SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-12
QUALITY DINING, INC.
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(Name of Registrant as Specified in Its Charter)
[COMPANY NAME]
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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QUALITY DINING, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MARCH 12, 2002
The annual meeting of shareholders of Quality Dining, Inc. will be held at
Quality Dining, Inc., 4220 Edison Lakes Parkway, Mishawaka, Indiana, on Tuesday,
March 12, 2002, at 9:00 a.m., Mishawaka time, for the following purposes:
(1) To elect two Directors to serve until the 2005 annual meeting of
shareholders and until their successors are elected and have qualified;
(2) To approve the appointment of PricewaterhouseCoopers LLP as auditors
for the Company for fiscal 2002; and
(3) To transact such other business as may properly come before the
meeting.
All shareholders of record at the close of business on January 14, 2002
will be eligible to vote.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THIS MEETING. WHETHER OR
NOT YOU EXPECT TO BE PRESENT, PLEASE FILL IN, DATE, SIGN AND RETURN THE ENCLOSED
PROXY FORM IN THE ACCOMPANYING ADDRESSED POSTAGE-PREPAID ENVELOPE. IF YOU ATTEND
THE MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON.
John C. Firth, Secretary
QUALITY DINING, INC.
4220 EDISON LAKES PARKWAY
MISHAWAKA, INDIANA 46545
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MARCH 12, 2002
This statement is being furnished to shareholders of Quality Dining, Inc.
(the "Company") on or about February 4, 2002, in connection with a solicitation
by the Board of Directors of the Company of proxies to be voted at the annual
meeting of shareholders to be held at 9:00 a.m., Mishawaka time, Tuesday, March
12, 2002, at Quality Dining, Inc., 4220 Edison Lakes Parkway, Mishawaka,
Indiana, for the purposes set forth in the accompanying Notice.
VOTING
At the close of business on January 14, 2002, the record date for the
meeting, there were 11,484,009 shares of Common Stock of the Company outstanding
and entitled to vote at the meeting. On all matters, including the election of
Directors, each shareholder will have one vote for each share held.
If the enclosed form of proxy is executed and returned, it may nevertheless
be revoked by the person giving it any time before the vote at the meeting
either by filing with the Secretary of the Company a written notice of
revocation or a proxy bearing a later date than the most recently submitted
proxy or by attending the meeting and voting in person. The execution of a proxy
will not affect a shareholder's right to attend the meeting and vote in person,
but attendance at the meeting will not, by itself, revoke a proxy.
Unless revoked, a proxy will be voted at the meeting in accordance with the
instructions of the shareholder in the proxy, or, if no instructions are given,
for the election as Directors of all nominees listed under Proposal 1 relating
to the election of Directors and for Proposal 2 relating to the appointment of
PricewaterhouseCoopers LLP as auditors for the Company for fiscal 2002. The
election of Directors will be determined by the vote of the holders of a
plurality of the shares voting on such election. Approval of Proposal 2 will be
subject to the vote of the holders of a greater number of shares favoring
approval than those opposing it. A proxy may indicate that all or a portion of
the shares represented by such proxy are not being voted with respect to a
specific proposal. This could occur, for example, when a broker is not permitted
to vote shares held in street name on certain proposals in the absence of
instructions from the beneficial owner. Shares that are not voted with respect
to a specific proposal will be considered as not present and entitled to vote on
such proposal, even though such shares will be considered present for purposes
of determining a quorum and voting on other proposals. Abstentions on a specific
proposal will be considered as present, but not as voting in favor of such
proposal. As a result, with respect to all of the proposals, neither broker
non-votes nor abstentions on such proposals will affect the determination of
whether such proposals will be approved.
The Board of Directors knows of no matters, other than those described in
the attached Notice of Annual Meeting, which are to be brought before the
meeting. If other matters properly come before the meeting, it is the intention
of the persons named in the enclosed form of proxy to vote such proxy in
accordance with their judgment on such matters.
The cost of the solicitation of proxies will be borne by the Company.
YOUR VOTE AT THIS YEAR'S ANNUAL MEETING IS IMPORTANT.
PLEASE SIGN AND DATE THE ENCLOSED WHITE PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE PROMPTLY.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
BOARD OF DIRECTORS' NOMINEES
Currently, the Board of Directors of the Company consists of seven
Directors divided into three classes. Two classes contain two Directors each,
with the remaining class containing three Directors. The term of one class of
Directors expires each year. Generally, each Director serves until the annual
meeting of shareholders held in the year that is three years after such
Director's election and until such Director's successor is elected and has
qualified.
Two Directors are to be elected at the meeting. It is the intention of the
persons named in the accompanying form of proxy to vote such proxy for the
election to the Board of Directors of Messrs. Christopher J. Murphy III and
Bruce M. Jacobson, whose terms expire this year. They have been nominated by the
Board of Directors for reelection as Directors for terms to expire at the 2005
annual meeting of shareholders and until their successors are elected and have
qualified. If Messrs. Murphy and Jacobson are unable or unwilling to accept
nomination or election, it is the intention of the persons named in the
accompanying form of proxy to nominate such other person(s) as Director(s) as
they may in their discretion determine, in which event the shares will be voted
for such other person(s).
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE IN FAVOR OF
THE TWO NOMINEES DESCRIBED BELOW.
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INFORMATION WITH RESPECT TO THE DIRECTORS
Unless otherwise indicated in a footnote to the following table, the
principal occupation of each Director or nominee has been the same for the last
five years, and such person possesses sole voting and investment power with
respect to the shares of Common Stock indicated as beneficially owned by such
person. Messrs. Daniel B. Fitzpatrick, James K. Fitzpatrick and Gerald O.
Fitzpatrick are brothers. There is no family relationship between any other of
the Directors or executive officers of the Company.
Shares
Beneficially
Owned on
Principal Director November 27, Percent
Name Age Occupation Since 2001 of Class
- --------------------------- ----- ------------------------------------------- -------- ------------- ----------
NOMINEES FOR DIRECTOR
(Nominees for three-year term to expire at the annual meeting of shareholders in 2005)
Christopher J. Murphy III 55 Chairman, President and Chief Executive 1994 61,500(1)(2) *
Officer of 1st Source Corporation (publicly
held diversified bank holding company) and
Chairman and Chief Executive Officer of 1st
Source Bank
Bruce M. Jacobson 52 Partner, Katz, Sapper & Miller, LLP 2000 11,500(3) *
(certified public accountants)
DIRECTORS CONTINUING IN OFFICE
(Term expiring at annual meeting of shareholders in 2003)
Daniel B. Fitzpatrick 44 Chairman of the Board, President and 1990 2,576,009(4) 22.2%
Chief
Executive Officer of the Company (5)
Philip J. Faccenda 72 Vice President and General Counsel 2000 19,000(3)(6) *
Emeritus, University of Notre Dame (7)
(Term expiring at annual meeting of shareholders in 2004)
James K. Fitzpatrick 46 Senior Vice President and Chief 1990 397,197(8)(9) 3.4%
Development Officer of the Company
Ezra H. Friedlander 60 Judge, Indiana Court of Appeals (10) 1995 511,131(11)(12) 4.4%
Steven M. Lewis 52 President of U.S. Restaurants, Inc. 1994 19,250(1)(13) *
(restaurant management company) (14)
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* Less than 1%.
