SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
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Check the appropriate box:
[ ] Preliminary Proxy Statement
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to S240.1a-11(c) or S240.1a-12
Taco Cabana, Inc.
----------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------------
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Notes:
Taco Cabana, Inc.
8918 Tesoro Dr., Suite 200
San Antonio, Texas 78217
Notice of Annual Meeting of Stockholders
August 14, 1996
TO THE STOCKHOLDERS OF
TACO CABANA, INC.:
Notice is hereby given that the 1995 Annual Meeting of
Stockholders of Taco Cabana, Inc., a Delaware corporation (the
"Company"), will be held at the Wyndham Hotel, 9821 Colonnade
Blvd., San Antonio, Texas, on Wednesday, August 14, 1996, at
10:00 a.m., Central Daylight Time for the following purposes:
To elect four directors.
To transact such other business as may properly come before
the meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on
Wednesday, July 10, 1996 as the record date for the determination
of stockholders entitled to vote at the meeting.
We hope that you will be able to attend the meeting in
person, but if you are unable to do so, please fill in, sign and
promptly mail back the enclosed proxy form, using the return
envelope provided. If for any reason you should subsequently
change your plans, you can of course revoke the proxy at any time
before it is actually voted.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ DAVID G. LLOYD
-----------------------
David G. Lloyd
Secretary
San Antonio, Texas
July 19, 1996.
TACO CABANA, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 14, 1996
THE MEETING
This Proxy Statement is furnished to the stockholders of Taco
Cabana, Inc., a Delaware corporation, in connection with the
solicitation of proxies by the Board of Directors of the Company for
use at the Annual Meeting of Stockholders to be held Wednesday,
August 14, 1996 (the "Meeting"). This Proxy Statement, the
accompanying proxy, and the Company's Annual Report are being sent
or given to the stockholders of the Company on or about July 19,
1996.
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of the Company's Common Stock is
necessary to constitute a quorum at the Meeting. Pursuant to
applicable Delaware law, only votes cast "for" a matter constitute
affirmative votes. Votes "withheld" or abstaining from voting are
counted for quorum purposes, but since they are not cast "for" a
particular matter, they will have the same effect as negative votes
or votes "against" a particular matter. In deciding all questions, a
holder of Common Stock is entitled to one vote, in person or by
proxy, for each share held on the record date.
Proxies in the form enclosed will be voted at the Meeting, if
properly executed, returned to the Company prior to the Meeting and
not revoked. A proxy may be revoked at any time before it is voted
by giving written notice of revocation to the Secretary of the
Company prior to the convening of the Meeting, or by presenting
another proxy card with a later date. If you attend the Meeting and
desire to vote in person, you may request that your previously
submitted proxy card not be used.
The record date for stockholders entitled to vote at the
Meeting is July 10, 1996. At the close of business on July 10, 1996,
the Company had issued and outstanding and entitled to vote at the
Meeting 15,697,162 shares of Common Stock. As of July 10, 1996, the
directors and executive officers of the Company and their affiliates
owned a total of 358,873 shares of the Company's Common Stock, or
approximately 2.3% of the total number of shares outstanding and
entitled to vote at the Meeting.
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information concerning
the beneficial ownership of the Company's Common Stock as of July 1,
1996, by: (i) each person known by the Company to be the beneficial
owner of more than 5% of its Common Stock, (ii) each named executive
officer of the Company, (iii) each director of the Company, and (iv)
all directors and officers as a group. Unless otherwise indicated,
each of the stockholders has sole voting and investment power with
respect to the shares beneficially owned.
Shares Beneficially Owned
Name Number Percent
Stephen V. Clark (1) 40,000 *
James A. Eliasberg(2) 167,750 1.1%
David G. Lloyd(3) 6,800 *
William J. Nimmo 3,817 *
Richard Sherman(4) 60,003 *
Cecil Schenker(5) 80,503 *
Massachusetts Financial
Services Co. (6) 1,264,630 8.1%
Smith Barney Mutual Funds
Management, Inc.,
Smith Barney Inc.,
Smith Barney Holdings
Inc.,
Travelers Group Inc. (7) 2,845,651 18.1%
All directors and officers
as a group (6 persons)(8) 358,873 2.2%
----------------------
* Less than 1%.
