SCHEDULE 14A - INFORMATION REQUIRED IN PROXY STATEMENT
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [ X ]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to section 240.-14a-11(c) or
sectin 240.14a-12
HUDSON'S GRILL OF AMERICA, INC.
(Name of Registrant as Specified in its Charter)
HUDSON'S GRILL OF AMERICA, INC.
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies: N/A
(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:
(4) Proposed maximum aggregate value of transaction:
Set forth the amount on which the filing fee is calculated and
state how it was determined.
[ ] 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:
HUDSON'S GRILL OF AMERICA, INC.
16970 Dallas Parkway
Suite 402
Dallas, Texas 75248
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
The Annual Meeting of Shareholders of HUDSON'S GRILL OF
AMERICA, INC. (the "Company"), will be held at the Hudson's Grill
restaurant located at 708 Grapevine Highway, Hurst, Texas 76054, on
May 28, 1996, at 10:00 a.m. to act upon the following proposals:
1. To elect three (3) directors;
2. To ratify the selection of independent auditors;
3. To vote upon a proposal to amend article III of the Articles
of Incorporation to increase the authorized Common Stock of
the Company from 10,000,000 shares, no par value per share, to
100,000,000 shares, no par value per share; and
4. To consider such other business as may properly come before
the meeting and any adjournments or postponements thereof.
Details relating to the above matters are set forth in the
attached Proxy Statement. Your management is not aware of any other
matters to come before the meeting. The Board of Directors has
fixed the close of business on April 25, 1996, as the record date
for shareholders entitled to notice of and to vote at the Annual
Meeting.
You are urged to fill in, date, sign and promptly return the
Proxy in the enclosed addressed envelope to which no postage need
be affixed if mailed in the United States. If you do not attend
the Annual Meeting, you may supersede your executed Proxy prior to
voting by filing a Proxy bearing a later date, by filing a written
revocation of the Proxy or by attending the meeting and voting in
person. In order to be valid, the enclosed Proxy (or any new proxy
or proxy revocation) must be received by the Secretary not later
than 10:00 a.m., May 28, 1996.
IF YOU DO NOT PLAN TO ATTEND THE MEETING, YOU ARE URGED TO
DATE, SIGN AND RETURN THE ENCLOSED PROXY WITHOUT DELAY. A BUSINESS
REPLY ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Mitzy Ferguson
Secretary
Dallas, Texas
April 25, 1996
PROXY STATEMENT
HUDSON'S GRILL OF AMERICA, INC.
16970 Dallas Parkway
Suite 402
Dallas, Texas 75248
GENERAL INFORMATION
The enclosed Proxy is solicited by the Board of Directors (the
"Board") of HUDSON'S GRILL OF AMERICA, INC. (the "Company").
This Proxy Statement is furnished in connection with the
solicitation of the Proxies by the Company to be voted at its
Annual Meeting of Shareholders to be held May 28, 1996, and at any
adjournment and postponement thereof. The Annual Meeting is to be
held at 10:00 a.m. at the Hudson's Grill restaurant at 708
Grapevine Highway, Hurst, Texas 76054.
A person giving the Proxy may revoke it at any time prior to
the exercise thereof by giving written notice to the Secretary of
the Company, attending the meeting and voting in person, or filing
a duly executed Proxy bearing a later date with the Secretary. The
mailing to shareholders of this Proxy Statement and the enclosed
form of Proxy will commence on or about April 26, 1996.
All of the expenses involved in preparing, assembling and
mailing this Proxy Statement and the material enclosed herewith,
will be paid by the Company. Officers and employees of the Company
may communicate with shareholders personally or by mail, telegraph,
telephone or otherwise, for the purpose of soliciting such Proxies,
but in such event no additional compensation will be paid to any
such persons for such solicitation. Brokerage houses, nominees,
fiduciaries and other custodians will be requested to forward
soliciting materials to the beneficial owners of shares, in which
case they will be reimbursed for their expenses.
Shares represented by valid Proxies will be voted in
accordance with the instructions indicated thereon. Unless
otherwise directed, votes will be cast for the election of
directors herewith named, and for the ratification of the Company's
selection of Hein + Associates, LLP, as independent auditors for
the Company.
VOTING SHARES
Shareholders of record as of the close of business on April
25, 1996, will be entitled to vote at the Annual Meeting and at any
adjournments thereof. At such date there were Six Million,
Fifty-Six Thousand, Nine Hundred Eighty Six (6,056,986) shares of
Common Stock. Each shareholder of record is entitled to one (1)
vote for each share of stock owned, except that shareholders may
have cumulative voting rights with respect to the election of
directors. See "Cumulative Voting."