(1) Includes presently exercisable stock options to purchase 10,000 shares and
6,000 shares, granted under the
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Company's 1993 Outside Directors Plan and 1999 Outside Directors Plan,
respectively.
(2) Includes 1,000 shares held by certain retirement plans in which Mr. Murphy
is a participant.
(3) Includes presently exercisable stock options to purchase 4,000 shares
granted under the Company's 1999 Outside Directors Plan.
(4) Includes presently exercisable stock options to purchase 23,200 shares,
granted by the Company.
(5) Mr. Daniel B. Fitzpatrick has been a significant shareholder and Director
of certain of the Company's predecessors since 1982 and also serves on the
Board of Directors of 1st Source Corporation, a publicly held diversified
bank holding company.
(6) Includes 15,000 shares held by Philip J. Faccenda, Inc., a holding company
of which Mr. Faccenda is the majority shareholder and has investment
control.
(7) Mr. Faccenda is also a Life Trustee at the University of Notre Dame, a
Regent at the University of Portland and a Regional Trustee at Ivy Tech
State College.
(8) Does not include shares subject to stock options which are not exercisable
within 60 days.
(9) Includes presently exercisable stock options to purchase 49,752 shares,
granted by the Company.
(10) Mr. Friedlander has been a significant shareholder of the Company or
certain of its predecessors since 1982.
(11) Includes presently exercisable stock options to purchase 8,000 shares, and
6,000 shares, granted under the Company's 1993 Outside Directors Plan and
1999 Outside Directors Plan, respectively.
(12) Includes 14,200 shares held in a trust of which Mr. Friedlander is the
trustee with investment control and the income beneficiary and 15,000
shares owned by Mr. Friedlander's spouse.
(13) Includes 500 shares held in a trust for the benefit of Mr. Lewis' minor
children.
(14) Mr. Lewis also serves on the Board of Directors of Commerce Bancorp, Inc.,
a bank holding company and Commerce Bank of Pa., Inc.
MEETINGS AND COMMITTEES
During fiscal 2001, the Board of Directors of the Company held five
meetings. During the period in fiscal 2001 for which he served as a Director,
each of the Company's Directors attended at least 75% of the meetings of the
Board of Directors and each committee on which he served. The Board of Directors
does not have a nominating committee.
The Company has an Executive Committee, an Audit Committee and a
Compensation and Stock Option Committee (the "Compensation Committee"). The
Executive Committee consists of Messrs. Fitzpatrick (Daniel B.), Lewis and
Murphy. The Audit Committee consists of Messrs. Murphy (Chairman), Jacobson and
Lewis. The Compensation Committee consists of Messrs. Lewis (Chairman), Faccenda
and Jacobson. The Executive Committee has authority to act on behalf of the
Board of Directors between meetings and, with certain exceptions, the authority
to take all actions that the full Board could take. The Audit Committee is
responsible for recommending independent auditors,
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reviewing with the independent auditors the scope and results of the audit
engagement, establishing and monitoring the Company's financial policies and
control procedures, reviewing and monitoring the provision of non-audit services
by the Company's auditors and reviewing all potential conflict of interest
situations. See "Audit Committee Report" and "Certain Transactions." The
Compensation Committee is responsible for reviewing, determining and
establishing the salaries, bonuses and other compensation of the executive
officers of the Company and for administering the 1993 Stock Option and
Incentive Plan ("1993 Stock Option Plan") and the 1997 Stock Option and
Incentive Plan ("1997 Stock Option Plan").
During fiscal 2001, the Audit Committee held four meetings, the
Compensation Committee held three meetings and the Executive Committee did not
meet.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and Directors, and persons who own more than 10% of Common
Stock, to file reports of ownership with the Securities and Exchange Commission.
Such persons also are required to furnish the Company with copies of all Section
16(a) forms they file.
Based solely on its review of copies of such forms received by it, or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that during fiscal 2001, all
filing requirements applicable to its executive officers, Directors and greater
than 10% shareholders were complied with except that Christopher J. Murphy III
failed to timely report the purchase of 500 shares.
EXECUTIVE OFFICERS
As used throughout this Proxy Statement, the term "executive officers"
refers to Daniel B. Fitzpatrick, Chairman of the Board, President and Chief
Executive Officer; John C. Firth, Executive Vice President, General Counsel and
Secretary; James K. Fitzpatrick, Senior Vice President and Chief Development
Officer; Gerald O. Fitzpatrick, Senior Vice President, Burger King Division;
Lindley E. Burns, Senior Vice President, Full Service Dining Division; Patrick
J. Barry, Senior Vice President, Administration and Information Technology;
Christopher L. Collier, Vice President, Finance; Jeanne M. Yoder, Vice President
and Controller; and Robert C. Hudson, Vice President, Grady's American Grill
Division.