(1) Includes 40,000 shares subject to presently exercisable options
(or those exercisable within 60 days). Excludes 160,000 shares
issuable pursuant to options which are not currently
exercisable (or exercisable within 60 days).
(2) Includes 83,000 shares subject to presently exercisable options
(or those exercisable within 60 days). Excludes 166,000 shares
issuable pursuant to options which are not currently
exercisable (or exercisable within 60 days).
(3) Includes 5,000 shares issuable pursuant to presently
exercisable options (or those exercisable within 60 days).
Excludes 95,000 shares issuable pursuant to options which are
not currently exercisable (or exercisable within 60 days).
(4) Represents shares subject to presently exercisable options (or
those exercisable within 60 days). Excludes 34,000 shares
issuable pursuant to options which are not currently
exercisable (or exercisable within 60 days).
(5) Represents shares subject to presently exercisable options (or
those exercisable within 60 days). Excludes 34,000 shares
issuable pursuant to options which are not currently
exercisable (or exercisable within 60 days).
(6) Based upon Schedule 13G, filed jointly in February 1996,
indicating beneficial ownership as stated in the table, and
shared dispositive power as to all shares beneficially owned.
Included in the joint filing were Massachusetts Financial
Services Company ("MFS"), indicating beneficial ownership of
1,264,630 shares and sole dispositive power as to 1,264,630
shares and MFS Series Trust II - MFS Emerging Growth Fund
("MEG"), indicating 962,395 shares beneficially owned by MFS as
well as MEG. Address: 500 Boylston Street, Boston,
Massachusetts 02116.
(7) Based on Schedule 13G, filed jointly in October 1995, and
amended in January 1996, indicating beneficial ownership as
stated in the table. Included in the joint filing were Smith
Barney Mutual Funds Management Inc. ("MFM"), indicating shared
voting and dispositive power as to 1,200,000 shares, and sole
voting and dispositive power as to 0 shares; Smith Barney Inc.
("SB"), indicating shared voting and dispositive power as to
1,645,651 shares, and sole voting and dispositive power as to 0
shares; Smith Barney Holdings Inc. ("SB Holdings"), indicating
shared voting and dispositive power as to 2,845,651 shares, and
sole voting and dispositive power as to 0 shares; and Travelers
Group Inc. ("TRV"), indicating shared voting and dispositive
power as to 2,845,651 shares, and sole voting and dispositive
power as to 0 shares. Address: 388 Greenwich Street, New York,
New York 10013.
(8) Includes 253,506 shares subject to presently exercisable
options (or those exercisable within 60 days). Excludes 504,000
shares issuable pursuant to options which are not currently
exercisable (or exercisable within 60 days).
PROPOSAL
ELECTION OF DIRECTORS
At the Annual Meeting four directors are to be elected by
plurality of the votes cast by the holders of the shares of
outstanding Common Stock of the Company. Under applicable Delaware
law, in tabulating the vote, broker nonvotes will be disregarded and
have no effect on the outcome of the vote. Each outstanding share of
Common Stock entitles the holder thereof to one vote with respect to
the election of the four director positions to be filled at this
meeting. The nominees for director are Stephen V. Clark, William J.
Nimmo, Richard Sherman and Cecil Schenker. All of the nominees are
presently directors of the Company. For information concerning the
backgrounds of such nominees, see "Directors and Executive Officers"
below.
The enclosed Proxy, if properly signed and returned will be voted
FOR the election of these four nominees unless authority to vote is
withheld. The Board of Directors has no reason to believe that any
of such nominees will be unable to serve if elected. In the event
any of such nominees become unavailable for election, votes will be
cast, pursuant to authority granted by the enclosed Proxy, for such
substitute nominee as may be designated by the Board of Directors.
All directors will hold office until the annual meeting of
stockholders to be held in 1997 and until their successors have been
duly elected and qualified, unless prior to such meeting a director
resigns or his directorship otherwise becomes vacant.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
ELECTION OF THE DIRECTOR NOMINEES.
