SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K/A
(AMENDMENT NO. 1)
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(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from __________________________ to __________________
Commission file number 1-12692
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MORTON'S RESTAURANT GROUP, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-3490149
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
3333 New Hyde Park Road, New Hyde Park, NY 11042
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(Address of principal executive offices) (zip code)
516-627-1515
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(Registrant's telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class Name of exchange
Common Stock, $.01 par value New York Stock Exchange
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Securities Registered Pursuant to Section 12(g) of the Act:
None
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(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
As of April 17, 2002, the aggregate market value of voting stock held by
non-affiliates of the registrant was $51,331,315.
As of April 17, 2002, the registrant had 4,184,711 shares of its common stock,
$.01 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None
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TABLE OF CONTENTS
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT ............................ 2
ITEM 11. EXECUTIVE COMPENSATION ........................................................ 4
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ................ 7
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ................................ 9
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This Amendment No. 1 to the Annual Report on Form 10-K of Morton's
Restaurant Group, Inc. (the "Company") amends and restates in their entirety
Items 10, 11, 12 and 13 of Part III of the Annual Report on Form 10-K of the
Company filed with the Securities and Exchange Commission (the "SEC") on March
29, 2002 (the "Form 10-K"). Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to such terms in the Form 10-K.
PART III
Item 10. Directors and Executive Officers of the Registrant
The following table sets forth information with respect to each member
of the Company's Board of Directors.
NAME AGE DIRECTOR SINCE YEAR TERM EXPIRES AND CLASS
---- --- -------------- ---------------------------
Allen J. Bernstein..... 56 December 1988 2004 Class 3
Thomas J. Baldwin...... 46 November 1998 2004 Class 3
John K. Castle......... 61 December 1988 2004 Class 3
Lee M. Cohn............ 54 August 1997 2002 Class 1
Dianne H. Russell...... 58 May 1993 2002 Class 1
Alan A. Teran.......... 56 May 1993 2002 Class 1
Robert L. Barney....... 65 February 2001; December 1991-August 1997 2003 Class 2
Dr. John J. Connolly... 62 October 1994 2003 Class 2
David B. Pittaway...... 50 December 1988 2003 Class 2
Allen J. Bernstein has been chairman of the board of the Company since
October 1994 and chief executive officer and a director of the Company since
December 1988. He has been president of the Company since September 1997 and was
previously president of the Company from December 1988 through October 1994. Mr.
Bernstein has worked in various aspects of the restaurant industry since 1970.
Mr. Bernstein is also a director of Dave and Busters, Inc., Charlie Browns
Acquisition Corp., Luther's Acquisition Corp., Wilshire Restaurant Group, Inc.
and McCormick and Schmick Holdings LLC, the last four of which are owned by an
affiliate of Castle Harlan, Inc.
Thomas J. Baldwin was elected a director of the Company in November
1998 and executive vice president in January 1997. He previously served as
senior vice president, finance of the Company since June 1992, and vice
president, finance since December 1988. In addition, Mr. Baldwin has been chief
financial officer, assistant secretary and treasurer of the Company since
December 1988. His previous experience includes seven years at General Foods
Corp., now a subsidiary of Kraft General Foods / Philip Morris Companies, Inc.,
where he worked in various financial management and accounting positions, and
two years at Citicorp where he served as Vice President responsible for
strategic planning and financial analysis at a major corporate banking division.
Mr. Baldwin is currently a director of Charlie Browns Acquisition Corp., which
is owned by an affiliate of Castle Harlan, Inc. Mr. Baldwin is a licensed
certified public accountant in the State of New York.
John K. Castle has been a director of the Company since December 1988.
Mr. Castle has been chairman, controlling stockholder and a director of Castle
Harlan, Inc. since 1987 and of Castle Harlan Partners III, G.P., Inc. since
1997. Mr. Castle is
2
also chairman and chief executive officer of Branford Castle, Inc., an
investment company formed in 1986, located at 150 East 58th Street, New York,
New York 10155. Immediately prior to forming Castle Harlan, Inc., Mr. Castle was
president and chief executive officer and a director of Donaldson Lufkin &
Jenrette, Inc., one of the nation's leading investment banking firms. Mr. Castle
is a director of Sealed Air Corporation, American Achievement Corporation,
AdobeAir, Inc., Wilshire Restaurant Group, Inc., Equipment Support Services,
Inc. and a managing director of Statia Terminals Group, N.V. Mr. Castle is a
member of the Corporation of the Massachusetts Institute of Technology and is
also a trustee of the New York-Presbyterian Hospital, Inc. and the Whitehead
Institute of Biomedical Research. Formerly, Mr. Castle was a director of The
Equitable Life Assurance Society of the United States and the New York Medical
College (for 11 years he was chairman of the board).