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PROPOSAL NO. 2
APPOINTMENT OF AUDITORS
The appointment of PricewaterhouseCoopers LLP as auditors for the Company
during fiscal 2002 will be submitted to the meeting in order to permit the
shareholders to express their approval or disapproval. In the event of a
negative vote, a selection of other auditors will be made by the Board. A
representative of PricewaterhouseCoopers LLP is expected to be present at the
meeting, will be given an opportunity to make a statement if he desires and will
respond to appropriate questions. Notwithstanding approval by the shareholders,
the Board of Directors reserves the right to replace the auditors at any time
upon the recommendation of the Audit Committee of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
SUMMARY COMPENSATION TABLE
The following table sets forth certain information regarding compensation
paid or accrued during each of the Company's last three fiscal years to the
Company's Chief Executive Officer and each of the Company's four other most
highly compensated executive officers, based on salary and bonus earned during
fiscal 2001 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
Long Term
Annual Compensation Compensation Awards
---------------------- ---------------------------
Securities Restricted
Name and Principal Position Fiscal Underlying Stock All Other
Year Salary Bonus (1) Options (2) Awards (3) Compensation
- --------------------------------------- ------ --------- ----------- --------------------------- ---------------
Daniel B. Fitzpatrick, Chairman, 2001 $370,000 $511,661(4) 0 $ 0 $ 5,000 (5)
President and Chief Executive Officer 2000 340,000 170,000 0 0 5,000 (5)
1999 346,538(6) 0 0 60,000 (7) 5,000 (5)
John C. Firth, Executive Vice President, 2001 $258,076 $ 53,056 0 $ 25,993 (8) $ 5,425 (9)
General Counsel and Secretary 2000 245,192 190,951(10) 6,434 25,736 (11) 5,425 (9)
1999 234,635(6) 97,486(12) 19,302 66,004 (13) 5,425 (9)
James K. Fitzpatrick, Senior Vice 2001 $215,000 $ 35,833 0 $ 22,529 (8) $ 5,000 (5)
President and Chief Development Officer 2000 205,000 161,000(10) 5,576 22,304 (11) 5,000 (5)
1999 198,750(6) 49,687 16,728 43,956 (7) 5,000 (5)
Gerald O. Fitzpatrick - Senior Vice 2001 $210,000 $ 26,250 0 $ 21,951 (8) $ 1,807 (5)
President, Burger King Division 2000 200,000 151,500(10) 5,433 21,732 (11) 1,292 (5)
1999 194,231(6) 58,270 16,299 43,098 (7) 1,638 (5)
Patrick J. Barry - Senior Vice 2001 $205,000 $ 34,167 0 $ 21,374 (8) $ 6,460 (14)
President, Administration and 2000 195,000 132,500(10) 5,290 21,160 (11) 6,420 (14)
Information Technology 1999 188,558(6) 47,712 15,871 42,240 (7) 6,420 (14)
- ---------------
(1) Except as specifically noted, represents awards under the Company's bonus
plan. To the extent the Company meets certain financial targets and
performance targets established for the areas of the Company's operations
under the supervision of the Named Executive Officer, the officer may
receive a discretionary bonus. For
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fiscal 2001, fiscal 2000 and fiscal 1999, targeted performance levels and
potential bonus awards were approved by the Compensation Committee. Bonus
awards are accrued in the fiscal year earned, but typically paid in the
following fiscal year.
(2) Options to acquire shares of Common Stock. The Company has never granted
SAR's.
(3) As of October 28, 2001, the total number and value (based on the closing
market price of the Company's Common Stock on October 28, 2001) of the
restricted stock awards held by the Named Executive Officers were as
follows: Daniel B. Fitzpatrick - 20,000 shares ($45,600); John C. Firth -
40,115 ($91,462); James K. Fitzpatrick - 33,240 shares ($75,787); Gerald O.
Fitzpatrick - 32,477 shares ($74,048); and Patrick J. Barry - 31,714 shares
($72,308).
(4) Includes a one-time bonus in the amount of $450,000 granted to Mr.
Fitzpatrick in connection with his employment agreement. See "Employment
and Non-Competition Agreements."
(5) Represents Company allocations to its discretionary, non-qualified deferred
compensation plan. The Company's allocations to this plan on behalf of
participants are determined at the discretion of the Board of Directors.
(6) Represents compensation paid over the Company's 53 week fiscal year.
(7) Represents the market value of restricted shares awarded on June 1, 1999
under the Company's 1997 Stock Option Plan based on the closing market
price of the Company's Common Stock ($3.00) on that date. The total number
of shares of restricted stock awarded to the Named Executive Officers
pursuant to the Company's 1997 Stock Option Plan in fiscal 1999 were:
Daniel B. Fitzpatrick - 20,000 shares; John C. Firth - 18,668 shares; James
K. Fitzpatrick - 14,652 shares; Gerald O. Fitzpatrick - 14,366 shares; and
Patrick J. Barry - 14,080 shares. These restricted shares vest on June 1,
2006, subject to accelerated vesting in one-third increments when the
Company's share price closes at or above $4.00, $5.00 and $7.00,
respectively, for at least 10 out of 20 consecutive trading days. Holders
of restricted stock are eligible to vote the shares and to receive
dividends, if any.
(8) Represents the market value of restricted shares awarded on December 20,
2000 under the Company's 1997 Stock Option Plan based on the closing market
price of the Company's Common Stock ($2.02) on that date. The total number
of shares of restricted stock awarded to the Named Executive Officers
pursuant to the Company's 1997 Stock Option Plan in fiscal 2001 were: John
C. Firth - 12,868 shares; James K. Fitzpatrick - 11,153 shares; Gerald O.
Fitzpatrick - 10,867 shares; and Patrick J. Barry - 10,581 shares. These
restricted shares vest on December 20, 2007, subject to accelerated vesting
in one-third increments when the Company's share price closes at or above
$3.02 $4.02 and $6.02, respectively, for at least 10 out of 20 consecutive
trading days. Holders of restricted stock are eligible to vote the shares
and to receive dividends, if any.
(9) Includes Company allocations to its discretionary, non-qualified deferred
compensation plan of $5,000 and life insurance premiums of $425.
(10) Includes a one-time cash retention bonus paid pursuant to the Company's
Strategic Executive Long Term Incentive Compensation Plan in the following
amounts: John C. Firth - $68,355; James K. Fitzpatrick - $58,500; Gerald O.
Fitzpatrick - $56,500; and Patrick J. Barry - $54,500.
(11) Represents the market value of restricted shares awarded on December 15,
1999 under the Company's 1997 Stock Option Plan based on the closing market
price of the Company's Common Stock ($2.00) on that date. The total number
of shares of restricted stock awarded to the Named Executive Officers
pursuant to the Company's 1997 Stock Option Plan in fiscal 2000 were: John
C. Firth - 12,868 shares; James K. Fitzpatrick - 11,152 shares; Gerald O.
Fitzpatrick - 10,866 shares; and Patrick J. Barry - 10,580 shares. These
restricted shares vest on December 15, 2006, subject to accelerated vesting
in one-third increments when the Company's
9
share price closes at or above $3.00, $4.00 and $6.00, respectively, for at
least 10 out of 20 consecutive trading days. During fiscal 2000, one-third
of each Named Executive Officer's restricted share award vested. Holders of
restricted stock are eligible to vote the shares and to receive dividends,
if any.
(12) Includes a one-time bonus which Mr. Firth received in connection with his
employment agreement.
(13) Of this amount, (i) $56,004 represents the market value of restricted
shares awarded on June 1, 1999 under the Company's 1997 Stock Option Plan
based on the closing market price of the Company's Common Stock ($3.00) on
that date and (ii) $10,000 represents the market value of 4,000 restricted
shares awarded pursuant to Mr. Firth's Employment Agreement with the
Company based on the closing market price of the Company's Common Stock on
the date of the award. The restricted shares awarded pursuant to Mr.
Firth's Employment Agreement vested on February 24, 2000.
(14) Includes Company allocations to its discretionary, non-qualified deferred
compensation plan of $5,000 and life insurance premiums of $1,460 in fiscal
year 2001 and $1,420 in each of fiscal years 2000 and 1999.
