<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
LOGAN'S ROADHOUSE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
[LOGO]
565 MARRIOTT DRIVE
SUITE 490
NASHVILLE, TENNESSEE 37214
To Our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders,
which is to be held on Thursday, May 7, 1998, at 8:30 a.m. at the Marriott
Hotel, Memphis Room, 600 Marriott Drive, Nashville, Tennessee. The following
pages contain the formal notice of the Annual Meeting and our Proxy Statement,
which describe the specific business to be considered and voted upon at the
Annual Meeting.
It is important that your shares be represented at the Annual Meeting.
Whether or not you expect to attend in person, we would greatly appreciate your
returning the enclosed Proxy as soon as possible. If you decide to attend the
Annual Meeting, you may withdraw your Proxy should you wish to vote in person.
We look forward to seeing you at the Annual Meeting.
Sincerely yours,
[SIG]
EDWIN W. MOATS, JR.
Chairman of the Board,
President and Chief Executive Officer
<PAGE> 3
LOGAN'S ROADHOUSE, INC.
565 MARRIOTT DRIVE
SUITE 490
NASHVILLE, TENNESSEE 37214
---------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
THURSDAY, MAY 7, 1998
---------------
Notice is hereby given that the Annual Meeting of Shareholders (the
"Annual Meeting") of Logan's Roadhouse, Inc. (the "Company") will be held on
Thursday, May 7, 1998 at 8:30 a.m. at the Marriott Hotel, Memphis Room, 600
Marriott Drive, Nashville, Tennessee, for the following purposes:
(1) To elect two nominees as Class III directors and one
nominee as a Class II director of the Company;
(2) To approve the proposed amendment to the Company's 1995
Incentive Stock Plan to increase from 722,500 to 922,500 the number of
shares of Common Stock authorized thereunder.
(3) To certify the appointment of KPMG Peat Marwick LLP as
independent public accountants to audit the consolidated financial
statements of the Company and its subsidiaries for the fiscal year
ended December 27, 1998; and
(4) To transact such other business as may properly come
before the meeting or any adjournments thereof.
Only shareholders of record at the close of business on March 18, 1998
will be entitled to vote at the Annual Meeting.
The enclosed Proxy Statement contains more information pertaining to
matters to be voted on at the Annual Meeting. Please read the Proxy Statement
carefully.
Each shareholder who does not plan to attend the Annual Meeting is
requested to date, sign and return the accompanying Proxy in the enclosed,
postage-paid envelope.
By Order of the Board of Directors,
[SIG]
David J. McDaniel
Secretary
Nashville, Tennessee
April 10, 1998
<PAGE> 4
LOGAN'S ROADHOUSE, INC.
565 MARRIOTT DRIVE
SUITE 490
NASHVILLE, TENNESSEE 37214
---------------
PROXY STATEMENT
FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 7, 1998
---------------
This Proxy Statement is furnished to the holders of Common Stock, $.01
par value per share, of Logan's Roadhouse, Inc. (the "Company") in connection
with the solicitation of proxies on behalf of the Board of Directors of the
Company to be voted at the annual meeting of shareholders of the Company (the
"Annual Meeting") to be held on Thursday, May 7, 1998 at 8:30 a.m. at the
Marriott Hotel, Memphis Room, 600 Marriott Drive, Nashville, Tennessee 37214,
and at any adjournments or postponements thereof.
Only the holders of Common Stock of the Company of record at the close
of business on March 18, 1998 will be entitled to vote at the Annual Meeting. On
such date, 7,147,054 shares of Common Stock were outstanding. Each shareholder
is entitled to one vote per share held of record on the record date. This Proxy
Statement and the accompanying proxy are first being mailed on or about April
10, 1998.
A majority of the shares of Common Stock entitled to vote, represented
in person or by proxy, is required to constitute a quorum. If a quorum is not
present at the time of the Annual Meeting, or if for any reason the Company
believes that additional time should be allowed for the solicitation of proxies,
the Company may adjourn or postpone the Annual Meeting with or without a vote of
the shareholders. If adjournment is proposed by the Company, the person named on
the enclosed proxy card will vote such shares for which they have voting
authority in favor of adjournment.
All shares of Common Stock represented at the Annual Meeting by
properly executed proxies received prior to or at the Annual Meeting and not
properly revoked will be voted at the Annual Meeting in accordance with the
instructions indicated thereon. If no specification is made, the proxies will be
voted in favor of the matters listed on the proxy card. Directors must be
elected by a plurality of votes cast (in person or by proxy) by the holders of
Common Stock entitled to vote at the Annual Meeting if a quorum is present. All
other matters shall be determined based upon the vote of the majority of votes
cast (in person or by proxy) by the holders of Common Stock entitled to vote at
the Annual Meeting if a quorum is present. Abstentions and broker non-votes will
be counted for purposes of constituting a quorum, but will not have the effect
of voting in opposition to a director or of a vote against the other proposals.
All expenses of the Annual Meeting, including the cost of soliciting
proxies, will be paid by the Company. The Company may reimburse persons holding
shares in their names for others, or holding shares for others who have the
right to give voting instructions, such
1
<PAGE> 5
as brokers, banks, fiduciaries and nominees, for such persons' reasonable
expenses in forwarding the proxy materials to their principals.
Any shareholder giving a proxy may revoke it by delivering a written
notice of such revocation to the Secretary of the Company at 565 Marriott Drive,
Suite 490, Nashville, Tennessee 37214 prior to the Annual Meeting, by submitting
to the Company a more recently dated proxy or by attending the Annual Meeting
and voting at any time before it is exercised.
In voting by proxy in regard to the election of two nominees as Class
III directors and one nominee as a Class II director to serve until the annual
meeting of shareholders for which such director's class will stand for election,
shareholders may vote in favor of all nominees, withhold their votes as to all
nominees or withhold their votes as to a specific nominee. If no instructions
are indicated, such proxies will be voted FOR the election of all nominees as
directors.
PROPOSAL 1: ELECTION OF DIRECTORS
The Company's Amended and Restated Charter provides that the Board of
Directors shall be divided into three classes of as nearly equal size as
possible. Approximately one-third of the directors are elected each year. The
Company's Bylaws provide that the Board of Directors shall consist of not less
than four nor more than 11 directors. The Board of Directors currently consists
of seven directors.
The Board of Directors has nominated the two individuals named below
under the caption "Class III Nominees" for election as directors to serve until
the annual meeting of shareholders in 2001 or until their successors have been
elected and qualified. The Class III nominees are currently serving on the Board
of Directors of the Company with terms expiring at this Annual Meeting.
CLASS III NOMINEES:
B. TOM COLLINS
Age -- 55
Director since 1995
B. Tom Collins has owned and operated Tom Collins Music, Inc., an
independent music publishing company, since 1982. From October 1992 to July
1995, Mr. Collins served on the management committee of Logan's Partnership (the
"Predecessor"), a general partnership acquired by the Company prior to the
Company's initial public offering in July 1995 (the "IPO").
