<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 5, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____ TO ____
COMMISSION FILE NUMBER 0-27366
RAINFOREST CAFE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MINNESOTA 41-1779527
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
720 South Fifth Street
Hopkins, MN 55343
(Address of principal executives offices, including zip code)
(612) 945-5400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Number of shares of Common Stock, $.01 par value per share outstanding as of
May 11, 1998: 25,449,687
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RAINFOREST CAFE, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page number
<S> <C> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
April 5, 1998 and December 28, 1997...............................................2
Consolidated Statements of Operations for the fourteen weeks ended
April 5, 1998 and thirteen weeks ended March 30, 1997.............................3
Consolidated Statements of Cash Flows for the fourteen weeks ended
April 5, 1998 and thirteen weeks ended March 30, 1997.............................4
Condensed Notes to Consolidated Financial Statements..............................5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............................................7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................................14
Item 2. Exhibits and Reports on Form 8-K..................................................15
Signature Page.............................................................................16
</TABLE>
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RAINFOREST CAFE, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
April 5, December 28,
(In Thousands) 1998 1997
---------- ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 25,731 $ 53,621
Short-term investments 28,847 16,963
Accounts receivable and other 13,644 9,893
Inventories 5,609 6,705
Preopening expenses 5,678 4,546
-------- --------
Total current assets 79,509 91,728
Long-Term Investments 31,329 39,948
Furniture, Equipment and Leasehold Improvements, net 126,839 112,695
Other Assets 3,734 1,729
-------- --------
Total Assets $241,411 $246,100
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 8,053 $ 7,135
Accrued liabilities
Payroll and payroll taxes 1,704 3,318
Other 3,727 3,543
Income taxes payable 2,040
-------- --------
Total current liabilities 15,524 13,996
Deferred Rent 8,602 8,214
Deferred Income Taxes 908 908
-------- --------
Total liabilities 25,034 23,118
-------- --------
Commitments and Contingencies
Shareholders' Equity:
50,000,000 shares authorized; 25,449,687 and 26,351,268
shares of common stock issued and outstanding 195,634 206,277
Retained earnings 20,743 16,705
-------- --------
Total shareholders' equity 216,377 222,982
-------- --------
Total Liabilities and Shareholders' Equity $241,411 $246,100
======== ========
</TABLE>
2
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RAINFOREST CAFE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Fourteen Thirteen
Weeks Ended Weeks Ended
April 5, March 30,
(In Thousands, Except Per Share Data) 1998 1997
------------ ------------
<S> <C> <C>
Revenues:
Restaurant sales $ 35,007 $ 16,621
Retail sales 9,312 4,998
Licensing fees and royalties 307 250
------------ ------------
Total revenues 44,626 21,869
------------ ------------
Costs and Expenses:
Food and beverage costs 8,331 3,962
Cost of retail goods sold 4,353 2,356
Restaurant operating expenses 17,930 8,179
Retail operating expenses 3,124 1,568
Depreciation and amortization 2,554 1,169
Amortization of preopening expenses 1,630 821
------------ ------------
Total costs and expenses 37,922 18,055
------------ ------------
Income from Unit Operations and Licensing 6,704 3,814
------------ ------------
Other (Income) Expense:
General, administrative and development expenses 2,791 1,516
Interest income (2,208) (2,129)
Write-off of development costs -- 1,935
------------ ------------
Total other expense 583 1,322
------------ ------------
Income before Income Taxes 6,121 2,492
Provision for Income Taxes 2,083 886
------------ ------------
Net Income $ 4,038 $ 1,606
============ ============
Basic Earnings Per Common Share: $ 0.16 $ 0.06
============ ============
Basic Weighted Average Shares Outstanding 25,986,973 25,797,738
============ ============
Diluted Earnings Per Common Share: $ 0.16 $ 0.06
============ ============
Diluted Weighted Average Shares Outstanding 26,037,619 26,643,590
============ ============
</TABLE>
3
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RAINFOREST CAFE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Fourteen Weeks Thirteen Weeks
Ended Ended
April 5, March 30,
(In Thousands) 1998 1997
-------------- ---------------
<S> <C> <C>
Operating Activities:
Net income $ 4,038 $ 1,606
Adjustments to reconcile net income to net cash
flows from operating activities
Depreciation and amortization 4,758 1,516
Write-off of discontinued development costs -- 1,935
Change in operating assets and liabilities
Accounts receivable and other (3,863) (1,000)
Inventories 1,096 660
Preopening expenses (2,762) (13)
Accounts payable 918 6,772
Accrued liabilities 610 (1,295)
-------- --------
Net cash provided by operating activities 4,795 10,181
-------- --------
Investing Activities:
Purchases of short-term investments, net (11,884) (20,032)
(Purchases) sales of longterm investments, net 8,619 (6,920)
Purchases of furniture, equipment and leasehold
improvements, net (16,886) (17,273)
Purchases of other assets (2,005) (405)
-------- --------
Net cash used in investing activities (22,156) (44,630)
-------- --------
Financing Activities:
Proceeds from the sale of common stock and put options, net 986 1,258
Repurchase of common stock (11,627) --
Tenant allowances collected 112 --
-------- --------
Net cash provided by (used in) financing activities (10,529) 1,258
-------- --------
Decrease in Cash and Cash Equivalents (27,890) (33,191)
Cash and Cash Equivalents, beginning of period 53,621 83,894
-------- --------
Cash and Cash Equivalents, end of period $ 25,731 $ 50,703
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for
Interest $ -- $ --
Income taxes 23 4,475
</TABLE>
4
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RAINFOREST CAFE, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 5, 1998
(UNAUDITED)
(1) BASIS OF FINANCIAL STATEMENT PRESENTATION
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include all accounts of Rainforest Cafe,
Inc. and its wholly-owned and majority-owned subsidiaries (collectively, the
Company). All significant intercompany balances and transactions have been
eliminated.