EMPLOYMENT AND NON-COMPETITION AGREEMENTS
In June 1999, the Company entered into non-compete agreements with certain
of its officers, including James K. Fitzpatrick and Gerald O. Fitzpatrick. The
agreements prohibit such officers from competing with the Company or soliciting
employees of the Company for a period of one year following the termination of
their employment. The agreements also provide that in the event of a change of
control of the Company, such officers will receive two times (in the case of
James K. Fitzpatrick) or one and one-half times (in the case of Gerald O.
Fitzpatrick) their base salary and maximum bonus potential at the time of the
change of control.
In August 1999, the Company entered into an Employment Agreement with John
C. Firth, its Executive Vice President and General Counsel. Mr. Firth's previous
Employment Agreement expired in June 1999. The agreement is for a period of
three years and extends automatically for one year on each anniversary date. Mr.
Firth's agreement provides for a $240,000 base salary which shall be reviewed at
least annually for increase and cash bonus payments of up to 50% of his base
salary determined in a manner similar to other senior executives of the Company.
In connection with entering into the agreement, Mr. Firth received a one-time
cash bonus of $40,000 and was awarded 4,000 restricted shares of Company Common
Stock, valued at $10,000 based upon the closing market price of the Company's
Common Stock on the date of grant. The restricted shares vested on February 24,
2000. The Company also agreed to maintain a life insurance policy on Mr. Firth's
life during his employment in the amount of $500,000 for the benefit of Mr.
Firth or his designee. Pursuant to the agreement, Mr. Firth is prohibited from
competing with the Company or soliciting Company employees for a period of one
year after the termination of his employment. If the agreement is terminated by
the Company, other than for cause or by Mr. Firth with good reason (which
includes the termination of Mr. Firth's employment for any reason within one
year following a change in control of the Company), Mr. Firth is entitled to two
times his base salary and maximum bonus, additional and accelerated vesting and
exercisability as to the portion of any outstanding option scheduled to vest on
the next following vesting date and the Company will continue to provide health
and welfare benefits for one year. The agreement also provides for gross-up
payments necessary to cover possible excise tax payments by Mr. Firth and to
reimburse him for legal fees that might be expended in enforcing the agreement's
provisions or contesting tax issues relating to the agreement's gross-up
provisions.
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In October 2000, the Company entered into an Employment Agreement with
Daniel B. Fitzpatrick, its Chairman of the Board, President and Chief Executive
Officer. The agreement is for a period of three years and extends automatically
for one year on each anniversary date. Mr. Fitzpatrick's agreement provides for
a $370,000 base salary which shall be reviewed at least annually for a minimum
5% increase and cash bonus payments of up to 50% of his base salary determined
in a manner similar to other senior executives of the Company. Pursuant to the
agreement, the Company agreed to pay Mr. Fitzpatrick a one-time cash bonus of
$450,000 payable in three equal installments on October 30, 2000, January 31,
2001 and January 31, 2002. The agreement prohibits Mr. Fitzpatrick from
competing with the Company or soliciting Company employees for a period of one
year after the termination of his employment except for any business in which
Mr. Fitzpatrick was engaged on the date of the agreement or which is expressly
approved by the Company's Board of Directors. If the agreement is terminated by
the Company, other than for cause,or by Mr. Fitzpatrick with good reason (which
includes the termination of Mr. Fitzpatrick's employment for any reason within
one year following a change in control of the Company), Mr. Fitzpatrick is
entitled to 2.99 times his base salary and maximum bonus, additional and
accelerated vesting and exercisability as to the portion of any outstanding
option scheduled to vest on the next following vesting date and the Company will
continue to provide health and welfare benefits for one year. The agreement also
provides for gross-up payments necessary to cover possible excise tax payments
by Mr. Fitzpatrick and to reimburse him for legal fees that might be expended in
enforcing the agreement's provisions or contesting tax issues relating to the
agreement's gross-up provisions.
The Board of Directors believed that these agreements, together with awards
under the Long Term Incentive Plans described below, would encourage these key
employees to remain with the Company at a critical stage in the implementation
of the Board's long-term strategy. In the case of the change of control
payments, the Board believed that these officers would be better able to act in
the interests of all shareholders in the face of a hostile takeover attempt or
in the event that the Board of Directors determined that the Company should be
sold if they were assured of receiving sizable payments following a change of
control. The Board was advised that such arrangements were prevalent among
publicly-traded companies and concluded that such arrangements would foster,
rather than impair, the ability of the Company to be sold. The Board of
Directors believed that these considerations were as applicable to Daniel, James
and Gerald Fitzpatrick as they were to the other key officers of the Company who
were provided with comparable arrangements.
COMPENSATION OF DIRECTORS
During fiscal 2001, the Company paid Directors who are not employees of the
Company an annual retainer of $8,000, plus $500 for each regular Board meeting
attended and $750 for each special Board meeting attended and each committee
meeting attended if the committee met on a day other than a Board meeting. All
Directors receive reimbursement of reasonable out-of-pocket expenses incurred in
connection with meetings of the Board. No Director who is an officer or employee
of the Company receives compensation for services rendered as a Director.
In addition, under the Company's 1993 Outside Directors Plan and the
Company's 1999 Outside Directors Stock Option Plan ("1999 Outside Directors
Plan") generally on May 1 of each year, each then non-employee Director of the
Company automatically receives an option to purchase 2,000 shares of Common
Stock with an exercise price equal to the fair market value of the Common Stock
on the date of grant. Each option will have a term of 10 years and will be
exercisable six months after the date of grant. On May 1, 2001, Messrs.
Friedlander, Lewis, Murphy, Faccenda and Jacobson each received an option to
purchase 2,000 shares of Common Stock, all at an exercise price of $2.28 per
share.
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STOCK OPTIONS
On December 17, 1993, the Directors and shareholders of the Company adopted
the 1993 Stock Option Plan. The 1993 Stock Option Plan provides for awards of
incentive and non-qualified stock options and shares of restricted stock to the
officers and key employees of the Company. An aggregate of 1,000,000 shares of
Common Stock are subject to the 1993 Stock Option Plan (subject to adjustment in
certain events). In fiscal 1999, the Company repurchased 298,340 options
previously issued under the 1993 Stock Option Plan. These options were
permanently retired and are not available to be reissued. As of October 28,
2001, options to purchase 110,890 shares of Common Stock were outstanding under
the 1993 Stock Option Plan. No awards for additional shares of Common Stock will
be made under the 1993 Stock Option Plan, although the terms of options granted
pursuant to the 1993 Stock Option Plan may be modified.