CUMULATIVE VOTING
Pursuant to California law, no shareholder may cumulate votes
unless the candidate's or candidates' name(s) for which such votes
are to be cast have been placed in nomination prior to the voting
and a shareholder who is present in person at the Annual Meeting
has given notice at the Annual Meeting and prior to voting of the
shareholder's intention to cumulate the shareholder's votes. If
any shareholder has given such notice, all shareholders may
cumulate their votes for candidates in nomination. Management does
not, at this time, intend to give such notice nor to cumulate the
votes it may hold pursuant to the proxies solicited hereby, unless
the required notice by a shareholder is given in proper form at the
Annual Meeting, in which instance management intends to
cumulatively vote all the proxies held by it in favor of the
nominees for office as set forth herein in such a way as to
maximize the possibility that the nominees will be elected.
In the event cumulative voting shall be utilized, each
shareholder may give one candidate a number of votes equal to the
number of directors to be elected (three) multiplied by the number
of votes to which the shareholder's shares are entitled, or
distribute the shareholder's votes on the same principle among as
many candidates as the shareholder desires. The three (3)
candidates receiving the highest number of votes are elected.
COMMITTEES OF THE BOARD
The Board held two meetings during fiscal 1995. Each
incumbent director during the fiscal year ended December 31, 1995,
attended more than seventy-five percent (75%) of all meetings of
the Board during the time he was a member and of the Committees of
which he was a member.
The Board has an Audit Committee composed of two members of
the Board. The members of this committee are appointed by the Board
to serve until their successors are appointed.
The Audit Committee was composed of Directors C.J. Osborn and
D. Marion Wood. This committee supervises and reviews the fiscal
and accounting procedures and practices of the Company, reviews the
audit and financial statements with the Company's independent
accountants, and reports its finding and recommendations to the
Board for appropriate action. The Committee met two times during
the fiscal year ended December 31, 1995.
The Board does not have a Nominating Committee, and it does
not have a Compensation Committee. Nominees may be recommended to
the Board in writing by any shareholder. Compensation matters are
considered by the whole Board of Directors.
Each of the nominees has consented to be named herein and to
serve if elected. However, if any nominee at the time of election
is unable or unwilling to serve as a director, or is otherwise
unavailable for election, the shares represented by proxies will be
voted for the election of such other person as the Board may
designate or, in the absence of such designation, for a nominee
selected by the persons named in the enclosed form of Proxy, or, if
there is no qualified nominee willing to serve, the position will
be left vacant.
Certain information concerning the director nominees is set
forth below:
Name Age Position
DAVID L. OSBORN 47 Chairman of the Board,
President & Chief
Executive Officer
D. MARION WOOD 50 Principal Financial Officer
THOMAS A. SACCO 42 Senior Vice President
David L. Osborn was elected as a Director in May 1990. He was
elected Chairman of the Board, President and Chief Executive
Officer in August 1993. Mr. Osborn is the Chief Executive Officer
of Southpoint Management Corporation, which owns and operates
restaurants, and is Chief Executive Officer of Famous Bars, Grills
& Cafes of America, Inc., which is a franchisee of Hudson's Grill.
He is also a partner in D.A.C. Associates, which is a franchisee of
Hudson's Grill, too.
D. Marion Wood was elected as a Director and Chief Financial
Officer in August 1993. He is a C.P.A. and is a shareholder in
Wood, Hearn, McClanahan & Company, PLLC, an accounting firm in
Dallas, Texas.
Thomas A. Sacco was elected Senior Vice President in May 1995.
He is Vice President of Dalms, Inc., a provider of consulting
services to the Company. In addition, he currently serves as Vice
Chairman of the Board of Directors of Triangle Food Service
Corporation, which operatesa 35 cafeterias and is based in Dallas,
Texas.
No director currently receives any direct compensation as a
director, except for reimbursement of expenses.
All directors are elected for a term of one (1) year and serve
until their successors have been duly elected and qualified.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with
respect to the shares of Common Stock beneficially owned, directly
or indirectly, by (i) persons owning, to the Company's knowledge,
five percent (5%) or more of the outstanding shares of Common
Stock, (ii) each director of the Company, and (iii) all directors
and executive officers of the Company as a group, in each case as
of December 31, 1995.
