SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
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Il Fornaio (America) Corporation
(Name of Registrant as Specified In Its Charter)
Not applicable
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|X| No fee required.
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IL FORNAIO (AMERICA) CORPORATION
770 TAMALPAIS DRIVE, #400
CORTE MADERA, CA 94925
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 2000
TO THE STOCKHOLDERS OF IL FORNAIO (AMERICA) CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of IL
FORNAIO (AMERICA) CORPORATION, a Delaware corporation (the "Company"), will be
held on Wednesday, May 3, 2000, at 4:30 p.m. local time at Il Fornaio's
corporate headquarters located at 770 Tamalpais Drive #400, Corte Madera,
California, for the following purposes:
1. To elect two directors to hold office until the 2003 Annual Meeting of
Stockholders.
2. To approve the Company's 1997 Equity Incentive Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized for
issuance under such plan by 500,000 shares.
3. To approve the Company's 1997 Employee Stock Purchase Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized for
issuance under such plan by 200,000 shares.
4. To ratify the selection of Deloitte & Touche LLP as independent auditors
of the Company for its fiscal year ending December 31, 2000.
5. To transact such other business as may properly come before the meeting or
any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on March 15, 2000,
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
/s/ Peter P. Hausback
-------------------------------------
Peter P. Hausback
Vice President, Finance, Chief Financial
Officer & Secretary
Corte Madera, California
April 6, 2000
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
IL FORNAIO (AMERICA) CORPORATION
770 TAMALPAIS DRIVE, #400
CORTE MADERA, CA 94925
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
May 3, 2000
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of Il
Fornaio (America) Corporation, a Delaware corporation (the "Company"), for use
at the Annual Meeting of Stockholders to be held on May 3, 2000, at 4:30 p.m.
local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at 770 Tamalpais Drive #400,
Corte Madera, California. The Company intends to mail this proxy statement and
accompanying proxy card on or about April 6, 2000, to all stockholders entitled
to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or other
regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on March
15, 2000 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 15, 2000, the Company had outstanding and entitled to
vote 5,725,209 shares of Common Stock. Each holder of record of Common Stock on
such date will be entitled to one vote for each share held on all matters to be
voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 770
Tamalpais Drive, #400, Corte Madera, California 94925, a written notice of
revocation or a duly executed proxy bearing a later date, or it may be revoked
by attending the meeting and voting in person. Attendance at the meeting will
not, by itself, revoke a proxy. Furthermore, if the shares are held of record by
a broker, bank or other nominee and the stockholder wishes to vote at the
meeting, the stockholder must obtain from the record holder a proxy issued in
the stockholder's name.
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STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2001 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission (the "Commission") is December 7, 2000. The deadline for submitting a
stockholder proposal or a nomination for director that is not to be included in
such proxy statement and proxy is February 2, 2001. Stockholders are also
advised to review the Company's By-Laws, which contain additional requirements
with respect to advance notice of stockholder proposals and director
nominations.
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PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation (the
"Restated Certificate") and By-laws provide that the Board of Directors shall be
divided into three classes, each class consisting, as nearly as possible, of
one-third of the total number of directors, with each class having a three-year
term. Vacancies on the Board may be filled only by persons elected by a majority
of the remaining directors. A director elected by the Board to fill a vacancy
(including a vacancy created by an increase in the Board of Directors) shall
serve for the remainder of the full term of the class of directors in which the
vacancy occurred and until such director's successor is elected and qualified.
The Board of Directors is presently composed of seven members. There are
two directors in the class whose term of office expires in 2000. Mr. Cortopassi
and Mr. Levy are currently directors of the Company, Mr. Cortopassi having been
elected by the stockholders and Mr. Levy having been appointed by the Board of
Directors. If elected at the Annual Meeting, each of the nominees would serve
until the 2003 annual meeting and until his or her successor is elected and has
qualified or until such director's earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote on the matter at the meeting. Shares
represented by executed proxies will be voted, if authority to do so is not
withheld, for the election of the two nominees named below. In the event that
any nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as management may propose. Each person nominated for election has agreed
to serve if elected, and management has no reason to believe that any nominee
will be unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2003 ANNUAL MEETING
Dean A. Cortopassi
Dean A. Cortopassi, 62, has been a director of the Company since April
1996. Mr. Cortopassi founded and has served as Chief Executive Officer of San
Tomo Group, a holding company which owns and operates a number of food
processing and marketing companies, including Stanislaus Food Products, Gilroy
Canning Company, Sierra Quality Canners and MGI Holdings, Inc.
Lawrence F. Levy
Lawrence F. Levy, 56, has been a director of the Company since December
1998. Since 1978, Mr. Levy has served as the Chairman and Chief Executive
Officer of Levy Restaurants, a food service company which he founded in 1978.
The Chicago-based company currently operates 50 food service locations
throughout 18 North American markets. Prior to founding Levy Restaurants, Mr.
Levy served as President of Hawthorn Realty Group, a commercial real estate
group. Mr. Levy is also a director of Chicago Title Corporation and Burrell
Communications.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
Laurence B. Mindel
Laurence B. Mindel, 62, joined the Company as Chairman of the Board,
President and Chief Executive Officer in January 1987. Mr. Mindel currently
serves as Chairman of the Board, having resigned as President in 1995 and as
Chief Executive Officer in 1998. From 1964 to 1970, Mr. Mindel was President and
Chief Executive Officer of Caswell Coffee Company in San Francisco. In 1970, Mr.
Mindel co-founded Spectrum Foods, where he served as Chairman of the Board,
President and Chief Executive Officer. Under Mr. Mindel's direction, Spectrum
created 14 restaurants in Northern and Southern
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California, including Chianti, MacArthur Park, Harry's Bar and American Grill,
Prego and Guaymas. In 1984, Saga Corporation acquired Spectrum Foods, and from
that time until he joined the Company, Mr. Mindel served as President of the
Saga Restaurant Group, which included Stuart Anderson's Black Angus, Velvet
Turtle, Spoons, Hotel Food Services and the newly acquired Spectrum Foods
restaurants. In 1985, Mr. Mindel became the first person of non-Italian descent
and the first American to be awarded the Caterina di Medici medal. Awarded by
the Italian government, the medal recognizes persons who have excelled in
preserving the Italian heritage outside of Italy. Michael Mindel, the son of
Laurence B. Mindel, is Vice President of Marketing of the Company.
W. Scott Hedrick
W. Scott Hedrick, 54, has been a director of the Company since 1987. Mr.
Hedrick co-founded InterWest Partners, a venture capital management firm, in
1979 and has been a general partner of that firm since that time. From 1974 to
1979, Mr. Hedrick was a partner of American-Euro Interfund, a venture capital
corporation. From 1970 to 1974, he was an Assistant Vice President with Small
Business Enterprise Company, a venture capital subsidiary of Bank of America NT
& SA. Mr. Hedrick is also a director of Office Depot, Inc. and Golden State
Vintners.
W. Howard Lester
W. Howard Lester, 64, has been a director of the Company since 1980. Mr.
Lester has served as Chairman of the Board and Chief Executive Officer of
Williams-Sonoma, Inc., a retail kitchen furnishings and housewares company,
since 1978. Mr. Lester is also a director of The Good Guys, Inc. and Harold's
Corporation.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2002 ANNUAL MEETING
F. Warren Hellman
F. Warren Hellman, 65, has been a director of the Company since 1983. From
1984 to 1997, Mr. Hellman was a general partner of Hellman & Friedman, an
investment firm, and since January 1998, he has been Chairman of Hellman &
Friedman LLC, an investment firm. He has also been a partner of Matrix Partners,
a venture capital firm, since 1982. From 1962 to 1977, Mr. Hellman was a partner
of Lehman Brothers in New York, where he served at various times as head of
Lehman's Investment Banking Division, President and Director of Lehman Brothers,
Inc., Chairman of Lehman Brothers, Inc. and Chairman of Lehman Corporation, a
closed-end investment company. From October 1981 to March 1984, Mr. Hellman also
served as a Managing Director of Lehman Brothers Kuhn Loeb. Mr. Hellman is also
a director of Levi Strauss & Co. a Young & Rubicam Holdings, Inc. and DN&E
Walter & Co.
Michael J. Hislop
Michael J. Hislop, 45, joined the Company as President and Chief Operating
officer in July 1995 and, since May 1998, he has served as Chief Executive
Officer. From April 1991 to May 1995, Mr. Hislop served as Chairman and Chief
Executive Officer of Chevy's Mexican Restaurants which, under his direction,
grew from 17 locations to 63 locations nationwide. From 1982 to 1991, Mr. Hislop
was employed by El Torito Mexican Restaurants, Inc., serving first as Regional
Operator, then as Executive Vice President of Operations and, for the last three
years, as Chief Operating Officer. From 1979 to 1982, Mr. Hislop was employed by
T.G.I. Fridays Restaurants, as a Regional Manager.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 26, 1999, the Board held four
meetings. The Board has an Audit Committee and a Compensation Committee, but
does not have a nominating committee or any committee performing a similar
function.
The Audit Committee meets with the Company's independent auditors to
review the results of the annual audit and discuss the financial statements;
recommends to the Board the independent auditors to be retained; receives and
considers the auditors' comments as to controls, adequacy of staff and
management performance and procedures in connection with audit and financial
controls; and performs other related duties delegated to such committee by the
Board. The Audit Committee, which consists of two non-employee directors, Mr.
Hellman and Mr. Cortopassi, held one meeting during fiscal 1999.
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The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate. The Compensation Committee, which currently consists of two
non-employee directors, Mr. Hedrick and Mr. Levy, held three meetings during
fiscal 1999.
During the fiscal year ended December 26, 1999, each Board member attended
75% or more of the aggregate of the meetings of the Board and of the committees
on which he served during the fiscal year, held during the period for which he
was a director or committee member, respectively.
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PROPOSAL 2
APPROVAL OF THE 1997 EQUITY INCENTIVE PLAN, AS AMENDED
In March 1997, the Board of Directors adopted and, in April 1997, the
stockholders approved, the Company's 1997 Equity Incentive Plan (the "1997
Plan"), as an amendment and restatement of the Company's existing 1992 Stock
Option Plan and 1995 Stock Option Plan (collectively, the "Prior Plans"). The
terms of options granted under the Prior Plans are substantially similar to
options that may be granted under the 1997 Plan. In March 2000, the Board
amended the 1997 Plan, subject to stockholder approval, to increase the number
of shares of Common Stock authorized for issuance under the 1997 Plan from a
total of 1,800,000 shares of Common Stock to a total of 2,300,000 shares. The
Board adopted this amendment in order to ensure that the Company can continue to
grant stock options at levels determined appropriate by the Board.
As of February 29, 2000, awards (net of canceled or expired awards)
covering an aggregate of 1,434,921 shares of the Company's Common Stock had been
granted under the 1997 Plan and 365,079 shares of Common Stock (plus any shares
that might in the future be returned to the 1997 Plan as a result of
cancellations or expiration of awards), remained available for future grant
under the 1997 Plan. Shares subject to Awards that have expired or otherwise
terminated without having been exercised in full (or, in the case of restricted
stock, vested) again become available for the grant under the 1997 Plan.
Stockholders are requested in this Proposal 2 to approve the 1997 Plan, as
amended. The affirmative vote of the holders of a majority of the shares present
in person or represented by proxy and entitled to vote on the matter at the
meeting will be required to approve the 1997 Plan, as amended. Abstentions will
be counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
The essential features of the 1997 Plan are outlined below:
GENERAL
The 1997 Plan provides for the grant of incentive stock options,
nonstatutory stock options, stock bonuses and restricted stock purchase awards
(collectively "Awards"). Incentive stock options granted under the 1997 Plan are
intended to qualify as "incentive stock options" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). Nonstatutory
stock options granted under the 1997 Plan are not intended to qualify as
incentive stock options under the Code. See "Federal Income Tax Information" for
a discussion of the tax treatment of Awards. To date, the Company has granted
stock options and stock bonuses under the Plan.
PURPOSE
The Board adopted the 1997 Plan to provide a means by which employees,
directors and consultants of the Company and its affiliates may be given an
opportunity to purchase stock of the Company, to assist in retaining the
services of such persons, to secure and retain the services of persons capable
of filling such positions and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its affiliates. Approximately
2% of the approximate 2,791 employees, directors and consultants of the Company
and its affiliates are eligible to participate in the 1997 Plan.