Lee M. Cohn has been a director of the Company since August 1997. Mr.
Cohn co-founded and has been the chief executive officer of Big 4 Restaurants,
Inc., located at 16601 North Pima Road, Scottsdale, Arizona 85260, since 1973.
Mr. Cohn has served on the boards of Valley Big Brothers and the Phoenix Ballet
Company and is an active member of The Phoenix Thunderbirds, The Fiesta Bowl
Committee and the Young Presidents Organization. Mr. Cohn is a director of
Luther's Acquisition Corp. and Wilshire Restaurant Group, Inc., which are owned
by an affiliate of Castle Harlan, Inc.
Dianne H. Russell has been a director of the Company since May 1993.
Ms. Russell is a senior vice president and regional managing director of the
Technology and Life Sciences Division of Comerica Bank (formerly Imperial Bank)
in Boston, one of the Company's lenders, located at 100 Federal Street, Boston,
Massachusetts 02110, heading the Northeast Region. Formerly, Ms. Russell was
president of Hyde Boston Capital, a financial consulting company, since January
1992, and before that, a senior vice president and department executive at
BankBoston, N.A., a national bank, where she was employed from 1975 to 1991. Ms.
Russell is the chairman of the Financial Advisory Board of the Commonwealth of
Massachusetts.
Alan A. Teran has been a director of the Company since May 1993. Mr.
Teran was the president of Cork 'N Cleaver Restaurants from 1975 to 1981. Since
1981, Mr. Teran has been a principal in private restaurant businesses. Mr. Teran
is currently a director of Good Times, Inc. and Charlie Browns Acquisition
Corp., an affiliate of Castle Harlan, Inc., and previously served on the board
of Boulder Valley Bank and Trust.
Robert L. Barney has been a director of the Company since February
2001. Mr. Barney previously served as a director of the Company from December
1991 through August 1997. Mr. Barney was the chairman of Wendy's International,
Inc., a restaurant company, from February 1982 to May 1990, and its chief
executive officer from September 1982 to February 1989. Since September 1994,
Mr. Barney has been the president and owner of Rolling Meadows Golf Club, Inc.
which runs a golf course.
Dr. John J. Connolly has been a director since October 1994. He is the
president and chief executive officer of Castle Connolly Medical Ltd., located
at 42 West 24th Street, New York, New York 10010, since 1992. He previously
served as president and chief executive officer of New York Medical College for
over ten years. He serves on the President's Advisory Council of the United
Hospital Fund, as a director of Funding First and as a director of the New York
Business Group on Health. He also has served as chairman of the Board of
Trustees of St. Francis Hospital in Poughkeepsie and as a member of the Board of
Trustees of St. Agnes Hospital in White Plains. He is a fellow of the New York
Academy of Medicine and is a founder and past chairman of the American Lyme
Disease Foundation. Dr. Connolly serves as a trustee emeritus and past chairman
of the board of the Culinary Institute of America and director of the
Westchester County Association. Dr. Connolly also presently serves as a director
of Dearborn Risk Management, Charlie Browns Acquisition Corp., which is an
affiliate of Castle Harlan, Inc., Gradipore, Inc. and as chairman and a director
of AlphaGene, Inc. (located at 260 West Cummings Park, Woburn, Massachusetts
01801).
David B. Pittaway has been a director of the Company since December
1988. He was a vice president from December 1988 through May 1993 and assistant
secretary from May 1988 through September 1993. Mr. Pittaway is currently the
senior managing director, senior vice president and secretary of Castle Harlan,
Inc. and secretary of Castle Harlan Partners III, G.P. Inc. He has been with
Castle Harlan, Inc. since 1987 and with Castle Harlan Partners III, G.P. Inc.
since 1997. Mr. Pittaway has been vice president and secretary of Branford
Castle, Inc., an investment company, since October 1986, located at 150 East
58th Street, New York, New York 10155. From 1987 to 1998 he was vice president,
chief financial officer and a director of Branford Chain, Inc., a marine
wholesale company, located at 150 East 58th Street, New York, New York 10155,
where he is now a director and vice chairman. Prior thereto, Mr. Pittaway was
vice president of strategic planning and assistant to the president of Donaldson
Lufkin & Jenrette, Inc. Mr. Pittaway is also a director of American Achievement
Corporation, Equipment Support Services, Inc., Charlie Browns Acquisition Corp.,
Luther's Acquisition Corp., Wilshire Restaurant Group, Inc., McCormick and
Schmick Holdings LLC, and The Dystrophic Epidermolysis Bullosa Research
Association of America, Inc. and a managing director of Statia Terminals Group,
N.V.