On February 14, 1997, the Board of Directors adopted, subject to
shareholder approval, the 1997 Stock Option Plan. On March 26, 1997, the
shareholders of the Company approved the adoption of the 1997 Stock Option Plan
at the 1997 annual meeting of shareholders. The 1997 Stock Option Plan provides
for awards of incentive and non-qualified stock options, shares of restricted
stock, SAR's and performance stock to the officers and key employees of the
Company. An aggregate of 1,100,000 shares of Common Stock are subject to the
1997 Stock Option Plan (subject to adjustment in certain events). As of October
28, 2001 options to purchase 433,564 shares of Common Stock were outstanding
under the 1997 Stock Option Plan and 321,292 restricted shares had been issued
and were outstanding under the 1997 Stock Option Plan.
The Company's Board of Directors and shareholders approved the 1993 Outside
Directors Plan effective December 17, 1993. The Company's 1993 Outside Directors
Plan reserved for issuance 40,000 shares of the Company's Common Stock (subject
to adjustment for subsequent stock splits, stock dividends and certain other
changes in the Common Stock) pursuant to non-qualified stock options to be
granted to non-employee Directors of the Company. As of October 28, 2001,
options to purchase 38,000 shares of Common Stock were outstanding under the
1993 Outside Directors Plan. See "--Compensation of Directors."
On December 15, 1999, the Board of Directors adopted the 1999 Outside
Directors Plan. The 1999 Outside Directors Plan reserves for issuance 80,000
shares of the Company's Common Stock (subject to adjustment for subsequent stock
splits, stock dividends and certain other changes in the Common Stock) pursuant
to non-qualified stock options to be granted to non-employee Directors of the
Company. The 1999 Outside Directors Plan provides that on May 1, 2000, each
non-employee Director automatically received an option to purchase 4,000 shares
of Common Stock and on May 1 of each year thereafter, each non-employee Director
will automatically receive an option to purchase 2,000 shares of Common Stock.
Each option will have an exercise price equal to the fair market value of the
Common Stock on the date of grant. As of October 28, 2001, options to purchase
26,000 shares of Common Stock were outstanding under the 1999 Outside Directors
Plan. See "--Compensation of Directors."
No option granted under the 1993 Outside Directors Plan or the 1999 Outside
Directors Plan may be exercised less than six months or more than 10 years from
the date it is granted. In addition, no option may be exercised unless the
grantee has served continuously on the Board of Directors at all times beginning
on the date of grant and ending on the date of exercise of the option.
Nevertheless, all options held by a grantee who ceases to be a non-employee
Director due to death, permanent disability or retirement with the consent of
the Board of Directors may be exercised, to the extent they were exercisable at
the date of cessation, at any time within one year after the date of cessation.
Options held by a deceased grantee may be exercised by the grantee's estate or
heirs. If a grantee ceases to be a non-employee Director for any other reason,
such grantee's options will expire three months after cessation.
No stock options were granted to the Named Executive Officers during fiscal
2001.
12
The following table sets forth information with respect to the exercise of
options by the Named Executive Officers during fiscal 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities
Underlying Value of Unexercised In-the-
Unexercised Options at Money Options at
Fiscal Year-End Fiscal Year-End (1)
--------------------------- ----------------------------
Name Shares Acquired Value
on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- --------------- ---------- ------------ ------------- ----------- ---------------
Daniel B. Fitzpatrick 0 0 23,200 0 0 (2) -
John C. Firth 0 0 31,259 14,477 $ 450 $1,351
James K. Fitzpatrick 0 0 48,358 12,546 $ 390 $1,171
Gerald O. Fitzpatrick 0 0 47,937 12,225 $ 380 $1,141
Patrick J. Barry 0 0 29,257 11,904 $ 370 $1,111
- ---------------
(1) The closing price for the Company's Common Stock as reported by the Nasdaq
National Market System on October 28, 2001 was $2.28.
(2) The exercise prices of the "Exercisable" options exceeded $2.28 and
therefore were not "In the Money."
401(K) AND DEFERRED COMPENSATION SAVINGS PLAN
On October 27, 1986, the Company implemented the Quality Dining, Inc.
Retirement Plan and Trust ("Plan I"). Plan I is designed to provide all of the
Company's employees with a tax-deferred long-term savings vehicle. The Company
provides a matching cash contribution equal to 50% of a participant's
contribution, up to a maximum of 5% of such participant's compensation. Plan I
is a qualified 401(k) plan. Participants in Plan I elect the percentage of pay
they wish to contribute as well as the investment alternatives in which their
contributions are to be invested. Participant's contributions vest immediately
while Company contributions vest 25% annually beginning in the participant's
second year of eligibility since Plan I inception.
On May 18, 1998, the Company implemented the Quality Dining, Inc.
Supplemental Deferred Compensation Plan ("Plan II"). Plan II is a non-qualified
deferred compensation plan. Plan II participants are considered a select group
of management and highly compensated employees according to Department of Labor
guidelines. Since the implementation of Plan II, Plan II participants are no
longer eligible to contribute to Plan I. Plan II participants elect the
percentage of their pay they wish to defer into their Plan II account. They also
elect the percentage of their account to be allocated among various investment
options. The Company makes matching allocations to the Plan II participants'
deferral accounts equal to 50% of a participant's contribution, up to a maximum
of 5% of such participant's compensation, subject to the same limitations as are
applicable to Plan I participants. Company allocations vest 25% annually,
beginning in the participant's second year of eligibility since Plan I
inception.
LONG TERM INCENTIVE PLANS
On June 1, 1999 the Company implemented two plans for its senior officers,
a Strategic Executive Long Term Incentive Compensation Plan (the "Strategic Long
Term Plan") and a Senior Executive Long
13
Term Incentive Compensation Plan (the "Senior Long Term Plan" and, together with
the Strategic Long Term Plan, the "Long Term Plans"). The participants in the
Strategic Long Term Plan were seven of the Company's executive officers
(including each of the Named Executive Officers other than Daniel Fitzpatrick,
the Chief Executive Officer) and one other senior officer, and the participants
in the Senior Long Term Plan were eight other senior officers of the Company.
The Strategic Long Term Plan consists of three components: (i) restricted
stock awards during fiscal 1999, 2000 and 2001; (ii) stock option grants during
fiscal 1999; and (iii) a one-time cash bonus equal to the product of (A) 10% and
(B) the sum of the actual base salary paid to a participant in fiscal years
1998, 1999 and 2000, which cash bonus was paid at the conclusion of the fiscal
year 2000 to those participants still employed by the Company at that time. The
restricted stock awards under the Strategic Long Term Plan will vest seven years
from the date of grant, subject to accelerating vesting terms if the Company's
Common Stock price reaches certain benchmarks for at least 10 out of 20
consecutive trading days. The stock option grants under the Strategic Long Term
Plan vest in three annual increments of 25%, 25% and 50%, respectively.
The Senior Long Term Plan consists of restricted stock awards and stock
options that are identical to the restricted stock awards and options contained
in the Strategic Long Term Plan, but does not contain a cash bonus component.