ADMINISTRATION
The Board administers the 1997 Plan. Subject to the provisions of the 1997
Plan, the Board has the power to construe and interpret the 1997 Plan and to
determine the persons to whom and the dates on which Awards will be granted, the
number of shares of Common Stock to be subject to each Award, the time or times
during the term of each
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Award within which all or a portion of such Award may be exercised, the exercise
price, the type of consideration and other terms of the Award.
The Board has the power to delegate administration of the 1997 Plan to a
committee composed of one or more members of the Board. In the discretion of the
Board, a committee may consist solely of two or more outside directors in
accordance with Section 162(m) of the Code or solely of two or more non-employee
directors in accordance with Rule 16b-3 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"). As used herein with respect to the 1997 Plan,
the "Board" refers to any committee the Board appoints as well as to the Board
itself.
The regulations under Section 162(m) of the Code require that the
directors who serve as members of the committee must be "outside directors." The
1997 Plan provides that, in the Board's discretion, directors serving on the
committee may be "outside directors" within the meaning of Section 162(m). This
limitation would exclude from the committee directors who are (i) current
employees of the Company or an affiliate as defined in the Code, (ii) former
employees of the Company or an affiliate receiving compensation for past
services (other than benefits under a tax-qualified pension 1997 Plan), (iii)
current and former officers of the Company or an affiliate, and (iv) directors
currently receiving direct or indirect remuneration from the Company or an
affiliate in any capacity (other than as a director). The definition of an
"outside director" under Section 162(m) is generally narrower than the
definition of a "non-employee director" under Rule 16b-3 of the Exchange Act.
ELIGIBILITY
Incentive stock options may be granted under the 1997 Plan only to
employees (including officers) of the Company and its affiliates. Employees
(including officers), directors and consultants of both the Company and its
affiliates are eligible to receive all other types of Awards under the 1997
Plan.
No incentive stock option may be granted under the 1997 Plan to any person
who, at the time of grant, owns (or is deemed to own) stock possessing more than
10% of the total combined voting power of the Company or any affiliate of the
Company, unless the exercise price is at least 110% of the fair market value of
the stock subject to the option on the date of grant and the term of the option
does not exceed five years from the date of grant. In addition, the aggregate
fair market value, determined at the time of grant, of the shares of Common
Stock with respect to which incentive stock options are exercisable for the
first time by a participant during any calendar year (under the 1997 Plan and
all other such plans of the Company and its affiliates) may not exceed $100,000.
No person may be granted awards under the 1997 Plan covering for more than
500,000 shares of Common Stock during any calendar year ("Section 162(m)
Limitation").
STOCK SUBJECT TO THE 1997 PLAN
Subject to this Proposal, an aggregate of 2,300,000 shares of Common Stock
is authorized for issuance under the 1997 Plan. If Awards granted under the 1997
Plan or that were granted under the Prior Plans expire or otherwise terminate
without being exercised, the shares of Common Stock not acquired pursuant to
such Awards again become available for issuance under the 1997 Plan. If the
Company reacquires unvested stock issued under the 1997 Plan, the reacquired
stock will again become available for reissuance under the 1997 Plan.
TERMS OF OPTIONS
The following is a description of the permissible terms of options under
the 1997 Plan. Individual option grants may be more restrictive as to any or all
of the permissible terms described below.
Exercise Price; Payment. The exercise price of incentive stock options may
not be less than 100% of the fair market value of the stock subject to the
option on the date of the grant and, in some cases (see "Eligibility" above),
may not be less than 110% of such fair market value. The exercise price of
nonstatutory options may not be less than 85% of the fair market value of the
stock on the date of grant. If options were granted with exercise prices below
market value, deductions for compensation attributable to the exercise of such
options could be limited by Section 162(m) of the Code. See "Federal Income Tax
Information." As of February 29, 2000, the closing price of the Company's Common
Stock as reported on the Nasdaq National Market System was $8.75 per share.
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The exercise price of options granted under the 1997 Plan must be paid
either in cash at the time the option is exercised or, at the discretion of the
Board, (i) by delivery of other Common Stock of the Company, (ii) pursuant to a
deferred payment arrangement or (iii) in any other form of legal consideration
acceptable to the Board.
Option Exercise. Options granted under the 1997 Plan may become
exercisable in periodic installments ("vest") as determined by the Board. Shares
covered by currently outstanding options under the 1997 Plan typically vest at
the rate of 20% to 25% per year during the participant's employment by, or
service as a director or consultant to, the Company or an affiliate
(collectively, "Service"). Shares covered by options granted in the future under
the 1997 Plan may be subject to different vesting terms. The Board has the power
to accelerate the time during which an option may vest or be exercised. In
addition, options granted under the 1997 Plan may permit exercise prior to
vesting, but in such event the participant may be required to enter into an
early exercise stock purchase agreement that allows the Company to repurchase
unvested shares, generally at their exercise price, should the participant's
Service terminate before vesting. To the extent provided by the terms of an
option, a participant may satisfy any federal, state or local tax withholding
obligation relating to the exercise of such option by a cash payment upon
exercise, by authorizing the Company to withhold a portion of the stock
otherwise issuable to the participant, by delivering already-owned Common Stock
of the Company or by a combination of these means.
Term. The maximum term of options under the 1997 Plan is 10 years, except
that in certain cases (see "Eligibility") the maximum term is five years.
Options under the 1997 Plan generally terminate three months after termination
of the participant's Service unless (i) such termination is due to the
participant's disability, in which case the option may, but need not, provide
that it may be exercised (to the extent the option was exercisable at the time
of the termination of Service), at any time within 12 months of such
termination; (ii) the participant dies before the participant's Service has
terminated, or within three months after termination of such Service, in which
case the option may, but need not, provide that it may be exercised (to the
extent the option was exercisable at the time of the participant's death) within
18 months of the participant's death by the person or persons to whom the rights
to such option pass by will or by the laws of descent and distribution; or (iii)
the option by its terms specifically provides otherwise. A participant may
designate a beneficiary who may exercise the option following the participant's
death. Individual option grants by their terms may provide for exercise within a
longer period of time following termination of Service.
TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK
Payment. The Board determines the purchase price under a restricted stock
purchase agreement; however, the purchase price may not be less than 85% of the
fair market value of the Company's Common Stock on the date of grant. The Board
may award stock bonuses in consideration of past Services without a purchase
payment. To date, the Board has awarded an aggregate of 370 shares of Common
Stock as stock bonuses to employees of the Company in consideration of past
services.
The purchase price of stock acquired pursuant to a restricted stock
purchase agreement under the 1997 Plan must be paid either in cash at the time
the option is exercised or at the discretion of the Board, (i) by delivery of
other Common Stock of the Company, (ii) pursuant to a deferred payment
arrangement or (iii) in any other form of legal consideration acceptable to the
Board.
Vesting. Shares of stock sold or awarded under the 1997 Plan may, but need
not, be subject to a repurchase option in favor of the Company in accordance
with a vesting schedule as determined by the Board. The Board has the power to
accelerate the vesting of stock acquired pursuant to a restricted stock purchase
agreement under the 1997 Plan.
Restrictions on Transfer. Rights under a stock bonus or restricted stock
bonus agreement may not be transferred except by will or the laws of descent and
distribution or where such assignment is required by law or expressly authorized
by the terms of the applicable stock bonus or restricted stock purchase
agreement.
RESTRICTIONS ON TRANSFER
The participant may not transfer an incentive stock option otherwise than
by will or by the laws of descent and distribution. During the lifetime of the
participant, only the participant may exercise an incentive stock option. The
Board may grant nonstatutory stock options that are transferable generally or by
will, the laws of descent or distribution or pursuant to a domestic relations
order satisfying the requirements of Rule 16b-3. Shares subject to repurchase by
the
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Company under an early exercise stock purchase agreement may be subject to
restrictions on transfer that the Board deems appropriate.
ADJUSTMENT PROVISIONS
Transactions not involving receipt of consideration by the Company, such
as a merger, consolidation, reorganization, recapitalization, reincorporation,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares or change in corporate
structure, may change the class and number of shares of Common Stock subject to
the 1997 Plan and outstanding Awards. In that event, the 1997 Plan will be
appropriately adjusted as to the class and the maximum number of shares of
Common Stock subject to the 1997 Plan and the Section 162(m) Limitation, and
outstanding Awards will be adjusted as to the class, number of shares and price
per share of Common Stock subject to such Awards.
EFFECT OF CERTAIN CORPORATE EVENTS
Except as otherwise provided in an Award, the 1997 Plan provides that, in
the event of a dissolution, liquidation or sale of substantially all of the
assets of the Company, or specified types of merger ( a "change in control"), to
the extent permitted by law, any surviving corporation will be required to
either assume Awards outstanding under the 1997 Plan or substitute similar
awards for those outstanding under the 1997 Plan, or such outstanding Awards
will continue in full force and effect. If any surviving corporation declines to
assume Awards outstanding under the 1997 Plan, or to substitute similar Awards,
then, with respect to participants whose Service has not terminated, the vesting
and the time during which such Awards may be exercised will be accelerated. An
outstanding Award will terminate if the participant does not exercise it before
a change in control. The acceleration of an Award in the event of an acquisition
or similar corporate event may be viewed as an anti-takeover provision, which
may have the effect of discouraging a proposal to acquire or otherwise obtain
control of the Company.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend or terminate the 1997 Plan without stockholder
approval or ratification at any time. Unless sooner terminated, the 1997 Plan
will terminate on March 16, 2007.
The Board may also amend the 1997 Plan at any time or from time to time.
However, no amendment will be effective unless approved by the stockholders of
the Company within 12 months before or after its adoption by the Board if the
amendment would (i) modify the requirements as to eligibility for participation
(to the extent such modification requires stockholder approval in order for the
1997 Plan to satisfy Section 422 of the Code, if applicable, or Rule 16b-3 of
the Exchange Act; (ii) increase the number of shares reserved for issuance upon
exercise of Awards; or (iii) change any other provision of the 1997 Plan in any
other way if such modification requires stockholder approval in order to comply
with Rule 16b-3 of the Exchange Act or satisfy the requirements of Section 422
of the Code or any Nasdaq or securities exchange listing requirements. The Board
may submit any other amendment of the 1997 Plan for stockholder approval,
including, but not limited to, amendments intended to satisfy the requirements
of Section 162(m) of the Code regarding the exclusion of performance-based
compensation from the limitation on the deductibility of compensation paid to
certain executive officers.
FEDERAL INCOME TAX INFORMATION
Long-term capital gains currently are generally subject to lower tax rates
than ordinary income or short-term capital gains. The maximum long-term capital
gains rate for federal income tax purposes is currently 20%, while the maximum
ordinary income rate and short-term capital gains rate is effectively 39.6%.
Slightly different rules may apply to participants who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
Incentive Stock Options. Incentive stock options under the 1997 Plan are
intended to be eligible for the favorable federal income tax treatment accorded
"incentive stock options" under the Code.
There generally are no federal income tax consequences to the participant
or the Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase the
participant's alternative minimum tax liability, if any.
9
<PAGE>
If a participant holds stock acquired through exercise of an incentive
stock option for at least two years from the date on which the option is granted
and at least one year from the date on which the shares are transferred to the
participant upon exercise of the option, any gain or loss on a disposition of
such stock will be a long-term capital gain or loss.
Generally, if the participant disposes of the stock before the expiration
of either of these holding periods (a "disqualifying disposition"), then at the
time of disposition the participant will realize taxable ordinary income equal
to the lesser of (i) the excess of the stock's fair market value on the date of
exercise over the exercise price, or (ii) the participant's actual gain, if any,
on the purchase and sale. The participant's additional gain or any loss upon the
disqualifying disposition will be a capital gain or loss, which will be
long-term or short-term depending on whether the stock was held for more than
one year.
To the extent the participant recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.
Nonstatutory Stock Options, Restricted Stock Purchase Awards and Stock
Bonuses. Nonstatutory stock options, restricted stock purchase awards and stock
bonuses granted under the 1997 Plan generally have the following federal income
tax consequences:
There are no tax consequences to the participant or the Company by reason
of the grant. Upon acquisition of the stock, the participant normally will
recognize taxable ordinary income equal to the excess, if any, of the stock's
fair market value on the acquisition date over the purchase price. However, to
the extent the stock is subject to certain types of vesting restrictions, the
taxable event will be delayed until the vesting restrictions lapse, unless the
participant elects to be taxed on receipt of the stock. With respect to
employees, the Company is generally required to withhold from regular wages or
supplemental wage payments an amount based on the ordinary income recognized.