EDWIN W. MOATS, JR.
Age -- 50
Director since 1995
Edwin W. Moats, Jr. has served as Chairman of the Board, President and
Chief Executive Officer of the Company since its inception in March 1995. From
July 1992 to
2
<PAGE> 6
July 1995, Mr. Moats served as Managing Partner of the Predecessor and President
and Chief Executive Officer of Logan's Management Group, Inc., a Tennessee
corporation which was a general partner of the Predecessor before merging into
the Company prior to the IPO. From 1991 to 1995, Mr. Moats provided consultant
services to Tri-M Management Company, an owner and operator of restaurants.
Since 1977, he has been an owner and partner of The Haury & Moats Company, a
franchisee of six Captain D's Seafood Restaurants in Alabama and Louisiana.
The Board of Directors has nominated the individual named below under
the caption "Class II Nominee" for election as director to fill the vacancy
created by the resignation of George S. Waltman as a Class II director of the
Company in October 1997. If elected, the individual named below shall serve as a
director of the Company until the annual meeting of shareholders in 2000 or
until his successor has been elected and qualified. The Class II nominee
currently serves on the Board of Directors of the Company with a term expiring
at this Annual Meeting.
CLASS II NOMINEE:
TED H. WELCH
Age -- 64
Director since 1995
Ted H. Welch has been a self-employed real estate investor since 1975.
Since 1993, Mr. Welch has served as President and Chief Executive Officer of
Eagle Communications, Inc., a publisher of periodicals. Mr. Welch also serves as
a director of National Health Investors, Inc. and First American Corporation.
Mr. Welch has served as a Class III director of the Company since July 1995.
CONTINUING DIRECTORS:
The persons named below will continue to serve as directors until the
annual meeting of shareholders in the year indicated and until their successors
are elected and take office. Shareholders are not voting on the election of
Class I and Class II directors (except for the election of Mr. Welch as a Class
II director). The following lists the names, ages and principal occupations of
each continuing director and the year in which each was first elected to the
Board of Directors.
CLASS I DIRECTORS SERVING UNTIL THE 1999 ANNUAL MEETING:
GARY T. BAKER
Age -- 51
Director since 1995
Gary T. Baker has served as Chairman of the Board of Peterbilt of
Nashville, Inc. since 1985 and as its Secretary since 1995. Mr. Baker has served
as Chairman of the Board and President of GT Investment Corp., a real estate
investment company, since 1986.
3
<PAGE> 7
JERRY O. BRADLEY
Age -- 58
Director since 1995
Jerry O. Bradley has served as President of Opryland Music Group, Inc.,
a music publishing business and an indirect wholly-owned subsidiary of Gaylord
Entertainment Company, and as Vice President of Opryland USA, Inc., an indirect
wholly-owned subsidiary of Gaylord Entertainment Company, since 1986.
DAVID J. MCDANIEL
Age -- 55
Director since 1995
David J. McDaniel has served as Chief Financial Officer, Secretary and
Treasurer of the Company since its inception in March 1995. Mr. McDaniel also
served as Vice President of Finance of the Company from March 1995 to January
1998, and currently serves as Senior Vice President of Finance. From November
1994 to July 1995, Mr. McDaniel served as Chief Financial Officer of the
Predecessor. From 1980 to November 1994, he served as Senior Vice President,
Secretary and Treasurer of Southern Hospitality Corporation, an operator of fast
food and full service restaurants.
CLASS II DIRECTOR SERVING UNTIL THE 2000 ANNUAL MEETING
THOMAS E. ERVIN
Age -- 63
Director since 1995
Thomas E. Ervin is currently retired. Mr. Ervin was previously employed
by H&C Communications, Inc., a Nashville CBS television affiliate, and was
serving as President when the company was acquired by Landmark Communications,
Inc. in 1991. Mr. Ervin serves on the advisory board of directors of NationsBank
of Tennessee, N.A.
INFORMATION REGARDING THE BOARD OF DIRECTORS
The Board of Directors held four meetings during 1997, including
regular and special meetings. Each director attended at least 75% of the
meetings of the Board of Directors and committees thereof on which the director
serves.
The Committees of the Board of Directors consist of an Audit Committee,
on which Messrs. Baker and Welch serve, and a Compensation Committee, on which
Messrs. Bradley, Collins and Ervin serve. During 1997, the Audit Committee met
once, and the Compensation Committee met three times.
The Audit Committee is responsible for recommending the independent
public accountants to the Board of Directors, reviewing audit fees and
supervising matters relating to audit functions and other financial controls.
4
<PAGE> 8
The Compensation Committee is responsible for approving compensation
arrangements for executive officers of the Company, reviewing compensation plans
and administering stock option and other employee benefit plans of the Company.
COMPENSATION OF DIRECTORS
Directors who are employees of the Company do not receive additional
compensation for serving as a director of the Company. Non-employee directors of
the Company are entitled to receive a fee of $750 for each board or committee
meeting attended. All directors also are entitled to reimbursement for their
actual out-of-pocket expenses incurred in connection with attending meetings.
Non-employee directors also are entitled to participate in the
Company's 1995 Non-Employee Director Stock Option Plan, as amended (the
"Director Plan"). Under the terms of the Director Plan, non-employee directors
are entitled to receive options for the purchase of the Company's Common Stock
at the sole discretion of the Compensation Committee at a price per share equal
to the fair market value of the Common Stock on the date of grant.
On July 26, 1995, the Company granted options to purchase an aggregate
of 37,500 shares of Common Stock under the Director Plan at an exercise price
per share of $9.00, the IPO price. Messrs. Baker, Bradley, Collins, Ervin and
Welch (the "Non-Employee Directors") each received options to purchase 7,500
shares. On January 1, 1996, the Company granted options to purchase 1,500 shares
of Common Stock to each of the Non-Employee Directors at an exercise price of
$11.50 per share. On January 1, 1997, the Company granted options to purchase
1,500 shares of Common Stock to each of the Non-Employee Directors at an
exercise price of $23.50 per share. On May 21, 1997, the Company granted options
to purchase 5,000 shares of Common Stock to each of the Non-Employee Directors
at an exercise price of $22.75 per share.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ELECTION
OF THE PROPOSED CLASS III NOMINEES AND THE PROPOSED CLASS II
NOMINEE TO THE BOARD OF DIRECTORS.
5
<PAGE> 9
PROPOSAL 2: APPROVAL OF AMENDMENT TO THE COMPANY'S
1995 INCENTIVE STOCK PLAN
The Board of Directors of the Company has adopted, subject to the
approval of the shareholders, an amendment to the Company's 1995 Incentive Stock
Plan, as amended (the "Incentive Plan") increasing the number of authorized
shares of Common Stock under the Incentive Plan from 722,500 to 922,500. The
following is a brief description of the material terms of the Incentive Plan and
the proposed amendment thereto.
