-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MM1cZxdZ8FHI9rRGZ6iJCP0SoGHgPgtUXa5KOP1r0ja4P58U6iE0KdY8qF1++Dwb 1diSjkwhP6yXidULGOOu3A== 0001040328-98-000016.txt : 19981027 0001040328-98-000016.hdr.sgml : 19981027 ACCESSION NUMBER: 0001040328-98-000016 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980628 FILED AS OF DATE: 19981026 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNIQUE CASUAL RESTAURANTS INC CENTRAL INDEX KEY: 0001040328 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING & DRINKING PLACES [5810] IRS NUMBER: 043370491 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-22639 FILM NUMBER: 98730829 BUSINESS ADDRESS: STREET 1: ONE CORPORATE PLACE STREET 2: 55 FERNCROFT RD CITY: DANVERS STATE: MA ZIP: 01923 BUSINESS PHONE: 5087749115 MAIL ADDRESS: STREET 1: ONE CORPORATE PLACE STREET 2: 55 FERNCROFT RD CITY: DANVERS STATE: MA ZIP: 01923 10-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A (Check One) X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] --- For The Fiscal Year Ended June 28, 1998 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from ___ to ___ Commission File Number: 0-22639 UNIQUE CASUAL RESTAURANTS, INC. (Exact name of registrant as specified in its charter) Delaware 04-3370491 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) One Corporate Place, 55 Ferncroft Road, Danvers, MA 01923 (Address of principal executive offices) (Zip Code) 978-774-6606 (Registrant's telephone number, including area code) 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 and (2) has been subject to such filing requirements for the past 90 days. YES X NO The aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing price of the Common Stock of the registrant as quoted on the National Association of Securities Dealers Automated Quotation System on October 2, 1998 was $38,366,754 (for purposes of calculating this amount only, directors, officers and beneficial owners of 10% or more of the Common Stock of the registrant may be deemed affiliates). Number of shares of Common Stock, $.01 par value, outstanding at October 2, 1998: 11,605,659 Explanatory Note This Amendment to Form 10-K is being filed solely to amend Items 10, 11, 12 and 13 of the Registrant's Form 10-K for the fiscal year ended June 28, 1998 and to file additional exhibits thereto. PART III Item 10. Directors and Executive Officers of the Registrant. Directors of the Registrant The following table sets forth certain information regarding current members of the Board of Directors:
Principal Director Expiration Name Age Occupation Since of Term Class ---- --- ---------- ----- ------- ----- E. L. Cox.......................... 71 Chairman of the Board and September 1988 2000 I Insurance Commissioner for the State of Michigan Erline Belton...................... 53 President and Chief December 1993 1998 II Executive Officer of The Lyceum Group Joseph W. O'Donnell................ 56 Partner, Osgood, August 1996 1998 II O'Donnell & Walsh Donald C. Moore.................... 44 Chief Executive Officer July 1998 1999 III and Chief Financial Officer of the Company Alan D. Schwartz................... 48 Senior Managing Director September 1988 1999 III of Corporate Finance for Bear, Stearns & Co., Inc.
The name, age and principal occupation during the past five years and other information concerning each non-employee director are set forth below: E. L. Cox, 71, has served as a director of the Company since May 1997. Prior to the Spin-Off Transaction, Mr. Cox served as a director of DAKA since September 1988 and as a director of Fuddruckers, Inc. from June 1988 until November 1988. As of May of 1998 Mr. Cox is the Insurance Commissioner for the State of Michigan. Prior thereto he worked as a private insurance consultant from August of 1996 until May of 1998, after serving as President and Chief Executive Officer of the Michigan Accident Fund from February 1991 until August 1996. Prior thereto Mr. Cox served as Chairman and Chief Executive Officer of Michigan Mutual/Amerisure Companies and its affiliated insurance companies from May 1979 through January 1991. Mr. Cox is also a member of the Board of Directors of Comerica, Inc., a publicly-traded financial institution, and a director of various trade associations in the insurance industry. Erline Belton, 54, has served as a director of the Company since May 1997. Prior to the Spin-Off Transaction, Ms. Belton served as a director of DAKA since December 1993. She has served as President and Chief Executive Officer of The Lyceum Group, a human resource consulting firm, since September 1992. She served as Senior Vice President of Human Resource and Organizational Development for Progressive Insurance Companies from April 1991 through September 1992. She also served as International Human Relations Director, as well as several other human resources positions, with Digital Equipment Corporation from 1978 through April 1991. Ms. Belton serves on the Board of Directors of: The National Leadership Coalition on AIDS; National Minority AIDS Coalition; Museum of African American History. Joseph W. O'Donnell, 56, has served as a director of the Company since May 1997. Prior to the Spin-Off Transaction, Mr. O'Donnell served as a director of DAKA since August 1996. Mr. O'Donnell is a partner in the firm of Osgood, O'Donnell & Walsh. Mr. O'Donnell has served as Chairman and Chief Executive Officer of The J. Walter Thompson Company and Campbell-Mithun-Esty Advertising, Inc. Alan D. Schwartz, 48, has served as a director of the Company since May 1997. Prior to the Spin- Off Transaction, Mr. Schwartz served as a director of DAKA since September 1988 and as a director of Fuddruckers, Inc. from September 1984 until November 1988. Mr. Schwartz is Senior Managing Director--Corporate Finance of Bear, Stearns & Co., Inc., and a director of its parent, The Bear Stearns Companies, Inc. He has been associated with such investment banking firm for more than five years. Mr. Schwartz is a director of Young & Rubicam, Inc. and a member of the Board of Visitors of the Fuqua School of Business at Duke University. Executive Officers of the Registrant Certain information is set forth below concerning the executive officers of the Company, each of whom has been elected to serve until the regular meeting of the Board of Directors and until his successor is duly elected and qualified. The executive officers of the Company are as follows: Name Age Position - ---- --- -------- Donald C. Moore 44 Director, Chief Executive Officer, Chief Financial Officer and Treasurer Donna L. Depoian 38 Vice President, General Counsel and Secretary Donald C. Moore has served as Chief Executive Officer and a Director of the Company since July 1998. He has served as Executive Vice President and Chief Financial Officer and Treasurer of the Company since June 1998 and was Senior Vice President and Chief Financial Officer and Treasurer from May 1997. He served as Senior Vice President and Chief Financial Officer and Treasurer of DAKA International from January 1997 to May 1997. From November 1995 through October 1996 he served as Senior Vice President and Chief Financial Officer for Al Copeland Investments, a multi-business, privately held corporation. From August 1990 until August 1995 he served principally as Senior Vice President and Chief Financial Officer of Rally's Hamburgers, Inc., a publicly held multi-unit quick service hamburger operator and franchiser. Mr. Moore is also a director of Restaurant Consulting Services, Inc. and La Salsa Holding Co. Donna L. Depoian has served as Secretary, Vice President and General Counsel of the Company since May 1998. She served as Assistant Secretary and Acting General Counsel from February 1998 to May 1998 and as Assistant Secretary and Corporate Counsel since July 1997. Ms. Depoian also served as Assistant Secretary and Corporate Counsel for DAKA International, Inc. since April 1994. From May 1989 to April 1994, she practiced as an attorney for Bass & Doherty, P.C., a Boston law firm concentrating in business and commercial real estate. From February 1988 to April 1989 she practiced as an attorney for Rossman, Rossman and Eschelbacher, a Boston based law firm. Item 11. Executive Compensation. Insofar as historical information on the executive compensation of the Company's officers as such is not available prior to fiscal year 1998, the following tables provide information as to compensation paid by DAKA and its subsidiaries prior to the Spin-Off Transaction during each of the two previous fiscal years ending with the fiscal year ended June 29, 1997 to the Chief Executive Officer and the four other most highly compensated executive officers whose total salary and bonus for fiscal year 1998 exceeded $100,000. In addition, compensation information is provided with respect to two persons whose employment terminated during the fiscal year. Summary Compensation Table
Long-Term Compensation Annual Awards Name and Compensation Other Annual Options/ All Other Principal Position Year Salary Bonus Compensation SARs(1) Compensation ------------------ ---- ------ ----- ------------ ------------- ------------ William H. Baumhauer(2) 1998 $450,500 $250,000 (3) Former Chairman and 1997 449,869 $265,014(4) Chief Executive Officer 1996 369,558 $200,000 Donald C. Moore(5) 1998 $187,981 $ 80,000 35,000 Chief Executive Officer and 1997 70,673 30,000 $ 40,820(6) Chief Financial Officer 1996 K.C. Moylan(7) 1998 $200,000 $ 80,000 $ 31,000(8) 50,000 President and Chief 1997 163,130 50,000 Executive Officer, 1996 51,923 21,000(9) Champps Entertainment, Inc. Richard B. Wolf 1998 $150,000 $ 17,500 $ 28,600(8) 25,000 Senior Vice President and 1997 150,000 Chief Operating Officer 1996 147,500 10,000 Richard K. Hendrie 1998 $145,000 $ 13,500 $ 25,000(8) 25,000 Senior Vice President 1997 145,000 of Marketing 1996 142,000 10,000 - ----------------- Dean P. Vlahos(10) 1998 $224,815 (11) Former President and 1997 348,009 Chief Executive Officer 1996 264,500 Champps Entertainment, Inc. Allen R. Maxwell(12) 1998 $ 78,076 $ 40,800(8) President and Chief 1997 270,211 Operating Office, 1996 254,527 $ 50,000 $ 60,000(13) 30,000(14) DAKA International, Inc.
- ----------------- (1) Represents the number of options to acquire Common Stock granted during the fiscal year. (2) As of July 1998, Mr. Baumhauer was no longer an employee of the Company. (3) Mr. Baumhauer's severance arrangements are described under "Certain Relationships and Related Transactions." (4) Represents amounts earned under Mr. Baumhauer's long term incentive plan, which vested during fiscal 1997. In connection with the Spin-Off Transaction, the Company's Board of Directors determined to pay amounts due to Mr. Baumhauer pursuant to his long term incentive plan through the issuance of Common Stock of the Company rather than in cash. On July 23, 1997 the Company issued to Mr. Baumhauer 37,973 shares of Common Stock, having a value of $265,014 based on the average closing price of the Company's Common Stock during the period of July 21 through July 23, 1997. (5) Mr. Moore was appointed Chief Executive Officer of the Company in July 1998. (6) Represents reimbursed relocation expenses. (7) Mr. Moylan was appointed President and Chief Executive Officer of Champps in February 1998. (8) Represents amounts paid in connection with the re-purchase of stock options. (9) Granted on February 19, 1996 pursuant to a long term incentive plan for management pursuant to which the options will vest 100% on February 19, 1999. As issued, such options were options to purchase DAKA common stock and had an exercise price equal to $22.63 per share (the fair market price of DAKA common stock as of the date of grant) with respect to one third of the options granted, $24.32 per share with respect to another one third of the options granted and $26.02 per share with respect to the remaining one third of the options granted. As converted pursuant to the terms of the Spin-Off Transaction, such options became options to purchase Common Stock of the Company and have an exercise price equal to $10.91 per share with respect to one third of the options granted, $11.72 per share with respect to another one third of the options granted and $12.54 per share with respect to the remaining one third of the options granted. (10) As of February 1998, Mr. Vlahos was no longer employed by the Company. (11) Mr. Vlahos' severance arrangements are described under "Certain Relationships and Related Transactions." (12) As of the completion of the Spin-off Transaction in July 1997, Mr. Maxwell was no longer employed by the Company but continued to be a Director of the Company. Mr. Maxwell died in January 1998. (13) In lieu of the receipt of senior executive stock options in fiscal 1992 in connection with the recapitalization of DAKA, DAKA provided to Mr. Maxwell an annuity for which DAKA paid to an insurance company $60,000 per year for five years, which payments commenced in fiscal year 1992 and ended in fiscal year 1996. (14) Granted on August 1, 1995 pursuant to a long-term incentive plan for management pursuant to which the options vested 100% on August 1, 1998. As issued, such options were options to purchase DAKA common stock and had an exercise price equal to $24.00 per share (the fair market price of DAKA common stock as of the date of grant) with respect to one third of the options granted, $25.80 per share with respect to another one third of the options granted and $27.60 per share with respect to the remaining one third of the options granted. As converted pursuant to the terms of the Spin-Off Transaction, such options became options to purchase Common Stock of the Company and have an exercise price equal to $11.57 per share with respect to one third of the options granted, $12.44 per share with respect to another one third of the options granted and $13.30 per share with respect to the remaining one third of the options granted. Option Grants in Fiscal 1998
Potential Realizable Values at Assumed % of Annual Rates of Stock Total Options Price Appreciation Granted to Exercise for Option Term Options Employees in Price Expiration ---------------------- Name Granted Fiscal Year Per Share Date 5% ($) 10% ($) ---- ------- --------------- --------- ---- ------ ------- William H. Baumhauer 250,000(1) 44% $6.31 06/30/99 $ 78,875 $157,750 Donald C. Moore 35,000(2) 6% 6.31 08/06/07 138,891 351,978 K.C. Moylan 50,000(1) 9% 6.31 08/06/07 198,415 502,825 Richard B. Wolf 25,000(1) 4% 6.31 08/06/07 99,208 251,413 Richard K. Hendrie 25,000(1) 4% 6.31 08/06/07 99,208 251,413
(1) Such options vest as to 25%, 25% and 50% of the amount of the grant on each of the first, second and third anniversaries of the date of grant, respectively, and under their existing terms will vest in full upon the consummation of the Proposed Fuddruckers Transaction. (2) Such options vest in full on the third anniversary of the date of grant and under their existing terms will vest in full upon the consummation of the Proposed Fuddruckers Transaction. Aggregate Option Exercises in Fiscal 1998 and Year-End Option Values
Value of Outstanding Number of Beneficial In-the-Money Options Shares Options at Fiscal Year-End at Fiscal Year-End Acquired Value -------------------------- ------------------ Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable - ---- ----------- -------- ----------- ------------- ----------- ------------- N/A N/A N/A N/A N/A N/A N/A
There were no options exercised in fiscal year 1998 by any of the named executive officers (as defined in Item 402 of Regulation S-K). Long-Term Incentive Plan--Award in Fiscal 1998
Performance Number of or Other Estimated Future Payouts Under Shares, Units Period Until Non Stock-Price-Based Plans or Other Maturation --------------------------- Name Rights or Payout Threshold Target Maximum ---- ------ --------- --------- ------ ------- William H. Baumhauer......... (1) June 30, 1997 (1) (1) (1)
(1) The long-term incentive plan implemented by DAKA's Board of Directors on July 3, 1994 for the Chief Executive Officer was designed to provide an incentive payment, payable at DAKA's option in the form of either cash or stock, equal to 2% of the increase in the market value of DAKA, as determined by the average 30 day trading price of DAKA common stock and the weighted average number of shares outstanding, from July 3, 1994 to June 30, 1997 in excess of 15% of the market value at June 30, 1994. As of June 30, 1997, Mr. Baumhauer's vested award under the plan amounted to 2% of the excess (if any) of (A) the market value of DAKA as of June 30, 1997 (determined based on the average aggregate trading price of the outstanding shares of DAKA common stock during the period beginning June 1, 1997 and ending June 30, 1997) over (B) $137,776,000. To take into account the impact of the Spin-Off Transaction on the operation of the plan, the Board of Directors resolved to treat Mr. Baumhauer's vested award as the equivalent of an option to acquire 228,260 shares of DAKA common stock at a price of $12.07 per share. Upon the consummation of the Spin-Off Transaction such deemed option was canceled through the issuance to Mr. Baumhauer of 37,973 shares of the Company's Common Stock, having a value of $265,014 based on the average closing price of the Common Stock during the three trading days immediately following the completion of the Spin-Off Transaction. Directors' Compensation In fiscal year 1998, non-employee Directors received a quarterly retainer of $3,000 and a fee of $1,000 per meeting attended, plus travel expenses. In connection with their agreement to serve on the Board of Directors of the Company following the Spin-Off Transaction, each non-employee director received in connection with the Spin-Off Transaction an option to purchase 2,500 shares of Common Stock at an exercise price equal to the fair market value of the Common Stock as of the date of grant. In addition, Messrs. Cox and Schwartz and Ms. Belton each received $2,400 in connection with the re-purchase of stock options. Employment Agreement The Moore Employment Agreement: On August 12, 1998, the Company entered into an employment agreement with Donald C. Moore to serve the Company as chief executive officer and chief financial officer. The agreement provides for an initial term of one (1) year and for automatic renewal each year so that the residual term of such agreement is never less than one year. Under the agreement, Mr. Moore receives an annual base salary of $250,000, subject to adjustment at the discretion of the Board of Directors. The agreement further provides that, in the event the Company terminates Mr. Moore's employment without "cause" (as defined below) or Mr. Moore terminates his employment for "good reason" (as defined below), the Company shall pay Mr. Moore an amount equal to Mr. Moore's cash compensation for two years. "Good reason" is defined in the agreement as (i) an assignment to Mr. Moore of duties other than those contemplated by the agreement, or a limitation on the powers of Mr. Moore not contemplated by the agreement, (ii) the removal of Mr. Moore from or failure to elect Mr. Moore to his named position, including the position of chief executive officer, or (iii) a reduction in Mr. Moore's rate of compensation or level of fringe benefits. "Cause" is defined in the agreement as Mr. Moore's (i) theft from or fraud on the Company, (ii) conviction of a felony or crime of moral turpitude, (iii) willful violation of the terms of the agreement, (iv) conscious disregard or neglect of his duties, or (v) willful and demonstrated unwillingness to perform his duties under the agreement. The Proposed Fuddruckers Transaction itself will not trigger any of Mr. Moore's rights or termination benefits under his employment agreement. Indemnification Agreements The Company has entered into Indemnification Agreements with certain of the executive officers of the Company and members of the Board who are not officers of the Company (the "Indemnitees"), pursuant to which the Company has agreed to advance expenses and indemnify such Indemnitees against certain liabilities incurred in connection with their services as executive officers and/or directors of the Company and in connection with their services as executive officers and/or directors of DAKA prior to the completion of the Spin-Off Transaction. In the event of a proceeding brought against an Indemnitee by or in the right of DAKA or the Company, such Indemnitee shall not be entitled to indemnification if such Indemnitee is adjudged to be liable to DAKA or the Company, as the case may be, or if applicable law prohibits such indemnification; provided, however, that, if applicable law so permits, indemnification shall nevertheless be made by the Company in such event if, and only to the extent that, the Court of Chancery of the State of Delaware, or another court in which such proceeding shall have been brought or is pending, shall determine. Under the terms of each Indemnification Agreement, the Company shall advance all reasonable expenses incurred by or on behalf of such Indemnitee in connection with any proceeding in which such Indemnitee is involved by reason of Indemnitee's service to the Company or by reason of Indemnitee's service to DAKA prior to the completion of the Spin-Off Transaction. Such statement shall include, among other things, an undertaking by or on behalf of such Indemnitee to repay any expenses so advanced if it shall be ultimately determined that such Indemnitee is not entitled to indemnification for such expenses. Compensation Committee Interlocks Alan D. Schwartz, a director of the Company who is also a member of the Compensation Committee, is Senior Managing Director-Corporate Finance of Bear Stearns. Bear Stearns acted as financial advisor to DAKA in connection with the Spin-Off Transaction and earned a fee of approximately $1.8 million for such services, which remains payable. In the past Bear Stearns and its affiliates have provided financial advisory and financing services to DAKA and have received fees for rendering such services. In addition, Bear Stearns is presently acting as advisor to the Company in connection with evaluating and seeking financial and strategic alternatives, including a possible sale of the Company. Compensation Committee Report The Compensation Committee reviews and approves compensation levels for the Company's executive officers and oversees and administers the Company's executive compensation programs. All members of the Compensation Committee, listed at the end of this report, are outside directors who are not eligible to participate in the compensation programs that the Compensation Committee oversees except for non-discretionary option grants. See "--Directors' Compensation." Philosophy: The Compensation Committee believes that the interests of the Company's stockholders are best served when compensation is directly aligned with the Company's financial performance. Therefore, the Compensation Committee has approved overall compensation programs which award a competitive base salary, and then encourage exceptional performance through meaningful incentive awards, both short and long term, which are tied to the Company's performance. Responsibilities: The responsibilities of the Compensation Committee include: - developing compensation programs that are consistent with and are linked to the Company's strategy; - assessing the performance of and determining an appropriate compensation package for the Chief Executive Officer; and - ensuring that compensation for the other executive officers reflects individual, team, and the Company's performance appropriately. Purpose: The Company's executive compensation programs are designed to: - attract, retain, and motivate key executive officers; - link the interests of executive officers with stockholders by encouraging stock ownership; - support the Company's goal of providing superior value to its stockholders and customers; and - provide appropriate incentives for executive officers, based on achieving key operating and organizational goals. The Compensation Committee believes that the Company's executive compensation policies should be reviewed during the first quarter of the fiscal year when the financial results of the prior fiscal year become available. The policies should be reviewed in light of their consistency with the Company's financial performance, its business plan and its position within the restaurant industry, as well as the compensation policies of similar companies in the restaurant business. The compensation of individual executives is reviewed annually by the Compensation Committee in light of its executive compensation policies for that year. In setting and reviewing compensation for the executive officers, the Compensation Committee considers a number of different factors designed to assure that compensation levels are properly aligned with the Company's business strategy, corporate culture and operating performance. Among the factors considered are the following: Comparability -- The Compensation Committee considers the compensation packages of similarly situated executives at companies deemed comparable to the Company. The objective is to maintain competitiveness in the marketplace in order to attract and retain the highest quality executives. This is a principal factor in setting base levels of compensation. Pay for Performance -- The Compensation Committee believes that compensation should in part be directly linked to operating performance. To achieve this link with regard to short-term performance, the Compensation Committee relies on cash bonuses which are determined on the basis of certain objective criteria and recommendations of the Chief Executive Officer. Equity Ownership -- The Compensation Committee believes that equity-based, long-term compensation aligns executives' long-range interests with those of the stockholders. These long-term incentive programs are reflected in the Company's stock option plans. The Compensation Committee believes that significant stock ownership is a major incentive in building stockholder value and reviews grants of options with that goal in mind. Qualitative Factors -- The Compensation Committee believes that in addition to corporate performance and specific business unit performance, in setting and reviewing executive compensation it is appropriate to consider the personal contributions that a particular individual may make to the overall success of the Company. Such qualitative factors as leadership skills, planning initiatives and employee development have been deemed to be important qualitative factors to take into account in considering levels of compensation. Annual Cash Compensation: Annual cash compensation for the executive officers consists of a base salary and a variable, at-risk incentive bonus under the Company's Management Annual Incentive Plan. It is the Company's general policy to pay competitive base compensation to its executive officers. The Compensation Committee annually reviews and, if appropriate, adjusts executive officers' base salaries. In making individual base salary recommendations, the Compensation Committee considers the executive's experience, management and leadership ability and technical skills, his or her compensation history, as well as the performance of the Company as a whole and, where applicable, the performance of specific business units. Under the Management Annual Incentive Plan, each executive is assigned a target incentive award. This incentive award, or some portion thereof, is "earned" through a combination of four factors: the Company's performance, business unit performance, attainment of predetermined individual goals, and the level of personal/leadership impact. This evaluation process is not strictly quantitative, but is largely based on qualitative judgments made by the Chief Executive Officer related to individual, team, and the Company's performance. Under DAKA's CEO Long Term Incentive Plan Mr. Baumhauer was eligible to earn a percentage of an increase in DAKA's value, as measured by stock appreciation above a predetermined rate of return, over a specified three-year period. The amount due under the CEO Long Term Incentive Plan vested at the end of fiscal year 1997. The Compensation Committee determined that, as a result of the Spin-Off Transaction, the Company would pay the amounts due under the under the CEO Long Term Incentive Plan through the issuance of Common Stock. Chief Executive Officer Compensation: Mr. Moore, the Company's current Chief Executive Officer, was determined by the Board of Directors to be the logical choice to serve as the Company's acting Chief Executive Officer upon the departure of Mr. Baumhauer. Upon the appointment of Mr. Moore as Chief Executive Officer, Mr. Moore's salary was adjusted commensurate with his new responsibilities. Mr. Moore is serving as Chief Executive Officer pursuant to an employment contract that includes severance provisions intended to create and incentive for Mr. Moore to continue to serve as Chief Executive Officer while the Company resolves issues concerning its strategic direction. Mr. Moore participates in the compensation programs as outlined above. Mr. Baumhauer, who served as the Company's Chief Executive Officer during fiscal year 1998, was employed by the Company pursuant to an employment contract. He participated in the compensation programs as outlined above. Compensation of Other Officers: The Company's executive compensation program for other executive officers is described above, although the corporate business unit and individual performance goals and the relative weighting of the quantitative performance factors described above varies, depending upon the responsibilities of particular officers. Erline Belton E.L. Cox Alan D. Schwartz Performance Graph [GRAPH] 07/15/97 06/26/98 -------- -------- Unique Casual Restaurants, Inc. $100.00 $91.96 Peer Group $100.00 $64.55 Russell 2000 Index $100.00 $119.44 The companies included in the peer group are: Rare Hospitality International, Inc.; Planet Hollywood International, Inc.; Avado Brands, Inc.; The Cheesecake Factory; Dave and Buster's, Inc.; Landry's Seafood Restaurants, Inc.; Rainforest Cafe, Inc.; and Logan's Roadhouse, Inc. The returns of each issuer in the foregoing group have been weighted according to the respective company's stock market capitalizations as of the beginning of the period. The Common Stock prices shown are neither indicative nor determinative of future stock price performance. The Company's Common Stock was not publicly traded prior to July 15, 1997. Accordingly, stock performance data is not presented for periods prior to that date. Item 12. Security Ownership of Certain Beneficial Owners and Management The following table sets forth the number of shares of Common Stock beneficially owned as of October 13, 1998 by the chief executive officer, the four other most highly compensated executive officers, each director, all directors and executive officers of the Company as a group, and each person known by the Company to be the beneficial owner of more than 5% of any class of the voting stock of the Company.
Amount and Nature of Beneficial Percent Name and Address of Beneficial Owner Ownership(l) Of Class - ------------------------------------ ------------ -------- Donald C. Moore(2)........................................ 100,617(3) *% E.L. Cox(2)............................................... 14,880(4) Erline Belton (2)......................................... 10,680(5) Alan D. Schwartz(2)....................................... 14,880(6) Joseph W. O'Donnell (2)................................... 7,500(7) K.C. Moylan(2)............................................ 73,440(8) Richard B. Wolf(2)........................................ 36,465(9) Richard K. Hendrie(2)..................................... 25,000(10) Donna L. Depoian(2)....................................... 21,969(11) Timothy R. Barakett(12)................................... 1,908,506(13) 16.4 Douglas A. Hirsch(14)..................................... 719,800(15) 6.2 Franklin Resources, Inc.(16).............................. 1,114,500(17) 9.6 Barrow, Hanley, Mewhinney & Strauss, Inc.(18)............. 579,600(19) 5.0 Atticus Management, Ltd.(20).............................. 820,200(21) 7.1 Atticus International, Ltd. (22).......................... 820,200(23) 7.1 All directors and executive officers as a group (9 persons).................................. 305,431(24) 2.6
- ----------- * Less than 1% (1) Beneficial share ownership is determined pursuant to Rule 13d-3 promulgated under the Exchange Act. Accordingly, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares the power to vote such security or the power to dispose of such security. The amounts set forth in the table as beneficially owned include shares owned, if any, by spouses and relatives living in the same home as to which beneficial ownership may be disclaimed. The amounts set forth in the table as beneficially owned include shares of Common Stock which directors and executive officers have the right to acquire pursuant to previously granted options exercisable within 60 days of October 13, 1998. (2) The address of the beneficial owner is c/o Unique Casual Restaurants, Inc., One Corporate Place, 55 Ferncroft Road, Danvers, Massachusetts 01923. (3) Includes 100,000 shares of Common Stock issuable upon the exercise of options, 91,250 of which vest and are exercisable only upon the closing of the Proposed Transaction. (4) Includes 14,500 shares of Common Stock issuable upon the exercise of options, 6,875 of which vest and are exercisable only upon the closing of the Proposed Transaction. (5) Includes 10,000 shares of Common Stock issuable upon the exercise of options, 5,675 of which vest and are exercisable only upon the closing of the Proposed Transaction. (6) Includes 14,500 shares of Common Stock issuable upon the exercise of options, 5,375 of which vest and are exercisable only upon the closing of the Proposed Transaction. (7) Includes 7,500 shares of Common Stock issuable upon the exercise of options, 5,375 of which vest and are exercisable only upon the closing of the Proposed Transaction. (8) Includes 70,000 shares of Common Stock issuable upon the exercise of options, 57,500 of which vest and are exercisable only upon the closing of the Proposed Transaction. (9) Includes 32,500 shares of Common Stock issuable upon the exercise of options, 18,750 of which vest and are exercisable only upon the closing of the Proposed Transaction. (10) Includes 25,000 shares of Common Stock issuable upon the exercise of options, 18,750 of which vest and are exercisable only upon the closing of the Proposed Transaction. (11) Includes 21,300 shares of Common Stock issuable upon the exercise of options, 20,000 of which vest and are exercisable only upon the closing of the Proposed Transaction. (12) The address of the beneficial owner is c/o Atticus Capital, L.L.C., 590 Madison Avenue, 32nd Floor, New York, NY 10022. (13) This information is based on a Schedule 13D/A, dated September 1, 1998, filed by Timothy R. Barakett with the SEC. Mr. Barakett is the Managing Member of Atticus Holdings, L.L.C., a Delaware limited liability company that serves as the general partner of Atticus Partners, L.P. and Atticus Qualified Partners, L.P., which beneficially own 276,906 and 479,950 shares of Common Stock, respectively. Mr. Barakett is also the President of Atticus Management, Ltd., an international business company organized under the laws of the British Virgin Islands that serves as the manager of Atticus International, Ltd., which beneficially owns 820,200 shares of Common Stock. Mr. Barakett is also the Managing Member of Atticus Capital, L.L.C, which has investment discretion with respect to certain managed accounts (the "Managed Accounts"), which collectively beneficially own 331,450 shares of Common Stock. Mr. Barakett is therefore deemed to be the beneficial owner of all shares of Common Stock owned by Atticus Partners, L.P., Atticus Qualified Partners, L.P., Atticus International, Ltd. and the Managed Accounts. (14) The address of the beneficial owner is c/o Seneca Capital Advisors LLC, 830 Third Avenue, 14th Floor, New York, NY 10022. (15) Includes 569,800 shares beneficially owned by Seneca Capital Advisors LLC and Seneca Capital Investments, LLC, of which Mr. Hirsch is a controlling person. Includes 150,000 shares with respect to which Mr. Hirsch disclaims beneficial ownership. This information is based on a Schedule 13D, dated June 23, 1997, filed by Seneca Capital Advisors LLC on behalf of Douglas Hirsch with the SEC. (16) The address of the beneficial owner is 777 Mariners Island Blvd., 6th Floor, San Mateo, CA 94404. (17) This information is based on a Schedule 13G, dated February 11, 1998, filed by Franklin Resources, Inc. with the SEC. (18) The address of the beneficial owner is 3232 McKinney Avenue, 15th Floor, Dallas, TX 75204-2429. (19) This information is based on a Schedule 13G, dated February 13, 1997, filed by Barrow, Hanley, Mewhinney & Strauss, Inc. with the SEC. (20) The address of the beneficial owner is c/o Atticus Capital, L.L.C., 590 Madison Avenue, 32nd Floor, New York, NY 10022 (21) This information is based on a Schedule 13D/A, dated September 1, 1998, filed by Atticus Management, Ltd. with the SEC. Mr. Barakett is the Managing Member of Atticus Holdings, L.L.C., a Delaware limited liability company that serves as the general partner of Atticus Partners, L.P. and Atticus Qualified Partners, L.P., which beneficially own 276,906 and 479,950 shares of Common Stock, respectively. Mr. Barakett is also the President of Atticus Management, Ltd., an international business company organized under the laws of the British Virgin Islands that serves as the manager of Atticus International, Ltd., which beneficially owns 820,200 shares of Common Stock. Mr. Barakett is also the Managing Member of Atticus Capital, L.L.C, which has investment discretion with respect to the Managed Accounts, which collectively beneficially own 331,450 shares of Common Stock. Mr. Barakett is therefore deemed to be the beneficial owner of all shares of Common Stock owned by Atticus Partners, L.P., Atticus Qualified Partners, L.P., Atticus International, Ltd. and the Managed Accounts. (22) The address of the beneficial owner is c/o Atticus Capital, L.L.C., 590 Madison Avenue, 32nd Floor, New York, New York 10022. (23) This information is based on a Schedule 13D/A, dated September 1, 1998, filed by Atticus International, Ltd. with the SEC. Mr. Barakett is the Managing Member of Atticus Holdings, L.L.C., a Delaware limited liability company that. serves as the general partner of Atticus Partners, L.P. and Atticus Qualified Partners, L.P., which beneficially own 276,906 and 479,950 shares of Common Stock, respectively, Mr. Barakett is also the President of Atticus Management, Ltd., an international business company organized under the laws of the British Virgin Islands that serves as the manager of Atticus International, Ltd., which beneficially owns 820,200 shares of Common Stock. Mr. Barakett is also the Managing Member of Atticus Capital, L.L.C, which has investment discretion with respect to the Managed Accounts, which collectively beneficially own 331,450 shares of Common Stock. Mr. Barakett is therefore deemed to be the beneficial owner of all shares of Common Stock owned by Atticus Partners, L.P., Atticus Qualified Partners, L.P., Atticus International, Ltd. and the Managed Accounts. (24) Includes 295,300 shares of Common Stock issuable upon the exercise of options, 229,550 of which vest and are exercisable only upon the closing of the Proposed Transaction. Item 13. Certain Relationships and Related Transactions