U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K/A
(Amendment No. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 3, 1999
Commission file number 0-24982
SILVER DINER, INC.
(Exact name of the Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
04-3234411
(I.R.S. employer identification no.)
11806 ROCKVILLE PIKE
ROCKVILLE, MARYLAND 20852
301-770-0333
(Address and telephone number of the Registrant's principal executive offices)
----------------------------------------------------------------------
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on
which registered
--------------------------- ---------------------------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.00074 Par Value
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [X] NO [_]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [_]
<PAGE>
At March 15, 1999, the Registrant had 11,809,146 shares of common stock
(the "Shares") outstanding, and the aggregate market value of the Shares
held by non-affiliates of the Registrant was approximately $8,669,061. The
aggregate market value was determined based on the closing price of the
Shares on the NASDAQ Stock Market(SM) on March 15, 1999.
<PAGE>
The purpose of this Form 10-K/A is to amend the Form 10-K for Silver
Diner, Inc. (the "Company") for the fiscal year ended January 3, 1999 filed
with the U.S. Securities and Exchange Commission (the "SEC") on April 5,
1999 so as to add items 10, 11, 12 and 13. Such items were to have been
incorporated into the Form 10-K by reference to the Company's Proxy
Statement for the annual meeting of stockholders for 1999. The annual
meeting and Proxy Statement have been delayed with the result that the Proxy
Statement will not be filed on or before May 3, 1999.
<PAGE>
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
The Directors, Executive Officers and key employees of the Company are as
follows:
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE POSITION
- - - ---------------------------------- ----- --------- ------------------------------------------
<S> <C> <C> <C>
Robert T. Giaimo ............ 47 1996 Chairman of the Board, President, Chief
Executive Officer, and Treasurer
Catherine Britton ........... 45 1996 Director
Michael Collier ............. 44 1999 Director
Ype Von Hengst .............. 48 1996 Director, Vice President, Executive Chef,
and Secretary
Edward H. Kaplan ............ 60 1996 Director
George A. Naddaff ........... 69 1994 Director
Louis P. Neeb ............... 60 1996 Director
Charles M. Steiner .......... 57 1996 Director
Douglas M. Suliman, Jr. ..... 43 1994 Director
</TABLE>
ROBERT T. GIAIMO has been the Company's Chairman of the Board, President,
Chief Executive Officer and Treasurer since March 1996. In 1987 Mr. Giaimo
developed and popularized the Silver Diner concept with Ype Von Hengst after
conducting a one year national tour of diner-style restaurants. Mr. Giaimo has
been the Co-Founder, Director, President, Chief Executive Officer and Treasurer
of Silver Diner Development, Inc. since its inception in 1987. Mr. Giaimo was
president, chief executive officer and director of Monolith Enterprises, Inc.
("Monolith") from 1971 to January 1987. From 1972 through 1976, Mr. Giaimo
co-founded and operated, through Monolith, Blimpies Restaurant in Georgetown.
In 1977, Mr. Giaimo co-founded and operated, through Monolith, The American
Cafe restaurant, an innovative, award-winning restaurant chain which was one of
the first restaurants to promote "American cuisine" and helped popularize the
croissant sandwich. In 1985, Mr. Giaimo sold The American Cafe to W.R. Grace &
Co. Mr. Giaimo graduated from the Business School of Georgetown University in
1974 and Harvard University's Smaller Company Management Program in 1982. He is
a member of the Young President's Organization and serves as a Director and
Co-chairman of Development. In 1993, Mr. Giaimo received an "Entrepreneur of
the Year" award from Inc. Magazine in conjunction with Ernst & Young and
Merrill Lynch. Mr. Giaimo is married to Catherine Britton.
CATHERINE BRITTON has been a Director since March 1996 and was a director
of Silver Diner Development, Inc. from July 1995 until March 1996. She assisted
with marketing and design of Silver Diner restaurants and has been involved
with menu development and concept evolution since Silver Diner Development,
Inc.'s inception. She also participated extensively in the development of
Silver Diner restaurants. Ms. Britton graduated from Georgetown University in
1975, receiving a Bachelor of Arts degree in Philosophy. Ms. Britton earned a
Masters Degree in Special Education from George Washington University in 1978.
Ms. Britton is married to Robert T. Giaimo.
MICHAEL COLLIER has been a Director since March 1999, when he was elected
to fill the vacancy left by Clinton A. Clark's resignation. Mr. Collier is the
President of Uniwest Group, Inc. and Uniwest Construction, Inc., companies
which handle business in the area of real estate development and general
contracting and which serve as the developer and general contractor for the
Company's diners. He is also President of Atlantic Environmental Services,
Incorporated, a full-service environmental company.
YPE VON HENGST has been a Director, Vice President, Executive Chef and
Secretary since March 1996 and co-founder, director, vice president of culinary
operations, and executive chef of Silver Diner Development, Inc. since 1987. Mr.
Hengst was a director of operations of "Dominiques" restaurant in Washington,
D.C. from May through September 1987. From 1984 to 1987, Mr. Hengst was
corporate executive chef and director for Food Service for The American Cafe and
was responsible for the central kitchen and bake shop, menu changes, and food
preparation for all seven American Cafe restaurants. From 1981 to 1984, Mr.
Hengst was corporate executive chef for Restaurant Associates in New York, New
York, where he supervised over fifteen diverse full-service restaurants. From
1976 to 1981, Mr. Hengst held executive chef positions in Charlotte, North
Carolina, Cleveland, Ohio, Houston, Texas, and New York, New York. Prior to
1976, Mr. Hengst worked as a chef in Europe.
EDWARD H. KAPLAN has been a Director since March 1996 and was a director
of Silver Diner Development, Inc. from 1987 until March 1996. He is a real
estate developer and investor and has served since 1983 as a Director of Palmer
National Bank, Washington, D.C. and subsequently, its successor, George Mason
Bankshares until April 2, 1998, when George Mason merged into United
Bankshares. Mr. Kaplan received his B.A. from the University of Pennsylvania,
Wharton School in 1961. Mr. Kaplan served as President of the United Jewish
Appeal Federation of Greater Washington from 1989 to 1991, President of the
United Jewish Endowment Fund from 1992 to 1997, and currently is a member of
the Maryland Public Television Commission.
GEORGE A. NADDAFF has been a Director since the Company's organization in
April 1994. From April 1994 to March 1996, Mr. Naddaff was also Chairman of the
Board. In September 1992, he co-founded Olde World Bakeries, Ltd. ("OWB") with
Douglas M. Suliman, Jr. and since its inception was its chief executive
officer. OWB was a commercial bread bakery which developed a chain of retail
gourmet coffee and breakfast shops. In December 1994, OWB sold its assets and
discontinued its business. From 1988 until June 1992, Mr. Naddaff was chairman,
chief executive officer and a director of New Boston Chicken, Inc. ("Boston
Chicken") and from 1988 until 1989, he also served as its president. Mr.