DESCRIPTION OF PROPOSED AMENDMENT
The amendment to the Incentive Plan increases the number of shares
reserved for issuance under the Incentive Plan from 722,500 to 922,500. The
amendment to the Incentive Plan is attached hereto as Appendix A.
REASONS FOR CHANGE
The Incentive Plan is an essential part of the Company's compensation
and reward program for its employees because awards under the Incentive Plan
permit employees to benefit from the Company's growth and financial performance.
As a result of the Company's growth, the Company has hired additional employees
and has awarded options to many such individuals. Of the 722,500 shares of
Common Stock reserved for issuance under the Incentive Plan, options to purchase
675,143 shares of Common Stock have been issued to eligible employees of the
Company. Accordingly, the Board of Directors believes that it is in the best
interests of the Company to authorize additional shares under the Incentive Plan
to continue to provide employees compensation and reward for their efforts to
accomplish the Company's long-term and short-term goals.
DESCRIPTION OF INCENTIVE PLAN
The purpose of the Incentive Plan is to provide a performance incentive
to employees and others who perform services that enhance the value of
shareholders' equity. Plan participants, from time to time, are awarded (i)
"incentive stock options" ("ISOs") described in Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") and (ii) options that are not ISOs
("NSOs"). These awards are intended to serve as an encouragement to participants
in the Incentive Plan to remain with the Company and to more closely align their
interests with the interests of the Company and its shareholders. The
Compensation Committee of the Board of Directors is authorized to administer the
Incentive Plan and to award options to Company employees and to certain others
who provide significant services to the Company. ISOs may be granted only to
Company employees. As of March 1, 1998, the Company employed approximately 2,950
people. The Incentive Plan will terminate in 2005 if not terminated earlier.
The Compensation Committee determines which individuals are to receive
awards under the Incentive Plan, whether to award ISOs or NSOs and the exercise
prices and vesting dates of award. The exercise price of NSOs may not be less
than 85% of the fair market value of the Common Stock on the date of grant. The
exercise price of ISOs may not
6
<PAGE> 10
be less than 100% of the fair market value of the Common Stock on the date of
grant (110% in the case of an individual who, at the time of the grant, owns
more than 10% of the total outstanding Common Stock). The aggregate fair market
value of Common Stock with regard to which ISOs are exercisable by an individual
for the first time during any calendar year may not exceed $100,000. No option
shall be exercisable after the expiration of ten years from the date the option
is granted (five years in the case of ISOs granted to employees who at the time
of grant own more than 10% of the total outstanding Common Stock).
The Company currently has options outstanding to purchase 675,143
shares of Common Stock under the Incentive Plan. The exercise price under which
options have been granted has been the fair market value of the Company's Common
Stock on the date of grant, which has ranged from $9.00 to $26.50 per share. All
options vest 25% per year commencing on the first anniversary of the date of
grant. As of March 18, 1998, the aggregate market value of the 675,143 shares of
Common Stock underlying the options issued pursuant to the Incentive Plan was
approximately $1.6 million.
Once an option has become exercisable, the participant may purchase
shares of Common Stock from the Company by paying the exercise price in cash or
in other consideration acceptable to the Compensation Committee. The Company is
authorized to loan, or guarantee loans of, the purchase price of shares issuable
upon exercise of options granted under the Incentive Plan.
Options awarded under the Incentive Plan become fully exercisable upon
the occurrence of a merger or certain other corporate transactions in which the
Company is not the survivor, but may be subject to limitations on deductibility
of "golden parachute" payments described in Section 280G of the Code. Options
also become exercisable within specified limited time periods in the event of
the death or permanent disability of the recipient.
The amount of any award under the Incentive Plan is subject to the
discretion, within the terms of the Incentive Plan, of the Compensation
Committee and, therefore, cannot be determined in advance. Similarly, the dollar
value of such awards cannot be determined prior to their grant.
7
<PAGE> 11
The table below provides information regarding the dollar value and the
number of shares underlying awards granted under the Incentive Plan in fiscal
year 1997:
1995 INCENTIVE STOCK PLAN
<TABLE>
<CAPTION>
DOLLAR VALUE OF NUMBER OF
SHARES UNDERLYING SHARES UNDERLYING
NAME AND POSITION STOCK OPTIONS($) STOCK OPTIONS
- ----------------- ---------------- -------------
<S> <C> <C>
Edwin W. Moats, Jr. (1) -- --
Chairman of the Board, President and Chief
Executive Officer
Peter W. Kehayes (2) $ -- (3) 45,000
Senior Vice President of Operations
Ralph W. McCracken (1) -- --
Senior Vice President of Development
David J. McDaniel (1) -- --
Senior Vice President of Finance, Chief Financial
Officer, Secretary, Treasurer and Director
George S. Waltman (1) (4) -- --
Former Vice President of Purchasing and Director
Executive Officer Group (1) $ -- (3) 45,000
Non-Executive Director Group -- --
Non-Executive Officer Employee Group $ -- (5) 24,900
</TABLE>
- ---------------
(1) No stock options were granted to the Company's executive officers in
1997, other than Mr. Kehayes.
(2) Mr. Kehayes joined the Company in August 1997.
(3) The closing price of the Company's Common Stock of $15.50 as reported
on the Nasdaq National Market on December 26, 1997 (the last trading
day before fiscal year end) was less than the exercise price of $24.50
per share.
(4) Mr. Waltman resigned as a Director of the Company on October 23, 1997
and resigned as Vice President of Purchasing on March 6, 1998.
(5) The closing price of the Company's Common Stock of $15.50 as reported
on the Nasdaq National Market on December 26, 1997 (the last trading
day before fiscal year end) was less than the weighted average of the
exercise prices of the options granted ($25.21).
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<PAGE> 12
FEDERAL INCOME TAX CONSEQUENCES
Tax consequences to the Company and to recipients of awards of options
will vary with the type of option awarded. Generally, a recipient will not
recognize income, and the Company is not entitled to take a deduction, upon the
grant of an ISO or NSO under the Incentive Plan. A recipient who exercises an
ISO will not recognize income on its exercise if he or she does not sell the
shares of Common Stock acquired thereby for at least two years after the date of
grant and one year after exercising the ISO. Any gain or loss on the sale of the
Common Stock after these statutory holding periods will be subject to capital
gains treatment. The exercise price of the ISO is the basis for purposes of
determining capital gains. Reduced capital gains rates apply if the Common Stock
is held for at least 18 months after the date of exercise of the ISO.