The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosure, normally
included in financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted pursuant to such rules and
regulations. Although management believes that the accompanying disclosures are
adequate to make the information presented not misleading, it is suggested that
these interim condensed financial statements be read in conjunction with the
Company's most recent audited financial statements and notes thereto. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary for a fair presentation of the financial position,
results of operations and cash flows for the interim periods presented have been
made. Operating results for the fourteen weeks ended April 5, 1998 are not
necessarily indicative of the results that may be expected for the fiscal year
ending January 3, 1999.
(2) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standard (SFAS) No. 130, "Reporting
Comprehensive Income", effective beginning in fiscal 1998, establishes standards
of disclosure and financial statement display for reporting total comprehensive
income and the individual components thereof. The adoption of SFAS No. 120 did
not have a material impact on the Company's financial position or results of
operations as comprehensive income and net income were the same for all periods
presented.
During April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accounts (AICPA) issued Statement of Position
(SOP) 98-5, "Reporting on the Costs of Start-Up Activities". SOP 98-5 requires
companies to expense as incurred all start-up and preopening costs that are not
otherwise capitalizable as long-lived assets. The Company has elected to
implement the accounting standard during the second quarter of 1998. Had the
Company adopted the accounting standard during the first quarter of 1998 the
effect of this accounting change would have been to charge to operations the
unamortized balance of preopening costs and other start-up expenses as of
December 28, 1997 of $4.5 million, net of $2 million of related tax benefit.
Also, $2.0 million of preopening costs capitalized during the first quarter of
1998 would have been expensed during the first quarter 1998 and included with
preopening costs in the accompanying statements of operations.
5
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(3) EARNINGS PER COMMON SHARE
The Company adopted in fiscal 1997, Statement of Financial Accounting Standards
(SFAS) No. 128 "Earnings per Share" which requires disclosure of basic earnings
per share (EPS) and diluted EPS, which replace the existing primary EPS and
fully diluted EPS, as defined by APB No. 15. Basic EPS is computed by dividing
net income by the weighted average number of shares of Common Stock outstanding
during the year. Diluted EPS is computed similarly to primary EPS as previously
reported provided that, when applying the treasury stock method to common
equivalent shares (consisting solely of outstanding stock options), the Company
must use its average share price for that period rather than the more dilutive
greater of the average share price or end-of-period share price required by APB
No. 15.
As a result of the adoption of SFAS No. 128, the Company's reported earnings per
share for March 30, 1997 was restated. The effect of this accounting change on
previously reported EPS data was as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended
March 30, 1997
--------------------
<S> <C>
Primary EPS as reported $0.09
Effect on SFAS No. 128 (0.03)
-----
Basic EPS as restated 0.06
=====
Fully diluted EPS as reported $ --
Effect on SFAS No. 128 0.06
------
Diluted EPS as restated $ 0.06
======
</TABLE>
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company, founded in February 1994, owns, operates, and licenses themed
restaurant/retail facilities (each a "Unit") under the name "Rainforest Cafe - A
Wild Place to Shop and Eat(R)." As of April 15, 1998, the Company owned and
operated fifteen Units in the United States and licensed three Units outside of
the United States. Rainforest Cafe Units range in size from the Company's
initial Unit opened on October 3, 1994 in the Mall of America in Bloomington,
Minnesota, which is approximately 15,000 square feet to the 34,000 square foot
Unit located at Disney's Animal Kingdom at Walt Disney World(R) in Orlando,
Florida. The Company's other domestic Units are located in Chicago, Schaumburg
and Gurnee, Illinois; McLean, Virginia; Miami, Fort Lauderdale and Downtown
Disney Marketplace at Walt Disney World(R) in Orlando, Florida; Costa Mesa in
Orange County, California; Westbury and West Nyack, New York; Dallas, Texas;
Tempe, Arizona; and at the MGM Grand Hotel and Casino in Las Vegas, Nevada.
Two Units opened during the first quarter 1998 including the Unit at Disney's
Animal Kingdom which operated in a start-up phase and was recorded as a
preopening expense from March 4, 1998 to April 20, 1998. The Company presently
plans to open seven additional domestic Units for the remaining three quarters
of 1998. Because the Company anticipates continued rapid expansion, period to
period comparisons may not be meaningful. The Company presently intends to lease
the sites for all future domestic Units and anticipates that most of its future
domestic Units will range in size from approximately 14,000 to 23,000 square
feet, with between 275 and 450 restaurant seats and 10% to 25 % of square
footage dedicated to retail selling space. However, some Units may be
significantly larger, such as the existing free-standing 30,000 square foot
Downtown Disney Market Place Unit and the free-standing 34,000 square foot
Disney's Animal Kingdom Unit, both of which contain approximately 550 restaurant
seats.
In addition to operations in the United States, the Company has pursued
international growth opportunities through licensing arrangements. The Company
has entered into five exclusive license agreements to develop up to 24 Units, of
which three are currently open, over the next ten years in the United Kingdom
and Ireland, Mexico, Canada, and certain Asian countries. The Company intends to
enter into additional license agreements in the future. In each of these
existing international license agreements, the Company is entitled to receive
area license agreements. Pursuant to these agreements, the Company is entitled
to receive area licensing fees in excess of $500,000 (other than the license
agreement relating to the United Kingdom and Ireland which does not have an area
licensing fee) and is entitled to receive a development fee per Unit and
royalties ranging from 3% to 10% of gross revenues. Certain agreements, such as
the agreement relating to the United Kingdom and Ireland, allow the Company to
become an equity participant of 20%-50% of each Unit developed. The agreement
for Canadian development is a 50/50 joint venture with the Elephant and Castle
Group located in Vancouver, Canada. The first international licensed Unit opened
in London in June, 1997, followed by Units in Cancun and Mexico City which
opened in August and October 1997, respectively. The Company believes
approximately five Units will be developed outside the United States for the
remaining three quarters of 1998.