The restricted stock and stock options granted to the participants of the Long
Term Plans are issued under the Company's 1997 Stock Option Plan.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee determines executive compensation and
administers the Company's 1993 Stock Option Plan and the 1997 Stock Option Plan.
The Company's compensation programs are designed to attract, retain and
motivate the finest talent possible for all levels of the organization. In
addition, the programs are designed to treat all employees fairly and to be
cost-effective. To that end, all compensation programs for management, including
those for executive officers, have the following characteristics:
- Compensation is based on the individual's level of job responsibility
and level of performance, the performance of the restaurant, division
or concept supervised by such individual and/or the performance of the
Company. Executive officers have a greater portion of their pay based
on Company performance than do other management employees.
- Compensation also takes into consideration the value assigned to the
job by the marketplace. To retain a highly skilled management team,
the Company strives to remain competitive with the pay of employers of
a similar stature who compete with the Company for talent.
- Through the grant of stock options and restricted stock awards, the
Company offers the opportunity for equity ownership to executive
officers and other key employees.
Consistent with these programs, the compensation of executive officers has
been and will be related in substantial part to Company performance.
Compensation for executive officers consists of salary, bonus, restricted stock
awards and stock option grants. Bonuses, restricted stock awards and stock
option grants are based in part on Company performance.
14
Stock Options
During fiscal 2001, the Compensation Committee only made isolated grants of
options, none of which were to Named Executive Officers of the Company.
Cash Bonuses
In December 1994, the Compensation Committee adopted guidelines for annual
cash bonus awards, which guidelines are used by the Company's Chairman and Chief
Executive Officer in his recommendations to the Compensation Committee regarding
the annual bonus awards. Under the bonus program adopted by the Compensation
Committee, executive officers are eligible for an annual bonus in an amount up
to a specified percentage of the executive officer's salary. These percentages
currently range from 25% to 50%. Within these parameters, the bonuses are at the
discretion of the Compensation Committee.
In making bonus recommendations to the Compensation Committee for the 2001
fiscal year, the Chief Executive Officer evaluated each bonus-eligible
employee's performance against targets established for the areas of the
Company's operations under their supervision, the Company's performance against
its financial targets and the executive officer's impact on the Company's
performance over a number of years. In setting bonuses for fiscal 2001, the
Compensation Committee considered the recommendations of the Chief Executive
Officer.
Long Term Incentive Plans
In fiscal 1999, the Compensation Committee engaged an outside executive
consulting firm to review its short and long term compensation plans. After
considering the consulting firm's report, the Compensation Committee concluded
that the Company's long term compensation program was neither effective nor
competitive, in part, because previously granted stock options had exercise
prices significantly higher than the fair market value of the Company's Common
Stock. As a result, "underwater" stock options were no longer providing
sufficient incentive to induce employees to remain with the Company or motivate
them towards improving the Company's overall financial performance during a
critical transition period for the Company. In view of the diminished value of
the stock options, and in light of the significant role stock options have
played in employees' overall compensation, the Compensation Committee determined
that it would be in the best interest of the Company's shareholders to implement
the Long Term Plans that were designed and recommended by its outside
consultants. The Long Term Plans give significant weight to "equity-based"
components which directly align long term executive compensation with the
Company's strategic plan to enhance shareholder value. After weighing the
benefits and detriments of implementing the Long Term Plans, the Compensation
Committee decided to adopt the Long Term Plans because it believed that they
were a necessary tool to induce employees, including executive officers, to
remain with the Company and provide the additional efforts needed during this
very critical time in the Company's history. See "-Compensation of Executive
Officers and Directors - Long Term Incentive Plans."
15
CEO Compensation
Daniel B. Fitzpatrick's salary and cash bonus for fiscal 2001 were
generally determined in accordance with the same procedures and standards as for
the other executive officers of the Company. Mr. Fitzpatrick received a cash
bonus of $61,661 for fiscal 2001. In addition, in October, 2000, Mr. Fitzpatrick
was granted a one-time bonus of $450,000 in connection with his employment
agreement. Mr. Fitzpatrick is not a participant in either the Strategic Long
Term Plan or the Senior Long Term Plan.
Compensation and Stock Option Committee
---------------------------------------
Steven M. Lewis, Chairman
Philip J. Faccenda
Bruce M. Jacobson
AUDIT COMMITTEE REPORT
The Board of Directors maintains an Audit Committee comprised of three of
the Company's outside directors. The Board of Directors and the Audit Committee
believe that the Audit Committee's current member composition satisfies the rule
of the National Association of Securities Dealers, Inc. ("NASD") that governs
audit committee composition, including the requirement that audit committee
members all be "independent directors" as that term is defined by NASD Rule 4200
(a)(14).
The Audit Committee oversees the Company's financial process on behalf of
the Board of Directors. Management has the primary responsibility for the
financial statements and the reporting process including the systems of internal
controls. In fulfilling its oversight responsibilities, the committee reviewed
the audited financial statements in the Annual Report with management including
a discussion of the quality, not just the acceptability, of the accounting
principles, the reasonableness of significant judgments, and the clarity of
disclosures in the financial statements. The Board has adopted a written Charter
of the Audit Committee.
The Audit committee reviewed with the independent auditors, who are
responsible for expressing an opinion on the conformity of those audited
financial statements with generally accepted accounting principles, their
judgments as to the quality, not just the acceptability, of the Company's
accounting principles and such other matters as are required to be discussed
with the Audit Committee under generally accepted auditing standards, including
Statement on Auditing Standards No. 61. In addition, the Audit Committee has
discussed with the independent auditors the auditors' independence from
management and the Company including the matters in the written disclosures and
the letter from the independent auditors required by the Independence Standards
Board, Standard No. 1 and has considered whether the provision of non-audit
services by the auditors is compatible with maintaining the auditor's
independence.
The Audit Committee discussed with the Company's independent auditors the
overall scope and plans for their audit. The Audit Committee meets with the
independent auditors, with and without management present, to discuss the
results of their examination, their evaluation of the Company's internal
controls, and the overall quality of the Company's financial reporting. The
Audit Committee held four meetings during fiscal 2001. The Company incurred the
following fees for services performed by PricewaterhouseCoopers LLP in fiscal
2001.
16
AUDIT FEES
Fees for the fiscal year 2001 audit and the review of Forms 10-Q are
$130,000, of which an aggregate amount of $58,000 has been billed through
October 28, 2001.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
PricewaterhouseCoopers LLP did not render any services related to financial
information systems design and implementation for the fiscal year ended October
28, 2001.