A recipient who disposes of the Common Stock before the statutory
holding periods are satisfied will have engaged in a "disqualifying disposition"
and will recognize ordinary compensation income on the difference between the
exercise price of the ISO and the fair market value of the Common Stock at the
time the ISO was exercised or the value at the time of disposition, if less. The
recipient's basis in the Common Stock after a disqualifying disposition is its
fair market value at the time of exercise. The recipient will also be subject to
tax on capital gain, if any, upon the sale of the Common Stock on the amount
realized in excess of the increased basis. Generally, the Company is not
entitled to a tax deduction upon the grant of an option or the exercise of an
ISO under the Incentive Plan. However, if the recipient engages in a
disqualifying disposition, the Company may take a tax deduction for the amount
of ordinary compensation income recognized by the recipient, provided that the
compensation is included in the recipient's Form W-2.
Upon exercise of a NSO, the recipient recognizes ordinary compensation
income on the difference between the fair market value of the Common Stock and
the exercise price paid under the NSO. The Company is entitled to deduct this
amount for tax purposes, provided that the compensation is included in the
recipient's Form W-2. The recipient is also subject to capital gains treatment
on the subsequent sale of the Common Stock acquired through the exercise of an
option.
Corporate deductions for reasonable compensation paid to certain
executive officers are limited to $1.0 million per year under Section 162(m) of
the Code. The Incentive Plan is intended to be a "performance-based compensation
plan" under Section 162(m) of the Code so that all compensation amounts
recognized through the exercise of options will be deductible by the Company.
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS APPROVAL OF THE
AMENDMENT TO THE COMPANY'S 1995 INCENTIVE STOCK PLAN.
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<PAGE> 13
PROPOSAL 3: SELECTION OF AUDITORS
Upon the recommendation of the Audit Committee, the Board of Directors
of the Company has appointed, subject to the approval of the shareholders, the
firm of KPMG Peat Marwick LLP as independent public accountants to audit the
Company's consolidated financial statements for the fiscal year ended December
27, 1998. KPMG Peat Marwick LLP has served as the Company's independent public
accountants since July 1995. If the appointment of KPMG Peat Marwick LLP is not
approved by the shareholders, the matter will be referred to the Audit Committee
for further review.
It is anticipated that representatives of KPMG Peat Marwick LLP will
attend the Annual Meeting and will have an opportunity to make a statement, if
they determine to do so, and will be available to respond to questions at that
time.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
SELECTION OF KPMG PEAT MARWICK LLP AS THE COMPANY'S INDEPENDENT
PUBLIC ACCOUNTANTS TO AUDIT THE COMPANY'S CONSOLIDATED FINANCIAL
STATEMENTS FOR THE FISCAL YEAR ENDED DECEMBER 27, 1998.
10
<PAGE> 14
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth certain information regarding beneficial
ownership of the Common Stock as of March 18, 1998 (unless otherwise noted) by
(i) each director and nominee for director who beneficially owns Common Stock,
(ii) each executive officer named in the Summary Compensation Table, (iii) each
person known by the Company to be the beneficial owner of more than 5% of the
Common Stock of the Company, and (iv) all directors and executive officers as a
group. Except as otherwise indicated, the beneficial owners listed below have
sole voting and investment power with respect to all shares owned by them,
except to the extent such power is shared by a spouse under applicable law.
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF
BENEFICIALLY OUTSTANDING
NAME OF BENEFICIAL OWNER OWNED(1) SHARES
- ------------------------ -------- ------
<S> <C> <C>
Edwin W. Moats, Jr.(2)......................................... 337,512 4.7%
Ralph W. McCracken(3).......................................... 18,115 *
David J. McDaniel(4)........................................... 31,750 *
George S. Waltman(5)........................................... 29,600 *
Gary T. Baker(6)............................................... 13,500 *
Jerry O. Bradley(6)............................................ 14,000 *
B. Tom Collins(6).............................................. 14,400 *
Thomas E. Ervin(6)............................................. 13,500 *
Ted H. Welch(6)................................................ 13,500 *
Pilgrim Baxter & Associates(7)................................. 565,750 7.9
Maynard Capital Partners LLC(8)................................ 513,275 7.2
Invesco PLC (9)................................................ 493,800 6.9
David K. Wachtel, Jr.(10)...................................... 469,701 6.6
Oberweis Asset Management, Inc.(11)............................ 417,400 5.9
All directors and executive officers as a group (eight
persons)(12).............................................. 456,277 6.3%
</TABLE>
- ---------------
* Less than 1%.
(1) Includes shares of Common Stock subject to options which may be
exercised within 60 days of March 18, 1998. Such shares are deemed to
be outstanding for the purposes of computing the percentage ownership
of the individual holding such shares, but are not deemed outstanding
for purposes of computing the percentage of any other person shown in
the table.
(2) Includes 1,500 shares beneficially owned by Edwin A. Moats and 1,500
shares beneficially owned by Jeffrey S. Moats, Mr. Moats's sons. Mr.
Moats disclaims beneficial ownership of such shares. Also includes
options to purchase 53,750 shares of Common Stock.
(3) Includes options to purchase 17,500 shares of Common Stock.
(4) Includes options to purchase 25,750 shares of Common Stock.
(5) Includes options to purchase 29,000 shares of Common Stock. Mr. Waltman
resigned as a Director of the Company on October 23, 1997 and resigned
as Vice President of Purchasing on March 6, 1998.
(6) Includes options to purchase 10,500 shares of Common Stock.
(7) Pilgrim Baxter & Associates, a registered investment advisor
("Pilgrim"), has sole voting and dispositive power as to 565,750
shares. Pilgrim's address is 1255 Drummers Lane, Suite 300, Wayne,
Pennsylvania 19087. Information is as of December 31, 1997 and is
derived from filings with the Securities and Exchange Commission (the
"SEC").
(8) Maynard Capital Partners LLC ("Maynard") filed a Schedule 13D with the
SEC on January 8, 1998, on behalf of a group of ten related parties
which have sole and shared voting and dispositive power as to certain
percentages of 513,275 shares of Common Stock. For more information
regarding the beneficial ownership of such shares, please refer to the
Schedule 13D filed by Maynard with the SEC on January 8, 1998.
Maynard's address is 5151 Glenwood Avenue, Raleigh, North Carolina
27612.
(9) Invesco PLC ("Invesco") filed a Schedule 13G with the SEC on February
11, 1998, on behalf of a group of 11 related parties which have shared
voting and dispositive power as to 493,800 shares of Common Stock. For
more information regarding the beneficial ownership of such shares,
please refer to the Schedule 13G filed by Invesco with the SEC on
February 11, 1998. Invesco's address is 1315 Peachtree Street N.E.,
Atlanta, Georgia 30309.
(10) Mr. Wachtel's address is 640 Spence Lane, Suite 123, Nashville,
Tennessee 37217.
(11) Oberweis Asset Management, Inc., a registered investment advisor
("Oberweis"), has shared voting power as to 417,400 shares. Oberweis'
address is 951 Ice Cream Drive, Suite 200, North Aurora, Illinois
60542. Information is as of December 31, 1997 and is derived from SEC
filings.