Subject to the requirement of reasonableness, the provisions of Section 162(m)
of the Code and the satisfaction of a tax reporting obligation, the Company will
generally be entitled to a business expense deduction equal to the taxable
ordinary income realized by the participant.
Upon disposition of the stock, the participant will recognize a capital
gain or loss equal to the difference between the selling price and the sum of
the amount paid for such stock plus any amount recognized as ordinary income
upon acquisition (or vesting) of the stock. Such gain or loss will be long-term
or short-term depending on whether the stock was held for more than one year.
Slightly different rules may apply to participants who acquire stock subject to
certain repurchase options or who are subject to Section 16(b) of the Exchange
Act.
Potential Limitation on Company Deductions. Section 162(m) of the Code
denies a deduction to any publicly held corporation for compensation paid to
certain "covered employees" in a taxable year to the extent that compensation to
such covered employee exceeds $1 million. It is possible that compensation
attributable to Awards, when combined with all other types of compensation
received by a covered employee from the Company, may cause this limitation to be
exceeded in any particular year.
Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation. In
accordance with Treasury regulations issued under Section 162(m), compensation
attributable to stock options will qualify as performance-based compensation if
the Award is granted by a compensation committee composed solely of "outside
directors" and either (i) the plan contains a per-employee limitation on the
number of shares for which such Awards may be granted during a specified period,
the per-employee limitation is approved by the stockholders, and the exercise
price of the Award is no less than the fair market value of the stock on the
date of grant, or (ii) the Award is granted (or exercisable) only upon the
achievement (as certified in writing by the compensation committee) of an
objective performance goal established in writing by the compensation committee
while the outcome is substantially uncertain, and the Award is approved by
stockholders.
Compensation attributable to restricted stock and stock bonuses will
qualify as performance-based compensation, provided that: (i) the Award is
granted by a compensation committee composed solely of "outside directors" and
(ii) the purchase price of the Award is no less than the fair market value of
the stock on the date of grant. Stock bonuses qualify as performance-based
compensation under the Treasury regulations only if (i) the Award is granted by
a compensation
10
<PAGE>
committee composed solely of "outside directors," (ii) the Award is granted (or
exercisable) only upon the achievement of an objective performance goal
established in writing by the compensation committee while the outcome is
substantially uncertain, (iii) the compensation committee certifies in writing
prior to the granting (or exercisability) of the award that the performance goal
has been satisfied and (iv) prior to the granting (or exercisability) of the
Award, stockholders have approved the material terms of the award (including the
class of employees eligible for such award, the business criteria on which the
performance goal is based, and the maximum amount -- or formula used to
calculate the amount -- payable upon attainment of the performance goal).
11
<PAGE>
PROPOSAL 3
Approval of the 1997 employee Stock Purchase Plan, As Amended
In March 1997, the Board of Directors adopted and, in April 1997, the
stockholders approved, the Company's 1997 Employee Stock Purchase Plan
("Purchase Plan"). Initially, 300,000 shares of the Common Stock of the Company
were authorized for issuance under the Purchase Plan.
In March 2000, the Board amended the Purchase Plan, subject to stockholder
approval, to increase the number of shares of Common Stock authorized for
issuance under the Purchase Plan from a total of 300,000 shares of Common Stock
to a total of 500,000 shares. The Board adopted this amendment in order to
ensure that the Company can continue to grant purchase rights at levels
determined appropriate by the Board.
During the last fiscal year, shares of Common Stock were purchased in the
amounts and at the weighted average prices per share under the Purchase Plan as
follows: Paul J. Kelley 3,519 shares ($6.80) and all employees (excluding
executive officers) as a group 101,057 shares ($6.80).
As of February 29, 2000, an aggregate of 224,042 shares of the Company's
Common Stock had been purchased under the Purchase Plan. Only 75,958 shares of
Common Stock (plus any shares that might in the future be returned to the
Purchase Plan as a result of cancellations or expiration of purchase rights)
remained available for future grant under the Purchase Plan.
Stockholders are requested in this Proposal 3 to approve the Purchase
Plan, as amended. The affirmative vote of the holders of a majority of the
shares present in person or represented by proxy and entitled to vote on the
matter at the meeting will be required to approve the Purchase Plan, as amended.
Abstentions will be counted toward the tabulation of votes cast on proposals
presented to the stockholders and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not counted for any
purpose in determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
The essential features of the Purchase Plan, as amended, are outlined
below:
PURPOSE
The purpose of the Purchase Plan is to provide a means by which employees
of the Company (and any parent or subsidiary of the Company designated by the
Board to participate in the Purchase Plan) may be given an opportunity to
purchase Common Stock of the Company through payroll deductions, to assist the
Company in retaining the services of its employees, to secure and retain the
services of new employees and to provide incentives for such persons to exert
maximum efforts for the success of the Company.
The rights to purchase Common Stock granted under the Purchase Plan are
intended to qualify as options issued under an "employee stock purchase plan" as
that term is defined in Section 423(b) of the Code.
ADMINISTRATION
The Board administers the Purchase Plan and has the final power to
construe and interpret both the Purchase Plan and the rights granted under it.
The Board has the power, subject to the provisions of the Purchase Plan, to
determine when and how rights to purchase Common Stock of the Company will be
granted, the provisions of each offering of such rights (which need not be
identical), and whether employees of any parent or subsidiary of the Company
will be eligible to participate in the Purchase Plan.
The Board has the power to delegate administration of the Purchase Plan to
a committee composed of not fewer than two members of the Board. The Board has
delegated administration of the Purchase Plan to the Compensation
12
<PAGE>
Committee of the Board. As used herein with respect to the Purchase Plan, the
"Board" refers to any committee the Board appoints as well as to the Board
itself.
OFFERINGS
The Purchase Plan is implemented by offerings of rights to all eligible
employees from time to time by the Board. For each offering, the Board may
determine the term and other provisions (which need not be identical), within
the limitations of the Purchase Plan. Such offerings may have a term of up to 27
months. To date, the Board has authorized offerings that are two years long and
are divided into four shorter "purchase periods" approximately six months long.
In the future, the Board may authorize offerings with terms different than those
described here.
ELIGIBILITY
The Board may establish certain eligibility requirements for participation
under the offerings it authorizes. For example, the Board may require that
employees complete a period of service of up to two years before they become
eligible to participate in an offering. In addition, as required by the Code, no
employee is eligible to participate in the Purchase Plan if, immediately after
the grant of purchase rights, the employee would own, directly or indirectly,
stock possessing 5% or more of the total combined voting power or value of all
classes of stock of the Company or of any parent or subsidiary of the Company
(including any stock which such employee may purchase under all outstanding
rights and options). The Code also provides that no employee may purchase more
than $25,000 worth of Common Stock (determined at the fair market value of the
Common Stock at the time a right under the Purchase Plan is granted) under all
employee stock purchase plans of the Company and its affiliates in any calendar
year. Approximately 55% of the Company's approximately 2,791 employees are
eligible to participate in the Purchase Plan. Under the current offering, any
person, including officers, who is customarily employed at least 20 hours per
week and five months per calendar year by the Company (or by any parent or
subsidiary of the Company designated by the Board) on the first day of the
offering is eligible to participate in the offering.
PARTICIPATION IN THE PLAN
Eligible employees enroll in the Purchase Plan by delivering to the
Company, prior to the date selected by the Board as the offering date for the
offering, an agreement authorizing payroll deductions. The Purchase Plan
authorizes the Board to establish a percentage of each employees' total
compensation that may be contributed during each purchase period, up to a
maximum of 15% of total compensation. Under the current offering, participants
are permitted to contribute up to 15% of their total compensation during each
purchase period.
PURCHASE PRICE
The Board may authorize the purchase price per share at which shares of
Common Stock will be sold in each offering. The purchase price shall not be less
than the lower of (i) 85% of the fair market value of a share of Common Stock on
first day of the offering or (ii) 85% of the fair market value of a share of
Common Stock on the last day of the purchase period. Under the current offering,
the purchase price at which shares of Common Stock will be sold is the lower of
(i) 85% of the fair market value of a share of Common Stock on first day of the
offering or (ii) 85% of the fair market value of a share of Common Stock on the
last day of the relevant purchase period.
PAYMENT OF PURCHASE PRICE; PAYROLL DEDUCTIONS
The purchase price of the shares is accumulated by payroll deductions over
each offering that is authorized under the Purchase Plan. During each offering,
a participant may terminate his or her payroll deductions as the Board provides
in the offering and withdraw from the offering (see "Withdrawal," below). Under
each offering, the Board may establish the time or times at which participants
may increase or decrease their payroll deductions. Under the current offering, a
participant may reduce his or her payroll deductions one time during each
purchase period. Otherwise, a participant may not increase or decrease his or
her payroll deductions except as of the beginning of a new purchase period. All
of the foregoing changes may be made at any time during the offering except
during the 10-day period preceding each purchase date.
13
<PAGE>
All payroll deductions made for a participant under the Purchase Plan are
credited to his or her account under the Purchase Plan and deposited with the
general funds of the Company. Unless specifically authorized under an offering,
participants may not make additional payments into such accounts.
PURCHASE OF STOCK
By executing an agreement to participate in the Purchase Plan, the
participant is entitled to purchase Common Stock under the Purchase Plan. In
connection with offerings made under the Purchase Plan, the Board may specify a
maximum aggregate number of shares of Common Stock that may be purchased
pursuant to such offering by all participants and a maximum number of shares
that may be purchased by each participant during each offering or on each
purchase date. If the aggregate number of shares to be purchased upon exercise
of rights granted in the offering would exceed the maximum aggregate number of
shares of Common Stock available, the Board would make a pro rata allocation of
available shares in a uniform and equitable manner. Unless the employee's
participation is discontinued, his or her right to purchase shares is exercised
automatically at the end of the purchase period at the applicable price.
WITHDRAWAL
While each participant in the Purchase Plan is required to sign an
agreement authorizing payroll deductions, the participant may withdraw from a
given offering by terminating his or her payroll deductions and by delivering to
the Company a notice of withdrawal from the Purchase Plan. Under the current
offering, such withdrawal may be elected at any time up to 10 days prior to the
end of the applicable purchase period.
Upon any withdrawal from an offering by the employee, the Company will
distribute to the employee his or her accumulated payroll deductions without
interest, less any accumulated deductions previously applied to the purchase of
shares of Common Stock on the employee's behalf during such offering, and such
employee's interest in the offering will be automatically terminated. The
employee is not entitled to again participate in that offering. However, an
employee's withdrawal from an offering will not have any effect upon such
employee's eligibility to participate in subsequent offerings under the Purchase
Plan.
TERMINATION OF ELIGIBILITY
Rights granted pursuant to any offering under the Purchase Plan terminate
immediately upon cessation of an employee's eligibility for any reason, and the
Company will distribute to such employee all of his or her accumulated payroll
deductions, without interest.
RESTRICTIONS ON TRANSFER
Rights granted under the Purchase Plan are not transferable and may be
exercised only by the person to whom such rights are granted.
DURATION, AMENDMENT AND TERMINATION
The Board may suspend, terminate or amend the Purchase Plan at any time.
Any amendment of the Purchase Plan must be approved by the stockholders within
12 months of its adoption by the Board if the amendment would modify any
provision of the Purchase Plan in a manner that would require stockholder
approval in order to comply with the requirements of Rule 16b-3 under the
Exchange Act or Section 423 of the Code. Rights granted before amendment or
termination of the Purchase Plan will not be altered or impaired by any
amendment or termination of the Purchase Plan without consent of the employee to
whom such rights were granted.
EFFECT OF CERTAIN CORPORATE EVENTS
In the event of a dissolution, liquidation or specified type of merger of
the Company, the surviving corporation either will assume the rights under the
Purchase Plan or substitute similar rights therefor, or the exercise date of any
ongoing offering will be accelerated such that the outstanding rights may be
exercised immediately prior to, or concurrent with, any such event.