Number of
Shares Percentage of
Beneficially Total Shares
Name and Address Owned Outstanding
Directors/Officers:
DAVID L. OSBORN 1,867,417 (1) 30.8%
16970 Dallas Parkway,
Suite 402
Dallas, TX 75248
CLIFFORD J. OSBORN 745,618 (1) 12.3%
5581 East Finisterra Drive
Tucson, Arizona 85715
D. MARION WOOD 602,846 (1) 10.0%
16970 Dallas Parkway,
Suite 500
Dallas, TX 75248
THOMAS A. SACCO 0 (2) 0.0%
16970 Dallas Parkway,
Suite 402
Dallas, Texas 75248
MITZY FERGUSON 220 0.0%
16970 Dallas Parkway,
Suite 402
Dallas, Texas 75248
All directors and executive
officers as a group
(4 persons) 3,172,101 52.4%
Others Owning 5% or More
Of the Company's Common Stock:
ANTHONY B. DUNCAN 1,044,311 (1) 17.2%
10732 Alta Lomo
El Paso, TX 79935
ROY J. MILLENDER, JR. 500,000 (1) 8.3%
129 Calle Bello
Santa Barbara, CA 93108
CHARLES L. BOPPELL 490,056 (1) 8.1%
1010 Hot Springs Road
Santa Barbara, CA 93108
(1) Shared voting and investment power is held for these shares.
(2) Mr. Sacco received options to purchase 400,000 shares of the
Company's stock in May 1995. On May 1, 1995, an option to purchase
100,000 of these shares vested; the remaining options to purchase
300,000 shares vest in three equal increments during the next three
years, provided that Mr. Sacco is providing full time consulting
services to the Company on May 1st of each of these next three
years.
In August 1993, David L. Osborn purchased control of the
Company from Roy J. Millender, Jr. Mr. Osborn bought 2,679,000
shares of common stock from Mr. Millender for $1 (paid by Mr.
Osborn without any financing) and Mr. Osborn's efforts to
revitalize and reorganize the Company. Prior to this purchase, Mr.
Osborn beneficially owned, either directly, indirectly or through
a voting trust, 1,398,652 shares of stock, of which 913,235 shares
were in a voting trust that terminated May 4, 1994. On August 28,
1995, Mr. Osborn distributed 1,297,000 shares to certain parties to
whom he had promised shares without receiving any monetary
consideration for the transfer. D. Marion Wood received 505,000
shares from Mr. Osborn; Clifford J. Osborn received 200,000 shares;
and Anthony B. Duncan received 592,000 shares. As of December 31,
1995, Mr. Osborn was the beneficial owner of 1,867,417 shares of
stock, which is 30.8% of the Company's outstanding shares. Mr.
Osborn directly owns 1,439,856 shares of stock, which is 23.8% of
the Company's outstanding shares.
Effective January 27, 1994, the Company, as part of an
agreement to reduce its secured debt, agreed with Travis Bryant,
its largest creditor, to grant Mr. Bryant a stock warrant for four
(4) million shares exercisable at a price of one-sixteenth (1/16th)
of a dollar for a period of ten (10) years. In exchange, Mr.
Bryant forgave most of the Company's secured debt owed to him. If
Mr. Bryant exercises a substantial portion of his stock warrant, he
could become the Company's largest shareholder; in addition, Mr.
Osborn's control of the Company would be greatly reduced.
REMUNERATION AND RELATED INFORMATION
The following table sets forth for the year ended January 2,
1994, certain information as to each of the Company's five (5) most
highly compensated executive officers and as to all executive
officers as a group:
Name of Individual
or Number of Capacities in Total Annual
Persons in Group Which Served Year Compensation
DAVID L. OSBORN President, CEO 1995 $0 (1)
1994 $0
1993 $0
D. MARION WOOD Chief Financial 1995 $0 (1)
Officer 1994 $0
1993 $0
THOMAS A. SACCO Senior Vice 1995 $0 (2)
President 1994 $0
1993 $0
MITZY FERGUSON Secretary 1995 $47,500 (1)
1994 $44,000
1993 $0
All executive officers
as a group
(4 persons) $47,500
(1) Mr. Osborn and/or companies affiliated with him were
reimbursed for travel expenses incurred on behalf of the Company,
but received no remuneration for his work. In 1995 he or his
affiliated companies were reimbursed $12,792.58 for his travel.
Ms. Ferguson was reimbursed $11,704.54 for her travel expenses, and
D. Marion Wood was reimbursed $961.93 for his travel expenses.
(2) Mr. Sacco works for Dalms, Inc., which is being paid
consulting fees to provide his services to the Company. In 1995,
Dalms, Inc., was paid $123,688.99 for Mr. Sacco's services and
travel. In addition, Mr. Sacco received unvested options to
purchase 400,000 shares of the Company's common stock. Provided he
is still providing services to the Company on a fulltime basis as
of the vesting date, each May 1st beginning 1995 and ending on May
1, 1998, options to purchase 100,000 shares will vest with him.