(12) Includes options to purchase 149,500 shares of Common Stock and 3,000
shares beneficially owned by Mr. Moats' sons. Mr. Moats disclaims
beneficial ownership of such shares.
11
<PAGE> 15
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than 10% of a registered
class of the Company's securities to file reports of ownership and changes in
ownership with the SEC.
Based solely on a review of copies of reports filed with the SEC and
written representations from certain of the Company's directors and executive
officers that no other reports were required, the Company believes that all
persons subject to the reporting requirements pursuant to Section 16(a) filed
the required reports on a timely basis with the SEC, except that one report for
a single transaction was filed late by each of Messrs. Baker, Bradley, Ervin and
McCracken. These transactions were subsequently reported.
12
<PAGE> 16
EXECUTIVE COMPENSATION
The following table sets forth summary information concerning
compensation paid or accrued by the Company in 1997 on behalf of (i) the
Company's Chief Executive Officer and (ii) the four other executive officers of
the Company as of the end of 1997 (hereinafter, collectively referred to as the
"Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------- ------------
SECURITIES
NAME AND UNDERLYING
PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)(1)
- ------------------ ---- --------- -------- -------------
<S> <C> <C> <C> <C>
Edwin W. Moats, Jr......................... 1997 $175,000 $131,250 --
Chairman of the Board, President 1996 150,000 80,000 65,000
and Chief Executive Officer 1995 75,000 90,600 75,000
Peter W. Kehayes (2)....................... 1997 60,289 20,625 45,000
Senior Vice President of
Operations
Ralph W. McCracken (3)..................... 1997 97,000 26,250 --
Senior Vice President of 1996 85,000 25,000 47,500
Development
David J. McDaniel.......................... 1997 107,000 21,875 --
Senior Vice President of Finance, 1996 95,000 25,000 28,000
Chief Financial Officer, 1995 85,000 17,000 37,500
Secretary and Treasurer
George S. Waltman(4)....................... 1997 97,000 35,000 --
Former Vice President of 1996 85,000 40,000 5,000
Purchasing 1995 57,200 45,300 55,500
</TABLE>
- ------
(1) Reflects the three-for-two stock split of the Company's Common Stock
effected in June 1996.
(2) Mr. Kehayes joined the Company in August 1997.
(3) Mr. McCracken joined the Company in January 1996.
(4) Mr. Waltman resigned as a Director of the Company on October 23, 1997
and resigned as Vice President of Purchasing on March 6, 1998.
13
<PAGE> 17
The following table sets forth information concerning the stock options
granted to the Named Executive Officers in 1997:
OPTION GRANTS IN LAST FISCAL YEAR
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN OR BASE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR PRICE($/SH) DATE
- ---- ------------- ----------- ----------- ----
<S> <C> <C> <C> <C>
Edwin W. Moats, Jr.(2)............. -- -- -- --
Peter W. Kehayes(3)................ 45,000 64.4% $24.50 9/16/07
Ralph W. McCracken(2).............. -- -- -- --
David J. McDaniel(2)............... -- -- -- --
George S. Waltman(2)(4)............ -- -- -- --
</TABLE>
- ---------------
(1) Options become exercisable in four equal annual installments beginning
on the first anniversary of the date of the grant. Options listed in
the table were granted under the Incentive Plan.
(2) No options were granted to Messrs. Moats, McCracken, McDaniel and
Waltman during fiscal year 1997.
(3) Mr. Kehayes joined the Company in August 1997.
(4) Mr. Waltman resigned as a Director of the Company on October 23, 1997
and resigned as Vice President of Purchasing on March 6, 1998.
The following table sets forth information with respect to unexercised
options held as of the end of 1997 by the Named Executive Officers. No Named
Executive Officer exercised any options for the purchase of shares of Common
Stock during 1997.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END(#) AT FISCAL YEAR-END($)(1)
------------------------------------ -------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Edwin W. Moats, Jr................. 53,750 86,250 $243,750 $243,750
Peter W. Kehayes................... -- 45,000 -- --
Ralph W. McCracken................. 11,875 35,625 23,456 70,369
David J. McDaniel.................. 25,750 39,750 121,875 121,875
George S. Waltman.................. 29,000 31,500 180,375 180,375
</TABLE>
- ---------------
(1) Based upon the closing sale price of the Common Stock ($15.50 per
share) as reported on the Nasdaq National Market on December 26, 1997
(the last trading day before fiscal year end), less the exercise price
for the options.
14
<PAGE> 18
The Company has not awarded stock appreciation rights to any of its
executive officers, directors or employees. The Company has no long-term
incentive, defined benefit or actuarial plans, as those terms are defined in SEC
regulations, covering employees of the Company.
EMPLOYMENT CONTRACTS AND TERMINATION AND CHANGE-IN-CONTROL ARRANGEMENTS
As of January 14, 1998, Mr. Moats entered into an Amended and Restated
Employment Agreement with the Company (the "Amended Agreement"). The Amended
Agreement superseded the employment agreement entered into by Mr. Moats as of
August 1, 1996, as amended October 1, 1997, and extended the initial period of
Mr. Moats' employment as President and Chief Executive Officer of the Company
until July 31, 2000, unless earlier terminated. In addition, as of January 14,
1998, Messrs. Kehayes, McCracken and McDaniel each entered into an Employment
Agreement with the Company (collectively, the "Employment Agreements"), the
provisions of which are described below. The initial term of the Employment
Agreements is for two years. Pursuant to their respective Employment Agreements,
Mr. Kehayes is employed as Senior Vice President of Operations, Mr. McCracken is
employed as Senior Vice President of Development of the Company and Mr.
McDaniel is employed as Senior Vice President of Finance and Chief Financial
Officer of the Company.
The Amended Agreement of Mr. Moats provides for an annual base salary
of $200,000, which is subject to annual review by the Compensation Committee or
Board of Directors, and bonuses, which amounts will be determined in accordance
with the Company's 1998 Executive Bonus Plan administered by the Compensation
Committee. Mr. Kehayes' employment agreement provides for an annual base salary
of $165,000, Mr. McCracken's employment agreement provides for an annual base
salary of $105,000 and Mr. McDaniel's employment agreement provides for an
annual base salary of $115,000. The salaries of Messrs. Kehayes, McCracken and
McDaniel are subject to annual review by the Compensation Committee or Board of
Directors. In addition, the Employment Agreements provide for bonuses, which
amounts will be determined in accordance with the Company's 1998 Executive Bonus
Plan administered by the Compensation Committee.
The Amended Agreement and the Employment Agreements provide that each
of the executive officers may terminate his employment agreement without cause
by giving the Company 90 days prior written notice. Pursuant to the terms of the
Amended Agreement and the Employment Agreements, each of the executive officers
has agreed not to disclose the Company's confidential information and not to
compete against the Company during the term of his employment agreement and for
a period of 12 months thereafter.