3
REPORTING UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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
the Company's Common Stock, to file reports of ownership and changes in
ownership on Forms 3, 4 and 5 with the SEC. Executive officers, directors and
greater than 10% stockholders are required to furnish the Company with copies of
all Forms 3, 4 and 5 that they file. Based solely on the Company's review of the
copies of such Forms it has received and written representations from certain
reporting persons that they were not required to file Forms 5 for specified
fiscal years, the Company believes that all of its executive officers, directors
and greater than 10% stockholders complied with all Section 16(a) filing
requirements applicable to them during the Company's fiscal year ended December
30, 2001.
See also Item 4A, "Executive Officers of the Registrant" in Part I of the Annual
Report on Form 10-K filed with the SEC March 29, 2002.
Item 11. Executive Compensation
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the Company's last three fiscal
years (ended December 30, 2001, December 31, 2000 and January 2, 2000,
respectively), the compensation of those persons who were, at December 30, 2001,
(i) the chief executive officer, and (ii) the other four most highly compensated
executive officers of the Company (together the "Named Officers"):
LONG TERM
COMPENSATION
AWARDS
NAME AND PRINCIPAL POSITION ------------
--------------------------- ANNUAL COMPENSATION (1) SECURITIES
--------------------------------------- UNDERLYING ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
YEAR ($) ($) (#) ($)
---- --------- -------------- ----------- --------------
Allen J. Bernstein................................ 2001 $675,500 $478,000 - $44,811(2)(3)
Chairman of the Board, President 2000 $649,519 $375,000 65,000 $43,761(4)(5)
and Chief Executive Officer 1999 $625,000 $350,000 65,000 $43,121(6)(7)
Thomas J. Baldwin................................. 2001 $265,788 $200,000 - $4,550(2)(3)
Executive Vice President, Chief Financial 2000 $254,807 $175,000 30,000 $3,500(4)(5)
Officer, Assistant Secretary and Treasurer 1999 $244,923 $160,000 30,000 $2,860(6)(7)
Allan C. Schreiber................................ 2001 $187,846 $150,000 - $4,550(2)(3)
Senior Vice President, Development 2000 $179,865 $105,000 6,500 $3,500(4)(5)
1999 $172,615 $90,000 6,500 $2,860(6)(7)
Klaus W. Fritsch.................................. 2001 $174,269 $120,000 - $1,979(2)(3)
Vice Chairman and Co-Founder, Morton's 2000 $155,769 $100,000 7,000 $3,745(4)(5)
of Chicago, Inc. 1999 $149,307 $150,000 7,000 $2,560(7)
John T. Bettin.................................... 2001 $249,616 $150,000 - $4,610(2)(3)
President, Morton's of Chicago, Inc. 2000 $239,647 $140,000 10,000 $3,542(4)(5)
1999 $229,826 $55,000 10,000 -
(1) Includes cash bonuses paid in the referenced fiscal year with respect to
services rendered in the prior fiscal year. Excludes cash bonuses paid in the
following fiscal year with respect to services rendered in the referenced
fiscal year. No cash bonuses were paid in 2002 with respect to services
rendered in 2001.
4
(2) Represents or includes the dollar value of insurance premiums paid by the
Company with respect to term life insurance for the benefit of: Allen J.
Bernstein ($40,561), Thomas J. Baldwin ($300), Allan C. Schreiber ($300), Klaus
W. Fritsch ($642) and John T. Bettin ($360).
(3) Includes employer contributions made by the Company pursuant to the Morton's
Group Profit Sharing and Cash Accumulation Plan and Trust (the "Morton's Plan"),
which is a retirement plan intended to be qualified under Sections 401(a) and
401(k) of the Internal Revenue Code of 1986, as amended, for the benefit of:
Allen J. Bernstein ($4,250), Thomas J. Baldwin ($4,250), Allan C. Schreiber
($4,250), Klaus W. Fritsch ($1,337) and John T. Bettin ($4,250).
(4) Represents or includes the dollar value of insurance premiums paid by the
Company with respect to term life insurance for the benefit of: Allen J.