The vested options are exercisable at the market price as of the
date of vesting.
Under the Company's Amended and Restated Incentive Stock
Option Plan adopted in 1989, and approved by the shareholders (the
"Plan"), the Company is authorized to grant options to selected
officers and employees to purchase up to an aggregate of Eight
Hundred Twenty Five Thousand (825,000) shares of Common Stock. As
of December 31, 1995, there were no outstanding options to purchase
shares of Common Stock under the Plan. Under the terms of the
Plan, options are granted at not less than the fair market value on
the date of grant, become exercisable in increments of twenty
percent (20%) per year for each year of employment after the date
of grant (except the final twenty percent (20%) increment becomes
exercisable four (4) years and six (6) months after the date of the
grant) and remain exercisable for a period of five (5) years from
the date of grant. The options terminate once employment
terminates.
CERTAIN TRANSACTIONS
As of February 1994, the Company's headquarters were moved
from California to Dallas, Texas. The Company is now leasing space
for its headquarters from Wood, Osborn and Osborn, a company
partially owned by two of the Company's directors, for $600 per
month plus its share of utilities expenses. The Company considers
this rental a fair market value for the space it is renting. This
space is in the same office building that leases space to the
Company's President and its Chief Financial Officer; thus the
management of the Company is more efficient because its executives
work near the headquarters, and travel costs are reduced.
Mr. David L. Osborn is affiliated with Southpoint Management
Corporation, DAC Associates and Famous Bars, Grills & Cafes of
America, Inc. ("FGA"). These companies, in turn, are affiliated
with owning and operating the Hudson's restaurants in Texas, which
are franchises granted by the Company. The franchise agreement for
Texas was entered into before Mr. Osborn became involved in the
management of the Company. Mr. Clifford J. Osborn is also
affiliated with DAC Associates.
In January 1994, pursuant to obligations under an agreement to
reduce its debt to the Company's largest creditor, Travis Bryant,
the Company loaned an additional $1 million to FGA (which is
evidenced by the "FGA Note"), which was in addition to a debt of
about $300,000 that FGA already owed the Company. Prior to January
1994 FGA was also partly owned by Mr. Bryant. If FGA fails to make
any payments to the Company, the Company has the right to use the
payments owed to it under the FGA Note to offset payments owed by
the Company to Mr. Bryant.
Subsequent to December 31, 1995, FGA formally requested and
obtained from the Company a modification of the "FGA Note"; the
Company will forego payments until February 1997, at which time the
entire amount of unpaid principal and interest will be amortized at
8% over ten years. Correspondingly, the Company began to exercise
its right of offset on its note payable to Mr. Bryant. The Company
was assigned several notes receivable with an aggregate face value
of $1,199,000 as additional collateral in connection with the
modification of the FGA Note.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE ELECTION OF THE THREE (3) NOMINEES FOR DIRECTORS
NAMED IN THIS PROXY STATEMENT.
Three (3) directors are to be elected, with each director to
hold office until the next Annual Meeting or until his successor is
elected and qualified. The persons named as proxies in the enclosed
Proxy have been designated by management and intend to vote for the
election of the persons named below to the Board, except where
authority is withheld by the shareholder.
PROPOSAL NO. 2
RATIFICATION OF THE SELECTION OF INDEPENDENT AUDITORS
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS
PROPOSAL.
Hein + Associates, LLP, has been selected as the Company's
independent auditors for the fiscal year ending January 5, 1997.
This firm served as the Company's independent auditors for the
period ended December 31, 1995.
PROPOSAL NO. 3
PROPOSAL TO AMEND THE COMPANY'S ARTICLES
OF INCORPORATION
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THIS
PROPOSAL.
Description of the Proposed Amendment and Vote Required
On February 26, 1996, the Board of Directors unanimously
adopted resolutions approving a proposal to amend article III of
the Company's Articles of Incorporation in order to increase the
number of shares of Common Stock which the Company is authorized to
issue from 10,000,000, no par value per share, to 100,000,000, no
par value per share. The Board of Directors determined that such
amendment is advisable and directed that the proposed amendment be
considered at the Annual Meeting of Share Owners to be held May 28,
1996. The affirmative vote of the holders of a majority of the
outstanding shares of Common Stock of the Company is required to
approve the proposed amendment.
The full text of the proposed amendment to the Articles of
Incorporation is set forth in Appendix A to this Proxy Statement.
The amendment will not affect shares of Preferred Stock, if any are
authorized.