In the event any executive officer is terminated upon a
"change-in-control" (as defined in each of the Amended Agreement and the
Employment Agreements), he will be paid all accrued base salary, bonus
compensation to the extent earned, vested deferred compensation (other than plan
benefits which will be paid in accordance with the applicable plan) and other
benefits through the date of termination. In addition, each executive officer
will receive as severance pay his base salary in monthly installments for 12
months if he is terminated within the initial term of his Employment Agreement.
Mr. Moats also will receive as severance pay pursuant to the Amended Agreement
his base salary in monthly installments for the greater of 12 months or the
remaining term of the Amended Agreement and any extensions thereof.
Alternatively, each executive officer may elect to receive a lump sum severance
payment equal to the present value of the cash
15
<PAGE> 19
flow of severance payments that would otherwise be paid to him. Notwithstanding
the foregoing, the Company is not required to pay any amount which is not
deductible for federal income tax purposes.
Each executive officer is entitled to receive his accrued base salary,
earned bonus and other benefits through the date of termination in the event
that the Company terminates his employment without cause. Mr. Moats also will
receive as severance compensation pursuant to the Amended Agreement his base
salary for the greater of 12 months or the remaining term of the Amended
Agreement. Messrs. Kehayes, McCracken and McDaniel will receive as severance
compensation his base salary for 12 months pursuant to the Employment
Agreements. Each executive officer also will receive an amount equal to his
average monthly bonus for the two years preceding the date of termination (as if
such bonus were paid monthly), which shall be computed on a pro rata basis if
the executive officer has not been employed by the Company for two years at the
time of termination. In addition, unvested stock options for each executive
officer will become fully vested and immediately exercisable.
In the event any executive officer is terminated for cause (as defined
in each of the Amended Agreement and the Employment Agreements), he is entitled
to receive all accrued base salary, earned bonus compensation and unreimbursed
expenses through the date of termination, but shall receive no other severance
benefits. Each of the Amended Agreement and the Employment Agreements also may
be terminated if the executive officer dies, in which event his estate will
receive these same payments and all unvested options will become fully vested
and immediately exercisable. In addition, pursuant to the Amended Agreement, Mr.
Moats' estate will receive severance payments equal to six months' salary.
In the event any executive officer becomes disabled for a period of 60
consecutive days, he is entitled to receive his base salary, insurance, bonus
and other benefits for a period of six months from the date such disability
began or for such shorter period as he is unable to perform his duties
thereunder. In the event he is unable to perform his duties after the expiration
of the six-month period, his employment agreement will terminate.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board of Directors during 1997
consisted of Messrs. Bradley, Collins and Ervin. None of the members of the
Compensation Committee have at any time been an officer or employee of the
Company or any of its subsidiaries, nor have any of the members had any
relationship with the Company requiring disclosure by the Company.
16
<PAGE> 20
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Edwin W. Moats, Jr....................... 50 Chairman of the Board, President and Chief Executive Officer
Peter W. Kehayes......................... 40 Senior Vice President of Operations
Ralph W. McCracken....................... 49 Senior Vice President of Development
David J. McDaniel........................ 55 Senior Vice President of Finance, Chief Financial Officer,
Secretary and Treasurer
</TABLE>
See "Proposal 1: Election of Directors" for information regarding the
backgrounds of Messrs. Moats and McDaniel.
Peter W. Kehayes joined the Company in August 1997 and has served as
Senior Vice President of Operations of the Company since October 1997. Prior to
joining the Company, Mr. Kehayes served as Senior Vice President of Operations
of Cucina! Cucina! Inc. from June 1994 to August 1997 and Director of Regional
Operations for Cooker Restaurant Corporation from June 1986 to June 1994.
Ralph W. McCracken has served as Senior Vice President of Development
since January 1998. Mr. McCracken also served as Director of Franchise
Development of the Company from January 1996 to January 1998. Mr. McCracken
founded Tri-M Management Company, an owner and operator of full-service, casual
dining restaurants, and served as its President, Chief Executive Officer and as
a director from 1981 until joining the Company.
17
<PAGE> 21
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee of the Company
(the "Compensation Committee") at the direction of the Board of Directors
pursuant to rules established by the SEC. This report provides certain data and
information regarding the compensation and benefits provided to Mr. Moats, the
Company's Chief Executive Officer, as well as to Messrs. Kehayes, McCracken and
McDaniel (collectively, the "Executive Officers").
The Compensation Committee is responsible for establishing and
administering the Company's executive compensation policies and programs within
the guidelines of the Company's compensation philosophy. Recommendations are
made by Mr. Moats with respect to the compensation of the Executive Officers to
the Compensation Committee, which makes the final decisions as to their
compensation. Employees serving on the Board of Directors do not participate in
the determination of their compensation.
COMPENSATION PHILOSOPHY
The Compensation Committee believes that the primary objectives of the
Company's executive compensation policies should be to:
- attract and retain talented executives by providing
compensation that is, overall, competitive with the
compensation provided to executives at companies of comparable
size and position in the restaurant industry, while
maintaining compensation within levels that are consistent
with the Company's overall financial objectives and operating
performance;
- provide the appropriate incentives for executives to work
toward the achievement of development targets; and
- align the interests of the executive officers more closely
with those of the Company's shareholders and the long-term
interests of the Company by providing long-term compensation
in the form of stock options.
The compensation program of the Company currently consists primarily of
(i) base salary and quarterly and annual incentive compensation in the form of
cash bonuses and (ii) long-term compensation in the form of stock options.
ANNUAL COMPENSATION
The Compensation Committee determines the annual salary of the
Company's executive officers after considering the financial results of the
Company for the prior year, the Company's position within the relative segments
of the food service industry in which it operates and the overall
responsibilities and individual performance of each executive officer. No
specific weighting is assigned to any of these factors.
Bonuses for the Company's executive officers are based upon the
Company's Executive Bonus Plan (the "Bonus Plan") which was adopted by the
Company in February
18
<PAGE> 22
1996 and amended in January 1998. The Bonus Plan provides for the payment of
cash bonuses to the Company's executive officers if the Company achieves or
exceeds certain quarterly and annual financial earnings targets. An aggregate of
50% of the cash bonus is payable quarterly and 50% is payable annually. Of each
portion of the bonus, 40% is earned based on the Company's achieving the
quarterly and annual targeted earnings goals, and the remaining 10% is earned
based on each officer's individual job performance. The amounts of the targeted
bonuses that can be earned by the executive officers under the Bonus Plan are
established by the Compensation Committee. For 1997, the Compensation Committee
approved targeted bonuses ranging from 20% to 35% of the officer's total annual
compensation. In addition, the Compensation Committee may award in its
discretion an additional bonus to each executive officer if the Company's annual
earnings exceed annual targeted earnings.
