
disability insurance coverage, automobile allowance and insurance benefits.
Compensation Committee
Joseph M. Cassin, Chairman
Irwin Chafetz
Richard P Dalton
Robert S. Parker
9
<PAGE> 12
STOCK PERFORMANCE GRAPH
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
Company/Index Mar92 Dec92 Dec93 Dec94 Dec95 Dec96
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Back Bay Restaurant Group, Inc. $100.00 $ 80.90 $101.13 $ 44.94 $ 22.47 $ 17.23
Restaurants-500 $100.00 $119.73 $139.78 $139.34 $208.98 $206.48
NASDAQ Index Composite $100.00 $112.84 $129.53 $126.61 $179.06 $220.24
--------------------------------------------------------------------------------------
</TABLE>
The preceding stock performance price graph compares the cumulative total
return on the Company's Common Stock with the cumulative total return of The
NASDAQ Stock Market Index of U.S. stocks and of the Standard & Poor's Restaurant
Index, Restaurants-500. The beginning of the measurement period for the Company,
March 20, 1992, the date of the Company's initial public offering, and the
beginning of the measurement period for The NASDAQ Stock Market Index and the
S&P Restaurant Index is March 31, 1992. The last day of each measurement period
is the last business day in each calendar year.
The stock price performance on the graph above is not necessarily
indicative of future price performance.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company entered into a three-year employment agreement with Mr. Sarkis
on January 16, 1992 which provides that Mr. Sarkis will be employed as President
and Chief Executive Officer and that the term of his employment under the
agreement will continue from year to year thereafter unless either party
terminates the agreement. Effective December 27, 1993, Mr. Sarkis' base
compensation under the agreement was adjusted to $335,000 per year and may be
readjusted from time to time by the Board of Directors or its Compensation
Committee. In addition, Mr. Sarkis may receive annual bonuses as determined by
the Board of Directors or its Compensation Committee. The Company may terminate
Mr. Sarkis' employment only for cause. The employment agreement contains a
noncompetition covenant which prohibits Mr. Sarkis, until the later of five
years from the date of the agreement, the date of a change of control, or such
time that neither he nor WGI owns more than 3% of the outstanding shares of
Common Stock of the Company, from engaging in any competing business, directly
or indirectly. Mr. Sarkis' real estate investments in two properties which
currently are leased to the Company are not subject to the noncompetition
covenant.
The Company has entered into Change of Control Severance Agreements
("Severance Agreements") with Charles F. Sarkis, Francis P. Bissaillon, Mark L.
Hartzfeld and Robert J. Ciampa. The Severance Agreements provide that if there
were a change of control (as defined in the Severance Agreements) of the
Company, and such officer's employment by
10
<PAGE> 13
the Company is terminated during the next two years for any reason other than
dismissal by the Company for cause (as defined in the Severance Agreements), the
officer would be entitled to certain benefits. These benefits include receipt of
a payment equal to the sum of three times the amount of the officer's annual
salary and bonus, a pro rated amount of the officer's current year bonus, the
amount of salary and bonus deferred in prior years and not yet received by the
officer, and, in certain circumstances, a gross-up for certain taxes payable by
the officer in connection with the receipt of payments under the Severance
Agreements. The Severance Agreements also provide that upon a qualifying
termination of employment, the officer's stock options will become fully vested
and that the Company will continue the officer's life, medical and disability
insurance for two years after the termination of the officer's employment to the
extent that these benefits are not provided by another employer, and that any
noncompetition agreements between the Company and the employee shall not be
effective.
TRANSACTIONS WITH MANAGEMENT AND AFFILIATES
Mr. Sarkis is the majority shareholder of WGI. WGI owns more than 10% of
the Common Stock of the Company. The following is a summary of certain
arrangements between the Company and WGI, its subsidiaries, Mr. Sarkis and Mr.
Sarkis' affiliates. Certain of these arrangements were made while the Company
was a wholly-owned subsidiary of WGI and accordingly, were established by
related parties and were not subject to arms length negotiations. The Company's
By-Laws provide that all future proposed agreements between the Company and WGI,
Mr. Sarkis or their respective affiliates are subject to advance approval by a
majority of the independent members of the Company's Board of Directors.
Leasing Arrangements
The Company had a lease agreement for one of its restaurant facilities with
a trust, the beneficiary of which is a wholly-owned subsidiary of WGI. The
annual rent under this lease was equal to the higher of $200,000 base rent or
7.5% of annual gross sales up to a maximum of $3,200,000 per year, so that in no
event shall the annual rent under this lease exceed $240,000. The lease
commenced on October 1, 1991 and ends September 30, 2001. The Company is also
liable for a portion of real estate taxes, insurance and building operating
expenses as defined in the lease. The lease agreement was terminated in November
1996, pursuant to the foreclosure of a mortgage, and as a result of such
foreclosure, the occupancy of the restaurant facility is tenant at sufferance.
The Company is in the process of negotiating a new lease with the new landlord.
In December 1991, Boraschi Cafe, Inc. ("Boraschi"), a wholly-owned
subsidiary of the Company, entered into a lease which formalized a prior leasing
arrangement for 14,427 square feet of restaurant space in Boston, Massachusetts
which Mr. Sarkis beneficially owns. The lease, which expires on September 30,
2006, provides for annual rent of $300,000 and that the Company is responsible
for utilities, maintenance and taxes. The restaurants operated at this location
are J.C. Hillary's, Ltd. and The Famous Atlantic Fish Company.