Naddaff also was active in the development of Mulberry Child Care Centers, Inc.
("MCC"), which developed a chain of child care centers in the northeast United
States. Mr. Naddaff was chairman of the board of MCC until 1991 when he sold
his interest in MCC. In 1987, Mr. Naddaff founded Business Expansion Capital
Corporation ("BECC"). BECC invests in developing enterprises capable of
expansion through replication of successful prototype operation. Boston Chicken
and MCC were organized with the assistance of BECC during BECC's first 15
months of operations. From 1987 until the present, he has been the sole
officer, director and stockholder of BECC. Since 1995, Mr. Naddaff has been a
director of Vie de France, a publicly-traded manufacturer of frozen foods. In
September 1995, Mr. Naddaff was named as vice-chairman of First Mortgage
Network, Inc., a privately held national company providing mortgage services,
and in November 1996, Mr. Naddaff became the chairman and chief executive
officer of Ranch *1, a New York restaurant chain.
LOUIS P. NEEB has been a Director since March 1996 and was a director of
Silver Diner Development, Inc. from 1994 until March 1996. Mr. Neeb is
currently the president of Neeb Enterprises, Inc., a corporation which provides
management consulting services and oversees the operation of an affiliated
restaurant company, and chairman of the board and chief executive officer of
Casa Ole Restaurants, Inc. He was the president and chief executive officer of
The Spaghetti Warehouse, Inc. from July 1991 until January 1994 and of Geest
Food USA from 1989 until 1991. From 1982 until 1987, he served as president and
chief executive officer of Creative Food N Fun, a subsidiary of W.R. Grace &
Co. From 1985 until 1987, be served as president and chief executive officer of
a W.R. Grace & Co. affiliate, Taco Villa, Inc. Mr. Neeb was employed by The
Pillsbury Company from 1973 until 1982. From 1980 to 1982, he served as an
executive vice president of The Pillsbury Company and as chairman and chief
executive officer of its affiliate, Burger King Corporation. In 1973, he was
director of operations at Steak & Ale Restaurants, Inc. another affiliate of
The Pillsbury Company. His leadership role with Steak & Ale Restaurants, Inc.
continued until 1980, after serving as vice president of operations and
eventually president and chief operating officer. Currently, Mr. Neeb serves as
a director of Showbiz Pizza Time, Inc. and Franchise Finance Corporation of
America, Inc., both publicly traded companies. Mr. Neeb received a BBA in
marketing from Notre Dame University in 1961 and an MBA from George Washington
University in 1969.
CHARLES M. STEINER has been a Director since March 1996. Mr. Steiner was a
director of Silver Diner Development, Inc. from 1987 until March 1996. He is
the chief executive officer of Branch Group, Inc., an electric distributor. In
1975, Mr. Steiner founded IMARK, an electric cooperative, and in 1991 founded
EDIC, a distribution insurance company. He is a former director and officer of
the National Association of Electric Distributors (NAED). He received a B.B.A.
in Accounting from the University of Pittsburgh in 1963.
DOUGLAS M. SULIMAN, JR. has been a Director since the Company's
organization in 1994. Mr. Suliman was also president, treasurer and secretary
from the Company's organization until March 1996. In September 1992, he
co-founded OWB with Mr. Naddaff. From September 1992 until July 1993, Mr.
Suliman served as OWB's president and from August 1993 to December 1994, served
as its vice chairman. In 1988, he founded Island Partners Ltd. ("IPL"), a
privately owned investment banking firm, and has served as its president since
then. IPL performs corporate finance services for privately owned and public
companies with particular emphasis on institutional private placements of debt
and equity securities and on merger and acquisition advisory engagements. From
1987 until 1988, Mr. Suliman served as managing director of First Reserve
Corporation, an investment management company, where he shared responsibility
for originating new investments and for fund raising activities. From 1985
until 1987 Mr. Suliman was president, and from 1982 until 1985 he was vice
president, of The Boston Company Energy Advisers, Inc. ("TBCEA"). During that
time, TBCEA was a wholly owned subsidiary of The Boston Company, Inc. and an
indirect subsidiary of Shearson Lehman American Express. TBCEA originated and
managed direct investments in the domestic energy industry for institutional
clients. Mr. Suliman's responsibilities with TBCEA included the origination,
negotiation and management of such investments and management of the
reorganization of TBCEA and its investment portfolio following the oil price
decline in December 1985. From 1980 until 1982, Mr. Suliman was a loan officer
for the First National Bank of Boston. Mr. Suliman received a Bachelor of
Science degree from the University of Massachusetts (Amherst) and a Masters of
Business Administration degree from Northeastern University.
There is no family relationship between any of the Company's directors or
officers except that Catherine Britton is the wife of Robert T. Giaimo. There
are no arrangements between any director of the Company and any other person
pursuant to which he was selected as a director.
NON-DIRECTOR EXECUTIVE OFFICERS
TIMOTHY CUSICK has been Area Director of Operations since July 1996 and
has been a member of the executive management since April 1998. Mr. Cusick
joined the Company in October 1992 and served as a restaurant manager and owner
operator until 1996. Mr. Cusick has over eight years of restaurant management
experience.
PATRICK MESKELL has been Senior Vice President, Human Resources since
January 1996. Mr. Meskell was an independent consultant to institutions,
specializing in the areas of risk management system design and implementation
from 1988 to 1992 and Director of Organizational Development & Management &
Operations Training for the Student Loan Marketing Association from 1992 to
1995.
CRAIG KENDALL has been Vice President, Finance since November 1998. From
1988 to 1998, Mr. Kendall was a senior financial officer for Team Washington,
Inc., one of the nation's largest Domino Pizza franchises, which operates in
the Washington, D.C. metropolitan area.
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The following table sets forth, to the Company's knowledge based solely
upon a review of reports and other information furnished to it by its
directors, officers, greater than 10% beneficial owners of the Company, and
other persons subject to the reporting requirements (collectively, the
"Reporting Persons"), the Reporting Persons who failed to file on a timely
basis reports required by Section 16(a) of the Securities Exchange Act of 1934,
as amended, during the year ended January 3, 1999. Each Reporting Persons'
inadvertence to file the reports on a timely basis was due to the broker's
failure to report these transactions to the Reporting Persons on a timely
basis.