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company and their
respective ages are as follows:
Name Age Position
----------------- --- --------------------------
Stephen V. Clark 42 President, Chief Operating
Officer and Director
James A. Eliasberg 38 Executive Vice President and
General Counsel
David G. Lloyd 33 Senior Vice President -
Finance, Chief Financial
Officer, Secretary and
Treasurer
William J. Nimmo 43 Director
Richard Sherman 52 Director
Cecil Schenker 54 Director
Mr. Clark has served as the Company's President, Chief
Operating Officer and as a Director since April 24, 1995. Prior to
that, Mr. Clark was with Church's Chicken, a division of America's
Favorite Chicken, for eighteen years with his final title having
been Senior Vice President and Concept General Manager. He also
served on the executive committee of America's Favorite Chicken and
was on the Board of Directors of Church's Operators Purchasing
Association. In his final position, Mr. Clark was primarily
responsible for the day-to-day operations of over 1100 company-owned
and franchised units with aggregate sales volume in excess of $600
million.
Mr. Eliasberg has served as the Company's Executive Vice
President and General Counsel since April 1995. From January 1991
to April 1995, Mr. Eliasberg served as the Company's Senior Vice
President and General Counsel. Prior to that, Mr. Eliasberg was
engaged in the private practice of law in Southern California at the
law firms of Fierstein & Sturman (March 1989 to January 1991), Hill,
Wynne, Troop & Meisinger (May 1986 to February 1989) and Jones, Day,
Reavis & Pogue (October 1984 to March 1986). In addition to
supervising all of the Company's legal affairs, Mr. Eliasberg's
responsibilities include real estate, construction and franchise
development. Mr. Eliasberg is a graduate of the University of
Chicago law school.
Mr. Lloyd joined the Company in October 1994 as Vice President
- - Finance, Chief Financial Officer, Secretary and Treasurer and was
promoted to Senior Vice President in May 1996. From August 1985 to
October 1994, Mr. Lloyd served in various capacities with Deloitte &
Touche (the Company's independent auditors), with his last position
being Senior Audit Manager. Mr. Lloyd is a certified public
accountant.
Mr. Nimmo has served as a director of the Company since
November 1991. Mr. Nimmo has served as a Vice President of
Prudential Equity Investors, Inc. since September 1989. For the ten
years prior to that, Mr. Nimmo was a Vice President of J.P. Morgan &
Co.
Mr. Sherman has been a director of the Company since November
1991. Mr. Sherman is a private investor and retail consultant. Mr.
Sherman served as President and Chief Executive Officer of Rally's,
Inc. from September 1987 to January 1991. From August 1989 to
January 1991, he also served as Chairman of the Board of Rally's,
Inc. Mr. Sherman currently serves as a member of the Board of
Trustees of Paul Quinn College in Dallas, Texas and as a director of
Reed's Jewelers, Inc., 50-Off Stores, Inc. and Papa John's
International, Inc.
Mr. Schenker has been a director of the Company since January
1992. Mr. Schenker is a corporate securities attorney and is the
managing partner of the San Antonio, Texas office of the law firm of
Akin, Gump, Strauss, Hauer & Feld, L.L.P., of which Mr. Schenker has
been a partner, through his professional corporation, for more than
the preceding five years. Akin, Gump, Strauss, Hauer & Feld, L.L.P.
has regularly performed legal services for the Company. See
"Compensation Committee Interlocks and Insider Participation". Mr.
Schenker is also a director of 50-Off Stores, Inc.
The Board of Directors has a compensation and stock option
committee and an audit committee, each of which currently consists
of William J. Nimmo, Richard Sherman and Cecil Schenker. The Board
of Directors does not currently have a nominating committee. All
directors serve for a term of one year and until their successors
are duly elected. Each director, who is not also an employee of the
Company, except William J. Nimmo, receives an annual retainer of
$25,000, and an attendance fee of $2,500 per Board meeting for up to
four meetings each year. All non-employee directors are reimbursed
for their expenses. The Board of Directors met four times during
1995. Each incumbent director attended at least 75% of the aggregate
number of Board meetings and meetings of Board committees, of which
he was a member, held during 1995.