7
<PAGE> 9
Components of operating expenses include operating payroll and fringe benefits
costs, occupancy costs, maintenance costs related to the bird habitat and
aquariums, and advertising and promotion costs. The majority of these costs are
variable and will increase with sales volume. Historically when a new Unit
opens, it incurs higher than normal levels of labor and food costs as Unit
personnel complete training. Management believes, however, that as new staff
gain experience, hourly labor schedules over the ensuing 30-60 day period will
gradually adjust because of operating efficiencies and then be similar to those
of established Units. Each of the Company's current leases includes both fixed
rate and percentage rent provisions.
General, administrative and new development expenses include all corporate and
administrative functions that serve to support existing operations and provide
an infrastructure to support future growth. In addition, certain expenses
related to the recruiting and training of Unit management personnel are also
included if such expenses do not meet the criteria to be capitalized as
preopening expenses. Management, supervisory and staff salaries, employee
benefits, travel, information systems, marketing, rent and office expenses are
primary items of cost in this category.
The Company uses a 52- or 53- week fiscal year ending on the Sunday nearest
December 31.
8
<PAGE> 10
RESULTS OF OPERATIONS FOR THE FOURTEEN WEEKS ENDED APRIL 5, 1998, COMPARED TO
THE THIRTEEN WEEKS ENDED MARCH 30, 1997.
The operating results of the Company expressed as a percentage of total revenues
(except where noted) were as follows:
<TABLE>
<CAPTION>
Fourteen Weeks Thirteen Weeks
Ended Ended
April 5, 1998 March 30, 1997
-------------- --------------
<S> <C> <C>
Revenues
Restaurant sales 78.4% 76.0%
Retail sales 20.9 22.9
Licensing fee .7 1.1
----- -----
Total revenues 100.0 100.0
===== =====
Costs and Expenses
Food and beverage costs (1) 23.8 23.8
Cost of retail goods sold (2) 46.7 47.1
Restaurant operating expenses (1) 51.2 49.2
Retail operating expenses (2) 33.5 31.4
Depreciation and amortization (3) 5.8 5.4
Amortization of preopening expenses (3) 3.7 3.8
----- -----
Total costs and expenses (3) 85.6 83.5
----- -----
Income from Unit Operations and Licensing 15.0 17.4
----- -----
Other (Income) Expense:
General, administrative and development 6.2 6.9
Interest income (4.9) (9.7)
Write-off of development costs -- 8.9
----- -----
Total other expenses 1.3 6.1
----- -----
Income before Income Taxes 13.7 11.4
Provision for Income Taxes 4.7 4.1
----- -----
Net income 9.0% 7.3%
===== =====
</TABLE>
(1) Percentage of restaurant sales
(2) Percentage of retail sales
(3) Percentage of unit sales
Results of operations for the first quarter ended April 5,1998, reflect the
operations of ten mall Units and three free-standing Units open for the entire
quarter. The Unit at Palisades Center in West Nyack, New York was open for 18
days during the quarter. Operations of the Unit at Disney's Animal Kingdom which
opened April 22, 1998 are not included in first quarter 1998 results.
9
<PAGE> 11
Total revenues increased 104% to $44.6 million for the fourteen week period
ended April 5, 1998 from $21.9 million for the thirteen week period ended March
30, 1997. The increase in revenues is primarily due to the addition of eight
domestic Rainforest Cafe Units which contributed $21.0 million and the $2.8
million generated from the additional week of the 1998 period. The increase in
revenues were partially offset by the Units at Tyson's Corner Center I and
Sawgrass Mills which experienced a decrease in sales of $1.2 million. The
Company's experience to date indicates that a Unit's revenues may decrease on
a comparable basis after the first year of operations, although this has not
been the case for all of the Company's Units. Management believes that any such
decreases result from the fact that the Company's new Units typically open at
or near full capacity. The comparable store sales base consisting of four
Units open more than 18 months contributed $0.1 million.
Retail sales decreased as a percentage of total revenues from 22.9% for the
first quarter in 1997 to 20.9% for the comparable period in 1998. The decrease
in the percentage of retail sales is primarily due to the addition of more Mall
Units than free-standing Units where retail sales comprise a greater percentage
of total sales.
Food and beverage costs increased 110% to $8.3 million for the first quarter in
1998 compared to $4.0 million for the comparable quarter in 1997. The increase
in food and beverage costs was primarily due to Unit expansion. Food and
beverage costs remained relatively stable as a percentage of sales.
Cost of retail goods sold increased 84.8% to $4.4 million for the first quarter
of 1998 compared to $2.4 million for the first quarter of 1997. The increase in
cost of retail goods sold was primarily due to Unit expansion. Cost of retail
goods sold decreased as a percentage of retail sales from 47.1% in the first
quarter of 1997 to 46.7% for the comparable period in 1998. The decrease as a
percentage of sales was primarily due to the allocation of fixed distribution
costs over a larger Unit base.
Restaurant and retail operating expenses increased 119% and 99.2% respectively
from the first quarter of 1997 to the comparable quarter in 1998. The increase
in restaurant and retail operating expenses was primarily due to Unit expansion.
Restaurant operating expenses increased as a percentage of restaurant sales from
49.2% in the first quarter of 1997 to 51.2% in the first quarter of 1998. Retail
operating expenses increased from 31.4% of retail sales in the first quarter of
1997 to 33.5% in the first quarter of 1998. The increase in restaurant and
retail operating expenses as a percentage of restaurant and retail sales
respectively is primarily due to increased expenditures on advertising and
marketing at most Units, the initial investment in Corporate sales teams in Las
Vegas, Orlando and Chicago and a high level of operating expenses at the
Aventura Mall Unit which was caused by low customer traffic resulting from
delays in mall construction.
Depreciation and amortization increased 119% to $2.6 million in the first
quarter of 1998 compared to $1.2 million for the comparable period in 1997.