<TABLE>
<CAPTION>
TRANSACTIONS
THAT WERE NOT KNOWN FAILURE
REPORTED ON A TO FILE A
LATE REPORTS TIMELY BASIS REQUIRED FORM
REPORTING PERSON (#) (#) (#)
- - - ------------------------------ -------------- --------------- --------------
<S> <C> <C> <C>
Catherine Britton(1) ......... 1 5 0
Timothy Cusick(2) ............ 2 6 0
Robert Giaimo(3) ............. 2 6 0
Ype Von Hengst(4) ............ 2 6 0
Craig Kendall(5) ............. 3 6 0
Patrick Meskell(6) ........... 2 6 0
Charles Steiner(7) ........... 1 5 0
</TABLE>
- - - ---------
(1) Ms. Britton made seven purchases of Shares between December 15, 1998 and
December 31, 1998, and only two of these purchases were reported timely on
Ms. Britton's Form 4 for December 1998 filed on January 8, 1999. Ms.
Britton's other five purchases were reported late on an amended Form 4 for
December 1998 filed on February 10, 1999.
(2) Mr. Cusick made six purchases of Shares between December 16, 1998 and
December 31, 1998, and only one of these purchases was reported timely on
Mr. Cusick's Form 4 for December 1998 filed on January 11, 1999. Mr.
Cusick's other five purchases were reported late on an amended Form 4 for
December 1998 filed on February 10, 1999. In addition, Mr. Cusick was
granted an option for 55,000 Shares on December 15, 1998, which should
have been reported on a Form 5 by February 17, 1999. Mr. Cusick's option
on Form 5 was filed late on March 9, 1999.
(3) Mr. Giaimo was granted an option for 150,000 Shares on December 15, 1998,
which should have been reported on a Form 5 by February 17, 1999. Mr.
Giaimo's option on Form 5 was filed late on March 9, 1999. In addition,
Mr. Giaimo is required to report his spouse's acquisitions of securities,
since he is deemed to own such securities indirectly. Consequently, the
five purchases reported late by Britton (see Note 1, above) were also
reported late by Mr. Giaimo on an amended Form 4 for December 1998 filed
on February 10, 1999.
(4) Mr. Von Hengst made six purchases of Shares between December 16, 1998 and
December 31, 1998, and only one of these purchases was reported timely on
Mr. Von Hengst's Form 4 for December 1998 filed on January, 8, 1999. Mr.
Von Hengst other five purchases were reported late on an amended Form 4
for December 1998 filed on February 10, 1999. In addition, Mr. Von Hengst
was granted an option for 55,000 Shares on December 15, 1998, which should
have been reported on a Form 5 by February 17, 1999. Mr. Von Hengst's
option on Form 5 was filed late on March 9, 1999.
(5) Mr. Kendall's employment by the Company began on January 4, 1999, and his
holdings in the Company should have been reported on a Form 3 by January
14, 1999. Mr. Kendall's holdings were reported late on a Form 3 filed on
March 9, 1999. In addition, Mr. Kendall made one purchase of Shares on
January 15, 1999, which should have been reported on a Form 4 by February
10, 1999, and four purchases of Shares during February 1999, which should
have been reported on a Form 4 by March 10, 1999. All five purchases were
reported late on a Form 4 filed on April 8, 1999.
(6) Mr. Meskell made six purchases of Shares between December 16, 1998 and
December 31, 1998, and only one of these purchases was reported timely on
Mr. Meskell's Form 4 for December 1998 filed on January 8, 1999. Mr.
Meskell's other five purchases were reported late on an amended Form 4 for
December 1998 filed on February 10, 1999. In addition, Mr. Meskell was
granted an option for 55,000 Shares on December 15, 1998, which should
have been reported on a Form 5 by February 17, 1999. Mr. Meskell's option
on Form 5 was reported late on March 9, 1999.
(7) The Steiner Family Partnership made six purchases of Shares between
December 16, 1998 and December 31, 1998, and only one of these purchases
was reported timely on Mr. Steiner's Form 4 for December 1998 filed on
January 8, 1999. Mr. Steiner is the managing partner of the Steiner Family
Partnership and reports the partnership's securities on his own Form 4 as
"indirectly" owned by him. The other five purchases were reported late on
an amended Form 4 for December 1998 filed on February 10, 1999.
To the Company's knowledge, all other Reporting Persons complied with all
applicable Section 16(a) filing requirements.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth summary information concerning compensation
paid by the Company with respect to fiscal years 1998, 1997 and 1996 to Robert
T. Giaimo, the Company's Chairman of the Board, President, Chief Executive
Officer and Treasurer, and to each of the Company's executive officers whose
aggregate annual cash compensation exceeded $100,000 for fiscal year 1998. The
following table includes each executive officer's service with the Company's
predecessor, Silver Diner Development, Inc. ("SDDI") prior to March 27, 1996,
when SDDI merged with FTAC Transition Corporation (the "Merger"). References to
Shares subject to options, including those granted by SDDI prior to the Merger,
reflect the numbers and corresponding exercise prices of Shares issuable after
giving effect to the Merger.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------- ----------------------------------------------
AWARDS
----------------------------------------------
SECURITIES
RESTRICTED UNDERLYING
OTHER ANNUAL STOCK OPTIONS/
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) AWARD(S)($) SARS(#)
- - - ----------------------------- ------ ----------- ---------- ----------------- ------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Giaimo ............ 1998 269,544 0 6,000 0 550,000(1),(2)
Chairman of the Board, 1997 250,000 50,000 18,000 0 0
President, Chief Executive 1996 240,000 0 18,000 0 0
Officer and Treasurer
Ype Von Hengst .............. 1998 129,144 0 6,000 0 205,000(4),(5),(2)
Director, Vice President, 1997 105,000 12,500 6,000 0 0
Executive Chef and 1996 105,000 11,814 6,000 0 0
Secretary
Patrick Meskell ............. 1998 103,579 5,000 6,000 0 155,000(7),(5),(2)
Senior Vice President, 1997 93,690 17,500 6,000 0 0
Human Resources 1996 90,000 0 6,000 0 0
Timothy Cusick .............. 1998 103,737 0 6,000 0 155,000(7),(5),(2)
Area Director of 1997 94,792 12,500 6,000 0 0
Operations 1996 75,186 0 6,000 0 0
<CAPTION>
LONG-TERM
COMPENSATION
-------------
PAYOUTS
------------
LTIP ALL OTHER
NAME AND PRINCIPAL POSITION PAYOUTS($) COMPENSATION($)
- - - ----------------------------- ------------ ----------------
<S> <C> <C>
Robert T. Giaimo ............ 0 56,358(3)
Chairman of the Board, 0 49,037(3)
President, Chief Executive 0 44,691(3)
Officer and Treasurer
Ype Von Hengst .............. 0 27,535(6)
Director, Vice President, 0 25,573(6)
Executive Chef and 0 17,049(6)
Secretary
Patrick Meskell ............. 0 0
Senior Vice President, 0 0
Human Resources 0 0
Timothy Cusick .............. 0 0
Area Director of 0 0
Operations 0 0
</TABLE>
- - - ---------
(1) Includes an option to purchase up to 150,000 Shares at $0.625 per Share
through December 14, 2008, which vests 100% on September 15, 2008, except
that 100% of the option may vest in 1999 or in 2000 if the preopening
budgets of all new stores opened in the applicable year, 1999 or 2000,
(the "New Stores") are met and if the Company's actual net income from
either January 1, 1999 through December 31, 1999 or from January 1, 2000
through December 31, 2000 is a positive number, after eliminating any
preopening expenses attributable to New Stores, excluding the income and
expenses of all New Stores for the first six months of each New Store's
operation, and adjusting write-offs of fixed assets. Also includes an
option to purchase up to 400,000 Shares at $1.238 per Share through
December 14, 2003, which vests, except as provided in Note 2 below, as
follows: (a) 120,000 on December 29, 1998, (b) 80,000 on December 29,
1999, (c) 80,000 on December 29, 2000, and (d) 120,000 on December 29,
2001.
(2) An additional 18% of the option may vest earlier each time the market price
of the Shares is initially greater than $5.00 per Share, $7.50 per Share
and $10 per Share, with the option vesting 100% when the market price is
greater than $12.00 per Share.
(3) Includes the annual premiums the Company paid on a $3,000,000 split dollar
life insurance policy on the life of Mr. Giaimo. The 1996 amount includes
$12,000 in term life insurance premiums for Mr. Giaimo paid by SDDI.
(4) Includes an option to purchase up to 55,000 Shares at $0.625 per Share
through December 14, 2008, which vests 100% at December 31, 2005, except
as provided in Note 5 below. Also includes an option to purchase up to
150,000 Shares at $1.125 per Share through December 28, 2007, which vests,
except as provided in Note 2 above, as follows: (a) 45,000 Shares on
December 29, 1998, (b) 30,000 on December 29,1999, (c) 30,000 on December
29, 2000, and (d) 45,000 on December 29, 2001.
(5) The option may vest earlier, as follows: (a) 25,000 Shares may vest
immediately if the Company's actual net income for 1999 exceeds the
Company's budgeted net income by at least $300,000; (b) 20,000 Shares may
vest immediately if the Company's actual net income for 1999 exceeds
budgeted net income by $200,000 or more but less than $300,000; (c)15,000
Shares may vest immediately if the Company's actual net income for 1999
exceeds budgeted net income by $100,000 or more but less than $200,000;
and (d) 10,000 Shares may vest immediately if the Company's actual net
income for 1999 exceeds budgeted net income by less than $100,000. The
Board has the ability to set other performance criteria for accelerating
the vesting of the option in future years.
(6) Includes the annual premiums the Company paid on a $1,500,000 split dollar
life insurance policy on the life of Mr. Von Hengst.
(7) Includes an option to purchase up to 55,000 Shares at $0.625 per Share
through December 14, 2008, which vests 100% at December 31, 2005, except
as provided in Note 5 above. Also includes an option to purchase up to
100,000 Shares at $1.125 per Share through December 28, 2007, which vests,
except as provided in Note 2 above, as follows: (a) 30,000 Shares on
December 29, 1998, (b) 20,000 on December 29,1999, (c) 20,000 on December
29, 2000, and (d) 30,000 on December 29, 2001.
STOCK OPTIONS
Options for 1,180,000 Shares were granted to executive officers during the
year ended January 3, 1999, including 60,000 granted to Daniel Brannan, which
expired prior to the fiscal year-end following the termination of Mr. Brannan's
employment by the Company during 1998. The following table provides information
as to grants of stock options made during the fiscal year ended January 3,
1999, and held by the following executive officers. No stock appreciation
rights with respect to the Shares were outstanding at such date.
OPTIONS/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS/
UNDER- SARS GRANTED
LYING TO EMPLOYEES
OPTIONS/ IN FISCAL YEAR
SARS ENDED EXERCISE OF
NAME GRANTED (#) 1/3/99(1) BASE PRICE ($/SH)
- - - -------------------------- --------------- ---------------- -------------------
<S> <C> <C> <C>
Robert T. Giaimo ......... 400,000 35.0 $ 1.238
150,000 13.1 $ 0.625
Timothy Cusick ........... 100,000 8.7 $ 1.125
55,000 4.8 $ 0.625
Craig Kendall ............ 55,000 4.8 $ 0.625
Patrick Meskell .......... 100,000 8.7 $ 1.125
55,000 4.8 $ 0.625
Ype Von Hengst ........... 150,000 13.1 $ 1.125
55,000 4.8 $ 0.625
Daniel Brannan ........... 60,000(2) 5.2 $ 1.125
<CAPTION>
MARKET PRICE
ON DATE EXPIRATION GRANT DATE
NAME DATE OF GRANT OF GRANT DATE PRESENT VALUE $
- - - -------------------------- --------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C>
Robert T. Giaimo ......... 12/15/98 $ 0.625 12/14/03 0
12/15/98 $ 0.625 12/14/08 0
Timothy Cusick ........... 12/29/97 $ 1.125 12/28/07 0
12/15/98 $ 0.625 12/14/08 0
Craig Kendall ............ 12/15/98 $ 0.625 12/14/08 0
Patrick Meskell .......... 12/29/97 $ 1.125 12/28/07 0
12/15/98 $ 0.625 12/14/08 0
Ype Von Hengst ........... 12/29/97 $ 1.125 12/28/07 0
12/15/98 $ 0.625 12/14/08 0
Daniel Brannan ........... 12/29/97 $ 1.125 expired(2) 0
</TABLE>
- - - ---------
(1) As of January 3, 1999 options for 1,143,500 Shares under the Stock Option
Plan were outstanding.
(2) Mr. Brannan's option for 60,000 Shares expired as follows: (a) the
non-vested portion of the Shares, representing 54,000 Shares, expired on
December 3, 1998, upon the termination of Mr. Brannan's employment, and (b)
the vested portion of the Shares, or 6,000 Shares, expired on January 2,
1999.
The following table provides information as to the number and value of
options during the year ended January 3, 1999 held by the following executive
officers. No stock appreciation rights with respect to the Shares were
outstanding at such date.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS/SARS
ACQUIRED OPTIONS/SARS AT FISCAL YEAR END AT FISCAL YEAR END(2)
ON VALUE ----------------------------------- ----------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE(#) UNEXERCISABLE(#) EXERCISABLE($) UNEXERCISABLE($)
- - - ------------------------ ------------ ------------ ---------------- ------------------ ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Giaimo ....... 0 0 120,000 430,000 0 28,200
Ype Von Hengst ......... 0 0 45,000 160,000 0 10,340
Patrick Meskell ........ 0 0 80,007 175,009 16,256 14,405
Timothy Cusick ......... 0 0 45,516 137,023 3,129 10,628
Daniel Brannan ......... 0 0 0 0 0 0
</TABLE>
- - - ---------
(1) Information pertains to options as there were no stock appreciation rights
issued or outstanding during the period concerned for the named individuals.
(2) Represents the difference between the fair market value of the Shares
subject to the options, based on the closing price of $0.813 for the
Shares on December 31, 1998 (the final trading day of the year ended
January 3, 1999), and the exercise prices of the options.
BENEFIT PLANS
The Company provides insurance benefits to its officers and other
employees, including health, dental, and life insurance, subject to certain
deductibles and co-payments by employees.
EMPLOYMENT AGREEMENTS
FOUNDER'S EMPLOYMENT AGREEMENT. The Company and Robert T. Giaimo entered
into a Founder's Employment Agreement on August 28, 1995, effective as of March
27, 1996, and amended on November 9, 1998. The base compensation under the
Founder's Employment Agreement is $240,000 per annum, increased annually at a
minimum amount equal to the increase in the Consumer Price Index for the
Washington, D.C., Maryland, and Virginia metropolitan area (the "Base
Compensation"). Benefits under the agreement include four weeks paid vacation,
health and dental insurance, life and disability insurance, director and
officer liability insurance and a $3,000,000 "split-dollar" life insurance
agreement. Perquisites include an up to $500 per month car allowance, an
education fee of $1,000 per month, and free shift meals.
The Founder's Employment Agreement had an initial term of five years and,
starting on its first anniversary, was renewable for five years from each
anniversary. If at any such anniversary the Board does not renew, the agreement
will expire five years from such anniversary (the five-year period beginning on
such anniversary is referred to as the "Expiration Term"). The Founder's
Employment Agreement was renewed on April 13, 1998 and, as renewed, expires in
March 2003. The Board will consider renewal of the Founder's Employment
Agreement at its next Board meeting.
During the Expiration Term, Mr. Giaimo may, upon at least sixty days prior
written notice, terminate the Founder's Employment Agreement immediately and
such termination shall be an "Involuntary Resignation." If an Involuntary
Resignation occurs, Mr. Giaimo shall be entitled to a severance amount equal
to: (i) his base compensation, including all bonuses, for the immediately
preceding fiscal year (the "Annual Amount"), (ii) divided by 365, and (iii)
multiplied by the number of days remaining in the Expiration Term, provided
that the severance amount paid to Mr. Giaimo due to an Involuntary Resignation
shall not exceed three times the Annual Amount.
Mr. Giaimo may also terminate the agreement by reason of a material breach
by the Company (as specified in the Founder's Employment Agreement). If Mr.
Giaimo terminates the Founder's Employment Agreement within the first five
years of the agreement for a material breach by the Company, he shall be
entitled to receive the Annual Amount multiplied by ten. If the material breach
occurs after the first five years of the agreement, the Annual Amount shall be
multiplied by five. Additionally, if a termination for a material breach occurs
prior to the earlier of (i) the end of the first five years of the agreement,
or (ii) the completion of an underwritten public offering of the Company's
Shares from which it realizes $15,000,000, then the Company shall be obligated,
at the employee's option, to purchase all of Mr. Giaimo's Shares at fair market
value.
The Company may terminate the agreement upon the death or disability of
Mr. Giaimo or for cause. If terminated for death, the Mr. Giaimo's estate shall
be entitled to receive all accrued compensation plus a severance amount equal
to one year's Base Compensation (as adjusted to the date of death). The
decedent's family will also be provided health insurance for one year from date
of death. If terminated for disability, Mr. Giaimo shall be entitled to receive
all accrued compensation plus a severance amount equal to his then current Base
Compensation for a period of five years, but reduced dollar for dollar by all
amounts received by the employee under disability insurance. If terminated for
cause, Mr. Giaimo shall be entitled to receive all accrued compensation.
EXECUTIVE EMPLOYMENT AGREEMENT. The Company and Ype Von Hengst entered
into an Employment Agreement effective as of November 9, 1998. The base salary
under the Employment Agreement is $125,000 per annum through December 31, 1998,
$150,000 per annum from January 1, 1999 through December 31, 1999, and
increased annually at a minimum amount equal to the increase in the Consumer
Price Index for the Washington, D.C., Maryland, and Virginia metropolitan area
beginning January 1, 2000 (the "Base Salary"). Benefits under the agreement
include health and dental insurance, life and disability insurance, and
participation in stock options, bonus plans and other benefit plans customarily
made available to executive employees of the Company.
In consideration of Mr. Von Hengst entering into the agreement, the
Company extended a $100,000 non-recourse loan (the "Loan") to Mr. Von Hengst,
subject to his execution of a promissory note and secured by his 182,881 Shares
in the Company (the "Collateral"). Beginning December 31, 1999, Mr. Von Hengst
is also entitled to an annual bonus of an amount equal to $20,000 plus accrued
and unpaid interest on the Loan (the "Bonus"). The Bonus is not paid directly
to Mr. Von Hengst, but is applied to repay the outstanding principal and
interest under the Loan. The term of the Employment Agreement is from November
9, 1998 to December 31, 2003.
Under the Employment Agreement, Mr. Von Hengst agrees, except as required
by the performance of his duties, not to disclose or use any Confidential
Information of the Company or its affiliates, which is defined as all
information disclosed to him or known by him as a consequence of or through his
employment with the Company where such information is not generally known in
the trade or industry and where such information refers or relates in any
manner to the business activities of the Company. During the term of the
Employment Agreement and for a period of twelve consecutive months after the
termination of the Employment Agreement, Mr. Von Hengst agrees, except as
required by the performance of his duties, not to induce, attempt to induce,
counsel, advise, solicit or encourage any person to leave the employ of the
Company or, with respect to any person who had left the employ of the Company
within the previous six months, not to engage in any of the above activities in
connection with such former employee's acceptance of employment with any person
or entity other than the Company. For a period of twelve consecutive months
after the termination of the Employment Agreement for any reason other than a
termination without cause, Mr. Von Hengst agrees not to (i) engage in the
"diner business" anywhere in the United States; (ii) engage in competition with
the Company within a 10 mile radius of any Company owned or franchised facility
or planned facility; or (iii) directly or indirectly, either individually or in
any other capacity, work for, consult with or otherwise assist Movenpick, its
parent corporation, affiliates and subsidiaries, in the development of
"diners."