The compensation and stock option committee monitors and makes
recommendations to the Board with respect to compensation programs
for officers and directors and administers the Company's Stock
Option Plan. The compensation and stock option committee met two
times during 1995.
The audit committee considers the adequacy of the internal
controls of the Company and the objectivity of financial reporting;
meets with the independent certified public accountants and
appropriate Company financial personnel about these matters; and
recommends to the Board the appointment of the independent certified
public accountants. The audit committee met two times in 1995.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") requires each director and executive
officer of the Company, and each person who owns more than 10% of a
registered class of the Company's equity securities to file by
specific dates with the Securities and Exchange Commission (the
"SEC") initial reports of ownership and reports of change in
ownership of Common Stock and other equity securities of the
Company. Officers, directors and 10% stockholders are required by
SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. The Company is required to report in this
report any failure of its directors and executive officers to file
by the relevant due date any of these reports during the Company's
fiscal year.
To the Company's knowledge, all Section 16(a) filing
requirements applicable to the Company's officers, directors and 10%
stockholders were complied with, except for one late filing as to a
Form 3 for Stephen V. Clark.
EXECUTIVE COMPENSATION
Executive compensation is set at levels which are sufficiently
competitive with companies of similar size and type to permit the
Company to attract and retain the best possible individuals.
Compensation is structured to provide incentives for executive
officer performance that results in continuing improvements in the
Company's financial results, over both the short term and the long
term. Compensation is also designed to align the interests of the
Company's executives and its shareholders by providing for payment
of a significant portion of incentive compensation in the form of
stock options. Moreover, each executive officer's compensation is
based upon both individual and Company performance.
As may be seen from the Summary Compensation Table included on
page 7, the compensation of executive officers consists of three
principal parts, each of which is reviewed regularly by the
committee.
Salaries shown in the Summary Compensation Table represent the
fixed portion of compensation for executive officers for the year.
Changes in salary depend upon Company as well as individual
performance.
The bonuses shown in the Summary Compensation Table are paid in
cash to executive officers and depend upon the financial and
strategic accomplishments of the Company. The Committee also has
discretion to modify the bonus based upon individual performance,
including the individual's progress in implementing the Company's
goals.
The third principal component of compensation arises from the
Company's grant of stock options to executive officers (the
Company's Stock Option Plan actually covers several levels of
employees). The Committee sets the number of options to be granted
based on a variety of factors, including, principally, salary grade,
Company and individual performance and individual levels of stock
ownership. All options under the Plan are granted at fair market
value, and therefore any value which ultimately accrues to executive
officers is based entirely on the Company's performance, as
perceived by investors who establish the price for the Company's
Common Stock.
In April 1995, the Company appointed Stephen V. Clark as its new
President. A written employment agreement entered into at the time
of his appointment served as the principal basis of Mr. Clark's
compensation. Such agreement provided for an annual base salary of
$200,000, a discretionary bonus (with a minimum of $50,000 to be
awarded for the partial 1995 year), and a prospective grant of an
option to acquire 200,000 shares of common stock (which grant was
effected on June 6, 1995 at an exercise price of $5.19). Mr. Clark
received a salary of $152,455 and a bonus of $50,000 in 1995. In
awarding Mr. Clark such bonus, the committee noted his achievements
in structuring and implementing a plan to reverse the adverse trends
in the Company's operating results. In 1996, Mr. Clark's bonus will
be based upon the Company's attainment of certain financial and
strategic goals.
A written employment agreement was the basis for the 1995
compensation of Richard Cervera, the Company's Chief Executive
Officer until his termination in June 1995. Mr. Cervera received no
bonus or options in 1995. In connection with the termination of
service to the Company, Mr. Cervera and the Company entered into a
severance agreement and mutual release pursuant to which Mr. Cervera
received a severance payment of $151,000. The severance agreement
further provided for accelerated vesting of previously granted
options for 81,000 shares of Common Stock. In June 1995, Mr. Cervera
forfeited the 200,000 stock options granted to him in 1994.