Amortization of preopening expenses increased from $0.8 million in the first
quarter of 1997 to $1.6 million in the same period of 1998. The increase in
depreciation and amortization and amortization of preopening expenses was due to
Unit expansion. Depreciation and amortization as a percentage of restaurant and
retail sales increased to 5.8% for the 1998 first quarter from 5.4% for the same
period in 1997. The increase in these expenses as a percentage of sales is due
to increased costs of new Unit development and capital improvements in existing
Units. Amortization of preopening expenses remained relatively stable as a
percentage of restaurant and retail sales.
10
<PAGE> 12
General, administration and development expenses increased 84.1% to $2.8 million
in the first quarter of 1998 compared to $1.5 million in the first quarter of
1997. The increase in general administrative and development expenses was due
primarily to the increases of senior management, corporate employees and Unit
management personnel involved with and in training related to the Company's
growth. General, administrative and development expenses as a percentage of
revenues decreased to 6.2% in the first quarter of 1998 from 6.9% for the same
period in 1997. Management believes general, administrative and development
expenses will continue to grow at a slower rate than total revenues over the
next year resulting in a continual decrease in these expenses as a percentage of
total revenues.
Interest income of $2.2 million for the first quarter of 1998 was generated
primarily by investing the proceeds from the Company's two follow-on public
offerings completed in January and September 1996 and capital gains realized
during the quarter. Interest income of $2.1 million for the first quarter of
1997 was generated primarily by investing the proceeds of the Company's two 1996
follow-on public offerings.
The write-off of development costs of $1.9 million in the first quarter of 1997
was the result of the termination of planned Units at Trump Taj Mahal (Atlantic
City, New Jersey) and Stratosphere (Las Vegas, Nevada).
The provision for income taxes in the 1998 and 1997 periods are both based upon
the Company's estimated effective tax rate, including tax exempt interest
income. The effective tax rate for 1998 was reduced to 34% from 36% in 1997. The
lower tax rate reflects the addition of more Units in lower tax states such as
Nevada and Florida.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal capital needs arise from the development and opening of
new Rainforest Cafe Units. In January 1996, the Company issued an aggregate of
6,210,000 shares of Common Stock pursuant to a secondary public offering at
$12.67 per share. The net proceeds to the Company, after payment of underwriting
fees and offering expenses, were approximately $73.6 million. In May 1996, the
Company received approximately $1.0 million in net proceeds from the exercise of
warrants at $3.20 per share issued to Underwriters of the Company's IPO. In
September 1996, the Company issued an aggregate of 4,837,500 shares of Common
Stock pursuant to an additional public offering at $21.00 per share. The net
proceeds to the Company, after payment of underwriting fees and offering
expenses, were approximately $96.0 million. On April 5, 1998 the Company had
working capital of approximately $64.0 million and long-term investments of
$31.3 million, consisting principally of investment grade, fixed income
securities.
During the first quarter of 1998, the Company generated $4.8 million in cash
flow from operating activities compared to $10.2 million for the first quarter
of 1997. Additionally, during the first quarter of 1998 the Company generated
$20,000 from stock options exercised, compared with $0.3 million for the
comparable period in 1997, and approximately $1.0 million from the sale of put
options on
11
<PAGE> 13
approximately 550,000 shares of the Company's Common Stock (at exercise prices
ranging from $10.00 to $11.67 per share). The sale of the put options was
executed as a part of a stock repurchase program announced in January 1997 and
amended in January 1998 pursuant to which up to 1.5 million shares and 3.0
million shares, respectively, of the Company's Common Stock may be repurchased
over a one year period. In the first quarter of 1998 approximately 909,000
shares of Common Stock were repurchased through put option assignments and open
market purchases at a cost of $11.6 million. The Company believes that it will
continue to generate cash from operating activities and earn interest income,
both of which will be utilized for future development and working capital
purposes.
The average investment to open the Company's first five Mall Units was $5.5
million, net of landlord contributions which averaged $1.1 million.
Additionally, the Company averaged approximately $650,000 in preopening expenses
and purchased an average of $300,000 of inventory in connection with the
openings. Total expenditures to develop the Downtown Disney Marketplace Unit
were $11.2 million, net of $1.5 million landlord contributions. Preopening
expenses incurred for the opening of the Downtown Disney Marketplace Unit were
approximately $1.2 million and the initial inventory purchased was approximately
$600,000.
The estimated average investment to open the Company's five Mall Units during
1997 was $7.1 million, net of landlord contributions, while total expenditures
to develop the free-standing downtown Chicago and MGM Grand Hotel and Casino
Icon Units were approximately $10.0 million and $10.3 million, respectively. The
Company received average landlord contributions of approximately $900,000 for
the Mall Units. Additionally, the Company averaged approximately $730,000 in
preopening expenses and purchased approximately $300,000 in initial inventory
for the 1997 Mall Units. The opening of the downtown Chicago Unit resulted in
preopening expenses of approximately $750,000 and the opening of the MGM Grand
Hotel and Casino Unit resulted in preopening expenses of approximately $1.2
million. Both Units required the purchase of approximately $300,000 in initial
inventory.
The Company expects future domestic Mall Units to cost between $5.5 million and
$8.5 million to develop, net of anticipated landlord contributions. In addition,
the Company expects that it will incur approximately $700,000 in preopening
costs and purchase approximately $300,000 of inventory in connection with the
opening of these Units. The Company also expects to open selected, larger Icon
Units, such as its Unit at Disney's Animal Kingdom at Walt Disney World(R),
which cost approximately $14 million. In connection with the construction of
existing Units, the Company has received landlord contributions, which reduced
the cost of opening these Units. There can be no assurance, however, that
landlord contributions will be available in the future.
The Company contemplates that the development and opening of each of its Units
from 1998 through 1999 will be financed with existing cash on hand and cash flow
from operations. The Company may require additional equity or debt financing for
expansion beyond 1999.
It is not anticipated that the Company's business will require substantial
working capital to meet its operating requirements. Virtually all of the
Company's revenues are collected in cash or pursuant to credit card processing.