Mr. Von Hengst may terminate his Employment Agreement at any time upon
sixty days written notice ("Voluntary Resignation"). Upon receipt of such
notice, the Company may elect to relieve Mr. Von Hengst of any or all of his
duties or terminate him immediately. The Company may terminate the agreement
for cause (as that term is defined in the Employment Agreement), upon the death
or disability of Mr. Von Hengst, or without cause. If the agreement is
terminated by Voluntary Resignation or for cause, (i) the Company's obligation
to pay the Base Salary, Bonus and medical benefits shall cease immediately on
the date of termination; and (ii) the principal balance under the Loan shall be
extinguished, and all right, title and interest in the Collateral shall vest
immediately with the Company. If the agreement is terminated for death (i) the
Company's obligation to pay the Base Salary, Bonus and medical benefits shall
cease immediately on the date of termination; and (ii) the principal balance
under the Loan shall be extinguished, and all right, title and interest in the
Collateral shall vest with Mr. Von Hengst (or his estate or heirs). If
terminated for disability, defined as the inability to perform the essential
function of the job, with or without accommodation, for at least 180
consecutive days, (i) Mr. Von Hengst's right to the Base Salary and Bonus shall
cease on the date of termination, (ii) the Company shall make the medical
benefits available to Mr. Von Hengst for a period of eighteen months following
termination, the costs of which shall be paid by the Company for the first
twelve months of such period; and (iii) the principal balance under the Loan
shall be extinguished, and all right, title and interest in the Collateral
shall vest with Mr. Von Hengst (or his estate or heirs). If terminated without
cause, (i) Mr. Von Hengst shall be entitled to the Base Salary, Bonus, and
medical benefits for a one year period commencing with the date of termination;
and (ii) the principal balance under the Loan shall be extinguished, and all
right, title and interest in the Collateral shall vest with Mr. Von Hengst (or
his estate or heirs).
OFFICER EMPLOYMENT AGREEMENTS. The Company entered into letter agreements
on March 4, 1999, with Craig Kendall, Timothy Cusick, and Patrick Meskell. Mr.
Meskell's letter agreement on March 4, 1999, supersedes his letter agreement
with the Company dated December 4, 1995. The agreements provide for Mr.
Kendall's employment as Vice President, Finance with a base salary of $125,000
per annum, Mr. Cusick's employment as Area Director of Operations with a base
salary of $104,000 per annum, and Mr. Meskell's employment as Senior Vice
President, Human Resources with a base salary of $104,000, with future
adjustments to each employee's base salary to be determined by the Board. In
addition, each employee is entitled to (i) participate in bonus and stock
option plans made available to executive employees of the Company; (ii) receive
a $500 per month car allowance, (iii) receive life insurance coverage in the
amount of $500,000; (iv) participate in group health and dental plans generally
offered to employees of the Company; (v) receive long term disability insurance
coverage in amount of approximately 60% of the employee's base salary per
month, subject to a 90 day initial waiting period; (vi) receive three weeks
paid vacation that does not accrue or carry over from one year to the next; and
(vii) receive sick leave and other benefits, in accordance with the Company's
policies for its executives. Each employee agrees to enter into confidentiality
and non-competition agreements with the Company.
Each of the agreements are terminable at any time by either party thereto.
However, if the Company terminates the agreement, the Company will pay the
employee all base salary earned but unpaid on the date of resignation plus
three months base salary. If the employee resigns after providing at least
three months prior notice, the Company will pay the employee all base salary
earned but unpaid on the date of resignation plus three months base salary
payable after resignation on the same schedule as the salary that was paid
before resignation. If the employee resigns without providing at least three
months prior notice, (i) all stock options and all stock purchase rights
granted under the Stock Option Plan to the employee (a) subsequent to March 1,
1999, (b) on December 15, 1997, and (c) to Mr. Cusick and Mr. Meskell on
December 29, 1997 will be terminated on the date of resignation; and (ii) the
employee will sell and the Company will purchase all Shares of the Company
acquired by the employee pursuant to stock options or stock purchase rights
within six months prior to the date of resignation at a purchase price equal to
the price paid for the Shares.
NON-EMPLOYEE DIRECTOR COMPENSATION
Pursuant to the 1996 Non-Employee Director Stock Option Plan, each
non-employee director was granted an option to purchase 1,000 Shares on the
first day of each calendar quarter in the year ended January 3, 1999. Options
granted may be exercised at a price equal to 100% of the fair market value on
the date of grant. Options granted under the plan are exercisable at any time
in whole or in part for a period of three years from the date of grant, and
vest immediately. During the year ended January 3, 1999, each of the Company's
non-employee directors, other than Michael Collier, who became a Director in
March 1999 to fill the vacancy left by Clinton A. Clark, received options to
purchase an aggregate of 4,000 Shares of the Company, none of which were
exercised as of January 3, 1999. Other than the option grants and the
reimbursement of certain expenses, Non-Employee Directors received no other
compensation for service as directors for the year ended January 3, 1999.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
As of May 3, 1999, the Company had 11,769,583 Shares issued and
outstanding. The following table sets forth, to the Company's knowledge as of
May 3, 1999, the beneficial ownership of Shares by each person or entity
beneficially owning more than 5% of the Shares, each director, each nominee,
and certain executive officers, individually, and all directors and executive
officers as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS(1) OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP(2) PERCENT(3)
- - - ------------------------------------------------------------- ---------------------------- -----------
<S> <C> <C>
Catherine Britton ........................................... 2,500,612(4),(5) 21.2
Michael Collier ............................................. 85,049(6) *
Robert T. Giaimo ............................................ 1,453,339(7) 12.2
Ype Von Hengst .............................................. 247,498(8) 2.1
Edward H. Kaplan ............................................ 459,759(9),(5) 3.9
Craig Kendall ............................................... 22,222(10) *
Patrick Meskell ............................................. 127,578(11) 1.1
George A. Naddaff ........................................... 251,961(12),(5) 2.1
Louis P. Neeb ............................................... 38,906(13),(5) *
Charles M. Steiner .......................................... 627,466(14),(5) 5.3
Douglas M. Suliman, Jr. ..................................... 176,397(15),(5) 1.5
Timothy Cusick .............................................. 57,328(16) *
Oppenheimer Enterprise Fund and Oppenheimer Discovery Fund .. 750,000(17) 6.4
All directors and executive officers as a group (12 persons) 5,440,294(18) 44.6
</TABLE>
"*" means less than 1%
- - - ---------
(1) The address for each beneficial owner listed above is Silver Diner, Inc.,
11806 Rockville Pike, Rockville, Maryland 20852, except for Oppenheimer
Enterprise Fund and Oppenheimer Discovery Fund, whose address is Two World
Trade Center, 34th Floor, New York, New York 10048.
(2) Unless otherwise stated in Notes 4 through 16 below, all references to
options are to options exercisable currently and within 60 days of May 3,
1999.
(3) Each percentage of beneficial ownership is calculated using a different
denominator, consisting of the total number of Shares outstanding
(11,769,583) increased by the number of options owned by the beneficial
owner that are exercisable within 60 days. The denominator used to
calculate the percentage of beneficial ownership of all directors and
executive officers as a group is the sum of the total number of Shares
outstanding (11,769,583) and all outstanding options held by directors and
executive officers that are exercisable within 60 days.