Respectfully submitted,
THE COMPENSATION AND STOCK OPTION COMMITTEE
Richard Sherman, William J. Nimmo, Cecil Schenker
Executive Compensation
Summary Compensation Table. The following table sets forth
certain information concerning the compensation earned during the
Company's last three fiscal years by the Company's Chief Executive
Officer and the Company's other executive officers (collectively the
"named executive officers"):
<TABLE>
Summary Compensation Table
Annual Compensation Long-Term Compensation
-------------------------------- -------------------------
Awards Payouts
---------------- -------
Other Securi-
Annual Restrict- ties All Other
Compen- ed Underly- LTIP Compen-
Name and Fiscal Salary Bonus sation Stock ing Payouts sation
Principal Year ($) ($) ($)(1) Award(s) Options/ ($)
Position SARs ($)
($) (#)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Stephen V. 1995 152,455 50,000 - - 200,000 - -
Clark, 1994 - - - - - - -
President 1993 - - - - - - -
and Chief
Operating
Officer (2)
- ----------------------------------------------------------------------------------
James A. 1995 175,025 - - - 200,000 - -
Eliasberg, 1994 135,000 - - - 25,000 - -
Executive 1993 109,769 - - - - - -
Vice
President
and General
Counsel
- ----------------------------------------------------------------------------------
David G. 1995 117,605 - - - 75,000 - -
Lloyd, 1994 15,769 - - - 25,000 - -
Senior Vice 1993 - - - - - - -
President,
Chief
Financial
Officer,
Secretary
and Treasurer
(3)
- ----------------------------------------------------------------------------------
Richard 1995 113,803 - - - - - 151,000(4
Cervera, 1994 300,000 - - - 200,000 - -
Former 1993 209,539 - - - - - -
President
and Chief
Executive
Officer (4)
- ----------------------------------------------------------------------------------
</TABLE>
(1) Certain of the Company's executive officers receive personal
benefits in addition to salary; however, the Company has
concluded that the aggregate amounts of such personal benefits
do not exceed the lesser of $50,000 or 10% of annual salary and
bonus reported for any named executive officer.
(2) Mr. Clark joined the Company in April 1995.
(3) Mr. Lloyd joined the Company in October 1994.
(4) Mr. Cervera served as the Company's President until April 1995
and as its Chief Executive Officer until June 1995. In
connection with Mr. Cervera's termination of service to the
Company, Mr. Cervera and the Company entered into a severance
agreement and mutual release pursuant to which Mr. Cervera
received a severance payment of $151,000. The severance
agreement further provided for accelerated vesting of
previously granted options for 81,000 shares of Common Stock.
Mr. Cervera has agreed not to participate in any manner, for
two years following August 3, 1995, in any business which owns
a Mexican food restaurant offering drive-thru service within a
two and one-half mile radius of any of Taco Cabana's Mexican
restaurants, provided however, Mr. Cervera continues to retain
certain franchise rights.
Employment Agreements. The Company has written employment
agreements with Stephen Clark and James Eliasberg. The Company's
agreement with Mr. Clark expires in April 1998. Mr. Clark receives a
base salary of $200,000 per year during the term of his contract.
Additionally, Mr. Clark will be paid a bonus based on the Company's
achievement of certain performance goals. Pursuant to such
agreement, Mr. Clark has agreed not to participate in any manner,
during his term of employment and for two years thereafter, in any
business which owns a Mexican fast food restaurant or Mexican "quick
service" restaurant in the continental United States.
The Company's agreement with Mr. Eliasberg expires in 1998.
Mr. Eliasberg receives a base salary of $185,000 per year during the
term of his contract. Additionally, Mr. Eliasberg will be paid a
bonus based on the Company's achievement of certain performance
goals. Pursuant to such agreement, Mr. Eliasberg has agreed not to
participate in any manner, during his term of employment and for two
years thereafter, in any business which owns a Mexican fast food
restaurant or Mexican "quick service" restaurant in the continental
United States.
Stock Option Plans and Directors' Options
Under the Taco Cabana, Inc. 1990 Stock Option Plan (the "1990
Option Plan"), amended in August 1992, and the 1994 Stock Option
Plan (the "1994 Option Plan") options to purchase up to 1,500,000
and 500,000 shares, respectively, of Common Stock may be granted to
employees, outside directors and consultants and advisers of the
Company or any subsidiary corporation or entity. The stock is
intended to permit the Company to retain and attract qualified
individuals who will contribute to its overall success. Shares that
by reason of the expiration of an option (other than by reason of
exercise) or which are no longer subject to purchase pursuant to an
option granted under an Option Plan may be reoptioned thereunder.
The 1990 and 1994 Option Plans are administered by a committee of
outside directors (the "Committee"). The Committee sets specific
terms and conditions of options granted under the 1990 and 1994
Option Plans and administers the 1990 and 1994 Option Plans, as well
as the Company's other employee benefit plans which may be in effect
from time to time. The Committee currently consists of William J.
Nimmo, Cecil Schenker and Richard Sherman.
The Company's employees are eligible to receive either
incentive stock options or nonqualified stock options or a
combination of both, as the Committee determines. Non-employee
participants may be granted only nonqualified stock options. Stock
options may be granted for a term not to exceed ten years (five
years with respect to a holder of 10% or more of the Company's
shares in the case of an incentive stock option) and are not
transferable other than by will or the laws of descent and
distribution. Each option may be exercised within the term of the
option pursuant to which it is granted (so long as the optionee, if
an employee, continues to be employed by the Company). In addition,
unless a shorter period is specified in a particular option
agreement, an incentive option may be exercised within 90 days after
the termination of employment of the optionee (subject to any
limitations in the particular option), within one year after
termination in case of termination because of disability, or
throughout the term of the option in the event of the optionee's
death, to the extent in each case the option was exercisable at the
termination date. A nonqualified stock option may be exercised for
such period, but not later than the expiration date, after
termination of employment, disability or death, as may be specified
in the particular option.
The exercise price of all incentive stock options must be at
least equal to the fair market value of the Common Stock on the date
of grant, or 110% of fair market value with respect to any incentive
stock option issued to a holder of 10% or more of the Company's
shares. Stock options may be exercised by payment in cash of the
exercise price with respect to each share to be purchased, by
delivering Common Stock of the Company already owned by such
optionee with a market value equal to the exercise price, or by a
method in which a concurrent sale of the acquired stock is arranged,
with the exercise price payable in cash from such sale proceeds.
The 1994 Option Plan provides that each outside director will
automatically receive a grant of 3,000 nonqualified stock options
each year on the fifth business day following the first public
release of the Company's audited earnings report on results of
operations for the preceding fiscal year. Each such option will
become exercisable in whole or in part on the first anniversary of
the award through the balance of its ten-year term. Subject to
availability of shares allocated to the 1994 Option Plan and not
already reserved for other outstanding stock options, outside
directors who join the Board in the future will in addition receive
an initial grant of options for 35,000 shares, which will become
exercisable in five equal increments beginning on the first
anniversary of the award and on each of the next four succeeding
anniversary dates. Such options will be exercisable for a term of
ten years. Such options will be awarded upon their appointment or
election to the Board. Options, once granted and to the extent
exercisable, will remain exercisable throughout their term,
regardless of whether the holder continues as a director. The
exercise price per share is equal to 100% of the fair market value
of a share of Common Stock at the time of grant.
The 1990 Option Plan will terminate on October 14, 2000. The
1994 Option Plan will terminate on October 17, 2004. The Board of
Directors may, however, terminate the 1990 and 1994 Option Plans at
any time prior to such respective dates. Termination of the 1990
and 1994 Option Plans will not alter or impair, without the consent
of the optionee, any of the rights or obligations pursuant to any
option granted under the Option Plans.
As of July 1, 1996, options for 652,533 shares of common stock
had been granted under the 1990 Option Plan and were outstanding,
with a weighted average exercise price of $6.38 per share, and no
additional shares were available for issuance upon exercise of
options which may be granted in the future. As of July 1, 1996,
options for 847,467 shares had been exercised.
