<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant [X]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
RAINFOREST CAFE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
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<PAGE> 2
RAINFOREST LOGO
720 SOUTH FIFTH STREET
HOPKINS, MINNESOTA 55343
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 18, 1998
------------------------
TO THE SHAREHOLDERS OF RAINFOREST CAFE, INC.:
Please take notice that the Annual Meeting of Shareholders of Rainforest
Cafe, Inc. (the "Company") will be held, pursuant to due call by the Board of
Directors of the Company, at the Marriott Hotel, Minneapolis City Center, 30
South Seventh Street, Minneapolis, Minnesota on May 18, 1998 at 8:45 a.m., or at
any adjournment or adjournments thereof, for the purpose of considering and
taking appropriate action with respect to the following:
1. To elect six directors.
2. To transact any other business as may properly come before the meeting
or any adjournments thereof.
Pursuant to due action of the Board of Directors, shareholders of record on
March 27, 1998, will be entitled to vote at the meeting or any adjournments
thereof.
A PROXY FOR THE MEETING IS ENCLOSED HEREWITH. YOU ARE REQUESTED TO FILL IN
AND SIGN THE PROXY, WHICH IS SOLICITED BY THE BOARD OF DIRECTORS, AND MAIL IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
RAINFOREST CAFE, INC.
Kenneth W. Brimmer, Secretary
April 4, 1998
<PAGE> 3
RAINFOREST CAFE, INC.
720 SOUTH FIFTH STREET
HOPKINS, MINNESOTA 55343
------------------------
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
MAY 18, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Rainforest Cafe, Inc. (the "Company") to be
used at the Annual Meeting of Shareholders of the Company to be held May 18,
1998. The approximate date on which this Proxy Statement and the accompanying
proxy were first sent or given to shareholders was April 4, 1998. Each
shareholder who signs and returns a proxy in the form enclosed with this Proxy
Statement may revoke the same at any time prior to its use by giving notice of
such revocation to the Company in writing, by attending the Annual Meeting and
voting in person or by executing and delivering a new proxy to the Secretary of
the Company. Unless so revoked, the shares represented by each proxy will be
voted at the meeting and at any adjournments thereof. Presence at the meeting of
a shareholder who has signed a proxy does not alone revoke that proxy. Only
shareholders of record at the close of business on March 27, 1998 (the "Record
Date") will be entitled to vote at the meeting or any adjournments thereof.
VOTING SECURITIES AND
PRINCIPAL HOLDERS THEREOF
The Company has outstanding one class of voting securities, Common Stock,
no par value, of which 25,449,687 shares were outstanding as of the close of
business on the Record Date. Each share of Common Stock is entitled to one vote
on all matters put to a vote of shareholders.
The following table sets forth as of March 27, 1998 certain information
regarding the beneficial ownership of shares of Common Stock by each director of
the Company, each of the executive officers listed in the Summary Compensation
Table, each person known to the Company to be the beneficial owner of more than
5% of the outstanding shares and all directors and executive officers as a
group. Except as otherwise indicated, each shareholder has sole voting and
investment power with respect to the shares beneficially owned. Unless otherwise
indicated, the address of the directors and executive officers is 720 South
Fifth Street, Hopkins, Minnesota 55343.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE
- ------------------------ ------ ----------
<S> <C> <C>
Lyle Berman(1)........................................... 1,697,250 6.7
Steven W. Schussler(2)................................... 933,956 3.7
Ercu Ucan(3)............................................. 389,002 1.5
Kenneth W. Brimmer(4).................................... 28,400 *
Mark S. Robinow(5)....................................... 56,321 *
Gregory C. Carey(6)...................................... 38,550 *
Mark Bartholomay(7)...................................... 24,196 *
Stephen Cohen............................................ 0 *
David L. Rogers(8)....................................... 101,250 *
Joel N. Waller(9)........................................ 98,438 *
Weiss, Peck & Greer, L.L.C.(10).......................... 1,337,123 5.3
Ark Asset Management Co., Inc.(11)....................... 2,475,000 9.7
BankBoston Corporation(12)............................... 1,642,013 6.5
All directors and executive officers as a group (ten
persons)............................................... 3,367,363 12.9
</TABLE>
- -------------------------
* Less than 1%.
<PAGE> 4
(1) The address of such reporting person is 130 Cheshire Lane, Minnetonka,
Minnesota 55305.
(2) Includes 39,000 shares not outstanding but deemed beneficially owned by
virtue of Mr. Schussler's right to acquire such shares within 60 days.