Food and beverage inventories and merchandise inventories are expected to
increase in relation to trade accounts payable.
12
<PAGE> 14
QUARTERLY FLUCTUATIONS, SEASONALITY AND INFLATION
As a result of the substantial revenues associated with each new Unit, the
timing of new Unit openings may result in significant fluctuations in quarterly
results. Units at entertainment centers or Disney theme parks may show
fluctuations in accordance with any overall seasonality at these locations.
The primary inflationary factors affecting the Company's operations include
food, beverage and labor costs. Management does not anticipate any significant
labor cost increases as a result of the minimum wage increases enacted in 1997
and 1998. Units in higher cost labor markets such as California, New York and
Nevada may experience lower operating margins than Units located in lower cost
labor markets. In addition, the Company's leases require the Company to pay
costs that are subject to inflationary increases, such as base rent, taxes,
maintenance, repairs and utilities. The Company believes low inflation rates
have contributed to relatively stable costs. There is no assurance, however,
that low inflation rates will continue.
The Company has performed an assessment of its information systems, equipment,
and vendors to determine compliance with Year 2000 issues. Results of the
assessment indicate that costs associated with Year 2000 compliance are expected
to be immaterial to future financial results.
FORWARD-LOOKING DISCLOSURE
The Private Securities Litigation Reform Act of 1995 provides a "safe-harbor"
for forward-looking statements. Certain information included in this report and
other materials filed by the Company with Securities and Exchange Commission (as
well as information included in oral statements or other written statements made
or to be made by the Company) contain statements that are forward-looking,
including statements relating to plans for future expansion and other business
development activities as well as other capital spending, financial sources, and
the effects of competition in addition to expenses related to any Company
litigation. Such forward-looking information involves important risks and
uncertainties that could significantly affect anticipated results in the future
and, accordingly, such results may differ from those expressed in any
forward-looking statements made by or on behalf of the Company. These risks and
uncertainties are indicated in the Company's form 10-K for fiscal 1997 and
include, but are not limited to, those relating to development and construction
activities, including delays in opening new Units, acceptance of the Rainforest
Cafe concept and the future Unit performance, the quality of the Company's
restaurant and retail operations, dependence on discretionary consumer spending,
the Company's failure to defend its intellectual property rights, dependence on
existing management, general economic conditions, changes in federal or state
laws or regulations and unanticipated results of litigation.
13
<PAGE> 15
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
SHAREHOLDER CLASS ACTION LITIGATION
The Company and certain executive officers of the Company are named as
defendants in seven separate purported class action complaints, indicated below,
alleging violations by the Company and such executive officers of certain
Federal securities laws. All complaints were filed in the United States District
Court for the District of Minnesota. These complaints each allege that the
defendants violated Federal securities laws by making misrepresentations and
omissions regarding the Company's performance and future prospects during the
respective class periods while individually selling the Company's Common Stock.
With the exception of the Amy Stern v. Rainforest Cafe, Inc., et al. complaint,
all of these complaints purport to seek relief on behalf of a class of
plaintiffs who purchased the Company's Common Stock during the period between
October 20, 1997 and January 6, 1998. The Company believes these claims are
without merit and intends to defend these claims vigorously.
Amy Stern v. Rainforest Cafe, Inc,. et al. was filed January 12, 1998 and
involves claims against the Company, Kenneth W. Brimmer, Ercu Ucan, and Steven
W. Schussler (each executive officers and directors of the Company) and Mark
Bartholomay, Mark S. Robinow and Gregory C. Carey (each executive offers of the
Company). The Stern complaint purports to seek relief on behalf of a class of
plaintiffs who purchased the Company's Common Stock during the period between
August 5, 1997 and January 6, 1998.
Emanuel Massing v. Lyle Berman, et al. was filed January 14, 1998 and
involves the claims against the Company, Lyle Berman, Kenneth W. Brimmer, Ercu
Ucan, Steven W. Schussler, Mark Bartholomay, Mark S. Robinow, and Gregory C.
Carey.
Wayne Stern and Sherry Bernstein v. Rainforest Cafe, Inc., et al. was filed
January 14, 1998 and involves claims against the Company, Lyle Berman, Kenneth
W. Brimmer, Ercu Ucan, Steven W. Schussler, and Mark S. Robinow.
Thomas R. Obinger v. Lyle Berman, et al. was filed January 23, 1998 and
involves claims against the Company, Lyle Berman, Kenneth W. Brimmer, Ercu Ucan,
Steven W. Schussler, Mark Bartholomay, Mark S. Robinow, and Gregory C. Carey.
Patricia Tempest v. Rainforest Cafe, Inc., et al. was filed February 4,
1998 and involves claims against the Company, Lyle Berman, Kenneth W. Brimmer,
Ercu Ucan, Steve W. Schussler, and Mark S. Robinow.
David Maltz v. Rainforest Cafe, Inc., et al. was filed February 23, 1998 an
involves claims against the Company, Lyle Berman, Kenneth W. Brimmer, Ercu Ucan,
Steven W. Schussler, and Mark S. Robinow.
Rosalie Cutter v. Rainforest Cafe, Inc., et al. was filed February 27, 1998
and involves claims against the Company, Lyle Berman, Kenneth W. Brimmer, and
Mark Robinow.
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<PAGE> 16
SHAREHOLDER DERIVATIVE LITIGATION
Luis San Andres, derivatively on behalf of Rainforest Cafe, Inc. vs.
Kenneth W. Brimmer, et al was filed on February 10, 1998 in the United States
District Court for the District of Minnesota. The Luis San Andres complaint
purports to seek relief on behalf of the Company against Kenneth W. Brimmer,
Mark Bartholomay, Gregory C. Carey, Mark S. Robinow, Ercu Ucan, Steven W.
Schussler and Lyle Berman and the Company as a nominal defendant. The complaint
alleges that the defendants breached their respective fiduciary duties to the
Company and were unjustly enriched as a result of certain trading activity.