Bernstein ($40,561), Thomas J. Baldwin ($300), Allan C. Schreiber ($300), Klaus
W. Fritsch ($545) and John T. Bettin ($342).
(5) Includes employer contributions made by the Company pursuant to the
Morton's Plan, which is a retirement plan intended to be qualified under
Sections 401(a) and 401(k) of the Internal Revenue Code of 1986, as amended,
for the benefit of: Allen J. Bernstein ($3,200), Thomas J. Baldwin ($3,200),
Allan C. Schreiber ($3,200), Klaus W. Fritsch ($3,200) and John T. Bettin
($3,200).
(6) Represents or includes the dollar value of insurance premiums paid by the
Company with respect to term life insurance for the benefit of: Allen J.
Bernstein ($40,561), Thomas J. Baldwin ($300), and Allan C. Schreiber ($300).
(7) Includes employer contributions made by the Company pursuant to the Morton's
Plan, for the benefit of: Allen J. Bernstein ($2,560), Thomas J. Baldwin
($2,560), Allan C. Schreiber ($2,560), and Klaus W. Fritsch ($2,560).
OPTIONS GRANTED IN LAST FISCAL YEAR
No stock options were granted to the Named Officers during fiscal 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, for fiscal 2001, information concerning
the exercise of options by the Named Officers and the value of unexercised
options of the Named Officers:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END (#) AT FY-END ($)(1)
ACQUIRED ON VALUE ---------------------------- --------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------- ------------ ----------- ------------- ----------- -------------
Allen J. Bernstein............ - - 258,750 191,250 $93,250 $0
Thomas J. Baldwin............. - - 65,500 85,500 $5,344 $0
Allan C. Schreiber............ - - 36,875 19,125 $0 $0
Klaus W. Fritsch.............. 10,000 $138,000 26,850 19,850 $7,125 $0
John T. Bettin................ - - 27,500 42,500 $0 $0
(1) Based upon the closing sale price of $11.30 per share of the Company's
Common Stock on December 30, 2001 on the New York Stock Exchange and calculated
net of the respective option exercise price.
The Company has not awarded stock appreciation rights to any employee
and has no long term incentive plans, as that term is defined in the regulations
of the SEC. The Company has a stock option plan and bonus plans. During fiscal
2001, the Company did not adjust or amend the exercise price of stock options
awarded to the Named Officers, whether through amendment, cancellation or
replacement grants, or other means. Also, the Company presently has no defined
benefit or actuarial plans covering any employees of the Company.
COMPENSATION OF DIRECTORS
Each non-officer director of the Company is entitled to receive
directors' fees at the rate of $15,000 per year. All directors are reimbursed
for actual expenses incurred in connection with attendance at meetings of the
Board of Directors or committees of the Board.
5
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL CONTRACTS
Employment Agreements
Pursuant to the Second Amended and Restated Employment Agreement dated
as of February 28, 1995, as amended on October 1, 1998, between the Company and
Allen J. Bernstein, Mr. Bernstein serves as Chairman of the Board, President and
Chief Executive Officer of the Company. His current annual base salary of
$676,000 is subject to minimum adjustments based upon increases in the Consumer
Price Index for Urban Wage Earners and Clerical Workers. In addition, Mr.
Bernstein is eligible to receive an annual bonus of up to 120% of his base
salary based upon the Company attaining a profitability target, which in the
discretion of the Board of Directors may be based on net income, operating
income, net cash flow (adjusted for nonrecurring items) or any other basis it
considers appropriate. Mr. Bernstein's employment agreement is terminable by the
Company upon 60 months written notice or at any time for Cause (as defined in
his employment agreement) and by Mr. Bernstein in the event of non-payment of
amounts due under the agreement or if he is assigned duties inconsistent with
his capacity as Chief Executive Officer of the Company. In the event of such a
termination by Mr. Bernstein or in the event of a termination by the Company for
any reason other than Cause, death or disability, Mr. Bernstein is entitled to
receive either (i) severance pay for a 60 month period following such
termination or the delivery of the Company's notice of termination (the
"Measuring Date"), in an amount equal to his base salary, a pro-rated bonus for
the year of termination plus continuance of certain fringe benefits or (ii) at
Mr. Bernstein's election (the "Election"), a lump-sum payment equal to 60
multiplied by $67,800. Upon Mr. Bernstein's acquisition of alternative
employment, the Company's monthly obligation to Mr. Bernstein will be reduced to
$50,600 (if Mr. Bernstein has not made the Election). If, however, Mr. Bernstein
had made the Election and acquires alternative employment, he shall repay to the
Company an amount equal to the product of $17,366 and a number equaling the
difference between 60 and the number of months between the Measuring Date and
the date Mr. Bernstein commences such new employment.
Pursuant to the Employment Agreement dated as of March 1, 2001, between
the Company and Thomas J. Baldwin, Mr. Baldwin serves as Executive Vice
President and Chief Financial Officer of the Company. His current annual base
salary of $266,000 is subject to minimum adjustments based upon increases in the
Consumer Price Index for Urban Wage Earners and Clerical Workers. In addition,
Mr. Baldwin is eligible to receive an annual bonus in the sole discretion of the
Company. Mr. Baldwin's employment agreement is terminable by the Company upon 36
months written notice or at any time for Cause (as defined in his employment
agreement) and by Mr. Baldwin in the event of non-payment of amounts due under
the agreement or if he is assigned duties inconsistent with his capacity as
Chief Financial Officer of the Company. In the event of such a termination by
Mr. Baldwin or in the event of a termination by the Company for any reason other
than Cause, death or disability, Mr. Baldwin is entitled to receive a lump sum
payment equal to three multiplied by $346,332. Upon Mr. Baldwin's acquisition of
alternative employment he shall repay to the Company an amount equal to the
product of $7,392 and a number equaling the difference between 36 and the number
of months between the date of such a termination by Mr. Baldwin or delivery of
the Company's notice of termination and the date Mr. Baldwin commences such new
employment. In the event of a change of control, the amounts payable to Mr.
Baldwin under his Employment Agreement are subject to reduction to the extent
the total amount received under the Employment Agreement and any other agreement
by reason of a change of control would constitute a "parachute payment" under
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Internal Revenue Code").
Pursuant to the Employment Agreement dated as of March 1, 2001, between
the Company and Agnes Longarzo, Ms. Longarzo serves as Vice President,
Administration and Secretary of the Company. Her current annual base salary of
$125,000 is subject to minimum adjustments based upon increases in the Consumer
Price Index for Urban Wage Earners and Clerical Workers. In addition, Ms.
Longarzo is eligible to receive an annual bonus in the sole discretion of the
Company. Ms. Longarzo's employment agreement is terminable by the Company upon
36 months written notice or at any time for Cause (as defined in her employment
agreement) and by Ms. Longarzo in the event of non-payment of amounts due under
the agreement or if she is assigned duties inconsistent with her capacity as
Vice President, Administration of the Company. In the event of such a
termination by Ms. Longarzo or in the event of a termination by the Company for
any reason other than Cause, death or disability, Ms. Longarzo is entitled to
receive a lump sum payment equal to three multiplied by $162,750. Upon Ms.
Longarzo's acquisition of alternative employment she shall repay to the Company
an amount equal to the product of $3,472 and a number equaling the difference
between 36 and the number of months between the date of such a termination by
Ms. Longarzo or delivery of the Company's notice of termination and the date Ms.
Longarzo commences such new employment. In the event of a change of control, the
amounts payable to Ms. Longarzo under her Employment Agreement are subject to
reduction to the extent the total amount received under the Employment Agreement
and any other agreement by reason of a change of control would constitute a
"parachute payment" under Section 280G(b)(2) of the Internal Revenue Code.
6
Change of Control Agreements
The Company has entered into change of control agreements with Allen J.
Bernstein, Thomas J. Baldwin, Allan C. Schreiber, Agnes Longarzo and one other
senior officer, and Morton's of Chicago, Inc. has entered into change of control
agreements with Klaus W. Fritsch, John T. Bettin and one other officer
(collectively, the "Change of Control Agreements"). Each Change of Control
Agreement has a three-year term, subject to automatic renewal for additional
three-year periods on each anniversary of the Change of Control Agreement unless
the Company or Morton's of Chicago, Inc., as applicable, gives the officer at
least 60 days' prior notice that the Change of Control Agreement will not be so
extended. Pursuant to each Change of Control Agreement, the Company or Morton's
of Chicago, Inc., as applicable, agrees to continue the officer in its employ
for a three-year period (the "Continuation Period") following a "Change of
Control" (as is defined in the applicable Change of Control Agreement). If,
during the Continuation Period, the officer's employment is terminated by the
Company or Morton's of Chicago, Inc., as applicable, other than for "Cause" (as
defined in the applicable Change of Control Agreement) or if the officer
terminates employment with the Company or Morton's of Chicago, Inc., as
applicable, for "Good Reason" (as defined in the applicable Change of Control
Agreement), the Company or Morton's of Chicago, Inc., as applicable, is required
to make a cash lump sum payment to the officer equal to 2.99 times the officer's
base amount, as computed under the Internal Revenue Code, less any severance
payments payable to such officer pursuant to employment agreements, where
applicable; subject to reduction to the extent the total amount received by the
officer under the Change of Control Agreement and any other agreement by reason
of a Change of Control would constitute a "parachute payment" under Section
280G(b)(2) of the Internal Revenue Code. In addition, for a period of at least
three years after such termination, the Company or Morton's of Chicago, Inc., as
applicable, is required to continue to provide the officer with welfare benefits
similar to those received by the officer when employed by the Company or
Morton's of Chicago, Inc., as applicable. In general, an officer's base amount
as used above is the average annual compensation included in the gross income of
such officer for the most recent five taxable years ending before a Change of
Control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Board of Directors
consists of John K. Castle, Lee M. Cohn and Dr. John J. Connolly. No member of
the Compensation and Stock Option Committee is a former or current officer or
employee of the Company or any of its subsidiaries.
On March 26, 2002, the Company entered into an Agreement and Plan of
Merger with Morton's Holdings, LLC (formerly Morton's Holdings, Inc., "Morton's
Holdings") and Morton's Acquisition Company ("Morton's Acquisition"). If the
Company's stockholders approve and adopt the merger agreement and approve the
merger, and the merger is completed: (a) Morton's Acquisition, a wholly owned
subsidiary of Morton's Holdings, will be merged with and into the Company, with
the Company as the surviving corporation; (b) each issued and outstanding share
of the Company's common stock will be converted into the right to receive $12.60
in cash without interest (other than shares held by the Company or any of the
Company's subsidiaries, held in the Company's treasury, or held by Morton's
Holdings or Morton's Acquisition, or shares held by Morton's stockholders who
perfect their appraisal rights under Delaware law); and (c) the Company will
continue its operations, but as a privately held company. Castle Harlan Partners
III, L.P. ("CHP") beneficially owns 100% of the outstanding membership interests
of Morton's Holdings. Directors John K. Castle and David B. Pittaway are
executive officers of certain affiliates of CHP and each has an indirect
financial interest in Morton's Holdings.
Except as set forth above and as set forth below under the caption
"Certain Relationships and Related Transactions," there are no other
relationships among the Company, the Company's executive officers, members of
the Compensation and Stock Option Committee or entities whose executives serve
on the Board of Directors or the Compensation and Stock Option Committee that
require disclosure under applicable SEC regulations.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information as of April 17,
2002, with respect to the beneficial ownership of the Company's Common Stock of
each director, each named executive officer in the summary compensation table
under "Executive Compensation," all executive officers and directors as a group,
and each person known by the Company to be the beneficial owner of 5% or more of
the Company's Common Stock. This information is based upon information received
from or on behalf of the named individuals or entities. The address of each of
the directors and executive officers is c/o Morton's Restaurant Group, Inc.,
3333 New Hyde Park Road, New Hyde Park, New York 11042. The addresses for the
other 5% beneficial owners of the Company's common stock are as follows: FMR
Corp., 82 Devonshire Street, Boston, Massachusetts 02109; Capital Research &
Management Co., 333 South Hope Street, Los Angeles, California 90071; Goldman,
Sachs & Co., 32 Old Slip, New York, New York 10005 and BFMA Holding Corporation,
50 East Sample Road, Suite 400, Pompano Beach, Florida 33064.
7
Beneficial Ownership
Number of Percent of
Beneficial Owner Shares (1) Total (2)
---------------- ---------- ---------
Allen J. Bernstein (3) 528,705 11.82%
Thomas J. Baldwin (3) 110,500 2.59%
Allan C. Schreiber (3) 39,750 *
Klaus W. Fritsch (3) 39,525 *
John T. Bettin (3) 27,500 *
John K. Castle 5,178 *
Dr. John J. Connolly 400 *
Dianne H. Russell 500 *
David B. Pittaway 3,132 *
Lee M. Cohn 1,500 *
Robert L. Barney 0 *
Alan A. Teran 560 *
FMR Corp. (4) (6) 784,800 18.75%
BFMA Holding Corp. (4) 573,900 13.71%
Capital Research and Management Company (4) 396,000 9.46%
Goldman, Sachs & Co. (4) 241,862 5.78%
Morton's Directors and Executive Officers as a Group (14 Persons) (5) 792,275 16.93%
* Represents less than 1%.