As of July 1, 1996, options for 445,467 shares of common stock
had been granted under the 1994 Option Plan and were outstanding,
with a weighted average exercise price of $5.61 per share, and
54,533 additional shares were available for issuance upon exercise
of options which may be granted in the future. As of July 1, 1995,
no options had been exercised.
Stock Option Grant Table. The following table sets forth
certain information concerning options granted to the named
executive officers during the Company's fiscal year ended December
31, 1995:
<TABLE>
Option Grants in Last Fiscal Year
Potential
Percent of Realizable
Total Value at
Options Assumed
Granted Annual Rates of
to Exercise Stock Price
Employees or Appreciation
Options in Base for Option Term
Granted Fiscal Price Expiration (2)
Name #(1) Year ($/Sh) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------
Stephen V. 200,000(3) 27.8% $5.125 6/05/2005 $645,750 $1,629,750
Clark
- ----------------------------------------------------------------------------
James A. 200,000(3) 27.8% $5.125 10/05/2005 $645,750 $1,629,750
Eliasberg
- ----------------------------------------------------------------------------
David G. 75,000 10.4% $5.875 9/06/2005 $277,593 $700,593
Lloyd
- ----------------------------------------------------------------------------
Richard - - - - - -
Cervera
- ----------------------------------------------------------------------------
</TABLE>
(1) All such stock options were granted for the numbers of shares
indicated at an exercise price equal to the fair market value of
the Common Stock on the date of grant as determined by the
Company's Board of Directors. All such stock options noted above
were granted 10 years prior to the noted expiration date. The
options become exercisable beginning one year after the date of
grant in five equal annual installments. The Company's current
Option Plans do not make provision for the award of stock
appreciation rights ("SARs") and the Company has no SARs currently
outstanding.
(2) As required by rules of the Securities and Exchange Commission
("SEC"), potential values stated are based on the assumption that
the Company's Common Stock will appreciate in value from the date
of grant to the end of the option term (ten years from the date of
grant) at annualized rates of 5% and 10% (total appreciation of
approximately 63% and 159%), respectively, and therefore are not
intended to forecast possible future appreciation, if any, in the
price of the Common Stock.
(3) Upon occurrence of a change of control of Taco Cabana, as defined
in the related Stock Option Agreements, all outstanding options, to
the extent not exercisable, will immediately become exercisable.
Stock Option Exercises and Holdings Table. The following table provides
information concerning the exercise of options and value of unexercised
options held by the named executive officers at December 31, 1995:
<TABLE>
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
Value of
Shares Number of Unexercised
Acquired Unexercised In-the-Money
on Value Options Options
Exercise Realized at Fiscal Year at Fiscal Year
Name (#) ($) End (#) End ($)(1)
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------
Exercis- Unexercis- Exercis- Unexercis-
able able able able
- --------------------------------------------------------------------------
Stephen V. - - - 200,000 - -
Clark
- --------------------------------------------------------------------------
James A. - - 37,000 212,000 $22,320 $22,320
Eliasberg
- --------------------------------------------------------------------------
David G. Lloyd - - 5,000 95,000 - -
- --------------------------------------------------------------------------
Richard 81,000 $170,910 - - - -
Cervera (2)
- --------------------------------------------------------------------------
</TABLE>
(1) Values stated are based on the last sale price of $5.00 per share
of the Company's Common Stock on the NASDAQ National Market System
on December 29, 1995, the last trading day of the fiscal year, and
equal the aggregate amount by which the market value of the option
shares exceeds the exercise price of such options at the end of the
fiscal year.
(2) Mr. Cervera served as the Company's President until April 1995 and
as its Chief Executive Officer until June 1995.
Compensation Committee Interlocks and Insider Participation
During 1995, William J. Nimmo, Richard Sherman and Cecil
Schenker served on the Company's compensation and stock option
committee.
Since 1987, the law firm of Akin, Gump, Strauss, Hauer & Feld,
L.L.P., has regularly rendered legal services as counsel to the
Company. Cecil Schenker, a director of the Company and a member of
the Company's compensation and stock option committee, is the sole
shareholder of Cecil Schenker, P.C., a partner of Akin, Gump,
Strauss, Hauer & Feld, L.L.P.
The Company believes that the abilities of Mr. Schenker to make
fair compensation decisions have not and will not be compromised by
he relationship referred to above.
STOCK PERFORMANCE GRAPH
Comparison of Five Year-Cumulative Total Returns
Performance Graph for
Taco Cabana, Inc.
(GRAPH APPEARS HERE)
<TABLE>
NASDAQ Stocks
Measurement Period NASDAQ Stock Market (SIC 5800-5899 US Companies)
(Fiscal Year Covered) Taco Cabana, Inc. (US Companies) Eating and drinking places
- -------------------- ----------------- ------------------- ----------------------------
<S> <C> <C> <C>
Measurement Pt-
12/31/90 -- 62.2 50.3
FYE 12/31/91 -- 99.9 83.8
FYE 12/31/92 122.3 116.3 117.1
FYE 12/31/93 163.8 133.4 118.7
FYE 12/30/94 83.1 130.5 85.7
FYE 12/29/95 46.2 184.5 104.4
</TABLE>
Notes:
A. The lines represent monthly index levels derived from compounded daily
returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the
previous day.
C. If the monthly interval, based on the fiscal year-end, is not a trading
day, the preceding trading day is used.
D. The index level for all series was set to $100.00 on 10/16/92.
* The Company's Common Stock commenced trading on October 16,
1992.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Richard Cervera has conditional franchise development rights
for up to three Taco Cabana restaurants to be located in Southern
California. Mr. Cervera may exercise such development rights at his
discretion. Mr. Cervera would not be required to pay the standard
$50,000 franchise fee for the first such restaurant, but would
otherwise pay the standard franchise fees, royalties, advertising
payments and other charges.
See "Compensation Committee Interlocks and Insider
Participation" for certain additional relationships and related
party transactions.
The Company believes that the transaction referred to above is
no less favorable than transactions which could have been obtained
from unrelated third parties. Any future transactions between the
Company and related parties will be approved by outside directors
and will be on terms no less favorable than those which could have
been obtained from unrelated third parties.
INDEPENDENT ACCOUNTANTS
The financial statements and schedules of the Company as of
December 31, 1995 and for the year then ended were audited by
Deloitte & Touche LLP. It is anticipated that if the nominees are
elected as directors, the new Board of Directors will reappoint
such firm as independent certified public accountants for the
current fiscal year. A representative of Deloitte & Touche LLP
will be present at the Meeting, will have an opportunity to make
a statement if he or she desires to do so and will be available
to respond to appropriate questions.
ANNUAL REPORT
The Company's Annual Report for the year ended December 31,
1995, which includes the Company's financial statements,
accompanies this proxy statement, but is not incorporated as part
of the proxy statement and is not to be regarded as part of the
proxy solicitation material.
OTHER MATTERS
The Company's management knows of no other matters that may
properly be, or which are likely to be, brought before the
meeting. However, if any other matters are properly brought
before the meeting, the persons named in the enclosed proxy, or
their substitutes, will vote in accordance with their best
judgment on such matters.
STOCKHOLDER PROPOSALS
The Company intends to conduct the next annual meeting of
stockholders in approximately June 1997. Proposals by
stockholders intended to be presented at the annual meeting to be
held in 1997 must be received by the Company by March 1, 1997 to
be included in the Company's proxy statement and form of proxy
relating to that meeting. Such proposals should be addressed to
the Secretary of the Company at the address indicated in this
notice.
COST AND METHOD OF PROXY SOLICITATION
The accompanying Proxy is being solicited on behalf of the
Board of Directors of the Company. The expense of preparing,
printing and mailing the form of Proxy and the material used in
the solicitation thereof will be borne by the Company. In
addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by directors, officers
and employees of the Company. Arrangements may also be made with
brokerage houses and other custodians, nominees and fiduciaries
for forwarding of solicitation materials to the beneficial owners
of stock held by such persons, and the Company may reimburse them
for reasonable out-of-pocket expenses incurred by them in
connection therewith.
By Order of the Board of Directors
/s/ DAVID G. LLOYD
------------------------
David G. Lloyd
Secretary