Item 2. Exhibits and Reports on Form 8-K
A. Exhibits:
10.1 1998 Non-Executive Employee Stock Option Plan
B. Reports on Form 8-K: The Company did not file any reports on Form
8-K during the quarter ended April 5, 1998.
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<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
RAINFOREST CAFE, INC.
Date: May 15, 1998
-------------------------------
Kenneth Brimmer
President
Date: May 15, 1998
-------------------------------
Mark S. Robinow
Chief Financial Officer
(Principal Financial Officer)
16
<PAGE> 1
EXHIBIT 10.1
RAINFOREST CAFE, INC.
1998 NON-EXECUTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the 1998 Non-Executive Stock Option Plan
(the "Plan") of Rainforest Cafe, Inc. (the "Company") is to increase shareholder
value and to advance the interests of the Company by attracting, motivating and
retaining non-executive full-time employees of the Company ("Non-Executive
Employees") by furnishing Non-Executive Employees non-qualified stock options to
purchase Common Stock, no par value, of the Company ("Stock Options").
2. Administration. The Plan shall be administered by a committee (the
"Committee") of the Board of Directors of the Company. The Committee shall
consist of not less than two directors of the Company and shall be appointed
from time to time by the Board of Directors of the Company. The members of the
Committee may be employee Directors of the Company, non-employee Directors of
the Company, or any combination thereof. The Board of Directors of the Company
may from time to time appoint members of the Committee in substitution for, or
in addition to, members previously appointed, and may fill vacancies, however
caused, in the Committee. The Committee shall select one of its members as its
chairman and shall hold its meetings at such times and places as it shall deem
advisable. A majority of the Committee's members shall constitute a quorum. All
action of the Committee shall be taken by the majority of its members. Any
action may be taken by a written instrument signed by majority of the members
and actions so taken shall be fully effective as if it had been made by a
majority vote at a meeting duly called and held. The Committee may appoint a
secretary, shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it shall deem advisable. The
Committee shall have complete authority to award Stock Options under the Plan,
to interpret the Plan, and to make any other determination which it believes
necessary and advisable for the proper administration of the Plan. The
Committee's decisions and matters relating to the Plan shall be final and
conclusive on the Company and its participants.
3. Eligible Employees. Non-Executive Employees of the Company who are
full-time employees shall become eligible to receive Stock Options under the
Plan when designated by the Committee. For purposes of the Plan, "Non-Executive
Employees" shall be any employee of the Company who is not a director or officer
of the Company, as defined in Rule 16a-1(f) of the Securities Exchange Act of
1934, as amended (the "1934 Act"). Non-Executive Employees may be designated
individually or by groups or categories (for example, by pay grade) as the
Committee deems appropriate.
4. Shares Subject to the Plan.
4.1 Number of Shares. Subject to adjustment as provided in
Section 6.5, the number of shares of Common Stock which may be issued
under the Plan shall not exceed 1,000,000 shares of Common Stock.
4.2 Cancellation. In the event that a Stock Option granted
hereunder expires or is terminated or canceled unexercised as to any
shares of Common Stock, options relating to such shares may again be
issued under the Plan. The Committee may also determine to cancel, and
agree to the cancellation of, Stock Options in order to make a
participant eligible for the grant of a Stock Option at a lower price
than the option to be canceled.
1
<PAGE> 2
4.3 Type of Common Stock. Common Stock issued under the Plan
in connection with Stock Options shall be authorized and unissued
shares.
5. Stock Options. A Stock Option is a right to purchase shares of
Common Stock from the Company. Each Stock Option granted by the Committee under
this Plan shall be subject to the following terms and conditions:
5.1 Price. The option price per share shall be determined by
the Committee, subject to adjustment under Section 6.5.
5.2 Number. The number of shares of Common Stock subject to
the option shall be determined by the Committee, subject to adjustment
as provided in Section 6.5.
5.3 Non-Qualified Stock Option. No Stock Option granted under
the Plan shall qualify as an incentive stock option (as such term is
defined in Section 422A of the Internal Revenue Code of 1986, as
amended).
5.4 Duration and Time for Exercise. Subject to earlier
termination as provided in Section 6.3, the term of each Stock Option
shall be determined by the Committee but shall not exceed ten years and
one day from the date of grant. Each Stock Option shall become
exercisable at such time or times during its term as shall be
determined by the Committee at the time of grant. Except as provided in
any Stock Option Agreement approved by the Committee, no Stock Option
may be exercised during the first twelve months of its term. Except as
provided by the preceding sentence, the Committee may accelerate the
exercisability of any Stock Option. Subject to the foregoing and with
the approval of the Committee, all or any part of the shares of Common
Stock with respect to which the right to purchase has accrued may be
purchased by the Company at the time of such accrual or at any time or
times thereafter during the term of the option.
5.5 Manner of Exercise. A Stock Option may be exercised, in
whole or in part, by giving written notice to the Company, specifying
the number of shares of Common Stock to be purchased and accompanied by
the full purchase price for such shares. The option price shall be
payable in United States dollars upon exercise of the option and may be
paid by cash; uncertified or certified check; bank draft; by delivery
of shares of Common Stock in payment of all or any part of the option
price, which shares shall be valued for this purpose at the Fair Market
Value on the date such option is exercised; by instructing the Company
to withhold from the shares of Common Stock issuable upon exercise of
the Stock Option shares of Common Stock in payment of all or any part
of the option price, which shares shall be valued for this purpose at
the Fair Market Value or in such other manner as may be authorized from
time to time by the Committee. Prior to the issuance of shares of
Common Stock upon the exercise of a Stock Option, a participant shall
have no rights as a shareholder.
6. General.
6.1 Duration. The Plan shall remain in effect until all Stock
Options granted under the Plan have either been satisfied by the
issuance of shares of Common Stock or the payment of cash or been
terminated under the terms of the Plan and all restrictions imposed on
shares of Common Stock in connection with their issuance under the Plan
have lapsed. No Stock Options may be granted under the Plan after the
tenth anniversary of the date the Plan is approved by the shareholders
of the Company.