14
<PAGE>
STOCK SUBJECT TO PURCHASE PLAN
Subject to this Proposal, an aggregate of 500,000 shares of Common Stock
is authorized for issuance under the Purchase Plan. If rights granted under the
Purchase Plan expire, lapse or otherwise terminate without being exercised, the
shares of Common Stock not purchased under such rights again will become
available for issuance under the Purchase Plan.
FEDERAL INCOME TAX INFORMATION
Rights granted under the Purchase Plan are intended to qualify for
favorable federal income tax treatment associated with rights granted under an
employee stock purchase plan which qualifies under provisions of Section 423 of
the Code.
A participant will be taxed on amounts withheld for the purchase of shares
of Common Stock as if such amounts were actually received. Other than this, no
income will be taxable to a participant until disposition of the acquired
shares, and the method of taxation will depend upon the holding period of the
acquired shares.
If the stock is disposed of at least two years after the beginning of the
offering period and at least one year after the stock is transferred to the
participant, then the lesser of (i) the excess of the fair market value of the
stock at the time of such disposition over the exercise price or (ii) 15% of the
fair market value of the stock as of the beginning of the offering period will
be treated as ordinary income. Any further gain or any loss will be taxed as a
long-term capital gain or loss. Such capital gains currently are generally
subject to lower tax rates than ordinary income.
If the stock is sold or disposed of before the expiration of either of the
holding periods described above, then the excess of the fair market value of the
stock on the exercise date over the exercise price will be treated as ordinary
income at the time of such disposition. The balance of any gain will be treated
as capital gain. Even if the stock is later disposed of for less than its fair
market value on the exercise date, the same amount of ordinary income is
attributed to the participant, and a capital loss is recognized equal to the
difference between the sales price and the fair market value of the stock on
such exercise date. Any capital gain or loss will be short-term or long-term,
depending on how long the stock has been held.
There are no federal income tax consequences to the Company by reason of
the grant or exercise of rights under the Purchase Plan. However, upon exercise
of an employee's rights under the Purchase Plan, the Company may be required to
withhold and pay FICA (Federal Insurance Contribution Act) and FUTA (Federal
Unemployment Tax Act) taxes. The Company is entitled to a deduction to the
extent amounts are taxed as ordinary income to a participant upon disposition by
a participant of stock before the expiration of the holding periods described
above (subject to the requirement of reasonableness and the satisfaction of tax
reporting obligations).
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<PAGE>
PROPOSAL 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Deloitte & Touche
LLP has audited the Company's financial statements since 1990. Representatives
of Deloitte & Touche LLP are expected to be present at the Annual Meeting, will
have an opportunity to make a statement if they so desire and will be available
to respond to appropriate questions.
Stockholder ratification of the selection of Deloitte & Touche LLP as the
Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of Deloitte & Touche
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Board in its discretion may direct the appointment of different
independent auditors at any time during the year if they determine that such a
change would be in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote on the matter at the Annual
Meeting will be required to ratify the selection of Deloitte & Touche LLP.
Abstentions will be counted toward the tabulation of votes cast on proposals
presented to the stockholders and will have the same effect as negative votes.
Broker non-votes are counted towards a quorum, but are not counted for any
purpose in determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 4.
16
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of February 29, 2000 by
(a) all those known by the Company to be beneficial owners of more than 5% of
its Common Stock; (b) each director and nominee for director; (c) each of the
executive officers named in the Summary Compensation Table; and (d) all
executive officers and directors of the Company as a group.
Beneficial Ownership(1)
Number Percent
Beneficial Owner Of Shares of Total(2)
---------------- --------- -----------
Eastbourne Capital Management, LLC(3)
1101 Fifth Avenue, Suite 1600
San Rafael, CA 94901..................... 1,391,600 24.4%
Laurence B. Mindel (4)
Il Fornaio (America) Corporation
770 Tamalpais Drive, #400
Corte Madera, CA 94925................... 730,019 12.7%
Michael J. Hislop(5)...................... 486,234 7.9%
Peter P. Hausback(5) (6).................. 7,846 *
Michael J. Beatrice(5).................... 53,419 *
Paul J. Kelley(6)......................... 76,332 1.3%
Dean A. Cortopassi(7)..................... 125,294 2.2%
W. Scott Hedrick(5)....................... 17,879 *
F. Warren Hellman(8)...................... 133,854 2.3%
W. Howard Lester(9)....................... 191,201 3.3%
Lawrence F. Levy(5)....................... 3,810 *
All executive officers and directors as a
group (9 persons) (10) 1,749,556 27.6%
- ----------------------------
* Less than one percent.
(1) This table is based on information supplied by officers, directors and
principal stockholders of the Company and on any Schedules 13D or 13G
filed with the Commission. Except as otherwise indicated in the footnotes
to this table and subject to community property laws where applicable, the
Company believes that each of the stockholders named in this table has
sole voting and investment power with respect to the shares indicated as
beneficially owned.
(2) Applicable percentages are based on 5,703,719 shares outstanding on
February 29, 2000, adjusted as required by rules promulgated by the
Commission.
17
<PAGE>
(3) Based on Schedule 13D/A filed with the Commission on February 8, 2000.
Includes 597,748 shares held by Black Bear Fund I, L.P. and 601,000 shares
held by Black Bear Offshore Fund Limited, both of which are advised by
Eastbourne Capital Management, L.L.C.
(4) Includes 7,195 share held by the Mindel Family Trust, 5,750 shares held by
a Trust created for the benefit of Laurence B. Mindel and his family, and
671,049 shares held by The Mindel Living Trust, of which Mr. Mindel is a
trustee. Also includes 46,025 shares issuable upon the exercise of stock
options that are exercisable within 60 days. Excludes an aggregate of
195,944 shares held in trusts for five children of Mr. Mindel, as to which
Mr. Mindel is not a trustee and disclaims beneficial ownership.
(5) Includes shares subject to options exercisable within 60 days of February
29, 2000 as follows: 486,234 for Mr. Hislop, 7,846 for Mr. Hausback,
53,419 for Mr. Beatrice, 3,000 for Mr. Hedrick, and 1,500 for Mr. Levy.
(6) Mr. Kelley resigned as Vice President, Finance, Chief Financial Officer
and Secretary in December 1999 and Mr. Hausback was elected Vice
President, Finance, Chief Financial Officer and Secretary.
(7) Includes 57,794 shares held of record by Stanislaus Food Products Company,
a California corporation. Mr. Cortopassi is Chief Executive Officer and a
principal stockholder of Stanislaus Food Products Company. Includes 60,000
shares held of record by DACCO, Inc. Mr. Cortopassi is Chief Executive
Officer, President and a controlling stockholder of DACCO, Inc. Also
includes 7,500 shares issuable upon the exercise of stock options that are
exercisable within 60 days.
(8) Includes 125,802 shares held of record by FWH Associates, a California
limited partnership. Mr. Hellman is a general partner of FWH Associates.
Also includes 2,052 shares held of record by Marco H. Hellman Trust "B."
Mr. Hellman is a trustee of the Marco H. Hellman Trust "B." Also includes
6,000 shares issuable upon the exercise of stock options that are
exercisable within 60 days.
(9) Includes 23,535 share held of record by Williams-Sonoma, Inc. Mr. Lester
is the Chairman of the Board and Chief Executive Officer of
Williams-Sonoma, Inc. Also includes 14,500 shares issuable upon the
exercise of stock options that are exercisable within 60 days.
(10) Includes information contained in the notes above, as applicable. Does not
include shares held by Mr. Kelley, a former executive officer.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who own more than 10% of a registered class of the Company's equity
securities, to file with the Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than 10% stockholders are required by
the Commission regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 26, 1999, the
Company's officers, directors and greater than 10% beneficial owners complied
with applicable section 16(a) filing requirements.
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<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each non-employee director of the Company receives stock option grants for
their services as directors under the 1997 Non-Employee Directors' Stock Option
Plan (the "Directors' Plan"). There are currently 100,000 shares of Common Stock
authorized for issuance under the Directors' Plan. Options granted under the
Directors Plan are intended by the Company not to qualify as incentive stock
options under the Code.
Option grants under the Directors' Plan are non-discretionary. Each person
who was serving as a non-employee director on April 23, 1997, the date the
Directors' Plan was approved by the stockholders of the Company, was
automatically granted an option to purchase 4,500 shares of Common Stock of the
Company. Additionally, each person who is first elected or appointed to the
Board after April 23, 1997, will automatically be granted an option to purchase
4,500 shares of Common Stock of the Company. Every 36 months after the initial
grant of 4,500 shares, each non-employee director will be granted an option to
purchase an additional 4,500 shares of the Common Stock of the Company. No other
options may be granted at any time under the Directors' Plan. The exercise price
of options granted under the Directors' Plan is 100% of the fair market value of
the Common Stock subject to the option on the date of the option grant. Options
granted under the Directors' Plan vest in three equal annual installments
commencing on the date one year after the date of grant of the option, provided
that the optionee has, during the entire year prior to each such vesting date,
provided continuous service to the Company as a non-employee director or as an
employee of the Company or an affiliate of the Company. The term of options
granted under the Directors' Plan is 10 years. In the event of a merger of the
Company with or into another corporation or a consolidation, acquisition of
assets or other change-in-control transaction involving the Company, the vesting
of each option will accelerate and the option will terminate if not exercised
prior to the consummation of the transaction unless any surviving corporation
assumes such options or substitutes similar options for such options.
During fiscal 1999, the Company did not grant options to any non-employee
director of the Company under the Directors' Plan. During fiscal 1999, options
to purchase 26,000 shares of Common Stock were exercised under the Directors'
Plan at a weighted average exercise price of $3.72.
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<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY OF COMPENSATION
The following table shows, for the fiscal years ended December 26, 1999,
December 27, 1998 and December 28, 1997, compensation awarded or paid to, or
earned by, the Company's Chief Executive Officer and its other executive
officers at December 26, 1999, and one former executive officer who departed
from the Company during fiscal 1999 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation(1) Awards
----------------------- ------
Number of Securities
Name and Principal Position Year Salary($) Bonus($)(2) Underlying Options (#)
--------------------------- ---- --------- ----------- ----------------------
<S> <C> <C> <C> <C>
Laurence B. Mindel(3) 1999 $408,099 $12,900 18,078
Chairman of the Board 1998 $408,293 $12,900 15,152
1997 $402,910 $204,050 20,500
Michael J. Hislop(3) 1999 $393,846 $9,000 177,060
President and Chief Executive Officer 1998 $365,642 $9,000 14,296
1997 $339,612 $175,000 17,500
Peter P. Hausback(4) 1999 $98,827 $15,800 12,643
Vice President, Finance, Chief 1998 $84,835 $0 10,288
Financial Officer and Secretary
Michael J. Beatrice(5) 1999 $169,192 $27,875 29,939
Chief Operating Officer 1998 $153,201 $6,000 25,144
1997 $135,511 $48,000 6,560
Paul J. Kelley(4) 1999 $164,846 $1,260 29,472
Former Vice President, Finance, Chief 1998 $158,925 $0 24,228
Financial Officer and Secretary 1997 $149,446 $37,500 7,450
</TABLE>
- ----------------
(1) In accordance with the rules of the Commission, the compensation described
in this table does not include medical, group life insurance or other
benefits received by the Named Executive Officers that are available
generally to all salaried employees of the Company, and certain
perquisites and other personal benefits received by the Named Executive
Officers that do not exceed the lesser of $50,000 or 10% of any such
officer's salary and bonus disclosed in this table.
(2) Includes bonuses paid in 1998 and 2000 for services rendered in 1997 and
1999, respectively. No bonus amounts were paid for services rendered in
1998. Includes car allowance.
(3) Mr. Mindel resigned as Chief Executive Officer in May 1998 and Mr. Hislop
was elected Chief Executive Officer in May 1998.
(4) In December 1999, Mr. Kelley resigned as Vice President, Finance, Chief
Financial Officer and Secretary and Mr. Hausback was elected Vice
President, Finance, Chief Financial Officer and Secretary.
(5) Mr. Beatrice was elected Chief Operating Officer in May 1998.
20
<PAGE>
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1997 Equity
Incentive Plan. The following tables shows, for fiscal 1999, certain information
regarding options granted to the Named Executive Officers during fiscal 1999 and
options held by the Named Executive Officers at fiscal year end.