ALL OTHER FEES
Aggregate fees billed for all other services rendered by
PricewaterhouseCoopers LLP for the fiscal year ended October 28, 2001 are
$139,634.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors (and the Board has approved)
that the audited financial statements be included in the Company's Annual Report
on Form 10-K for the fiscal year ended October 28, 2001 for filing with the
Securities and Exchange Commission. The Audit Committee and the Board have also
recommended, subject to shareholder approval, the selection of the Company's
independent auditors.
Christopher J. Murphy III, Audit Committee Chair
Bruce M. Jacobson, Audit Committee Member
Steven M. Lewis, Audit Committee Member
17
PERFORMANCE GRAPH
The performance graph set forth below compares the cumulative total
shareholder return on the Company's Common Stock with the Nasdaq Market Index
and an Index of Nasdaq Companies in SIC Major Group 581 for the period from
October 28, 1996 through October 26, 2001. The Company's Common Stock commenced
trading on the Nasdaq National Market System on March 2, 1994.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG THE COMPANY,
NASDAQ MARKET INDEX AND INDEX OF NASDAQ COMPANIES IN SIC MAJOR GROUP 581
<Table>
<Caption>
FISCAL YEAR ENDING
------------------------------------------------------------------------------------------
COMPANY/INDEX/MARKET 10/25/1996 10/24/1997 10/30/1998 10/29/1999 10/27/2000 10/26/2001
- -------------------------- ---------- ---------- ---------- ---------- ---------- ----------
Quality Dining..................... 100.00 21.88 11.51 11.93 9.66 10.36
Eating & Drinking Places........... 100.00 105.15 128.32 142.99 121.51 123.58
NASDAQ Market Index................ 100.00 131.06 148.19 244.59 287.67 144.26
</Table>
Notwithstanding anything to the contrary set forth in any of the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that may incorporate future filings (including
this Proxy Statement, in whole or in part), the preceding Compensation Committee
Report on Executive Compensation, Audit Committee Report and the stock price
Performance Graph shall not be incorporated by reference in any such filings.
18
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
On March 8, 1994, the Board of Directors established the Compensation
Committee to approve compensation and stock option grants for the Company's
executive officers. The Compensation Committee members are Messrs. Lewis,
Faccenda and Jacobson. None of the Compensation Committee members are involved
in a relationship requiring disclosure as an interlocking executive
officer/director or under Item 404 of Regulation S-K or as a former officer or
employee of the Company.
CERTAIN TRANSACTIONS
Related party transactions are subject to the review and approval of the
Company's Audit Committee, which is composed exclusively of the Company's
disinterested Directors.
LEASES OF RESTAURANT FACILITIES
Of the Burger King restaurants operated by the Company as of October 28,
2001, 41 were leased from a series of entities owned, in various percentages, by
Messrs. Daniel B. Fitzpatrick, Ezra H. Friedlander and James K. Fitzpatrick (the
"Real Estate Partnerships"). The Company believes that these leases are on terms
at least as favorable as leases that could be obtained from unrelated third
parties. Each of the leases between the Company and a Real Estate Partnership
are triple net leases which provide for an annual base rent equal to 13 1/2% of
the total cost (land and building) of the leased restaurant, together with
additional rent of 7% of restaurant sales, to the extent that amount exceeds the
base rental. These terms are substantially identical to those which were offered
by Burger King Corporation to its franchisees at the time the leases were
entered into except that Burger King Corporation was generally charging
additional rent of 8 1/2% of restaurant sales. During fiscal 2001, the Company
paid $3,924,000 under these leases.
TRANSPORTATION SERVICES
Burger Management South Bend No. 3, Inc., an Indiana corporation ("SB No.
3"), owned by Messrs. Daniel B. Fitzpatrick, Ezra H. Friedlander and James K.
Fitzpatrick, has provided the service of its King Air turbo-prop aircraft to the
Company. In fiscal 2001, SB No. 3 billed the Company $393,000. The Company
believes that the amounts paid for air services were no greater than amounts
which would have been paid to unrelated third parties for similar services.
Consequently, the Company intends to continue to utilize SB No. 3 to provide air
transportation services. Since January 1, 1996, SB No. 3 has leased two or three
employees from the Company to act as a pilot and co-pilot of the aircraft. SB
No. 3 reimburses the Company for the Company's full cost of such employees.
ADMINISTRATIVE SERVICES
The Company provides certain accounting, tax and other administrative
services to the Real Estate Partnerships and SB No. 3 on a fee for services
basis. The aggregate amount of fees paid to the Company for administrative
services by these entities during fiscal 2001 was $14,000. The Company believes
that these fees are no less than amounts which would have been charged to
unaffiliated third parties for comparable services.
19
PRINCIPAL OWNERS OF COMMON STOCK
The following table sets forth, as of November 27, 2001, the number of
shares of Common Stock of the Company owned by any person (including any group)
known by management to beneficially own more than 5% of the Common Stock of the
Company, by each of the Directors and Named Executive Officers, and by all
Directors and executive officers of the Company as a group. Unless otherwise
indicated in a footnote, each individual or group possesses sole voting and
investment power with respect to the shares indicated as beneficially owned.
Name and Address of Number of Shares Percent
Individual or Beneficially of
Identity of Group Owned Class
- --------------------------------------------------------------------------------
Philip J. Faccenda 19,000 (1)(2) *
Daniel B. Fitzpatrick (3) 2,576,009 (4) 22.2%
James K. Fitzpatrick 397,197 (5)(6) 3.4%
Ezra H. Friedlander 511,131 (7)(8) 4.4%
Bruce M. Jacobson 11,500 (1) *
Steven M. Lewis 19,250 (9)(10) *
Christopher J. Murphy III 61,500 (9)(11) *
Patrick J. Barry 70,821 (5)(12) *
John C. Firth 87,224 (5)(13) *
Gerald O. Fitzpatrick 283,041 (5)(14) 2.4%
Jerome L. Schostak
Robert I. Schostak
David W. Schostak
Mark S. Schostak
NBO, LLC
25800 Northwestern Highway
Southfield, MI 48075 ** 1,159,014 (15) 10.0%
Dimensional Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401 *** 896,300 7.7%
All current Directors and executive officers
as a group (14 persons) 4,173,633 (5)(16) 35.1%
20
- ---------------
* Less than 1%.
** Information is based solely on reports filed by such shareholders under
Section 13(d) of the Securities Exchange Act of 1934.
*** Information is based solely on reports filed by such shareholder under
Section 13(G) of the Securities Exchange Act of 1934.
(1) Includes presently exercisable stock options to purchase 4,000 shares
granted under the Company's 1999 Outside Directors Plan.
(2) Includes 15,000 shares held by Philip J. Faccenda, Inc., a holding company
of which Mr. Faccenda is the majority shareholder and has investment
control.
(3) The address of this shareholder is 4220 Edison Lakes Parkway, Mishawaka,
Indiana 46545.