(4) Includes: (a) 2,467,609 directly owned Shares; (b) options to purchase
13,000 Shares granted under the 1996 Non-Employee Director Stock Option
Plan, exercisable at the prices set forth in Note 5 below; and (c) 20,003
Shares assigned to Ms. Britton by Robert T. Giaimo which are subject to an
option held by Mr. Clinton A. Clark at an exercise price of $3.60 per
Share through April 5, 2004. Does not include 1,453,339 Shares
beneficially owned by Mr. Giaimo, Ms. Britton's spouse. Ms. Britton
disclaims beneficial ownership of the Shares beneficially owned by Mr.
Giaimo.
(5) Each non-employee director other than Mr. Collier (six persons) holds
options for 13,000 Shares granted under the 1996 Non-Employee Director
Stock Option Plan, exercisable at the following prices: (a) 1,000 at $6.50
per Share; (b) 1,000 at $5.625 per Share; (c) 1,000 at $5.375 per Share;
(d) 1,000 at $3.8125 per Share; (e) 1,000 at $3.4375 per Share; (f) 1,000
at $3.125 per Share; (g) 1,000 at $2.125 per Share; (h) 1,000 at $1.25 per
Share; (i) 1,000 at $1.25 per Share; (j) 1,000 at $1.125 per Share; (k)
1,000 at $0.969 per Share; (l) 1,000 at $0.8125 per Share; and (m) 1,000
at $0.938 per Share.
(6) Includes: (a) 51,857 directly owned Shares; (b) options to purchase 26,069
Shares granted under the 1991 Stock Option Plan at an exercise price of
$.003 per Share; (c) options to purchase 6,123 Shares granted under the
1996 Consultant Stock Option Plan at an exercise price of $3.812 per
Share; and (d) options to purchase 1,000 Shares granted under the
Non-Employee Director Stock Option Plan at an exercise price of $0.938 per
Share. Of the 51,857 Shares directly owned by Mr. Collier, 31,672 are
subject to the terms of a voting agreement described in clause (d) of Note
7.
(7) Includes: (a) 300,000 directly owned Shares; (b) options to purchase
120,000 Shares granted under the Stock Option Plan at an exercise price of
$1.238 per Share; (c) 478,334 Shares owned of record by four persons who
were principals of the Company prior to March 27, 1996, which are subject
to a voting agreement as described in Note 12; and (d) 555,005 Shares
owned of record by stockholders of the Company that are subject to voting
agreements. The voting rights described in clause (d) above were granted
to Mr. Giaimo pursuant to the voting agreements that grant to Mr. Giaimo
an irrevocable right to vote with respect to all matters in which
stockholder approval is required under the Delaware General Corporation
Law, including, without limitation, voting such stockholders' Shares in
favor of nominees to the Board and for or against any and all matters that
may come before the Company's stockholders for a vote. The appointment
survives until the earliest of five years after March 27, 1996, the public
offering of Shares by the Company from which the Company realizes $15
million or more, or the death of the stockholder. The 1,453,339 Shares
beneficially owned by Mr. Giaimo do not include any Shares beneficially
owned by Catherine Britton, Mr. Giaimo's spouse. Mr. Giaimo disclaims
beneficial ownership of Shares beneficially owned by Catherine Britton.
The 1,453,339 Shares beneficially owned by Mr. Giaimo also do not include
Shares issuable upon the exercise of certain outstanding stock option
agreements issued to employees of the Company ("Options") that will be
subject to the terms of voting agreements between the holders of such
Options and Mr. Giaimo ("Voting Agreements"). Pursuant to the Voting
Agreements, Mr. Giaimo would have the sole power to vote the Shares issued
upon the exercise of such Options until the earliest to occur of: (i)
March 27, 2001; (ii) an underwritten public offering by the Company from
which it realizes at least $15 million; or (iii) if applicable,
termination of the optionee's employment with the Company as a result of
death or incapacity. An aggregate of approximately 279,876 Shares issuable
upon exercise of Options would be subject to the Voting Agreements. Of
such Options, approximately 209,112 are currently exercisable through June
24, 1999 (including approximately 122,268 with an exercise price of less
than $.01 per Share and approximately 86,844 with an exercise price
between $2.25 and $4.05 per Share) and approximately 70,764 are not
exercisable within such period (including approximately 6,082 with an
exercise price of less than $.01 per Share and approximately 64,682 with
an exercise price of between $2.25 and $4.05 per Share). Mr. Giaimo would
have sole power to vote the approximately 209,112 Shares underlying the
currently exercisable Options, if such Options were exercised.
(8) Includes: (a) 202,498 directly owned Shares; and (b) options to purchase
45,000 Shares granted under the Stock Option Plan at an exercise price of
$1.125 per Share. Of the 202,498 Shares directly owned by Mr. Von Hengst,
182,881 are subject to the terms of a voting agreement described in clause
(d) of Note 7.
(9) Includes: (a) 441,759 directly owned Shares; (b) options to purchase 13,000
Shares granted under the 1996 Non-Employee Director Stock Option Plan,
exercisable at the prices set forth in Note 5 above, and (c) options to
purchase 5,000 Shares granted under the 1991 Stock Option Plan at an
exercise price of $4.05 per Share.
(10) Includes 22,222 directly owned Shares.
(11) Includes: (a) 47,570 directly owned Shares; (b) options to purchase 20,003
Shares granted under the Earned Ownership Plan at an exercise price of
$.0003 per Share; (c) options to purchase 30,005 Shares granted under the
1991 Stock Option Plan at an exercise price of $4.05 per Share; and (d)
options to purchase 30,000 Shares granted under the Stock Option Plan at
an exercise price of $1.125 per Share.
(12) Includes: (a) options to purchase 13,000 Shares granted under the 1996
Non-Employee Director Stock Option Plan, exercisable at the prices set
forth in Note 5 above; and (b) 238,961 Shares owned by Sliver, LLC, which
is owned 50% by Mr. Naddaff and 50% by Mr. Naddaff's spouse, and is
managed by Business Expansion Capital Corporation, a corporation
wholly-owned by Mr. Naddaff. Sliver, LLC has granted voting rights to
Robert T. Giaimo with respect to its 238,961 Shares pursuant to the FTAC
Voting and Lockup Agreement, as amended by an Addendum thereto, which
provides that Robert T. Giaimo has an irrevocable right to vote the
238,961 Shares with respect to all matters in which stockholder approval
is required under the Delaware General Corporation Law. The right survives
until the earlier of (i) five years after March 27, 1996; (ii) the death
of the stockholder; or (iii) the sale by Robert T. Giaimo of 50% or more
of his Shares. Notwithstanding the foregoing, up to 25% of such Shares may
be transferred free of the voting restriction during the period commencing
36 months after March 27, 1996 and ending 48 months after such time and up
to a total of 50% of such Shares may be transferred free of the voting
restrictions during the period commencing 48 months after March 27, 1996
and ending 60 months after such time. In addition, a security interest in
the Shares may be granted at any time after 36 months after March 27, 1996
and in the event of a default with respect to such secured debt the Shares
may be sold free and clear of such right.