STOCK OPTION GRANTS DURING FISCAL 1999
<TABLE>
<CAPTION>
Potential Realizable Value
at Assumed Annual Rates of
Stock Price Appreciation
Individual Grants for Option Term(4)
-------------------------------------------------------------------- ---------------------------
Number of
Securities
Underlying % of Total Options Exercise
Options Granted to Price
Granted Employees In Per Share Expiration
Name (#)(1) Fiscal Year(2) ($/share)(3) Date 5% ($) 10% ($)
- ---- -------- ----------------- -------------- ----------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Laurence B. Mindel 4,450 1.0% $11.14 5/6/09 $13,696 $30,265
13,628 3.0% $10.13 5/6/09 $86,820 $220,019
Michael J. Hislop 17,060 3.7% $10.13 5/6/09 $108,684 $275,427
160,000 34.6% $7.38 12/14/09 $742,599 $1,881,891
Peter P. Hausback 5,143 1.1% $7.00 12/28/08 $22,641 $57,376
7,500 1.6% $10.13 5/6/09 $47,780 $121,085
Michael J. Beatrice 12,571 2.7% $7.00 12/28/08 $55,341 $140,245
17,368 3.8% $10.13 5/6/09 $110,646 $280,400
Paul J. Kelley 12,114 2.6% $7.00 12/28/08 $4,967 $9,973
17,358 3.8% $10.13 5/6/09 $7,297 $14,535
</TABLE>
- ------------------------
(1) Options generally become exercisable on an annual basis at a rate of 25%
per year over four years. Options generally expire 10 years from the date
of grant or earlier upon termination of employment. Upon certain changes
in control of the Company, if an outstanding option is not assumed or
substituted by the surviving entity, the unvested portion of the option
accelerates and the option terminates if not exercised prior to such
change in control.
(2) Options to purchase 461,924 shares of Common Stock were granted to
employees in fiscal 1999.
(3) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant as determined by the Board
of Directors except that, with respect to the incentive stock option
granted to Mr. Mindel, the exercise price was equal to 110% of such fair
market value.
(4) The potential realizable value is calculated based on the term of the
option at its date of grant (five years for Mr. Mindel's incentive stock
option and 10 years for the nonstatutory stock option held by Mr. Mindel
and for the options held by other officers). It is calculated based on the
assumption that the stock price on the date of grant appreciates from the
date of grant at the indicated annual rate compounded annually for the
entire term of the option and that the option is exercised and sold on the
last day of its term for the appreciated stock price. The 5% and 10%
assumed rates of appreciation are derived from the rules of the Commission
and do not represent the Company's estimate or projection of future Common
Stock price.
(5) The potential realizable value for Mr. Kelley's incentive stock options is
based on the period from the date of grant of the options to February 22,
2000, the termination date of the options.
21
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN FISCAL 1999 AND FISCAL YEAR-END OPTION VALUES
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name On Exercise (#) Realized($)(1) Unexercisable(2) Unexercisable(2)(3)
- ---- --------------- ------------ -------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Laurence B. Mindel 14,200 $74,266 35,234/52,021 $58,889/$31,912
Michael J. Hislop -- -- 479,694/204,362 $1,384,732/$39,555
Peter P. Hausback 3,647 $31,540 5,112/23,347 $5,158/$8,208
Michael J. Beatrice -- -- 38,946/72,787 $77,030/$60,077
Paul J. Kelley 5,415 $30,486 37,547/60,828 $86,206/$36,119
</TABLE>
- -------------------
(1) Value realized is based on the fair market value of the Company's Common
Stock on the date of exercise minus the exercise price, without taking
into account any taxes that may be payable in connection with the
transaction.
(2) Reflects shares vested and unvested at December 26, 1999.
(3) Fair market value of the Company's Common Stock based on the closing sales
price of the Company's Common Stock reported by the Nasdaq National Market
for December 26, 1999 ($7.4375) minus the exercise price of the options.
EMPLOYMENT AGREEMENTS
In April 1995, the Company entered into an at-will employment agreement
with Michael. J. Hislop as President and Chief Operating Officer. The agreement
provided for a base salary, option grant, annual bonus and a monthly car
allowance, subject to annual review. The agreement provides that in the event
Mr. Hislop's employment is involuntarily terminated by the Company for any
reason other than death, disability or cause (as defined in the agreement) or in
the event Mr. Hislop voluntarily terminates his employment within 30 days of a
change of control (as defined in the agreement), Mr. Hislop will receive, in
lieu of any severance benefits to which he may otherwise be entitled under any
Company severance plan or program, a cash severance payment in an aggregate
amount equal to 100% of Mr. Hislop's annual base salary at the time of such
termination.
22
<PAGE>
REPORT OF THE COMPENSATION OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION(1)
The Company's executive compensation program is administered by the
Compensation Committee of the Board of Directors. The Committee currently
consists of W. Scott Hedrick and Lawrence F. Levy, neither of whom is an
employee of the Company. The Committee is currently responsible for setting the
Company's policies regarding compensation and benefits, and administering the
Company's employee stock option and stock purchase plans. In particular, the
Committee evaluates the performance of management and determines the
compensation and benefits of executive officers.
The Company's executive management program is designed (i) to attract and
retain outstanding executive officers capable of leading the Company to
fulfillment of its business objectives and (ii) to establish an appropriate link
between executive compensation and achievement of the Company's strategic and
financial performance goals, including the enhancement of stockholder value. To
that end, the Company's compensation program offers competitive compensation
opportunities that reward individual contributions as well as corporate
performance, based on the following policies and principles:
o Implementation of competitive pay practices, taking into account the pay
practices of other companies of comparable size and stage of development
with which the Company competes for talented executives.
o Emphasis on pay-for-performance as a major component of compensation
through annual incentive programs designed to reward executives for
achievement of annual corporate financial performance goals.
o Use of equity-based incentives designed to motivate executives to focus on
long-term strategic objectives, to align the interests of management and
the stockholders and to provide opportunities for management to share in
the benefits that they achieve for the Company's stockholders.
For 1999, the Company's executive compensation program included the
following components: (i) base salary, (ii) annual incentives in the form of
cash bonuses and (iii) long-term incentives in the form of options to purchase
common stock of the Company.
In establishing the size of an executive's opportunity for incentive
compensation, including bonus and stock options, the Committee takes into
account, in addition to general comparative information, the individual
performance of the executive and the financial performance and strategic
achievements of the Company during the prior year, the executive's level of
responsibility and potential to influence or contribute to the Company's
operations and direction and the quality of the executive's long-term strategic
decisions made during the year. The Committee generally does not base its
considerations on any single performance factor nor does it specifically assign
relative weights to factors, but rather considers a mix of factors and evaluates
Company and individual performance against that mix. To the extent that
qualitative factors are involved in the determination, the Committee must
necessarily make a subjective assessment of performance.
BASE COMPENSATION
Base salaries paid to executives are subject to annual review and
adjustment. The Committee evaluates executive performance on the basis of a
variety of factors, both individual and corporate, as well as level of
responsibility, competitive factors and the Company's internal policies
regarding salary increases. For 1999, the base salary of Michael J. Hislop, the
Company's Chief Executive Officer, was increased by 7.7%, largely reflecting his
contributions toward the Company's long-term strategic objectives, particularly
his performance in leading the Company's expansion in the prior year. The base
salaries paid to other executives were increased for 1999 by amounts ranging up
to 16%, reflecting primarily changes in position and responsibilities and their
contributions to the Company in connection with the execution of the Company's
long-term strategic initiatives.
- ---------------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act of 1933, as amended (the "Securities Act") or
the Exchange Act, whether made before or after the date hereof and irrespective
of any general incorporation language in any such filing.
23
<PAGE>
ANNUAL INCENTIVE COMPENSATION
Annual bonuses are intended to reward executives for achievement of
targeted corporate financial performance goals. At a meeting in 1999, the
Committee established the bonus potential for 1999 for each executive. Mr.
Hislop was eligible to receive a bonus for 1999 equal to 25% of his base salary
if the Company attained a targeted level of pre-tax income established by the
Board in the Company's annual operating plan and an additional 25% of his base
salary if the Company achieved a targeted level of improvement in 1999 earnings
per share as compared with 1998. Mr. Mindel was eligible to receive a similar
bonus based on the same criteria. The other executives were eligible to receive
bonuses ranging from 25% to 50% of their respective base salaries if the Company
achieved certain financial performance goals. The goals, and the relative
weights attributable to each, varied for each executive. These goals included
achievement of one or more of the following elements: a targeted level of
pre-tax income established by the Board in the Company's operating plan, a
targeted level of improvement in 1999 earnings per share and a targeted
divisional operating profit. With respect to any target, bonuses are typically
not paid unless the particular target is achieved in full, with the result that
a substantial portion of each executive's compensation is "at risk." In all
cases, the targeted goals for 1999 were not met, and no bonuses were awarded to
Mssrs. Hislop, Mindel and Kelley. However, the Committee elected to pay bonuses
at the rate of 50% of pre-established levels to two executive officers in light
of their performance during the year and in recognition of the adverse impact on
fiscal 1999 performance of one-time only write-offs.
LONG-TERM COMPENSATION
Stock options under the Company's stock option plans are used to
underscore the common interests of stockholders and management. Options are
granted to executives to provide a continuing financial incentive to maximize
long-term value to stockholders and to help make the executive's total
compensation opportunity competitive. Options may be tax-qualified or
nonstatutory and typically have exercise prices set at the fair market value of
the Common Stock on the date of grant. In addition, because stock options
generally become exercisable over a period of several years, options encourage
executives to remain in the long-term employ of the Company.
The size of the options granted to Mr. Hislop were calculated on the basis
of the potential reward to him, assuming a specified stock price appreciation
over a five-year period. The targeted potential return was determined as a
percentage of current base salary. Based on this formula, in 1999, Mr. Hislop
was initially granted an option to purchase 17,060 shares of Common Stock.
Subsequently, in December 1999, recognizing that Mr. Hislop's options were
substantially vested, the Committee granted Mr. Hislop an additional option to
purchase 160,000 shares of Common Stock, intended to be in lieu of options to be
granted under the then-current formula. The sizes of options granted to the
other executives were determined as a multiple of the executives' respective
annual base salaries divided by the fair market value of the shares on the date
of the grant. The other executives were granted options to purchase Common Stock
at levels ranging from 12,643 to 29,939 shares. Executives may realize the
targeted return only to the extent that the actual price of the Common Stock
increases in the public market at the assumed rate.
Section 162(m) of the Code, generally imposes on the Company an annual
corporate deduction limitation of $1 million on the compensation of certain
executive officers. Compensation in excess of $1 million may be deducted if it
is performance-based compensation within the meaning of the Code. The Committee
has not yet adopted a policy with respect to the treatment of all forms of
compensation under Section 162(m); however, the Committee has determined that
stock options granted under the Company's 1997 Equity Incentive Plan with an
exercise price at least equal to the fair market value of the Company's Common
Stock on the date of grant should, where practicable, be treated as
"performance-based compensation," and the 1997 Equity Incentive Plan contains
provisions designed to allow compensation recognized by an executive as a result
of the grant of a stock option to be deductible by the Company.
Compensation Committee
W. Scott Hedrick
Lawrence F. Levy
24
<PAGE>
PERFORMANCE MEASUREMENT COMPARISON(1)
The following chart shows the value of an investment of $100 in cash at
the close of business on September 19, 1997, the date of commencement of public
trading of the Company's Common Stock, in (a) the Company's Common Stock, (b)
the Dow Jones Restaurant Index and (c) the CRSP Total Return Index for the
Nasdaq Stock Market (U.S. Companies) . All values assume reinvestment of the
full amount of all dividends.
COMPARISON OF 27-MONTH CUMULATIVE TOTAL RETURN ON INVESTMENT
[OBJECT OMITTED]
September December December December
19, 1997 26, 1997 27, 1998 26, 1999
Il Fornaio (America)
Corporation 100.00 99.00 48.00 51.00
Dow Jones Restaurant Index 100.00 100.00 148.00 148.00
Nasdaq CRSP Total Return
Index 100.00 100.00 129.00 232.00
- ----------------------------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
Commission and is not to be incorporated by reference in any filing of the
Company under the Securities Act or the Exchange Act, whether made before or
after the date hereof and irrespective of any general incorporation language in
any such filing.