(4) Includes presently exercisable stock options to purchase 23,200 shares,
granted by the Company.
(5) Does not include shares subject to stock options which are not exercisable
within 60 days.
(6) Includes presently exercisable stock options to purchase 49,752 shares,
granted by the Company.
(7) Includes presently exercisable stock options to purchase 8,000 shares, and
6,000 shares, granted under the Company's 1993 Outside Directors Plan and
1999 Outside Directors Plan, respectively.
(8) Includes 14,200 shares held in a trust of which Mr. Friedlander is the
trustee with investment control and the income beneficiary and 15,000
shares owned by Mr. Friedlander's spouse.
(9) Includes presently exercisable stock options to purchase 10,000 shares and
6,000 shares, granted under the Company's 1993 Outside Directors Plan and
1999 Outside Directors Plan, respectively.
(10) Includes 500 shares held in a trust for the benefit of Mr. Lewis' minor
children.
(11) Includes 1,000 shares held by certain retirement plans in which Mr. Murphy
is a participant.
(12) Includes presently exercisable stock options to purchase 30,580 shares,
granted by the Company.
(13) Includes presently exercisable stock options to purchase 32,868 shares
granted by the Company.
(14) Includes presently exercisable stock options to purchase 49,295 shares,
granted by the Company.
(15) The individuals listed are members of NBO, LLC, a Michigan limited
liability company. The reporting persons share voting and dispositive
power with respect to all 1,159,014 shares reported.
(16) Includes presently exercisable stock options to purchase 301,183 granted
by the Company.
SHAREHOLDER PROPOSALS FOR 2002 ANNUAL MEETING
The date by which shareholder proposals must be received by the Company for
inclusion in proxy materials relating to the 2003 Annual Meeting of Shareholders
is October 6, 2002. Such proposals should be submitted in writing to the
Secretary of the Company at its principal executive offices.
21
If a shareholder intends to submit a proposal at the 2003 Annual Meeting of
Shareholders which is not eligible for inclusion in the proxy materials relating
to that meeting in accordance with the previous paragraph, the Company's By-Laws
require that, for business to be properly brought before an annual meeting by a
shareholder (other than nominations of candidates for director), the Company
must have received written notice thereof not less than 70 nor more than 90 days
prior to the anniversary date of the previous annual meeting. If, however, the
annual meeting is more than 30 days earlier or more than 60 days later than the
anniversary date of the prior annual meeting, notice by the shareholder must be
delivered or received not earlier than the 90th day prior to the annual meeting
and not later than the close of business on the later of the 70th day prior to
the annual meeting or the 10th day following the date on which public disclosure
of the meeting date was first made. The notice must set forth (a) a brief
description of the business proposed to be brought before the meeting and the
reasons for conducting such business at the meeting and, in the event that such
business includes a proposal to amend the Restated Articles of Incorporation of
the Company, the language of the proposed amendment, (b) the shareholder's name
and address, (c) a representation that the shareholder is a holder of record of
shares of the Company entitled to vote at the meeting and intends to appear in
person or by proxy at the meeting to propose such business, (d) any material
interest of the shareholder in such business, and (e) if the shareholder intends
to solicit proxies in support of such shareholder's proposal, a representation
to that effect. Such notice must be given to the Secretary of the Company,
either by personal delivery or by United States mail, postage prepaid, at the
principal executive offices of the Company. The foregoing requirements will be
deemed satisfied if the shareholder notifies the company of its intention to
present a proposal at an annual meeting and such proposal has been included in
the Company's proxy statement for such annual meeting. Such shareholder's
proposal, however, will not be presented at the annual meeting unless the
shareholder appears or sends a qualified representatives to present the proposal
at the meeting.
If the shareholder's proposal includes the nomination of a person to become
a director with respect to an election to be held at an annual meeting, the
shareholder's notice must be received by the Company in the manner and within
the time frame provided above for shareholder's proposals. If, however, the
nomination is with respect to an election to be held at a special meeting of
shareholders for the election of directors, notice must be received not earlier
than the 90th day prior to such meeting and not later than the close of business
on the later of the 60th day prior to such meeting or the 10th day following the
date on which public disclosure of the meeting date was first made. The notice
must set forth (a) the shareholder's name and address, (b) a representation that
the shareholder is a holder of record of stock of the Company entitled to vote
at the meeting and intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice, (c) a description of all
arrangements or understandings between the shareholder and each nominee and any
other person pursuant to which the nomination or nominations are to be made by
the shareholder, (d) such other information regarding each nominee proposed by
such shareholder as would be required under the federal proxy rules, (e) the
consent of each nominee to serve if so elected, and (f) if the shareholder
intends to solicit proxies in support of such shareholder's nominees, a
representation to that effect.
John C. Firth, Secretary
February 4, 2002
22
QUALITY DINING, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
I hereby appoint Daniel B. Fitzpatrick and John C. Firth, or either of them, my
proxies, with power of substitution, to vote all shares of common stock of the
Company which I am entitled to vote at the Annual Meeting of shareholders of the
Company, to be held at the Company's headquarters, 4220 Edison Lakes Parkway,
Mishawaka, Indiana, on Tuesday, March 12, 2002 at 9:00 a.m., Mishawaka time, and
at any adjournment, as follows:
(change of address)
--------------------------------
--------------------------------
--------------------------------
(If you have written in the above space,
please mark the corresponding box on the
reverse side of this card.)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE ELECTION AS DIRECTOR OF THE NOMINEES LISTED UNDER PROPOSAL 1 AND FOR
PROPOSAL 2.
SEE REVERSE SIDE.
[ X ] PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
THE BOARD OF RECOMMENDS A VOTE "FOR" ITEM 1
DIRECTORS
1. ELECTION OF DIRECTORS NOMINEES: CHRISTOPHER J. MURPHY III AND FOR THE WITHHOLD
BRUCE M. JACOBSON NOMINEES AUTHORITY
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL LISTED TO THE TO VOTE FOR THE NOMINEES
NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW): LEFT (EXCEPT AS LISTED TO THE LEFT
MARKED TO THE
CONTRARY)
- --------------------------------------------------------------- [ ] [ ]
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEM 2
2. APPROVE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS AUDITORS
FOR FISCAL 2002
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. IN THEIR DISCRETION, ON ANY OTHER MATTERS THAT MAY PROPERLY COME
BEFORE THE MEETING.
Date
----------------------------------
---------------------------------------
(SIGNATURE)
---------------------------------------
(SIGNATURE IF HELD JOINTLY)
Please sign exactly as your name appears
hereon. When shares are held by two or
more persons, all of them should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give full title as such. If a
corporation, please sign in full
corporate name by President or other
authorized officer. If a partnership,
please sign in partnership name by
authorized person.
PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD USING THE ENCLOSED ENVELOPE.