Mr. Sarkis beneficially owns a parking lot located in Boston, Massachusetts
near the Company's executive office and five of the Company's restaurants. The
Company rents parking spaces in this parking lot for its employees. In 1996, the
Company paid a total of approximately $84,000 in fees to park cars in this lot.
Concessions and Management Agreements
Prior to 1994, the Company and WGI were parties to agreements pursuant to
which the Company operated the concession business and received certain other
revenues in connection with the operation of Wonderland Greyhound Park and
Foxboro Park, two parimutuel race tracks owned by WGI. In May 1994, the Company
transferred its concession and related operations to WGI in return for a
$770,000 term note, to which $200,000 owed by WGI to the Company was added, to
bring the total principal amount of the note to $970,000. This note was
subsequently amended to provide that principal and interest payments under the
note would not begin until April 1, 1998.
11
<PAGE> 14
AUDIT MATTERS
Coopers & Lybrand has been selected to examine the financial statements of
the Company for the fiscal year ended December 29, 1996, and to report the
results of their examination. A representative of Coopers & Lybrand is expected
to be present at the Annual Meeting and will be afforded the opportunity to make
a statement and to respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
Proposals of stockholders to be included in the Company's proxy statement
for its 1998 annual meeting of stockholders must be received by the Company no
later than December 31, 1997.
In addition, the Company's By-Laws provide that any stockholder of record
wishing to nominate a director or have a stockholder proposal considered at an
annual meeting must provide written notice of such nomination or proposal and
appropriate supporting documentation, as set forth in the By-Laws, to the
Company at its principal executive offices not less than 90 days prior to the
anniversary date of the prior year's annual meeting or special meeting in lieu
thereof (the "Anniversary Date"); provided, however, that in the event that the
annual meeting is called for a date more than twenty days prior to the
Anniversary Date, stockholders may, under certain circumstances set forth in the
Company's By-Laws, have additional time to deliver their stockholder notice.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely on the review of Forms 3, 4 and 5 and all amendments thereto
furnished to the Company with respect to its most recent fiscal year, it appears
that each Director, officer and 10% beneficial owner of Common Stock of the
Company complied with Section 16(a) of the Securities Exchange Act of 1934.
OTHER BUSINESS
The Board of Directors knows of no business that will come before the
meeting for action except as described in the accompanying Notice of Meeting.
However, as to any such business, the persons designated as proxies will have
discretionary authority to act in their best judgment.
<PAGE> 15
BACK BAY RESTAURANT GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 3, 1997
The undersigned hereby appoints Charles F. Sarkis and Francis P. Bissaillon,
and each of them, his true and lawful proxies, with full power of substitution,
on behalf of the undersigned to attend the Annual Meeting of Stockholders of
Back Bay Restaurant Group, Inc. ("Back Bay") to be held at PapaRazzi
restaurant, Cambridgeside Galleria, Cambridge, Massachusetts on June 3, 1997 at
10:00 a.m., and at any adjournments or postponements thereof (the "Annual
Meeting"), and thereat to vote all shares of common stock, par value $0.01 per
share, of Back Bay standing in the name of the undersigned as specified on the
reverse side, with all the powers the undersigned would possess if personally
present at the Annual Meeting, hereby revoking all previous proxies. Each of
such proxies or his substitute shall have and may exercise all the powers
granted herein. This proxy is revocable at any time before it is voted by
giving written notice of such revocation to the Secretary or any Assistant
Secretary of Back Bay, signing and duly delivering a proxy bearing a later date
or by attending the Annual Meeting, notifying the Secretary or any Assistant
Secretary of Back Bay and voting in person. The undersigned reserves the right
to attend the Annual Meeting and vote in person.
- - -------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE.
- - -------------------------------------------------------------------------------
Please sign exactly as your name(s) appear(s) on this proxy card. When shares
are held by joint tenants, both should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
- - -------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- - ------------------------------------ -------------------------------------
- - ------------------------------------ -------------------------------------
- - ------------------------------------ -------------------------------------
<PAGE> 16
/X/ PLEASE MARK VOTES
AS IN THIS EXAMPLE
- - -------------------------------------------------------------------------------
BACK BAY RESTAURANT GROUP, INC.
- - -------------------------------------------------------------------------------
THIS PROXY, WHEN PROPERLY EXECUTED AND DELIVERED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS GIVEN, THIS
PROXY WILL BE VOTED IN FAVOR OF PROPOSAL 1.
RECORD DATE SHARES:
_________________________
Please be sure to sign and date this Proxy. Date
_______________________________________________________________________________
_________Stockholder sign here____________________Co-owner sign here___________
1. Election of two Class III Directors for a three WITH- FOR ALL
year term. FOR HOLD EXCEPT
CHARLES F. SARKIS / / / / / /
ROBERT S. PARKER
NOTE: If you do not wish your shares voted "For" a particular nominee,
mark the "For All Except" box and strike a line through the nominee's name.
Your shares will be voted for the remaining nominee.
Mark box at right if an address change or comment has been / /
noted on the reverse side of this card.
DETACH CARD DETACH CARD
BACK BAY RESTAURANT GROUP, INC.
Dear Stockholder,
Your vote counts, and you are strongly encouraged to exercise your right to
vote your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Back Bay Restaurant
Group, Inc. on June 3, 1997.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Back Bay Restaurant Group, Inc.