LONG-TERM COMPENSATION
The Company's long-term compensation strategy for executive officers
includes the grant of stock options, although the Company currently has no set
policy as to when stock options should be awarded. The Compensation Committee
grants stock options to provide a total compensation package which rewards
contributions by the executive officers to the Company's long-term stock
performance. These grants are intended not only to motivate and retain the
executive officers in the service of the Company, but to more closely align the
interests of the executive officers with those of the Company's shareholders.
The Compensation Committee believes its past grants of stock options have helped
to focus the Company's management team on building profitability and enhancing
shareholder value.
COMPENSATION PAID IN 1997
In accordance with the philosophy and procedures described above, the
Compensation Committee determined to (i) increase the base salary for Mr.
McCracken by 14% for fiscal year 1997 from $85,000 per year to $97,000 per year
and (ii) increase the base salary for Mr. McDaniel by 13% for fiscal year 1997
from $95,000 per year to $107,000 per year. In addition, the Compensation
Committee approved cash bonuses of $26,250 and $21,875 for each of Messrs.
McCracken and McDaniel, respectively, pursuant to the Bonus Plan described
above. During fiscal 1997, no long-term incentive compensation was awarded to
Messrs. McCracken and McDaniel because such compensation was awarded to both
executive officers in the form of two separate grants of stock options during
fiscal 1996. Mr. Kehayes joined the Company in 1997 and earned approximately
$60,000 in base salary and approximately $20,000 in cash bonus during fiscal
1997. The Compensation Committee also awarded Mr. Kehayes stock options to
purchase 45,000 shares of Common Stock during fiscal year 1997 as long-term
incentive compensation. Although the Company currently has no set policy as to
when stock options should be awarded, the Compensation Committee believes that
the Company should as a part of its regular executive compensation policies
consider granting annual awards or stock options to executive officers to
provide long-term incentives as part of each executive's annual compensation
package.
19
<PAGE> 23
COMPENSATION PAID IN 1997 TO THE CHIEF EXECUTIVE OFFICER
The Compensation Committee determined to increase the base salary for
Mr. Moats, the Company's Chief Executive Officer, by 17% for fiscal year 1997
from $150,000 per year to $175,000 per year and determined to grant, pursuant to
the Bonus Plan, an aggregate bonus award of $131,250 in 1997. No long-term
incentive compensation was awarded to Mr. Moats in 1997 because such
compensation was awarded to him in the form of two separate grants of stock
options during fiscal 1996. The compensation levels established for Mr. Moats in
1997 were in response to the Compensation Committee's assessment of the
Company's revenue growth, its success in expanding its restaurant base and
recognition of Mr. Moats' leadership of the Company. The Compensation Committee
believes Mr. Moats' compensation is consistent with its general policies
concerning executive compensation and is appropriate in light of the Company's
financial objectives and performance.
The Compensation Committee intends to structure future compensation so
that executive compensation paid by the Company is fully deductible in
accordance with Section 162(m) of the Code, enacted in 1993, which generally
disallows a tax deduction to public companies for compensation over $1.0 million
paid to certain executive officers unless certain conditions are met.
Compensation Committee
Thomas E. Ervin (Chairman)
B. Tom Collins
Jerry O. Bradley
20
<PAGE> 24
COMPARATIVE PERFORMANCE GRAPH
The following is a comparative performance graph which compares the
percentage change of cumulative total shareholder return on the Company's Common
Stock with (a) the performance of a broad equity market indicator and (b) the
performance of a published industry index or peer group. The following graph
compares the percentage change of cumulative total shareholder return on the
Company's Common Stock with (a) the CRSP Index for Nasdaq Stock Market (US
Companies) (the "Market Index") and (b) CRSP Index for NYSE/AMEX/Nasdaq
Restaurant Stocks (the "Peer Index"). The graph begins on July 26, 1995, the
date on which the Company's Common Stock first begin trading on the Nasdaq Stock
Market, and assumes the investment on such date of $100 in the Company's Common
Stock, the Market Index and the Peer Index and assumes that all dividends, if
any, were reinvested at the time they were paid.
<TABLE>
<CAPTION>
7/26/95 12/31/95 12/31/96 12/31/97
------- -------- -------- --------
<S> <C> <C> <C> <C>
Logan's Roadhouse, Inc. $100 $ 97 $199 $131
Nasdaq U.S. $100 $106 $130 $160
NYSE/AMEX/Nasdaq Stocks (SIC 5810-5819) $100 $107 $107 $112
</TABLE>
21
<PAGE> 25
CERTAIN TRANSACTIONS
In 1992, the Company entered into an asset purchase agreement and a
sublease agreement with Bluegrass Steaks, Inc., a Tennessee corporation
("Bluegrass") owned by David K. Wachtel, Jr., a principal shareholder of the
Company, for the purpose of obtaining the right to develop and operate the
Logan's Roadhouse restaurant located in Lexington, Kentucky. The sublease
agreement calls for minimum annual lease payments of approximately $148,000
through September 2002, subject to contingent rentals based on certain achieved
sales levels, and requires Bluegrass to pay all taxes other than real property
taxes and assessments related to the restaurant property and improvements. Under
this lease, the Company paid approximately $148,000 in basic rentals and
approximately $72,000 in contingent rentals in 1997.
In connection with the franchising of Logan's Roadhouse restaurants in
select market areas not in the Company's immediate expansion plans for owned
restaurants, the Company entered into an Area Development Agreement (the
"Development Agreement") and a Franchise Agreement (the "Franchise Agreement"),
with L.W. Group, Inc. ("L.W. Group"), a corporation controlled by Mr. Wachtel
(L.W. Group is sometimes referred to herein as the "Franchisee"), in January
1996. L.W. Group operates two Logan's Roadhouse restaurants in Edmond, Oklahoma
and Oklahoma City, Oklahoma.
The initial term of the Development Agreement with L.W. Group expires
on December 31, 2000, subject to automatic renewal for an additional five years
following the initial term, provided the Franchisee has satisfied the
development schedule specified in the Development Agreement. The Company has the
right to purchase all of the outstanding stock of L.W. Group beginning in
January 2001, upon the occurrence of specified events on the terms and
conditions as set forth in the Development Agreement. The Franchisee could lose
its exclusive development rights under the Development Agreement if it fails to
meet the performance and other requirements specified in the Development
Agreement or the Franchise Agreement.
The Franchise Agreement prohibits the Franchisee from transferring
ownership of the franchise without the prior approval of the Company and
provides the Company a right of first refusal to purchase the franchise on the
same terms and conditions as any proposed transfer by the Franchisee. For a
period of 24 months following the date of termination or expiration of the
Franchise Agreement, the Franchisee and certain of its principals may not
compete with the Company within a 50-mile radius of any existing or planned
Company or franchised restaurant, subject to certain exceptions. Additionally,
the Franchisee may not solicit any previously serviced accounts, groups or
clientele for or on behalf of any casual dining restaurant for one year
following the termination or expiration of the Franchise Agreement.