25
<PAGE>
CERTAIN TRANSACTIONS
The Company has entered into indemnity agreements with each of the
Company's directors and executive officers which provide that, subject to
certain limitations, the Company will indemnify against any and all expenses of
the director or executive officer who incurred such expenses because of his or
her status as a director or executive officer, to the fullest extent permitted
by the Company's By-laws and Delaware law. In addition, the Company's By-laws
provide that the Company shall indemnify its directors and executive officers to
the fullest extent not prohibited by Delaware law, subject to certain
limitations, and may also secure insurance, to the fullest extent permitted by
Delaware law, on behalf of any director, officer, employee or agent against any
expense, liability or loss arising out of his or her actions in such capacity.
The Company's Restated Certificate, provides that a director of the
Company shall not be personally liable to the Company or its stockholders for
monetary damages for any breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) for
unlawful payment of dividends or unlawful stock repurchases or redemptions, or
(iv) for any transaction from which the director derived an improper personal
benefit. If the Delaware law is amended to authorize corporate action further
eliminating or limiting the personal liability of a director, then the liability
of a Company director shall be eliminated or limited to the fullest extent
permitted by the Delaware law, as so amended. The provision in the Restated
Certificate does not eliminate the duty of care and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of
non-monetary relief will remain available under Delaware law. The provision also
does not affect a director's responsibilities under any other law, such as the
federal securities laws or state or federal environmental laws.
Laurence B. Mindel's son, Michael Mindel, is Vice President of Marketing
of the Company, and, as such, for 1999, received aggregate cash compensation of
$108,838 and options to acquire 14,004 shares of Common Stock.
26
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for consideration at the Annual Meeting. If any other matters are properly
brought before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Peter P. Hausback
-------------------------------------------------
Peter P. Hausback
Chief Financial Officer, Vice President Finance and
Secretary
April 6, 2000
A copy of the Company's Annual Report on Form 10-K for the year ended December
26, 1999 is available without charge upon written request to: Investor Relations
Department, Il Fornaio (America) Corporation, 770 Tamalpais Drive #400, Corte
Madera, California 94925.
27
<PAGE>
IL FORNAIO (AMERICA) CORPORATION
1997 EQUITY INCENTIVE PLAN
ADOPTED MARCH 17, 1997
APPROVED BY STOCKHOLDERS APRIL 23, 1997
AMENDED BY THE BOARD OF DIRECTORS ON MARCH 11, 1999
APPROVED BY STOCKHOLDERS ON MAY 6, 1999
AMENDED BY THE BOARD OF DIRECTORS ON MARCH 8, 2000
INTRODUCTION.
This Plan is an amendment and restatement of the Company's existing 1992
Stock Option Plan (the "1992 Plan") and the 1995 Stock Option Plan (the "1995
Plan"), and shall become effective on the date of approval of this Plan by the
Board (the "Effective Date"). No options shall be granted under the 1992 Plan or
the 1995 Plan from and after the Effective Date. Notwithstanding anything to the
contrary, prior to the Listing Date all Stock Awards granted under this Plan
shall comply with all of the requirements set forth in Section 25102(o) of the
California Corporate Securities Law of 1968.
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company and its Affiliates may
be given an opportunity to benefit from increases in value of the common stock
of the Company ("Common Stock") through the granting of (i) Incentive Stock
Options, (ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to
purchase restricted stock, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees, Directors or Consultants, to secure and retain
the services of new Employees, Directors and Consultants, and to provide
incentives for such persons to exert maximum efforts for the success of the
Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and a separate certificate or certificates will be
issued for shares purchased on exercise of each type of Option.
<PAGE>
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary corporation,
whether now or hereafter existing, as those terms are defined in Sections 424(e)
and (f) respectively, of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) "COMPANY" means Il Fornaio (America) Corporation, a Delaware
corporation.
(f) "CONSULTANT" means any person, including an advisor, engaged by the
Company or an Affiliate to render consulting services and who is compensated for
such services, provided that the term "Consultant" shall not include Directors
who are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT" means the
employment or relationship as a Director or Consultant is not interrupted or
terminated. The Board, in its sole discretion, may determine whether Continuous
Status as an Employee, Director or Consultant shall be considered interrupted in
the case of: (i) any leave of absence approved by the Board, including sick
leave, military leave, or any other personal leave; or (ii) transfers between
locations of the Company or between the Company, Affiliates or their successors.
(h) "DIRECTOR" means a member of the Board.
(i) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(j) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(k) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock of the Company determined as follows:
(1) If the Common Stock is listed on any established stock
exchange, or traded on the Nasdaq National Market or The Nasdaq Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in Common Stock) on the last market trading day prior to determination,
as reported in the Wall Street Journal or such other source as the Board deems
reliable;
<PAGE>
(2) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.
(l) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(m) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange, or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been certified in
accordance with the provisions of Section 25100(o) of the California Corporate
Securities Law of 1968.
(n) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be required
under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
of 1933 ("Regulation S-K"), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.
(p) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "OPTION" means a stock option granted pursuant to the Plan.
(r) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement shall be subject to the terms and conditions of the Plan.
(s) "OPTIONEE" means a person to whom an Option is granted pursuant to
the Plan.
(t) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury regulations
1
<PAGE>
promulgated under Section 162(m) of the Code), is not a former employee of the
Company or an "affiliated corporation" receiving compensation for prior services
(other than benefits under a tax qualified pension plan), was not an officer of
the Company or an "affiliated corporation" at any time, and is not currently
receiving direct or indirect remuneration from the Company or an "affiliated
corporation" for services in any capacity other than as a Director, or (ii) is
otherwise considered an "outside director" for purposes of Section 162(m) of the
Code.
(u) "PLAN" means this 1997 Equity Incentive Plan.
(v) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect to
the Plan.
(w) "STOCK AWARD" means any right granted under the Plan, including any
Option, any stock bonus, and any right to purchase restricted stock.
(x) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; whether a Stock Award will be an Incentive Stock Option, a
Nonstatutory Stock Option, a stock bonus, a right to purchase restricted stock,
or a combination of the foregoing; the provisions of each Stock Award granted
(which need not be identical), including the time or times when a person shall
be permitted to receive stock pursuant to a Stock Award; and the number of
shares with respect to which a Stock Award shall be granted to each such person.
(2) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Stock Award Agreement,
in a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in Section
12.
<PAGE>
(4) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.
(c) The Board may delegate administration of the Plan to a committee or
committees ("Committee") of one or more members of the Board. In the discretion
of the Board, a Committee may consist solely of two (2) or more Outside
Directors, in accordance with Code Section 162(m), or solely of two (2) or more
Non-Employee Directors, in accordance with Rule 16b-3. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board (and
references in this Plan to the Board shall thereafter be to the Committee),
subject, however, to such resolutions, not inconsistent with the provisions of
the Plan, as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the administration of
the Plan.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 11 relating to adjustments upon
changes in stock, the stock that may be issued pursuant to Stock Awards shall
not exceed in the aggregate two million three hundred thousand (2,300,000)
shares of Common Stock. Such share reserve shall consist of (i) the options
granted under the 1992 Plan and the 1995 Plan which are outstanding as of the
Effective Date plus (ii) the shares available for grant under the 1992 Plan and
the 1995 Plan as of the Effective Date plus (iii) an additional one million five
hundred four thousand three hundred ninety-five (1,504,395) shares of common
stock. If any Stock Award shall for any reason expire or otherwise terminate, in
whole or in part, without having been exercised in full (or vested in the case
of Restricted Stock), the stock not acquired under such Stock Award shall revert
to and again become available for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees. Stock
Awards other than Incentive Stock Options may be granted only to Employees,
Directors or Consultants.
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own pursuant
to Section 424(d) of the Code) stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or of any
of its Affiliates unless the exercise price of such Option is at least one
hundred ten percent (110%) of the Fair Market Value of such stock at the date of
grant and the Option is not exercisable after the expiration of five (5) years
from the date of grant.
<PAGE>
(c) Subject to the provisions of Section 11 relating to adjustments upon
changes in stock, no person shall be eligible to be granted Stock Awards
covering more than five hundred thousand (500,000) shares of Common Stock in any
calendar year.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option shall be
not less than one hundred percent (100%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted, and the exercise price
of each Nonstatutory Stock Option shall be not less than eighty-five percent
(85%) of the Fair Market Value of the stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, an Option may be granted
with an exercise price lower than that set forth in the preceding sentence if
such Option is granted pursuant to an assumption or substitution for another
option in a manner satisfying the provisions of Section 424(a) of the Code.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii) at
the discretion of the Board or Committee, at the time of the grant of the
Option, (A) by delivery to the Company of other Common Stock of the Company, (B)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other Common Stock of the
Company) with the person to whom the Option is granted or to whom the Option is
transferred pursuant to subsection 6(d), or (C) in any other form of legal
consideration that may be acceptable to the Board. In the case of any deferred
payment arrangement, interest shall be payable at least annually and shall be
charged at the minimum rate of interest necessary to avoid the treatment as
interest, under any applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Incentive Stock Option
is granted only by such person. A Nonstatutory Stock Option may be transferred
to the extent provided in the Option Agreement; provided that if the Option
Agreement does not expressly permit the transfer of a Nonstatutory Stock Option,
the Nonstatutory Stock Option shall not be transferable except by will, by the
laws of descent and distribution or pursuant to a domestic relations order
satisfying the requirements of Rule 16b-3,
<PAGE>
and shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person or any transferee pursuant to a domestic relations
order. Notwithstanding the foregoing, the person to whom the Option is granted
may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the Optionee,
shall thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time during
each of such installment periods, the Option may become exercisable ("vest")
with respect to some or all of the shares allotted to that period, and may be
exercised with respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested but was not fully
exercised. The Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The provisions of this
subsection 6(e) are subject to any Option provisions governing the minimum
number of shares as to which an Option may be exercised.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR OR
CONSULTANT. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option within such period of
time designated by the Board, which shall in no event be later than the
expiration of the term of the Option as set forth in the Option Agreement (the
"Post-Termination Exercise Period") and only to the extent that the Optionee was
entitled to exercise the Option on the date Optionee's Continuous Status as an
Employee, Director or Consultant terminates. In the case of an Incentive Stock
Option, the Board shall determine the Post-Termination Exercise Period at the
time the Option is granted, and the term of such Post-Termination Exercise
Period shall in no event exceed three (3) months from the date of termination.
In addition, the Board may at any time, with the consent of the Optionee, extend
the Post-Termination Exercise Period and provide for continued vesting; provided
however, that any extension of such period by the Board in excess of three (3)
months from the date of termination shall cause an Incentive Stock Option so
extended to become a Nonstatutory Stock Option, effective as of the date of
Board action. If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after termination, the
Optionee does not exercise his or her Option within the time specified in the
Option Agreement or as otherwise determined above, the Option shall terminate,
and the shares covered by such Option shall revert to the Plan. Notwithstanding
the foregoing, the Board shall have the power to permit an Option to continue to
vest during the Post-Termination Exercise Period.
(g) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates as a result of the Optionee's
disability, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination), but only
within such period of time ending on the earlier of (i) the
<PAGE>
date twelve (12) months following such termination (or such longer or shorter
period specified in the Option Agreement, which is no event shall be less than
six (6) months), or (ii) the expiration of the term of the Option as set forth
in the Option Agreement. If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(h) DEATH OF OPTIONEE. In the event of the death of an Optionee during,
or within a three (3) month period after the termination of, the Optionee's
Continuous Status as an Employee, Director or Consultant, the Option may be
exercised to the extent vested by the Optionee's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionee's death pursuant to
subsection 6(d), but only within the period ending on the earlier of (i) the
date eighteen (18) months following the date of death (or such longer or shorter
period specified in the Option Agreement, which in no event shall be less than
six (6) months), or (ii) the expiration of the term of such Option as set forth
in the Option Agreement. If, at the time of death, the Optionee was not entitled
to exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for issuance
under the Plan. If, after death, the Option is not exercised within the time
specified herein, the Option shall terminate, and the shares covered by such
Option shall revert to and again become available for issuance under the Plan.
(i) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee, Director or
Consultant to exercise the Option as to any part or all of the shares subject to
the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in such
form and shall contain such terms and conditions as the Board or Committee shall
deem appropriate. The terms and conditions of stock bonus or restricted stock
purchase agreements may change from time to time, and the terms and conditions
of separate agreements need not be identical, but each stock bonus or restricted
stock purchase agreement shall include (through incorporation of provisions
hereof by reference in the agreement or otherwise) the substance of each of the
following provisions as appropriate:
(a) PURCHASE PRICE. The purchase price under each restricted stock
purchase agreement shall be such amount as the Board or Committee shall
determine and designate in such agreement but in no event shall the purchase
price be less than eighty-five percent (85%) of the
<PAGE>
stock's Fair Market Value on the date such award is made. Notwithstanding the
foregoing, the Board or Committee may determine that eligible participants in
the Plan may be awarded stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company for its
benefit.
(b) TRANSFERABILITY. No rights under a stock bonus or restricted stock
purchase agreement shall be transferable except by will or the laws of descent
and distribution or, if the agreement so provides, pursuant to a domestic
relations order satisfying the requirements of Rule 16b-3, so long as stock
awarded under such agreement remains subject to the terms of the agreement.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or Committee, according to a
deferred payment or other arrangement with the person to whom the stock is sold;
or (iii) in any other form of legal consideration that may be acceptable to the
Board or Committee in its discretion. Notwithstanding the foregoing, the Board
or Committee to which administration of the Plan has been delegated may award
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company or for its benefit.
(d) VESTING. Shares of stock sold or awarded under the Plan may, but
need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or Committee.
(e) TERMINATION OF CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR
CONSULTANT. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such person.
8. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares under Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
of 1933, as amended (the "Securities Act") either the Plan, any Stock Award or
any stock issued or issuable pursuant to any such Stock Award. If, after
reasonable efforts, the Company is unable to obtain from any such regulatory
commission or agency the authority which counsel for the Company deems necessary
for the lawful issuance and sale of stock under the Plan, the Company shall be
relieved from any liability for failure to issue
<PAGE>
and sell stock upon exercise of such Stock Awards unless and until such
authority is obtained.
9. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
10. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which a
Stock Award may first be exercised or the time during which a Stock Award or any
part thereof will vest, notwithstanding the provisions in the Stock Award
stating the time at which it may first be exercised or the time during which it
will vest.
(b) Neither an Employee, Director nor a Consultant nor any person to
whom a Stock Award is transferred in accordance with the Plan shall be deemed to
be the holder of, or to have any of the rights of a holder with respect to, any
shares subject to such Stock Award unless and until such person has satisfied
all requirements for exercise of the Stock Award pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Stock Award
granted pursuant thereto shall confer upon any Employee, Consultant or other
holder of Stock Awards any right to continue in the employ of the Company or any
Affiliate, or to continue serving as a Consultant and Director, or shall affect
the right of the Company or any Affiliate to terminate the employment of any
Employee with or without notice and with or without cause, or the right to
terminate the relationship of any Consultant pursuant to the terms of such
Consultant's agreement with the Company or Affiliate or service as a Director
pursuant to the Company's By-Laws.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Options.
(e) The Company may require any person to whom a Stock Award is granted,
or any person to whom a Stock Award is transferred in accordance with the Plan,
as a condition of exercising or acquiring stock under any Stock Award, (1) to
give written assurances satisfactory to the Company as to such person's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such
<PAGE>
person is acquiring the stock subject to the Stock Award for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered under
a then currently effective registration statement under the Securities Act, or
(ii) as to any particular requirement, a determination is made by counsel for
the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.
(f) To the extent provided by the terms of a Stock Award Agreement, the
person to whom a Stock Award is granted may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of stock
under a Stock Award by any of the following means or by a combination of such
means: (1) tendering a cash payment; (2) authorizing the Company to withhold
shares from the shares of the Common Stock otherwise issuable to the participant
as a result of the exercise or acquisition of stock under the Stock Award; or
(3) delivering to the Company owned and unencumbered shares of the Common Stock
of the Company.
11. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Stock Award, without the receipt of consideration by the Company (through
merger, consolidation, reorganization, recapitalization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan and the maximum number of shares subject to
award to any person during any calendar year, and the outstanding Stock Awards
will be appropriately adjusted in the class(es) and number of shares and price
per share of stock subject to such outstanding Stock Awards. Such adjustments
shall be made by the Board or Committee, the determination of which shall be
final, binding and conclusive. (The conversion of any convertible securities of
the Company shall not be treated as a "transaction not involving the receipt of
consideration by the Company.")
(b) Except as otherwise provided in the Stock Award Agreement, in the
event of: (1) a dissolution, liquidation or sale of substantially all of the
assets of the Company; (2) a merger or consolidation in which the Company is not
the surviving corporation; or (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then to the extent
permitted by
<PAGE>
applicable law: (i) any surviving corporation (or an Affiliate thereof shall
assume any Stock Awards outstanding under the Plan or shall substitute similar
Stock Awards for those outstanding under the Plan, or (ii) such Stock Awards
shall continue in full force and effect. Except as otherwise provided in the
Stock Award Agreement, in the event any surviving corporation (or an Affiliate)
refuses to assume or continue such Stock Awards, or to substitute similar Stock
Awards for those outstanding under the Plan, then, with respect to Stock Awards
held by persons then performing services as Employees, Directors or Consultants,
the time during which such Stock Awards may be exercised shall be accelerated
and the Stock Awards terminated if not exercised prior to such event.
12. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 11 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or
securities exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments to
the Plan intended to satisfy the requirements of Section 162(m) of the Code and
the regulations thereunder regarding the exclusion of performance-based
compensation from the limit on corporate deductibility of compensation paid to
certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible
Employees, Directors or Consultants with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.
(d) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Stock Award was
granted and (ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend the terms of
any one or more Stock Award; provided, however, that the rights and obligations
under any Stock Award shall not be impaired by any such amendment unless (i) the
Company requests the consent of the person to whom the Stock Award was granted
and (ii) such person consents in writing.
13. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner
<PAGE>
terminated, the Plan shall terminate ten (10) years from the date the Plan is
adopted by the Board or approved by the stockholders of the Company, whichever
is earlier. No Stock Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.
(b) Rights and obligations under any Stock Award granted while the Plan
is in effect shall not be impaired by suspension or termination of the Plan,
except with the consent of the person to whom the Stock Award was granted.
14. STOCKHOLDER APPROVAL.
No Stock Awards granted under the Plan shall be exercisable in whole or
part unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.
<PAGE>
IL FORNAIO (AMERICA) CORPORATION
1997 EMPLOYEE STOCK PURCHASE PLAN
Adopted March 17, 1997
Approved by the Stockholders on April 23, 1997
Amended by the Board of Directors on March 8, 2000
1. PURPOSE.
(a) The purpose of this 1997 Employee Stock Purchase Plan (the "Plan")
is to provide a means by which employees of Il Fornaio (America) Corporation, a
Delaware corporation (the "Company"), and its Affiliates, as defined in
subparagraph 1(b), which are designated as provided in subparagraph 2(b), may be
given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services of
its employees, to secure and retain the services of new employees, and to
provide incentives for such persons to exert maximum efforts for the success of
the Company.
(d) The Company intends that the rights to purchase stock of the Company
granted under the Plan be considered options issued under an "employee stock
purchase plan" as that term is defined in Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of Directors (the
"Board") of the Company unless and until the Board delegates administration to a
Committee, as provided in subparagraph 2(c). Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase stock of the
Company shall be granted and the provisions of each offering of such rights
(which need not be identical).
(ii) To designate from time to time which Affiliates of the Company
shall be eligible to participate in the Plan.
(iii) To construe and interpret the Plan and rights granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the
<PAGE>
exercise of this power, may correct any defect, omission or inconsistency in the
Plan, in a manner and to the extent it shall deem necessary or expedient to make
the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an "employee stock purchase plan" within the meaning of Section 423 of the
Code.
(c) The Board may delegate administration of the Plan to a Committee
composed of two (2) or more members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to rights granted
under the Plan shall not exceed in the aggregate five hundred thousand (500,000)
shares of the Company's common stock (the "Common Stock"). If any right granted
under the Plan shall for any reason terminate without having been exercised, the
Common Stock not purchased under such right shall again become available for the
Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
(a) The Board or the Committee may from time to time grant or provide
for the grant of rights to purchase Common Stock of the Company under the Plan
to eligible employees (an "Offering") on a date or dates (the "Offering
Date(s)") selected by the Board or the Committee. Each Offering shall be in such
form and shall contain such terms and conditions as the Board or the Committee
shall deem appropriate, which shall comply with the requirements of Section
423(b)(5) of the Code that all employees granted rights to purchase stock under
the Plan shall have the same rights and privileges. The terms and conditions of
an Offering shall be incorporated by reference into the Plan and treated as part
of the Plan. The provisions of separate Offerings need not be identical, but
each Offering shall include (through incorporation of the provisions of this
Plan by reference in the document comprising the Offering or otherwise) the
period during which the Offering shall be effective, which period shall not
exceed twenty-seven (27) months beginning with the Offering Date, and the
substance of the provisions contained in paragraphs 5 through 8, inclusive.
2
<PAGE>
(b) If an employee has more than one right outstanding under the Plan,
unless he or she otherwise indicates in agreements or notices delivered
hereunder: (1) each agreement or notice delivered by that employee will be
deemed to apply to all of his or her rights under the Plan, and (2) a right with
a lower exercise price (or an earlier-granted right, if two rights have
identical exercise prices), will be exercised to the fullest possible extent
before a right with a higher exercise price (or a later-granted right, if two
rights have identical exercise prices) will be exercised.
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company or, as the
Board or the Committee may designate as provided in subparagraph 2(b), to
employees of any Affiliate of the Company. Except as provided in subparagraph
5(b), an employee of the Company or any Affiliate shall not be eligible to be
granted rights under the Plan, unless, on the Offering Date, such employee has
been in the employ of the Company or any Affiliate for such continuous period
preceding such grant as the Board or the Committee may require, but in no event
shall the required period of continuous employment be equal to or greater than
two (2) years. In addition, unless otherwise determined by the Board or the
Committee and set forth in the terms of the applicable Offering, no employee of
the Company or any Affiliate shall be eligible to be granted rights under the
Plan, unless, on the Offering Date, such employee's customary employment with
the Company or such Affiliate is for at least twenty (20) hours per week and at
least five (5) months per calendar year.
(b) The Board or the Committee may provide that each person who, during
the course of an Offering, first becomes an eligible employee of the Company or
designated Affiliate will, on a date or dates specified in the Offering which
coincides with the day on which such person becomes an eligible employee or
occurs thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall have the
same characteristics as any rights originally granted under that Offering, as
described herein, except that:
(i) the date on which such right is granted shall be the "Offering
Date" of such right for all purposes, including determination of the exercise
price of such right;
(ii) the period of the Offering with respect to such right shall
begin on its Offering Date and end coincident with the end of such Offering; and
(iii) the Board or the Committee may provide that if such person
first becomes an eligible employee within a specified period of time before the
end of the Offering, he or she will not receive any right under that Offering.
(c) No employee shall be eligible for the grant of any rights under the
Plan if, immediately after any such rights are granted, such employee owns stock
possessing five percent (5%) or more of the total combined voting power or value
of all classes of stock of the Company or of any Affiliate. For purposes of this
subparagraph 5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such
3
<PAGE>
employee may purchase under all outstanding rights and options shall be treated
as stock owned by such employee.
(d) An eligible employee may be granted rights under the Plan only if
such rights, together with any other rights granted under "employee stock
purchase plans" of the Company and any Affiliates, as specified by Section
423(b)(8) of the Code, do not permit such employee's rights to purchase stock of
the Company or any Affiliate to accrue at a rate which exceeds twenty-five
thousand dollars ($25,000) of fair market value of such stock (determined at the
time such rights are granted) for each calendar year in which such rights are
outstanding at any time.
(e) Officers of the Company and any designated Affiliate shall be
eligible to participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of the Code
shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant to an
Offering made under the Plan, shall be granted the right to purchase up to the
number of shares of Common Stock of the Company purchasable with a percentage
designated by the Board or the Committee not exceeding fifteen percent (15%) of
such employee's Earnings (as defined in subparagraph 7(a)) during the period
which begins on the Offering Date (or such later date as the Board or the
Committee determines for a particular Offering) and ends on the date stated in
the Offering, which date shall be no later than the end of the Offering. The
Board or the Committee shall establish one or more dates during an Offering (the
"Purchase Date(s)") on which rights granted under the Plan shall be exercised
and purchases of Common Stock carried out in accordance with such Offering.
(b) In connection with each Offering made under the Plan, the Board or
the Committee may specify a maximum number of shares that may be purchased by
any employee as well as a maximum aggregate number of shares that may be
purchased by all eligible employees pursuant to such Offering. In addition, in
connection with each Offering that contains more than one Purchase Date, the
Board or the Committee may specify a maximum aggregate number of shares which
may be purchased by all eligible employees on any given Purchase Date under the
Offering. If the aggregate purchase of shares upon exercise of rights granted
under the Offering would exceed any such maximum aggregate number, the Board or
the Committee shall make a pro rata allocation of the shares available in as
nearly a uniform manner as shall be practicable and as it shall deem to be
equitable.
(c) The purchase price of stock acquired pursuant to rights granted
under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Offering Date; or
(ii) an amount equal to eighty-five percent (85%) of the fair market
value of the stock on the Purchase Date.
4
<PAGE>
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in the Plan pursuant
to an Offering by delivering a participation agreement to the Company within the
time specified in the Offering, in such form as the Company provides. Each such
agreement shall authorize payroll deductions of up to the maximum percentage
specified by the Board or the Committee of such employee's Earnings during the
Offering. "Earnings" is defined as an employee's regular salary or wages
(including amounts thereof elected to be deferred by the employee, that would
otherwise have been paid, under any arrangement established by the Company
intended to comply with Section 401(k), Section 402(e)(3), Section 125, Section
402(h), or Section 403(b) of the Code, and also including any deferrals under a
non-qualified deferred compensation plan or arrangement established by the
Company), which shall include or exclude (as provided for each Offering) the
following items of compensation: bonuses, commissions, overtime pay, incentive
pay, profit sharing, other remuneration paid directly to the employee, the cost
of employee benefits paid for by the Company or an Affiliate, education or
tuition reimbursements, imputed income arising under any group insurance or
benefit program, traveling expenses, business and moving expense reimbursements,
income received in connection with stock options, contributions made by the
Company or an Affiliate under any employee benefit plan, and similar items of
compensation, as determined by the Board or Committee. The payroll deductions
made for each participant shall be credited to an account for such participant
under the Plan and shall be deposited with the general funds of the Company. A
participant may reduce (including to zero) or increase such payroll deductions,
and an eligible employee may begin such payroll deductions, after the beginning
of any Offering only as provided for in the Offering. A participant may make
additional payments into his or her account only if specifically provided for in
the Offering and only if the participant has not had the maximum amount withheld
during the Offering.
(b) At any time during an Offering, a participant may terminate his or
her payroll deductions under the Plan and withdraw from the Offering by
delivering to the Company a notice of withdrawal in such form as the Company
provides. Such withdrawal may be elected at any time prior to the end of the
Offering except as provided by the Board or the Committee in the Offering. Upon
such withdrawal from the Offering by a participant, the Company shall distribute
to such participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire stock for the
participant) under the Offering, without interest, and such participant's
interest in that Offering shall be automatically terminated. A participant's
withdrawal from an Offering will have no effect upon such participant's
eligibility to participate in any other Offerings under the Plan but such
participant will be required to deliver a new participation agreement in order
to participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan shall
terminate immediately upon cessation of a participant's employment with the
Company and any designated Affiliate, for any reason, and the Company shall
distribute to such terminated employee all of his or her accumulated payroll
deductions (reduced to the extent, if any, such deductions have been used to
acquire stock for the terminated employee), under the Offering, without
interest.
5
<PAGE>
(d) Rights granted under the Plan shall not be transferable by a
participant otherwise than by will or the laws of descent and distribution, or
by a beneficiary designation as provided in paragraph 14 and, otherwise during
his or her lifetime, shall be exercisable only by the person to whom such rights
are granted.
8. EXERCISE.
(a) On each Purchase Date specified in the relevant Offering, each
participant's accumulated payroll deductions and other additional payments
specifically provided for in the Offering (without any increase for interest)
will be applied to the purchase of whole shares of stock of the Company, up to
the maximum number of shares permitted pursuant to the terms of the Plan and the
applicable Offering, at the purchase price specified in the Offering. No
fractional shares shall be issued upon the exercise of rights granted under the
Plan. The amount, if any, of accumulated payroll deductions remaining in each
participant's account after the purchase of shares which is less than the amount
required to purchase one share of stock on the final Purchase Date of an
Offering shall be held in each such participant's account for the purchase of
shares under the next Offering under the Plan, unless such participant withdraws
from such next Offering, as provided in subparagraph 7(b), or is no longer
eligible to be granted rights under the Plan, as provided in paragraph 5, in
which case such amount shall be distributed to the participant after such final
Purchase Date, without interest. The amount, if any, of accumulated payroll
deductions remaining in any participant's account after the purchase of shares
which is equal to the amount required to purchase whole shares of stock on the
final Purchase Date of an Offering shall be distributed in full to the
participant after such Purchase Date, without interest.
(b) No rights granted under the Plan may be exercised to any extent
unless the shares to be issued upon such exercise under the Plan (including
rights granted thereunder) are covered by an effective registration statement
pursuant to the Securities Act of 1933, as amended (the "Securities Act") and
the Plan is in material compliance with all applicable state, foreign and other
securities and other laws applicable to the Plan. If on a Purchase Date in any
Offering hereunder the Plan is not so registered or in such compliance, no
rights granted under the Plan or any Offering shall be exercised on such
Purchase Date, and the Purchase Date shall be delayed until the Plan is subject
to such an effective registration statement and such compliance, except that the
Purchase Date shall not be delayed more than twelve (12) months and the Purchase
Date shall in no event be more than twenty-seven (27) months from the Offering
Date. If on the Purchase Date of any Offering hereunder, as delayed to the
maximum extent permissible, the Plan is not registered and in such compliance,
no rights granted under the Plan or any Offering shall be exercised and all
payroll deductions accumulated during the Offering (reduced to the extent, if
any, such deductions have been used to acquire stock) shall be distributed to
the participants, without interest.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan, the Company
shall keep available at all times the number of shares of stock required to
satisfy such rights.
6
<PAGE>
(b) The Company shall seek to obtain from each federal, state, foreign
or other regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such rights unless and until
such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted under the
Plan shall constitute general funds of the Company.
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to rights granted
under the Plan unless and until the participant's shares acquired upon exercise
of rights hereunder are recorded in the books of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any rights granted under the Plan (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan and outstanding rights will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding rights. Such adjustments shall be made by the Board or
the Committee, the determination of which shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a "transaction not involving the receipt of consideration by
the Company.")
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise; or (4) the acquisition by
any person, entity or group within the meaning of Section 13(d) or 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or any
comparable successor provisions (excluding any employee benefit plan, or related
trust, sponsored or maintained by the Company or any Affiliate of the Company)
of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, then, as determined by the Board in its
sole discretion (i) any surviving or acquiring corporation may assume
outstanding rights or substitute similar rights for those under the Plan, (ii)
such rights may continue in full force and effect, or (iii) participants'
7
<PAGE>
accumulated payroll deductions may be used to purchase Common Stock immediately
prior to the transaction described above and the participants' rights under the
ongoing Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 12 relating to adjustments upon changes
in stock, no amendment shall be effective unless approved by the stockholders of
the Company within twelve (12) months before or after the adoption of the
amendment if such amendment requires stockholder approval in order for the Plan
to obtain employee stock purchase plan treatment under Section 423 of the Code
or to comply with the requirements of Rule 16b-3 promulgated under the Exchange
Act.
(b) The Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible employees with the maximum benefits
provided or to be provided under the provisions of the Code and the regulations
promulgated thereunder relating to employee stock purchase plans and/or to bring
the Plan and/or rights granted under it into compliance therewith.
(c) Rights and obligations under any rights granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan, except
with the consent of the person to whom such rights were granted, or except as
necessary to comply with any laws or governmental regulations, or except as
necessary to ensure that the Plan and/or rights granted under the Plan comply
with the requirements of Section 423 of the Code.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who is
to receive any shares and cash, if any, from the participant's account under the
Plan in the event of such participant's death subsequent to the end of an
Offering but prior to delivery to the participant of such shares and cash. In
addition, a participant may file a written designation of a beneficiary who is
to receive any cash from the participant's account under the Plan in the event
of such participant's death during an Offering.
(b) Such designation of beneficiary may be changed by the participant at
any time by written notice. In the event of the death of a participant and in
the absence of a beneficiary validly designated under the Plan who is living at
the time of such participant's death, the Company shall deliver such shares
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its sole discretion, may deliver such shares
and/or cash to the spouse or to any one or more dependents or relatives of the
participant, or if no spouse, dependent or relative is known to the Company,
then to such other person as the Company may designate.
15. TERMINATION OR SUSPENSION OF THE PLAN.
8
<PAGE>
(a) The Board in its discretion, may suspend or terminate the Plan at
any time. No rights may be granted under the Plan while the Plan is suspended or
after it is terminated.
(b) Rights and obligations under any rights granted while the Plan is in
effect shall not be altered or impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of the person
to whom such rights were granted, or except as necessary to comply with any laws
or governmental regulation, or except as necessary to ensure that the Plan
and/or rights granted under the Plan comply with the requirements of Section 423
of the Code.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective upon the Company's initial public
offering of shares of common stock (the "Effective Date"), but no rights granted
under the Plan shall be exercised unless and until the Plan has been approved by
the stockholders of the Company within twelve (12) months before or after the
date the Plan is adopted by the Board or the Committee, which date may be prior
to the Effective Date.
9
<PAGE>
1637-PS-00
<PAGE>
ILF81B DETACH HERE
PROXY
IL FORNAIO (AMERICA) CORPORATION
SOLICITED BY BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 3, 2000
The undersigned hereby appoints Laurence B. Mindel and Peter P. Hausback, and
each of them, as attorneys and proxies of the undersigned, with full power of
substitution, to vote all of the shares of stock of Il Fornaio (America)
Corporation that the undersigned may be entitled to vote at the Annual Meeting
of Stockholders of Il Fornaio (America) Corporation to be held on Wednesday, May
3, 2000, at 4:30 p.m., local time, at the corporate headquarters of Il Fornaio
(America) Corporation located at 770 Tamalpais Drive # 400, Corte Madera,
California, and at any and all postponements, continuations and adjournments
thereof, with all powers that the undersigned would possess if personally
present, upon and in respect of the following matters and in accordance with the
following instructions, with discretionary authority as to any and all other
matters that may properly come before the meeting.
Unless a contrary direction is indicated, this Proxy will be voted for all
nominees listed in Proposal 1 and for Proposals 2, 3 and 4, as more specifically
described in the proxy statement. If specific instructions are indicated, this
proxy will be voted in accordance therewith.
SEE REVERSE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE SIDE
<PAGE>
DETACH HERE
|X|
Please mark
votes as in
this example.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW AND FOR PROPOSALS 2,
3 AND 4.
1. To elect two directors to hold office until the 2003 Annual Meeting of
Stockholders and until their successors are elected.
Nominees: (01) Dean A. Cortopassi and (02) Lawrence F.
Levy WITHHOLD
FOR AUTHORITY
|_| |_|
|X| _______________________________________
For both nominees except as noted above
MARK HERE
FOR ADDRESS
CHANGE AND
NOTE BELOW
|_|
2. To approve the Company's 1997 Equity Incentive Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized for
issuance under such plan by 500,000 shares.
FOR AGAINST ABSTAIN
|_| |_| |_|
3. To approve the Company's 1997 Employee Stock Purchase Plan, as amended, to
increase the aggregate number of shares of Common Stock authorized for
issuance under such plan by 200,000 shares.
FOR AGAINST ABSTAIN
|_| |_| |_|
4. To ratify the selection of Deloitte & Touche LLP as the Company's
independent auditors for the fiscal year ending December 31, 2000.
FOR AGAINST ABSTAIN
|_| |_| |_|
Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership name by authorized person.
Please vote, date, sign and promptly return this proxy in the enclosed return
envelope which is postage prepaid if mailed in the United States.
Signature:___________________________________ Date:________________________
Signature:___________________________________ Date:________________________