(13) Includes: (a) 13,334 Shares held of record by Neeb Enterprises, Inc., a
corporation wholly-owned by Mr. Neeb and of which Mr. Neeb is President
and a Director; (b) options to purchase 12,572 Shares granted under the
1991 Stock Option Plan at the exercise price of $.003 per Share; and (c)
options to purchase 13,000 Shares granted under the 1996 Non-Employee
Director Stock Option Plan, exercisable at the prices set forth in Note 5
above.
(14) Includes: (a) 559,466 Shares held of record by the Steiner Family
Partnership (Mr. Steiner owns a 25% interest in and is the managing
partner of The Steiner Family Partnership and, therefore, may be deemed to
beneficially own all Shares held of record by such partnership (except to
the extent of his 25% ownership interest in The Steiner Family
Partnership, Mr. Steiner disclaims beneficial ownership of such Shares));
(b) 50,000 Shares held by the Branch Group, Inc. 401(k) Profit Sharing
Plan (Mr. Steiner is sole trustee of the Branch Group, Inc. 401(k) Profit
Sharing Plan and one of a number of beneficiaries thereof, holding an
approximate 7% interest in the plan); (c) options to purchase 5,000 Shares
under the 1991 Stock Option Plan at the exercise price of $4.05 per Share;
and (d) options to purchase 13,000 Shares under the 1996 Non-Employee
Director Stock Option Plan, exercisable at the prices set forth in Note 5
above.
(15) Includes: (a) 163,397 directly owned Shares; and (b) options to purchase
13,000 Shares granted under the 1996 Non-Employee Director Stock Option
Plan, exercisable at the prices set forth in Note 5 above. Of the 163,397
Shares directly owned by Mr. Suliman, 154,307 Shares are subject to a
voting agreement similar to the voting agreement described in Note 12
above.
(16) Includes: (a) 11,812 directly owned Shares; (b) options to purchase 11,667
Shares granted under the 1991 Stock Option Plan at an exercise price of
$4.05 per Share; (c) options to purchase 3,849 Shares granted under the
Earned Ownership Plan at an exercise price of $.0003 per Share; and (d)
options to purchase 30,000 Shares granted under the Stock Option Plan at
an exercise price of $1.125 per Share.
(17) 50,000 Shares are beneficially owned by Oppenheimer Enterprise Fund, and
700,000 Shares are beneficially owned by Oppenheimer Discovery Fund, based
on information provided to the Company by the foregoing Funds on April 9,
1997.
(18) The total Shares beneficially owned by all directors and executive officers
as a group was calculated by taking the sum of all Shares
beneficially-owned by each director and executive officer, as reflected in
the table, and reducing that number to avoid double counting of those
Shares which are subject to a proxy given to Mr. Giaimo, as follows: (a)
31,672 Shares held by Mr. Collier; (b) 182,881 Shares held by Mr. Von
Hengst; (c) 238,961 Shares held by Mr. Naddaff; and (d) 154,307 Shares held
by Mr. Suliman.
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SILVER DINER POTOMAC MILLS, INC. Pursuant to lease agreements dated
October 14, 1991 and May 27, 1992, the Company leases the Silver Diner
restaurant in Potomac Mills, Virginia (the "Potomac Mills Restaurant") from
Silver Diner Potomac Mills, Inc. ("SDPMI"), a corporation wholly owned by
Robert T. Giaimo, the Chairman and President of the Company. The leases require
the payment of an annual base rent, with annual adjustments based on the
Consumer Price Index, and the payment of percentage rent based on gross
receipts. The leases expire in late 2011. For the years ending January 3, 1999,
December 28, 1997, and December 29, 1996, occupancy costs were $355,000,
$350,000 and $389,000, respectively, in rent and related pass through costs
associated with the leases.
ROBERT GIAIMO DEVELOPMENT, INC. On June 17, 1997, the Company purchased
from Robert Giaimo Development, Inc. ("RGDI"), a corporation wholly owned by
Robert T. Giaimo, the Chairman and President of the Company, an undivided 70%
interest in the parcel of land used as a parking lot for the Potomac Mills
Restaurant. The total purchase price of the land was $408,000, of which
$267,000 was borrowed from a bank, secured by the land, bearing interest of
9.25% annually, and due to mature in June 1999.
The Company assumed a management agreement entered into between RGDI with
SDPMI (the "Management Agreement"), which provides that the Company is the
exclusive manager of the Potomac Mills Restaurant, is entitled to receive all
of the net profits (as defined in the Management Agreement) from the Potomac
Mills Restaurant, and is responsible for paying all operating costs and
expenses of the restaurant, including rent. The Management Agreement is
unlimited in duration and can only be terminated by mutual agreement of the
Company and SDPMI, or following notice that the Company failed to meet its
management obligations and responsibilities. RGDI has granted the Company an
option to purchase the Potomac Mills Restaurant for an amount equal the fair
market value, on the date of purchase, as determined by an appraisal.
LOAN TO YPE VON HENGST. In connection with his entering into an employment
agreement with the Company on November 9, 1998, Ype Von Hengst, a Director and
officer of the Company, received a $100,000 loan from the Company, secured by
his 182,881 Shares in the Company and bearing interest at 5.25% annually. The
loan and accrued interest is to be repaid annually by applying an annual bonus
received by Mr. Von Hengst beginning December 31, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
SILVER DINER, INC.
Date: May 3, 1999 By: /s/ Robert T. Giaimo
--------------------------------------
Robert T. Giaimo
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Robert T. Giaimo President, Chief Executive Officer May 3, 1999
- - - --------------------
Robert T. Giaimo Director
/s/ Craig Kendall Vice President, Finance May 3, 1999
- - - -------------------------
Craig Kendall
/s/ Catherine Britton Director May 3, 1999
- - - -------------------------
Catherine Britton
/s/ Ype Hengst Director May 3, 1999
- - - -------------------------
Ype Hengst
/s/ Charles Steiner Director May 3, 1999
- - - -------------------------
Charles Steiner
/s/ Michael Collier Director May 3, 1999
- - - -------------------------
Michael Collier
<PAGE>
Director May 3, 1999
- - - -------------------------
Edward H. Kaplan
Director May 3, 1999
- - - -------------------------
George A. Naddaff
Director May 3, 1999
- - - -------------------------
Louis P. Neeb
Director May 3, 1999
- - - -------------------------
Douglas M. Suliman