2
<PAGE> 3
6.2 Non-transferability of Stock Options. No Stock Option may
be transferred, pledged or assigned by the holder thereof (except, in
the event of the holder's death, by will or the laws of descent and
distribution to the limited extent provided in the Plan or in the Stock
Option) and the Company shall not be required to recognize any
attempted assignment of such rights by any participant. During a
participant's lifetime, a Stock Option may be exercised only by him or
by his guardian or legal representative.
6.3 Effect of Termination of Employment or Death. In the event
that a participant ceases to be an employee of the Company for any
reason, including death, any Stock Options may be exercised or shall
expire at such times as may be determined by the Committee.
6.4 Additional Condition. Notwithstanding anything in this
Plan to the contrary: (a) the Company may, if it shall determine it
necessary or desirable for any reason, at the time of award of Stock
Option require the recipient of the Stock Option, as a condition to the
receipt thereof, to deliver to the Company a written representation of
present intention to acquire the Stock Option or the shares of Common
Stock issued pursuant thereto for his own account for investment and
not for distribution; and (b) if at any time the Company further
determines, in its sole discretion, that the listing, registration or
qualification (or any updating of any such document) of any Stock
Option issuable pursuant thereto is necessary on any securities
exchange or under any federal or state securities or blue sky law, or
that the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with the
award of any Stock Option, the issuance of shares of Common Stock
pursuant thereto, or the removal of any restrictions imposed on such
shares, such Stock Option shall not be awarded or such shares of Common
Stock shall not be issued or such restrictions shall not be removed, as
the case may be, in whole or in part, unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the
Company.
6.5 Adjustment. In the event of any merger, consolidation or
reorganization of the Company with any other corporation or
corporations, there shall be substituted for each of the shares of
Common Stock then subject to the Plan, including shares subject to
restrictions, options, or achievement of performance share objectives,
the number and kind of shares of stock or other securities to which the
holders of the shares of Common Stock will be entitled pursuant to the
transaction. In the event of any recapitalization, stock dividend,
stock split, combination of shares or other change in the Common Stock,
the number of shares of Common Stock then subject to the Plan,
including shares subject to restrictions, options or achievements of
performance shares, shall be adjusted in proportion to the change in
outstanding shares of Common Stock. In the event of any such
adjustments, the purchase price of any option, the performance
objectives of any Stock Option, and the shares of Common Stock issuable
pursuant to any Stock Option shall be adjusted as and to the extent
appropriate, at the discretion of the Committee, to provide
participants with the same relative rights before and after such
adjustment.
6.6 Stock Option Plans and Agreements. The terms of each
Stock Option shall be stated in an agreement approved by the Committee.
6.7 Withholding.
(a) The Company shall have the right to withhold from
any payments made under the Plan or to collect as a condition
of payment, any taxes required by law to be withheld. At any
time when a participant is required to pay to the Company an
amount required to be withheld under applicable income tax
laws in connection with an exercise
3
<PAGE> 4
of an option, the participant may satisfy this obligation in
whole or in part by electing (the "Election") to have the
Company withhold from the distribution shares of Common Stock
having a value up to the amount required to be withheld. The
value of the shares to be withheld shall be based on the Fair
Market Value of the Common Stock on the date that the amount
of tax to be withheld shall be determined ("Tax Date").
(b) Each Election must be made prior to the Tax Date.
The Committee may disapprove of any Election, may suspend or
terminate the right to make Elections, or may provide with
respect to any Stock Option that the right to make Elections
shall not apply to such Stock Option. An Election is
irrevocable.
6.8 No Continued Employment or Right to Corporate Assets. No
participant under the Plan shall have any right, because of his or her
participation, to continue in the employ of the Company for any period
of time or to any right to continue his or her present or any other
rate of compensation. Nothing contained in the Plan shall be construed
as giving an employee, the employee's beneficiaries or any other person
any equity or interests of any kind in the assets of the Company or
creating a trust of any kind or a fiduciary relationship of any kind
between the Company and any such person.
6.9 Amendment of the Plan. The Board may amend or discontinue
the Plan at any time. However, no such amendment or discontinuance
shall, subject to adjustment under Section 6.5, change or impair,
without the consent of the recipient, a Stock Option previously
granted.
6.10 Immediate Acceleration of Stock Option. Notwithstanding
any provision in this Plan or in any Stock Option to the contrary, all
outstanding options will become exercisable immediately any of the
following events occur unless otherwise determined by the Board of
Directors and a majority of the Continuing Directors (as defined
below):
(1) any person or group of persons becomes the
beneficial owner of 30% or more of any equity security of the
Company entitled to vote for the election of directors;
(2) a majority of the members of the Board of
Directors of the Company is replaced within the period of less
than two years by directors not nominated and approved by the
Board of Directors; or
(3) the shareholders of the Company approve an
agreement to merge or consolidate with or into another
corporation or an agreement to sell or otherwise dispose of
all or substantially all of the Company's assets (including a
plan of liquidation).
For purposes of this Section 6.10, beneficial ownership by a
person or group of persons shall be determined in accordance with
Regulation 13D (or any similar successor regulation) promulgated by the
Securities and Exchange Commission pursuant to the 1934 Act. Beneficial
ownership of more than 30% of an equity security may be established by
any reasonable method, but shall be presumed conclusively as to any
person who files a Schedule 13D report with the Securities and Exchange
Commission reporting such ownership. If the restrictions and
forfeitability periods are eliminated by reason of provision (1), the
limitations of this Plan shall not become applicable again should the
person cease to own 30% or more of any equity security of the Company.
4
<PAGE> 5
For purposes of this Section 6.10, "Continuing Directors" are
directors (a) who were in office prior to the time any of provisions
(1), (2) or (3) occurred or any person publicly announced an intention
to acquire 20% or more of any equity security of the Company, (b)
directors in office for a period of more than two years, and (c)
directors nominated and approved by the Continuing Directors.