Purposes and Effects of Increasing the Number of Authorized Shares
of Common Stock
The proposed amendment would increase the number of shares of
Common Stock which the Company is authorized to issue from
10,000,000 to 100,000,000. The additional 90,000,000 shares would
be a part of the existing class of Common Stock and, if and when
issued, would have the same rights and privileges as the shares of
Common Stock presently issued and outstanding. The holders of
Common Stock of the Company are not entitled to preemptive rights
or cumulative voting, except as permitted by California law.
The Board of Directors believes it desirable to have
additional authorized shares in order to meet the Company's
obligations to issue shares if certain warrants, that are currently
outstanding, are exercised. The Company, as of April 25, 1996, had
6,056,986 shares of stock issued, and also had warrants and options
outstanding requiring it to deliver 4,400,000 shares. At the
present, should all warrant holders elect to exercise their option
to purchase Company shares, the Company would not have enough
authorized shares to issue stock to the warrant and option holders.
Thus, it would be required to obtain 456,986 shares on the open
market, which in turn could deplete, if not completely eliminate
the Company's cash and credit. Possibly, it might not have enough
resources to satisfy its obligation to purchase the necessary
shares. If the Company is authorized to issue more shares than it
is currently authorized to do, none of these aforementioned
problems could arise. Increasing the number of shares that the
Company is authorized to issue will not cost the Company, except to
the extent that it incurs legal fees and filing fees to file
articles of amendment with the state of California, which fees the
Company feels will not be substantial. Furthermore, should the
Company desire to issue more shares in order to raise capital, it
would not be restricted from doing so. In order that it have wide
latitude in the future, the Directors proposed that the limit on
the number of authorized shares be increased by 90,000,000 shares.
This will also enable enough shares to be available if in the
future the Company wants to have a stock split, to issue a stock
dividend or to grant options to employees, officers, and directors.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has invited its accountants from Hein +
Associates, LLP, to be present at the Annual Meeting; therefore
they may be present. If a representative of Hein + Associates,
LLP, is present at the Annual Meeting of Shareholders, the
representative will be allowed to answer appropriate questions, and
will be afforded an opportunity to make a statement if so desired.
Prior to the appointment in December 1993 of Hein + Associates,
LLP, Deloitte & Touche was dismissed in December 1993 as the
Company's accountants and replaced by Hein + Associates, LLP.
Neither of Deloitte & Touche's reports for the previous two fiscal
years contained an adverse opinion or disclaimer of opinion, or was
modified as to uncertainty, audit scope, or accounting principles.
The Audit Committee of the Board of Directors recommended to the
Board that Hein + Associates, LLP, be hired instead of Deloitte &
Touche, and the Directors so decided. The Company did not have any
disagreements with Deloitte & Touche about any accounting matters,
financial statement disclosure, or scope of audit or procedure.
Prior to hiring Hein + Associates, LLP, the Company had not
contacted them about what types of opinions they might make about
the Company's financial statements or about any specific
transactions.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers and directors, and persons who own more than
10% of a registered class of the Company's equity securities, to
file reports of ownership and changes of ownership with the
Securities and Exchange Commission (the "SEC"). Officers,
directors and ten-percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a)
forms they file.
Based solely upon a review of the copies of the forms
furnished to the Company, or written representations from certain
reporting persons that no Forms 5 were required, the Company
believes that filing requirements applicable to its officers and
directors were complied with during the 1995 fiscal year.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 1997
Stockholder proposals to be presented at the 1997 Annual
Meeting must be received by the Company on or before February 1,
1997, for inclusion in the proxy statement and form of proxy
relating to that meeting.
OTHER MATTERS
Management of the Company does not know of any other matters
to be presented for action at the Annual Meeting. However, if any
other matters should be properly presented at the Annual Meeting,
it is the intention of the persons named in the accompanying Proxy
to vote said Proxy in accordance with their best judgment.
OTHER INFORMATION
The Annual Report to Shareholders of the Company for the year
ended December 31, 1995, is mailed herewith to shareholders of
record at the close of business on April 25, 1996.
IF YOU WOULD LIKE A COPY OF THE COMPANY'S ANNUAL REPORT OR
FORM 10-KSB, PLEASE CONTACT THE SECRETARY AT (214) 931-9743.
Mitzy Ferguson
Secretary
Dallas, Texas
April 25, 1996
f\sec\960417.O01
APPENDIX A
RESOLVED, that the Articles of Incorporation of the Company be, and
the same hereby is, amended by deleting the current Article III
thereof, and substituting the following:
"III.
This Corporation is authorized to issue only one (1) class of
shares of stock, and the total number of shares which this
Corporation is authorized to issue is One Hundred Million
(100,000,000) shares of common stock, no par value per share."