(1) Unless otherwise noted, the beneficial owners listed have sole voting and
investment power over the shares listed.
(2) Percent of Class based upon 4,184,711 outstanding shares of common stock
plus, for those persons who hold options to acquire shares of common stock, the
number of shares of common stock beneficially owned by such person as of June
16, 2002.
(3) Includes beneficial ownership of shares of common stock issuable upon
exercise of outstanding incentive stock options issued under the Morton's
Restaurant Group, Inc. 2000 Stock Option Plan ("Stock Option Plan") as follows:
Thomas J. Baldwin (77,000), John T. Bettin (27,500), Allen J. Bernstein
(287,500), Klaus W. Fritsch (29,525) and Allan C. Schreiber (39,750). Excludes
shares of common stock issuable upon exercise of incentive stock options issued
under the Stock Option Plan which are not exercisable by June 16, 2002.
(4) Shares of common stock beneficially owned by Capital Research and Management
Co. ("CRM"), and Goldman, Sachs & Co. ("Goldman") are listed according to
reports on Schedule 13G as of December 31, 2001, each of which was filed during
February 2002. Shares of common stock beneficially owned by FMR Corp. are listed
according to a report on Schedule 13G as of December 31, 2000, which was filed
during February 2001. Shares of common stock beneficially owned by BFMA Holding
Corporation ("BFMA") are listed according to a report filed on Schedule 13D as
of March 21, 2002, filed on March 22, 2002.
Based upon information set forth in such report on Schedule 13G filed by FMR
Corp., FMR Corp. and Fidelity Management & Research Company ("Fidelity"), a
wholly-owned subsidiary of FMR Corp., each of which is the beneficial owner of
784,800 shares or 18.75% of the common stock as a result of acting as an
investment advisor to several investment companies. Members of the Edward C.
Johnson 3rd family, FMR Corp., through its control of Fidelity, and the
aforementioned investment companies each has sole dispositive power over these
784,800 shares. The ownership of two investment companies, Fidelity Advisor
Value Strategies Fund and Fidelity Low-Priced Stock Fund, amounted to 424,800
shares or 10.15% and 360,000 shares or 8.60%, respectively, of the common stock.
The power to vote such shares resides with the aforementioned investment
companies' Boards of Trustees.
Based upon information set forth in such report on Schedule 13G filed by CRM,
CRM has sole dispositive power over 396,000 shares or 9.46% of the common stock
as a result of acting as investment advisor to SmallCap World Fund, Inc. which
has sole voting power over these 396,000 shares.
Based upon information set forth in such report on Schedule 13G filed by
Goldman, Goldman has sole voting power over 208,144 shares or 4.97% and sole
dispositive power over 241,862 shares or 5.78% of the common stock.
8
Based upon information set forth in such reports on Schedule 13D filed by BFMA,
BFMA has sole voting and dispositive power over 488,500 shares or 11.67% of the
common stock and shared voting and dispositive power over 56,300 shares, or
1.35%. Barry W. Florescue, president, chief executive officer, director and
controlling shareholder of BFMA reports sole voting and dispositive power over
517,600 shares or 12.27% of the common stock, shared voting and dispositive
power over 56,300 shares or 1.35% of the common stock and aggregate beneficial
ownership of 573,900 shares or 13.71% of the common stock.
(5) Includes beneficial ownership of 496,300 shares of common stock issuable
in the aggregate upon exercise of outstanding incentive and non-qualified
stock options issued under Company's the stock option plan to officers of the
Company. Excludes shares of common stock issuable upon exercise of incentive
and non-qualified stock options issued under the stock option plan that are
not exercisable by June 16, 2002.
(6) Pursuant to the terms of the Company's amended and restated stockholders
rights plan, the rights issued thereunder have not become exercisable as a
result of the beneficial ownership held by FMR Corp. exceeding 15%. In
accordance with the terms of the rights plan, the rights issued thereunder will
not become exercisable upon a stockholder's beneficial ownership exceeding 15%
of the outstanding stock of the Company if the increase above 15% is caused by
the Company's repurchase of stock. The beneficial ownership of FMR Corp. has
increased above 15% as a result of repurchases of stock by the Company. Any
further purchases of stock by FMR Corp. would activate the rights plan. The
Company has notified FMR Corp. of this fact. Management of FMR Corp. has
indicated that it does not intend to purchase any additional shares of stock in
the Company. The Company will continue to monitor the beneficial ownership
percentages of FMR Corp. and other significant stockholders and notify those
stockholders of the possibility of triggering the rights plan.