The Franchise Agreement requires the Franchisee to pay an initial
non-refundable $30,000 franchise fee and a monthly royalty fee of 3.0% of gross
sales. The Company currently requires L.W. Group to contribute 0.5% of gross
sales to the Company's general advertising account and may require the
Franchisee to contribute up to 1.0%. In addition, the Company may require the
Franchisee to expend on an annual basis up to 3.0% of gross
22
<PAGE> 26
sales for local promotional activities, subject to the approval of the Company.
In 1997, L.W. Group paid the Company total royalty fees of approximately
$146,000.
On March 15, 1997, the Company entered into a sponsorship agreement
(the "Sponsorship Agreement") with Southern Racing Promotions, Inc. ("SRP"), a
corporation controlled by Gary T. Baker, a director of the Company. Pursuant to
the terms of the Sponsorship Agreement, the Company became the primary sponsor
of a SuperTruck Racing Team competing at the Nashville Motor Speedway during the
1997 racing season. The Company paid a total of $50,000 in 1997 to SRP in
consideration for its sponsorship privileges. The term of the 1997 Sponsorship
Agreement expired on November 30, 1997. On February 24, 1998, the Company
entered into a new sponsorship agreement (the "1998 Sponsorship Agreement") with
SRP. Pursuant to the terms of the 1998 Sponsorship Agreement, the Company is the
primary sponsor of a NASCAR Late Model Stock Car Racing Team competing at the
Nashville Motor Speedway during the 1998 racing season. The Company paid SRP
$40,000 upon execution of the 1998 Sponsorship Agreement and is required to pay
an additional $40,000 to SRP in eight equal monthly installments of $5,000 each
beginning in March 1998. The term of the 1998 Sponsorship Agreement expires on
November 30, 1998, unless earlier terminated.
The Company's Board of Directors has adopted a policy that all
transactions between the Company and its officers, directors, principal
shareholders and affiliates be on terms no less favorable to the Company than
those obtainable from unrelated third parties. Although all of the above
transactions necessarily involved conflicts of interests, management of the
Company believes that all of the above transactions were entered into on such
terms based on (i) a comparison of terms and conditions available from third
parties, (ii) the advice of counsel and other outside experts and (iii) a
determination by the Company's board of directors in certain instances.
23
<PAGE> 27
SHAREHOLDER PROPOSALS
If a shareholder wishes to have a proposal considered for inclusion in
the Company's proxy materials for the 1999 annual meeting of shareholders, the
proposal must comply with the SEC's proxy rules, be stated in writing and be
submitted on or before November 30, 1998. Any proposals should be mailed to the
Company at 565 Marriott Drive, Suite 490, Nashville, Tennessee 37214, Attention:
David J. McDaniel, Secretary.
OTHER MATTERS
The Board of Directors is not aware of any other matters to be brought
before the Annual Meeting. If any other matters, however, are properly brought
before the Annual Meeting, the persons named in the enclosed form of proxy will
have discretionary authority to vote all proxies with respect to such matters in
accordance with their best judgment.
UPON THE WRITTEN REQUEST OF ANY HOLDER OF THE COMPANY'S COMMON STOCK
ENTITLED TO VOTE AT THE 1998 ANNUAL MEETING OF SHAREHOLDERS, THE COMPANY WILL
FURNISH, WITHOUT CHARGE, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 28, 1997, INCLUDING FINANCIAL STATEMENTS, AS
FILED WITH THE SEC. REQUESTS SHOULD BE DIRECTED TO DAVID J. MCDANIEL, SENIOR
VICE PRESIDENT OF FINANCE, CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER,
LOGAN'S ROADHOUSE, INC., 565 MARRIOTT DRIVE, SUITE 490, NASHVILLE, TENNESSEE
37214.
By Order of the Board of Directors
[Sig]
David J. McDaniel
Secretary
24
<PAGE> 28
APPENDIX A
AMENDMENT TO LOGAN'S ROADHOUSE, INC.
1995 INCENTIVE STOCK PLAN
WHEREAS, on May 26, 1995, Logan's Roadhouse, Inc. (the "Company")
adopted the 1995 Incentive Stock Plan (the "Plan"); and
WHEREAS, the Plan was amended effective April 16, 1997, and such
amendments were approved by the shareholders of the Company; and
WHEREAS, the Board of Directors desires to increase the number of
authorized shares available for issuance under the Plan;
NOW, THEREFORE, the Plan is hereby amended as follows, effective March
20, 1998:
1. Section 2 of the Plan is hereby amended by deleting the reference to
"722,500 shares of Stock" and replacing such reference with "922,500 shares of
Stock".
IN WITNESS WHEREOF, the undersigned officer has executed this Amendment
pursuant to authority granted by the Board of Directors of the Company on this
___ day of ______________, 1998.
LOGAN'S ROADHOUSE, INC.
By:
----------------------------------
Title:
-------------------------------
<PAGE> 29
APPENDIX B
LOGAN'S ROADHOUSE, INC.
ANNUAL MEETING OF SHAREHOLDERS
MAY 7, 1998
The undersigned hereby appoints Edwin W. Moats, Jr. and David J. McDaniel,
or either of them, with power of substitution, as proxies to vote all stock of
Logan's Roadhouse, Inc. (the "Company") owned by the undersigned at the Annual
Meeting of Shareholders to be held at the Marriott Hotel, Memphis Room, 600
Marriott Drive, Nashville, Tennessee 37214, at 8:30 a.m. on May 7, 1998, and any
adjournment thereof, on the following matters as indicated below and such other
business as may properly come before the meeting.
1. [ ] FOR the election as director of all nominees listed: B. Tom Collins,
Edwin W. Moats, Jr. and Ted H. Welch (except as marked to the contrary
below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed: B. Tom Collins, Edwin
W. Moats, Jr. and Ted H. Welch.
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR INDIVIDUAL NOMINEES, WRITE
THEIR NAME(S) IN THE SPACE PROVIDED BELOW:
- --------------------------------------------------------------------------------
2. Proposal to amend the 1995 Incentive Stock Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to ratify the appointment of KPMG Peat Marwick LLP as the
independent public accountants of the Company for fiscal year 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES NAMED ABOVE MAY VOTE UPON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY MUST BE DATED AND SIGNED ON THE REVERSE SIDE
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
This Proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this Proxy will
be voted (i) FOR the two nominees as Class III directors and one nominee as a
Class II director of the Company, (ii) FOR the amendment to the 1995 Incentive
Stock Plan and (iii) FOR the proposal to ratify the appointment of KPMG Peat
Marwick LLP.
Please sign exactly as your name appears on this Proxy Card. When signing as
attorney, executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by President or
other authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated: , 1998
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Signature of Shareholder
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE
