SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported): June
30, 1995 (February 23, 1995)
HUDSON'S GRILL OF AMERICA, INC.
(Exact name of Registrant as specified in its Charter)
California
(State or other jurisdiction of incorporation)
0-13642
(Commission or File Number)
95-3477313
(IRS Employer Identification Number)
16970 Dallas Parkway, Suite 402, Dallas, Texas 75248
(Address of Principal Executive Offices)
Registrant's telephone number, including area code:
(214) 931-9743
Item 5. Other Events.
Hudson's Grill of America, Inc. (the "Company")
elected Tom Sacco as Senior Vice President of Operations
and Franchise Development at the director's meeting held
following the Company's annual shareholders meeting held
on May 30, 1995. Pursuant to an agreement finally
consummated on June 29, 1995, Mr. Sacco's consulting
company will be paid a fee of $10,000 per month, renewable
on a year by year basis. In addition Mr. Sacco will
receive health insurance; a $350 per month car allowance;
and if more than three new franchises have been sold in a
year, he will receive 30% of the initial franchise fees
raised from the sale of new franchises after the first
three are sold each year.
The directors also voted to grant to Mr. Sacco
options to purchase 400,000 shares of the Company's stock.
One hundred thousand shares will vest each year on May
1st, starting in 1995 and ending in 1998. The exercise
price will be set at the time of vesting at the average
between the closing bid and asked on the day of vesting
(or the next business day if May 1 is not a business day).
The 1995 options are already vested with an option
exercise price of 10.9 cents. All of the options expire
on May 1, 2003. The future options will immediately vest
in the event a tender offer is made for all of the
Company's stock.
Mr. Sacco's duties will be to act as the Company's
franchise representative, and as such he will be
responsible for support of existing franchisees and also
for the sale and development of new franchises. Mr.
Sacco's compensation package will also include incentives
based on the number of new franchisees signed up with the
Company. Mr. Sacco has formerly held similar positions
with the Red Robin, Bonanza and Western Sizzlin franchise
chains.
At the same director's meeting, the board re-elected
David L. Osborn as President, D. Marion Wood as Chief
Financial Officer, and Mitzy Ferguson as Secretary.
The Company also announced that it had entered into
agreements to sell its interest in the Company's
Hornblowers restaurant located in Ventura, California.
The Hornblowers restaurant is not styled after a Hudson's
Grill, but has been owned by the Company or operated as a
joint venture for many years. The sale will be to the
current co-joint venturer, Kiam Farzadam. The purchase
price is $300,000 and will be paid with $6,000 in cash and
a $294,000 note. Closing on the transaction has not been
set yet, but on June 8, 1995, the sale was placed into an
escrow company for closing at some time in the future.
The note will be payable over 48 months and its interest
rate will be prime plus two, or nine percent, whichever is
greater. Payments will be made monthly. As part of the
transaction, the Buyer will be assuming the liabilities
and taxes owed by the joint venture that has operated
Hornblowers since 1993. In addition, the Buyer has agreed
to assume the lease for the premises where the Hornblowers
restaurant is located.
The Company also recently learned that its commercial
liability insurance carrier would pick up the Company's
defense of a sexual harassment case filed by two former
employees of the Company's Hudson's Grill located in
Whittier, California. The insurance company will only
assume the defense of the libel cause of action in the
"Torres" case filed against the Company in 1994. The case
also involves causes of action based on sexual harassment,
and wrongful termination.
Although the insurance company has agreed only to
assume the libel cause of action, in so doing it will also
effectively defend the Company on the other causes of
action. With the insurance company now defending the
Company, the Company is hopeful that a reasonable
settlement can be obtained for the entire case. From now
on, the legal expenses of the defense will be the
responsibility of the insurance company so long as the
libel cause of action remains part of the lawsuit.
The Company also announced that as of June 30, 1995,
it had settled the controversy over its lease obligations
related to its former operations in Irvine, California.
The company ceased operations at the site in early 1994,
and it officially withdrew from the lease in November
1994. The settlement calls for the Company to pay $85,000
as a full settlement of the lease obligations. Fifty
thousand dollars ($50,000) will be paid on or about July
30, 1995; $20,000 will be paid on or about August 30,
1995; and $15,000 will be paid on or about September 30,
1995.
Item 7. Exhibits.
1. Press Release dated June 30, 1995 with regard
to the addition of Tom Sacco.
2. Press Release dated June 30, 1995 with regard
to the sale of the Company's Hornblowers restaurant and
Hudson's insurance company's defense of "Torres" case.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: June 30, 1995
HUDSON'S GRILL OF AMERICA, INC.
Registrant
s/s David L. Osborn
David L. Osborn
f\sec\950605.O01