6.11 Definition of Fair Market Value. For purposes of this
Plan, the "Fair Market Value" of a share of Common Stock at a specified
date shall, unless otherwise expressly provided in this Plan, be the
amount which the Committee determines in good faith to be 100% of the
fair market value of such a share as of the date in question; provided,
however, that notwithstanding the foregoing, if such shares are listed
on a U.S. securities exchange or are quoted on the NASDAQ National
Market System, then Fair Market Value shall be determined by reference
to the last sale price of a share of Common Stock on such U.S.
securities exchange or NASDAQ on the applicable date. If such U.S.
securities exchange or NASDAQ is closed for trading on such date, or if
the Common Stock does not trade on such date, then the last sale price
used shall be the one on the date the Common Stock last traded on such
U.S. securities exchange or NASDAQ.
5
<PAGE> 1
EXHIBIT 10.2
RAINFOREST CAFE, INC.
OPTION AGREEMENT
OPTION AGREEMENT made effective as of the [ ] day of _____, 1998, by
and between Rainforest Cafe, Inc., a Minnesota corporation (the "Company"), and
[ ] ("Employee").
BACKGROUND
A. Employee has been hired to serve as a full-time employee of the
Company.
B. Employee is not an executive officer of the Company as such term
is defined in Rule 16(a) of the Securities Exchange Act of 1934.
C. The Company desires to induce Employee to continue to serve the
Company as an employee.
D. The Company had adopted a 1998 Non-Executive Stock Option Plan
(the "Plan") pursuant to which non-qualified options to purchase
Common Stock of the Company may be issued to Non-Executive
Employees of the Company.
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. The Company hereby irrevocably grants from the Plan
to Employee the right and option, hereinafter called the Option, to purchase all
or any part of an aggregate of [ ] shares of the Common Stock, without par
value, of the Company (the "Shares") (such number being subject to adjustment as
provided in paragraph 8 hereof) subject to the terms and conditions herein set
forth.
2. Purchase Price. The purchase price of the Shares covered by the
Option shall be $[ ] per Share.
3. Exercise and Vesting of Option. The Option shall be exercisable only
to the extent that all, or any portion thereof, has vested in the Employee. The
Option shall vest on a pro-rata basis in installments over a [ ] year period,
beginning on the date of the first anniversary of the date of this Agreement and
continuing on each subsequent anniversary date (hereinafter referred to
singularly as a "Vesting Date" and collectively as "Vesting Dates") until the
Option is fully vested, as set forth in the following schedule:
1
<PAGE> 2
Total Shares
Subject to Vested Option Vesting Date
------------------------ ------------
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
[ ] [ ]
In the event that the Employee ceases to be employed by the Company,
for any reason or no reason (other than as provided in the Plan), with or
without cause, prior to any Vesting Date, that part of the Option scheduled to
vest on such Vesting Date, and all parts of the Option scheduled to vest in the
future, shall not vest and all of Employee's rights to and under such non-vested
parts of the Option shall terminate.
4. Term of Option. To the extent vested, and except as otherwise
provided in this Agreement, the Option shall be exercisable for ten (10) years
from the date of this Agreement; provided, however, that in the event that
Employee ceases to be employed by the Company, for any reason or no reason, with
or without cause, Employee or his/her legal representative shall have six (6)
months from the date of such termination of his/her position as an employee to
exercise any part of the Option vested pursuant to Sections 3 or 4 of this
Agreement. Upon the expiration of such six (6) month period, or, if earlier,
upon the expiration date of the Option as set forth above, the Option shall
terminate and become null and void.
5. Method of Exercising Option. Subject to the terms and conditions of
this Agreement, the Option may be exercised by written notice to the Company.
Such notice shall state the election to exercise the Option and the number of
Shares in respect of which it is being exercised, and shall be signed by the
person or persons so exercising the Option. Such notice shall either: (a) be
accompanied by payment of the full purchase price of such Shares, in which event
the Company shall deliver a certificate or certificates representing such Shares
as soon as practicable after the notice shall be received; or (b) fix a date not
less than five (5) nor more than ten (10) business days from the date such
notice shall be received by the Company for the payment of the full purchase
price of such Shares against delivery of a certificate or certificates
representing such Shares. Payment of such purchase price may take the form of
cash, shares of stock of the Company, the total market value of which equals the
total purchase price, or any combination of cash and shares of the Company, the
total market value of which equals the total purchase price. Any such notice
shall be deemed given when received by the Company at its principal place of
business. All Shares that shall be purchased upon the exercise of the Option as
provided herein shall be fully paid and non-assessable.
2
<PAGE> 3
6. Rights of Option Holder. Employee, as holder of the Option, shall
not have any of the rights of a shareholder with respect to the Shares covered
by the Option except to the extent that one or more certificates for such Shares
shall be delivered to him upon the due exercise of all or any part of the
Option.
7. Non-Transferability. The Option shall not be transferable otherwise
than by will or the laws of descent and distribution, and the Option may be
exercised, during the lifetime of Employee, only by Employee. More particularly
(but without limiting the generality of the foregoing), the Option may not be
assigned, transferred (except as provided above), pledged, or hypothecated in
any way, shall not be assignable by operation of law, and shall not be subject
to execution, attachment, or similar process. Any attempted assignment,
transfer, pledge, hypothecation, or other disposition of the Option contrary to
the provisions hereof, and the levy of any execution, attachment, or similar
process upon the Option shall be null and void and without effect.
8. General. The Option is granted pursuant to the Company's 1998
Non-Executive Stock Option Plan and is governed by the terms thereof. The
Company shall at all times during the term of the Option reserve and keep
available such number of Shares as will be sufficient to satisfy the
requirements of this Option Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
RAINFOREST CAFE, INC.
---------------------------------------
By
-------------------------------------
Its
----------------------------------
3
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