On March 26, 2002, the Company entered into an Agreement and Plan of
Merger with Morton's Holdings and Morton's Acquisition. If the Company's
stockholders approve and adopt the merger agreement and approve the merger, and
the merger is completed: (a) Morton's Acquisition, a wholly owned subsidiary of
Morton's Holdings, will be merged with and into the Company, with the Company as
the surviving corporation; (b) each issued and outstanding share of the
Company's common stock will be converted into the right to receive $12.60 in
cash without interest (other than shares held by the Company or any of the
Company's subsidiaries, held in the Company's treasury, or held by Morton's
Holdings or Morton's Acquisition, or shares held by Morton's stockholders who
perfect their appraisal rights under Delaware law); and (c) the Company will
continue its operations, but as a privately held company.
Item 13. Certain Relationships and Related Transactions
On October 21, 1996, Fleet National Bank ("Fleet") (formerly known
as BankBoston, NA), which was previously the sole provider of the Company's
credit facility, as amended, syndicated a portion of the credit facility to
Comerica Bank (formerly Imperial Bank). Ms. Dianne Russell is a senior
officer of Comerica Bank as well as a director of the Company. Fleet has also
syndicated portions of the credit facility to First Union National Bank
(formerly First Union Corporation), JPMorgan Chase Bank and LaSalle Bank
National Association.
On March 26, 2002, the Company entered into an Agreement and Plan of
Merger with Morton's Holdings and Morton's Acquisition. If the Company's
stockholders approve and adopt the merger agreement and approve the merger, and
the merger is completed: (a) Morton's Acquisition, a wholly owned subsidiary of
Morton's Holdings, will be merged with and into the Company, with the Company as
the surviving corporation; (b) each issued and outstanding share of the
Company's common stock will be converted into the right to receive $12.60 in
cash without interest (other than shares held by the Company or any of the
Company's subsidiaries, held in the Company's treasury, or held by Morton's
Holdings or Morton's Acquisition, or shares held by Morton's stockholders who
perfect their appraisal rights under Delaware law); and (c) the Company will
continue its operations, but as a privately held company. CHP beneficially owns
100% of the outstanding membership interests of Morton's Holdings. Directors
John K. Castle and David B. Pittaway are executive officers of certain
affiliates of CHP and each has an indirect financial interest in Morton's
Holdings.
9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this Amendment No. 1 to Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized.
MORTON'S RESTAURANT GROUP, INC.
-------------------------------
(Registrant)
Date APRIL 26, 2002 By: /s/ Allen J. Bernstein
--------------------------- ----------------------------------------------
Allen J. Bernstein
Chairman of the Board of Directors, President,
and Chief Executive Officer (Principal Executive
Officer)
Date APRIL 26, 2002 By: /s/ Thomas J. Baldwin
--------------------------- ----------------------------------------------
Thomas J. Baldwin
Executive Vice President, Chief Financial Officer,
Assistant Secretary, Treasurer and Director
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
Date APRIL 26, 2002 By: /s/ Allen J. Bernstein
--------------------------- ----------------------------------------------
Allen J. Bernstein
Chairman of the Board of Directors, President,
and Chief Executive Officer
Date APRIL 26, 2002 By: /s/ Thomas J. Baldwin
--------------------------- ----------------------------------------------
Thomas J. Baldwin
Executive Vice President, Chief Financial Officer,
Assistant Secretary, Treasurer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
(CONTINUED)
Date APRIL 26, 2002 By: /s/ Robert L. Barney
--------------------------- ----------------------------------------------
Robert L. Barney
Director
Date APRIL 26, 2002 By: /s/ Lee M. Cohn
--------------------------- ----------------------------------------------
Lee M. Cohn
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
(CONTINUED)
Date APRIL 26, 2002 By: /s/ Dianne H. Russell
--------------------------- ----------------------------------------------
Dianne H. Russell
Director
Date APRIL 26, 2002 By: /s/ Alan A. Teran
--------------------------- ----------------------------------------------
Alan A. Teran
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to Form 10-K has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates indicated.
(CONTINUED)
Date APRIL 26, 2002 By: /s/ John K. Castle
--------------------------- ----------------------------------------------
John K. Castle
Director
Date: APRIL 26, 2002 By: /s/ John J. Connolly
--------------------------- ----------------------------------------------
Dr. John J. Connolly
Director
Date APRIL 26, 2002 By: /s/ David B. Pittaway
--------------------------- ----------------------------------------------
David B. Pittaway
Director