William H. Baumhauer, the former chairman and chief executive officer of the Company, was a party to an employment agreement with the Company. Under the agreement, Mr. Baumhauer received an annual base salary of $450,500, subject to adjustment at the discretion of the Board. The Baumhauer Employment Agreement further provided that in the event the Company terminated Mr. Baumhauer's employment without "cause" (as defined therein) or Mr. Baumhauer terminated his employment for "good reason" (as defined therein), the Company would be required to pay Mr. Baumhauer an amount equal to his cash compensation for three years. "Good reason" was defined in the agreement as (i) an assignment to Mr. Baumhauer of duties other than those contemplated by the agreement, or a limitation on his powers not contemplated by the agreement, (ii) the removal of Mr. Baumhauer from or failure to elect him to his named position, or (iii) a reduction in his rate of compensation or level of fringe benefits. "Cause" is defined in each agreement as Mr. Baumhauer's (i) theft from or fraud on the Company, (ii) conviction of a felony or crime of moral turpitude, (iii) willful violation of the terms of the agreement, (iv) conscious disregard or neglect of his duties, or (v) willful and demonstrated unwillingness to perform his duties under the agreement. The consummation of the Proposed Fuddruckers Transaction would have given rise to "Good Reason" under Mr. Baumhauer's employment agreement such that he would have become entitled to termination benefits equal to his base compensation for a period of three years following a sale of Fuddruckers if he resigned after the closing of the Proposed Fuddruckers Transaction. In connection with Mr. Baumhauer's resignation in July 1998 to pursue other opportunities, the Company's Board of Directors reached an agreement with Mr. Baumhauer whereby, in consideration of Mr. Baumhauer's contribution to the Fuddruckers business and his commitment to cooperate with the Company in satisfying the various pre-closing covenants and conditions required by the Stock Purchase Agreement, Mr. Baumhauer is entitled, if and when the Proposed Fuddruckers Transaction is consummated, to (i) a cash payment in the amount of $675,000 and (ii) immediate vesting of options to acquire 187,500 shares of the Company's Common Stock at $6.31 per share which were not vested at the time of Mr. Baumhauer's resignation, which options would then be exercisable until June 30, 1999 and terminate on that date unless exercised. In addition, the Board approved a bonus for Mr. Baumhauer for his performance during fiscal 1998 and resolved to make the payment of such bonus contingent on the closing of the Proposed Fuddruckers Transaction. Joseph W. O'Donnell, a director of the Company who is also a member of the Compensation Committee, is a principal in Osgood, O'Donnell & Walsh, which provides marketing consulting services to the Company. During fiscal year 1997, the Company paid Osgood, O'Donnell & Walsh $83,086 for such services and related expenses. Mr. O'Donnell also owns a 66.2% interest in PulseBack, Inc. ("PulseBack"), a company in which the Company owns a 32.5% interest. PulseBack provides customer satisfaction measurement services to the Company. During fiscal 1998, the Company paid PulseBack $112,433 for such services. On February 2, 1998 the Company sold a Company-owned Champps restaurant in Minnetonka, Minnesota to Dean P. Vlahos, a former Director of the Company and the former President and Chief Executive officer of Champps for $2.9 million, representing the fair value of the restaurant based upon an independent appraisal. The purchase price was settled through a cash payment by Mr. Vlahos of $1.5 million and the cancellation of Mr. Vlahos' employment contract. The Company recognized a net gain of approximately $700,000 on this transaction. As part of this transaction, the Company entered into a separation agreement with Mr. Vlahos which grants Mr. Vlahos the right, subject to certain restrictions, to develop up to six franchised Champps restaurants in the United States by February 2, 2006. Under the separation agreement, Mr. Vlahos will not pay a franchise fee with respect to such restaurants and will pay a continuing royalty of 1.25% of gross sales. Under Mr. Vlahos' employment contract, Mr. Vlahos provided full-time services to Champps in the capacity of Chief Executive Officer and President and had the authority to control the operations of Champps so long as the average gross revenues per square foot of the Champps-owned restaurants was at least $400. During the period of Mr. Vlahos' full-time employment, Champps paid Mr. Vlahos an initial base salary of $350,000 plus a bonus of 50% of his base salary if he attained certain targets established by the Board, which amount could be increased to up to 100% of his base salary if he exceeded such performance targets by margins determined by the Board. Twenty percent (20%) of the potential bonus payments for Mr. Vlahos were related to performance targets established for DAKA as a whole (prior to the Spin-Off Transaction) and eighty percent (80%) were related to performance targets established for Champps. Following the Spin-Off Transaction and the assumption of the Vlahos Employment Agreement, 20% of the potential bonus payments for Mr. Vlahos related to the Company as a whole and 80% related to performance targets established for Champps. If Mr. Vlahos left the Company for "good reason," or was terminated by the Company without "cause," during the term of his employment contract, the Company would have been obligated to pay Mr. Vlahos his remaining salary and bonus as severance. "Good reason" was defined in such agreement as (i) an assignment to Mr. Vlahos of duties other than those contemplated by the agreement, or a limitation on the powers of Mr. Vlahos not contemplated by the agreement, (ii) the removal of Mr. Vlahos from or failure to elect Mr. Vlahos to his named position, or (iii) a reduction in Mr. Vlahos' rate of compensation or level of fringe benefits. "Cause" was defined in the agreement as Mr. Vlahos' (i) theft from or fraud on the Company, (ii) conviction of a felony, (iii) violation of the terms of the agreement, (iv) conscious disregard or neglect of his duties, or (v) demonstrated unwillingness to perform his duties under the agreement. In the event that Mr. Vlahos' employment was terminated for any reason other than by the Company for cause, Mr. Vlahos would have been provided the right, subject to certain obligations to the Company, to establish a franchise for up to five Champps Americana restaurants anywhere in the world, but no such restaurant could be within a 20 mile radius of any other Champps restaurant, or in any territory that was franchised or licensed by Champps. PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K. The following are being filed as part of this Annual Report on Form 10-K. A. Financial Statements: *** Independent Auditors' Report *** Consolidated Balance Sheets - June 28, 1998 and June 29, 1997 *** Consolidated Statements of Operations - Years ended June 28, 1998, June 29, 1997 and 1996. *** Consolidated Statements of Cash Flows - Years ended June 28, 1998, June 29, 1997 and 1996. *** Consolidated Statements of Changes in Stockholders' Equity - Years ended June 28, 1998, June 29, 1997 and 1996. *** Notes to Consolidated Financial Statements - Years ended June 28, 1998, June 29, 1997 and 1996. B. Financial Statement Schedules: There are no Financial Statement Schedules required to be filed. Information required by Article 12 of Regulation S-X with respect to Valuation and Qualifying Accounts has been included in the Notes to the Consolidated Financial Statements. C. Exhibits: * 2.1 Agreement and Plan of Merger, dated as of May 27, 1997, by and among Compass Interim, Inc. ("Compass Interim"), Compass Holdings, Inc. ("Purchaser"), Compass Group PLC ("Parent") and DAKA International, Inc. ("DAKA International"). * 2.2 Reorganization Agreement dated as of May 27, 1997, by and among DAKA International, Daka, Inc. ("Daka"), the Company, Parent and Compass Holdings, together with certain exhibits thereto. * 2.3 Agreement and Plan of Merger among Champps Entertainment, Inc. ("Champps"), DAKA and CEI Acquisition Corp., dated as of October 10, 1995, incorporated herein by reference to DAKA's Registration Statement on Form S-4 (File No. 33-65425) ("1996 DAKA Form S-4"). ** 2.4 Series D Convertible Preferred Stock and Warrant Purchase Agreement, dated as of January 12, 1996, by and among La Salsa Holding Co. and Casual Dining Ventures, Inc. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to the Series D Convertible Preferred Stock and Warrant Purchase Agreement are omitted. The Company hereby undertakes to furnish supplementally a copy of any omitted Schedule to the Commission upon request. ** 2.5 Stock Purchase Agreement, dated as of March 18, 1996, by and among Casual Dining Ventures, Inc., DAKA, Champps Development Group, Inc., Steven J. Wagenheim, Arthur E. Pew, III, PDS Financial Corporation, Douglas B. Tenpas and certain other stockholders of Americana Dining Corp. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to the Stock Purchase Agreement are omitted. The Company hereby undertakes to furnish supplementally a copy of any omitted Schedule to the Commission upon request. ** 2.6 Asset Purchase Agreement, dated March 18, 1996, between Americana Dining Corp., as Seller, and New Brighton Ventures, Inc., as Buyer. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to the Asset Purchase Agreement are omitted. The Company hereby undertakes to furnish supplementally a copy of any omitted Schedule to the Commission upon request. ** 2.7 Stock Purchase Agreement, dated as of March 29, 1996, by and among DAKA, The Great Bagel & Coffee Franchising Corp., GBC Credit Company, Gemini Production Facility, Inc., The Great Bagel & Coffee Company, Mark C. Gordon, Brian H. Loeb, Jason R. Olivier, Michael F. Zerbib, Nicholas D. Zerbib, and Thierry E. Zerbib. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to the Stock Purchase Agreement are omitted. The Company hereby undertakes to furnish supplementally a copy of any omitted Schedule to the Commission upon request. ** 2.8 Stock Purchase Agreement, dated as of March 31, 1996, by and among Casual Dining Ventures, Inc., DAKA and Edgebrook, Inc. Pursuant to Item 601(b)(2) of Regulation S-K, the Schedules to the Stock Purchase Agreement are omitted. The Company hereby undertakes to furnish supplementally a copy of any omitted Schedule to the Commission upon request. * 3.1 Certificate of Incorporation of the Company. * 3.2 By-laws of the Company * 3.3 Form of Amended and Restated Certificate of Incorporation of the Company. * 3.4 Form of Amended and Restated By-laws of the Company. 3.5 Certificate of Designations, Preferences and Rights of a Series of Preferred Stock of the Company, dated January 30, 1998, incorporated herein by reference to the Company's Current Report on Form 8-K filed February 2, 1998. 4.2 Amended and Restated Shareholder Rights Agreement, dated as of January 30, 1998, between the Company and American Stock Transfer and Trust Company, as Rights Agent, incorporated herein by reference to the Company's Current Report on Form 8-K filed February 2, 1998. * 4.1 Specimen Stock Certificate for shares of the UCRI Common Stock. * 10.1 Tax Allocation Agreement dated as of May 27, 1997, by and among DAKA, the Company, and Parent. * 10.2 Post-Closing Covenants Agreement, dated as of May 27, 1997, by and among DAKA, Daka, Inc., the Company, Champps, Fuddruckers, Inc., Purchaser and Parent. * 10.3 Stock Purchase Agreement, dated as of May 26, 1997, between DAKA, Parent, Purchaser, First Chicago Equity Corporation, Cross Creek Partners I and the other holders of Series A Preferred Stock of DAKA. * 10.4 Form of the Company's 1997 Stock Option and Incentive Plan. * 10.5 Form of the Company's 1997 Stock Purchase Plan. * 10.6 Form of Indemnification Agreement, by and between the Company and directors and officers of DAKA. * 10.7 Employment Agreement, dated as of January 1, 1997, by and between DAKA and William H. Baumhauer. * 10.8 Employment Agreement, dated as of January 1, 1997, by and between DAKA and Allen R. Maxwell. * 10.9 Employment Agreement, dated as of February 21, 1996, by and among Dean P. Vlahos, DAKA and Champps. **10.10 Third Amended and Restated Registration Rights Agreement, dated as of January 12, 1996, by and among La Salsa Holding Co., FMA High Yield Income L.P., WSIS Flexible Income Partners L.P., WSIS High Income L.P., Howdy S. Kabrins, La Salsa, Inc., Crown Associates III, L.P., Crown-Glynn Associates, L.P., Nueberger & Berman as Trustee for the Crown Trust, Theodore H. Ashford, Noro-Moseley Partners II, L.P., Seidler Salsa, L.P., Bankers Trust Company as Master Trustee for Hughes Aircraft Retirement Plans, Charles A. Lynch, Sienna Limited Partnership I, Sienna Limited Partnership II, Sienna Holdings, Inc., as Nominee, InterWest Partners IV, Donald Benjamin, Vicki Tanner, Ronald D. Weinstock, Inc., Frank Holdraker, and Casual Dining Ventures, Inc. **10.11 Fourth Amended and Restated Restricted Stock Agreement, dated as of January 12, 1996, by and among La Salsa Holding Co., Howdy S. Kabrins, La Salsa, Inc., InterWest Partners IV, Sienna Holding, Inc., Sienna Limited Partnership I, Charles A. Lynch, Theodore H. Ashford, Crown Associates III, L.P., Crown-Glynn Associates, L.P., Nueberger & Berman as Trustee for The Crown Trust, Noro-Moseley Partners II, L.P., Seidler Salsa, L.P., Bankers Trust Company, as Master Trustee, for Hughes Aircraft Retirement Plans, FMA High Yield Income L.P., WSIS Flexible Income Partners L.P., WSIS High Yield Income L.P., Sienna Limited Partnership II, Donald Benjamin, Vicki Tanner, Ronald D. Weinstock, Inc., Frank Holdraker, and Casual Dining Ventures, Inc. **10.12 La Salsa Holding Co. Warrant to Purchase Shares of Series D Convertible Preferred Stock, dated as of January 12, 1996, issued to Casual Dining Ventures, Inc. by La Salsa Holding Co. **10.13 Severance, Non-Competition and Confidentiality Agreement, dated as of March 18, 1996, between Steven J. Wagenheim and Americana Dining Corp. **10.14 La Salsa License Agreement, dated as of February 14, 1996, by and between La Salsa Franchise, Inc. and La Salsa Holding Co. ***10.15 Separation Agreement, dated as of February 2, 1998, by and among Dean P. Vlahos, the Company and Champps. ***10.16 Asset Purchase Agreement, dated as of February 2, 1998, by and between Dean P. Vlahos and Champps. ***10.17 Champps Restaurant Development Agreement, dated as of February 2, 1998, by and between Dean P. Vlahos and Champps. ***10.18 Venturino Settlement Agreement, dated as of December, 1997, by and among Rita Venturino, Cosmos Phillips and Matthew Minogue, et. al. and DAKA International, Inc. and William H. Baumhauer. ***10.19 Stock Purchase Agreement, dated as of July 31, 1998, by and between King Cannon, Inc. and Unique Casual. Restaurants, Inc. ***10.20 Employment Agreement, dated as of August 12, 1998, by and between Unique Casual Restaurants, Inc. and Donald C. Moore. 10.21 Post-Closing Payments Agreement, dated as of January 21, 1998, by and among DAKA International, Inc., Daka, Inc., Compass Group PCL, the Company, Champps and Fuddruckers. ***21.1 Subsidiaries of the Company. ***23.1 Consent of Deloitte & Touche LLP ***24.1 Powers of Attorney. * Incorporated herein by reference to the Company's Registration Statement on Form 10 filed June 3, 1997, as amended. ** Incorporated herein by reference to the Annual Report on Form 10-K of DAKA International for the year ended June 29, 1996. *** Previously filed D. Reports on Form 8-K Not applicable. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. UNIQUE CASUAL RESTAURANTS, INC. (Registrant) By: /s/Donald C. Moore ----------------------- Donald C. Moore Director, Chief Executive Officer, Chief Financial Officer and Treasurer (Principal Executive, Financial and Accounting Officer) Date: October 26, 1998 Pursuant to the requirement 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 date indicated. Signature Title E. L. Cox* Chairman of the Board Joseph W. O'Donnell* Director Erline Belton* Director Alan D. Schwartz* Director /s/Donald C. Moore Director, Chief Executive Officer, - ------------------------ Chief Financial Officer and Treasurer Donald C. Moore (Principal Executive, Financial and Accounting Officer) *By: /s/Donna L. Depoian Date: October 26, 1998 ----------------------- Donna L. Depoian Attorney-In-Fact EX-10.21 2 Exhibit 10.21 POST-CLOSING PAYMENTS AGREEMENT This POST-CLOSING PAYMENTS AGREEMENT (the "Agreement") is dated as of January __, 1998 among DAKA INTERNATIONAL, INC., a Delaware corporation ("International"), DAKA, INC., a Massachusetts corporation ("Daka"), COMPASS GROUP PLC, a public limited company incorporated in England and Wales ("Compass"), COMPASS HOLDINGS, INC., a Delaware corporation ("Compass Holdings"), UNIQUE CASUAL RESTAURANTS, INC., a Delaware corporation ("UCRI"), CHAMPPS ENTERTAINMENT, INC., a Minnesota corporation ("Champps"), and FUDDRUCKERS, INC., a Texas corporation ("Fuddruckers"). RECITALS WHEREAS, under the terms of an Agreement and Plan of Merger dated as of May 27, 1997 (the "Merger Agreement"), by and among Compass, Compass Holdings, Compass Interim, Inc. ("Compass Interim") and International, International agreed to transfer its restaurant business to UCRI, and Compass Holdings agreed to commence a tender offer for the shares of International and to thereafter cause the merger of International into Compass Interim (the "Acquisition"); and WHEREAS, as a part of the transactions described in the Merger Agreement, the following agreements were entered into: (a) the Reorganization Agreement, dated as of May 27, 1997, among International, Daka, UCRI, Compass and Compass Holdings (the "Reorganization Agreement"), (b) the Tax Allocation Agreement, dated as of May 27, 1997, among International, UCRI and Compass (the "Tax Allocation Agreement"), (c) the Post-Closing Covenants Agreement, dated as of May 27, 1997, among International, UCRI, Champps, Fuddruckers, Compass and Compass Holdings (the "PCCA"), and (d) the Transition Agreement, dated as of July 17, 1997, among UCRI, International and Compass (the "Transition Agreement") (collectively, the "Ancillary Agreements"); and WHEREAS, the Merger Agreement and Ancillary Agreements specify certain actions to be taken following the effective date of the Acquisition, including but not limited to certain payments and purchase price adjustments pursuant to Articles IV and V, respectively, of the PCCA; and WHEREAS, the parties to this Agreement have determined to set forth the amount of such post-closing payments, the method of payment and certain other post-closing matters; NOW, THEREFORE, in consideration of the premises, and of the terms and conditions set forth herein, the parties hereto agree as follows: Section 1. Trade Receivables and Obligations Settlement. The parties agree as follows: (a) Attached hereto as Schedule 1(a) and Schedule 6 is a complete and accurate list of all Trade Receivables delivered by Daka to UCRI, as of the date hereof, pursuant to Section 4.8(a) of the PCCA. The parties acknowledge that payment with respect to the Trade Receivables set forth in Schedule 1(a) may be received by Daka as the named account creditor or by Compass as the successor to International. The parties agree that any payment received by Compass, Daka or International with respect to such Trade Receivables shall be remitted to UCRI not later than the third business day following receipt and that Compass shall have no right of set-off whatsoever against any such amount. (b) Attached as Schedule 1(b) is a complete and accurate description of all Obligations delivered by Daka to UCRI, as of the date hereof, pursuant to Section 4.8(a) of the PCCA. (c) The amount to be remitted by UCRI to Compass under Section 4.8(a) of the PCCA is $3,800,000. (d) Each party has performed fully, to the other party's satisfaction, all duties and obligations set forth in Article IV of the PCCA, and all further performance obligations thereunder shall hereby cease, including without limitation Compass' obligation to collect any Trade Receivables, to pay any Obligations or to otherwise act in any capacity as agent on behalf of UCRI in connection therewith. Notwithstanding the foregoing, Compass' and UCRI's respective performance obligations under Section 4.8(b) of the PCCA shall remain in effect, as provided therein. Section 2. Balance Sheet and Managed Volume/Profit Adjustments. The parties agree that the aggregate amount to be paid by UCRI to Compass pursuant to Sections 5.2 and 5.3 of the PCCA is $15,000,000. Section 3. Amount and Method of Payment. The parties agree as follows: (a) The methods described in Sections 4.8(a) and 5.4 of the PCCA for determining the amounts of payments and the method of payment under Articles IV and V of the PCCA are no longer in force and effect and are superseded in their entirety by this Agreement. In addition, Sections 5.6, 5.10, 5.11, 5.12 and 5.13 of the Transition Agreement are superseded in their entirety by this Agreement. (b) The aggregate amount of $18,800,000 owing by UCRI to Compass pursuant to Articles IV and V of the PCCA (the "Post-Closing Payment"), as described in Sections 1 and 2 hereof, shall be paid as follows: (i) Retained Cash (Section 4) $4,200,000 (ii) Tax Refund (Section 5) 6,300,000 (iii) Assigned Trade Receivables (Section 6) 4,200,000 (iv) Assigned UCRI Accounts (Section 7) 2,300,000 (v) Assigned Tax Benefits (Section 8) 8,000,000 (vi) Assigned Rebates (Section 9) 200,000 (vii) Agreed Discount (Section 10) (6,400,000) ----------- Total $18,800,000 (c) UCRI will have no rights or interests in any assets (or any portions thereof) assigned by UCRI to Compass and credited against the Post-Closing Payment pursuant to this Agreement to the extent that the aggregate value of such asset exceeds $18,800,000, or otherwise. Compass will have no rights or interests in any assets (or any portion thereof) assigned by UCRI to Compass and credited against the Post-Closing Payment pursuant to this Agreement to the extent that the aggregate value of such asset is less than $18,800,000, or otherwise. Except for any Assigned UCRI Account that is evidenced by a note and is to be delivered to Compass pursuant to Section 7 below, Compass acknowledges and agrees that it is in possession of all cash or other assets to be conveyed or delivered by UCRI to Compass pursuant to this Agreement. Section 4. Retained Cash. The parties agree that the amount of cash in the possession of Compass that is classified as UCRI Assets pursuant to Section 1.1 of the Reorganization Agreement equals $4,200,000. The parties further agree that ownership of such cash amount of $4,200,000 has been conveyed to Compass (the "Retained Cash") pursuant to that certain Conveyance and Assignment Agreement, dated as of the date hereof, between UCRI and Compass Holdings (the "Conveyance and Assignment Agreement") and will be credited against the Post- Closing Payment as specified in Section 3(b) hereof. Section 5. Tax Refund. The parties agree that (a) the Refund (as defined in that certain letter from UCRI to Compass, dated July 14,1997) equals $6,300,000 and has been received and retained by Compass in accordance with Compass' lien on and security interest therein, (b) the Refund has been conveyed to Compass pursuant to the Conveyance and Assignment Agreement and will be credited against the Post-Closing Payment as specified in Section 3(b) hereof, and (c) UCRI shall have no further rights to or claims on the Refund as a UCRI Asset pursuant to the Tax Allocation Agreement or otherwise. Section 6. Assigned Trade Receivables. Attached as Schedule 6 is a list of trade receivables that have been assigned by UCRI to Compass (the "Assigned Trade Receivables") pursuant to the Conveyance and Assignment Agreement. The parties agree that $4,200,000 will be credited against the Post-Closing Payment as specified in Section 3(b) hereof in consideration for such assignment. The parties further agree that all client advances related to the Assigned Trade Receivables are the responsibility of Compass, and UCRI will have no liability in connection therewith. Section 7. Assigned UCRI Accounts. Attached as Schedule 7 is a list of certain notes receivable and accounts that have been assigned by UCRI to Compass (the "Assigned UCRI Accounts") pursuant to the Conveyance and Assignment Agreement. To the extent that any Assigned UCRI Account is evidenced by a note, each such note has been endorsed by UCRI and delivered to Compass. The parties agree that $2,300,000 will be credited against the Post-Closing Payment as specified in Section 3(b) hereof in consideration for such assignment. Section 8. Assigned Tax Benefits. Section 3.2(c) of the Tax Allocation Agreement provides that Compass shall pay to UCRI the amount of the Income Tax Benefit (as defined therein) associated with any Carryforward Item (as defined therein). UCRI has assigned its rights to any such payment under Section 3.2(c) (the "Assigned Tax Benefits") pursuant to the Conveyance and Assignment Agreement. The parties agree that $8,000,000 will be credited against the Post-Closing Payment as specified in Section 3(b) hereof in consideration for such assignment. Section 9. Assigned Rebates. Attached as Schedule 9 is a list of certain rebates that were classified as UCRI Assets, which rebates have been assigned by UCRI to Compass (the "Assigned Rebates") pursuant to the Conveyance and Assignment Agreement. The parties agree that $200,000 will be credited against the Post-Closing Payment as specified in Section 3(b) hereof in consideration for such assignment. Section 10. Agreed Discount. In lieu of an itemized valuation of the Refund, the Assigned Trade Receivables, the Assigned UCRI Accounts, the Assigned Tax Benefits and the Assigned Rebates, the parties have assigned an aggregate discount of $6,400,000 to such items. Section 11. Venturino Claim. As a condition to the various agreements of the parties contained in this Agreement and in furtherance thereof, the parties each acknowledge and agree as follows: (a) UCRI (i) in accordance with the Stipulation and Agreement of Settlement, dated December 19, 1997, among Shapiro Haber & Urmy LLP, Milberg Weiss Bershad Hynes & Lerach LLP, Schiffrin & Craig, Ltd. and Law Offices of Alfred G. Yates, Jr. (collectively as counsel for the Plaintiffs) and Goodwin, Procter & Hoar LLP (as counsel for the Defendants) and Daka International, Inc. (the "Settlement Agreement"), and in accordance with the Supplemental Agreement, dated December 15, 1997, among the parties listed above (together with the Settlement Agreement, the "Venturino Agreements"), has directed National Union Fire Insurance Company of Pittsburgh, PA (the "Insurer") to proceed promptly to complete the settlement (the "Venturino Settlement") of the Venturino Claim (as defined in Section 2.1(d) of the PCCA) and to pay all settlement amounts as directed in the final approval of the Venturino Settlement by the United States District Court for the District of Massachusetts (the "Court"), (ii) in accordance with the Venturino Agreements, has directed its counsel to immediately take all actions required to complete the Venturino Settlement and will not withdraw or modify these instructions, (iii) has fully complied with all requests to date of plaintiff's counsel in the Venturino Claim for confirmatory discovery so that no further discovery is necessary to complete the Venturino Settlement, except as may be directed by the Court after the date hereof, and (iv) has notified, or has caused its counsel to notify, the Court in writing that the Venturino Claim has been settled and has filed an appropriate motion seeking court approval of the Venturino Settlement. (b) UCRI will promptly take all actions necessary and to otherwise use all commercially reasonable efforts to cause the Venturino Settlement to be completed as soon as practical in accordance with the Venturino Agreements. Section 12. Miscellaneous. (a) UCRI makes no representations or warranties regarding the condition or value of the Tax Refund, the Assigned Trade Receivables, the Assigned UCRI Accounts, the Assigned Tax Benefits or the Assigned Rebates, and Compass agrees that it takes such assets as is. (b) Except as otherwise expressly amended or modified by this Agreement, the Merger Agreement and the Ancillary Agreements shall remain in full force and effect, including without limitation (i) UCRI's obligations pursuant to the Transition Agreement regardless of whether UCRI relocates its corporate headquarters and (ii) UCRI's obligations pursuant to the Tax Allocation Agreement to provide to Compass access to tax personnel and records. The parties hereto may modify or amend this Agreement only by written agreement executed and delivered by duly authorized officers of the respective parties. (c) No delay on the part of any party hereto in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any waiver on the part of any party hereto of any right, power or privilege hereunder operate as a waiver of any other right, power or privilege hereunder, nor will any single or partial exercise of any right, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. No waiver will be effective hereunder unless it is in writing. Unless otherwise provided, the rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies which the parties may otherwise have at law or in equity. (d) For the convenience of the parties, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts shall together constitute the same agreement. (e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE. (f) Any notice, request, instruction or other communication to be given hereunder by any party to any other shall be in writing and shall be deemed to have been duly given (i) on the date of delivery if delivered personally, or by telecopy or telefacsimile, upon confirmation of receipt, (ii) on the first business day following the date of dispatch if delivered by Federal Express or other nationally reputable next-day courier service, or (iii) on the third business day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice: (i) If to UCRI, Champps or Fuddruckers: Unique Casual Restaurants, Inc. One Corporate Place 55 Ferncroft Road Danvers, Massachusetts 01923-4001 Attention: General Counsel (ii) If to Compass, International or Daka: Compass Group USA, Inc. 2400 Yorkmont Road Charlotte, North Carolina 28217 Attention: General Counsel (g) The Merger Agreement, the Ancillary Agreements, the Confidentiality Agreement , the Assignment of Debt and Collateral by UCRI, dated November 20, 1997, and this Agreement constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof and thereof. (h) No party to this Agreement shall convey, assign or otherwise transfer any of its rights or obligations under this Agreement without the express written consent of the other parties hereto in their sole and absolute discretion, except that any party hereto may assign any of its rights hereunder to a successor to all or any part of its business. Except as aforesaid, any such conveyance, assignment or transfer without the express written consent of the other parties shall be void ab initio. No assignment of this Agreement shall relieve the assigning party of its obligations hereunder. (i) If any provision of this Agreement or the application thereof to any person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon any such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties. (j) Nothing contained in this Agreement is intended to confer upon any person or entity other than the parties hereto and their respective successors and permitted assigns, any benefit, right or remedies. (k) (i) The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which they are entitled at law or in equity. (ii) Except for claims barred by the applicable statute of limitations (which may not be pursued by the parties in any judicial, arbitral or other forum), any and all disputes between the parties that arise out of or relate to this Agreement or any other agreement between the parties entered into in connection herewith or the transactions contemplated hereby or thereby, and which cannot be amicably settled, shall be determined solely and exclusively by arbitration administered by the American Arbitration Association ("AAA") under its commercial arbitration rules for such disputes at its office in Boston, Massachusetts. The parties expressly, unconditionally and irrevocably waive any right to recision, repudiation or any similar remedy in any legal action hereunder. The arbitration panel (the "Panel") shall be formed of three arbitrators approved by the AAA, one to be appointed by Compass, one to be appointed by UCRI, and the third to be appointed by the first two or, in the event of failure to agree within 30 days, by the President of the AAA. Judgment on the award rendered by the Panel may be entered in any court having jurisdiction thereof. (iii) To the extent a court action is authorized above, the parties hereby consent to the jurisdiction of the United States District Court of Delaware. Each of the parties waives personal service to any and all process upon them and each consents that all such service of process be made by certified mail directed to them at their address shown in Section 12(e) hereof. THE PARTIES WAIVE TRIAL BY JURY AND WAIVE ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER. (l) Each party hereto agrees to cooperate reasonably with the other parties, and to execute and deliver, or use its reasonable best efforts to cause to be executed and delivered, all instruments and documents and to take all such other actions as such party may reasonably be requested to take by any other party hereto from time to time, consistent with the terms of this Agreement, in order to effectuate the provisions and purposes of this Agreement. IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto on the date first hereinabove written. DAKA INTERNATIONAL, INC. By: Title: UNIQUE CASUAL RESTAURANTS, INC. By: Title: DAKA, INC. By: Title: CHAMPPS ENTERTAINMENT, INC. By Title: FUDDRUCKERS, INC. By: Title: COMPASS GROUP PLC By: Title: COMPASS HOLDINGS, INC. By: Title: -----END PRIVACY-ENHANCED MESSAGE-----