(3) Includes 386,250 shares not outstanding but deemed beneficially owned by
virtue of Mr. Ucan's right to acquire such shares within 60 days.
(4) Includes 12,500 shares not outstanding but deemed beneficially owned by
virtue of Mr. Brimmer's right to acquire such shares within 60 days.
(5) Includes 54,000 shares not outstanding but deemed beneficially owned by
virtue of Mr. Robinow's right to acquire such shares within 60 days.
(6) Mr. Carey has disclaimed beneficial ownership of 1,050 shares which are
owned by his minor children. Includes 37,500 shares not outstanding but
deemed beneficially owned by virtue of Mr. Carey's right to acquire such
shares within 60 days.
(7) Includes 24,000 shares not outstanding but deemed beneficially owned by
virtue of Mr. Bartholomay's right to acquire such shares within 60 days.
(8) Includes 56,250 shares not outstanding but deemed beneficially owned by
virtue of Mr. Roger's right to acquire such shares within 60 days.
(9) Includes 56,250 shares not outstanding but deemed beneficially owned by
virtue of Mr. Waller's right to acquire such shares within 60 days.
(10) Based on the most recent Schedule 13G filed on February 9, 1998 with the
Securities and Exchange Commission pursuant to which such shareholder
claims shared voting power. The address of Weiss, Peck & Greer, L.L.C. is
One New York Plaza, New York, New York 10004.
(11) Based on the most recent Schedule 13G filed on February 12, 1998 with the
Securities and Exchange Commission. The address of Ark Asset Management
Co., is One New York Plaza, New York, New York, 10004.
(12) Based on the most recent Schedule 13G filed on February 17, 1998 with the
Securities and Exchange Commission. The address of BankBoston Corporation
is 100 Federal Street, Boston, Massachusetts 02110.
2
<PAGE> 5
ELECTION OF DIRECTORS
Six directors are to be elected at the meeting, each director to hold
office until the next Annual Meeting of Shareholders, or until his successor is
elected and qualified. All of the persons listed below are now serving as
directors of the Company. All of the persons listed below have consented to
serve as a director, if elected. The Board of Directors proposes for election
the nominees listed below:
LYLE BERMAN, age 56, has been Chairman of the Board and Chief Executive
Officer of the Company since its inception in February 1994. Mr. Berman has been
Chairman of the Board of Grand Casinos, Inc. and its predecessor since October
1990 and Chief Executive Officer through February 1998. Mr. Berman was Chief
Executive Officer of Stratosphere Corporation from July 1994 through July 1997
and Chairman of Stratosphere Corporation from July 1996 through July 1997.
Stratosphere Corporation filed for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in January 1997. Mr. Berman is also a director of G-III Apparel
Group Ltd., Innovative Gaming Corporation of America, New Horizon Kids Quest,
Inc. and Wilsons -- The Leather Experts, Inc. ("Wilsons").
STEVEN W. SCHUSSLER, age 42, has been Executive Vice President - Marketing
and Development of the Company since its inception and a director of the Company
since January 1995. From 1983 to February 1992, Mr. Schussler was an officer of
Juke Box Saturday Night in Minneapolis, Inc. ("JBSN"), a 1950's and 1960's theme
restaurant and nightclub. JBSN filed for bankruptcy under Chapter 7 of the U.S.
Bankruptcy Code in January 1992.
ERCU UCAN, age 42, has been Executive Vice President - Retail of the
Company since its inception and a director of the Company since January 1995.
From September 1992 until December 1993, Mr. Ucan served as President of the
Orjin Textile Group in Istanbul, Turkey.
KENNETH W. BRIMMER, age 42, has been a director of the Company since August
1996, Treasurer of the Company since May 1995 and President and Secretary of the
Company since April 1997. Mr. Brimmer has been employed by Grand Casinos, Inc.
and its predecessor since October 1990 as Special Assistant to the Chairman and
Chief Executive Officer, Lyle Berman. Mr. Brimmer is also a director of New
Horizons Kids Quest, Inc. and Oxboro Medical International, Inc.
DAVID L. ROGERS, age 55, has been a director of the Company since January
1995. From November 1988 through March 1992, Mr. Rogers was Executive Vice
President and Chief Operating Officer of Wilsons. Since April 1992, Mr. Rogers
has been President and Chief Operating Officer of Wilsons. Mr. Rogers is also a
director of Grand Casinos, Inc.
JOEL N. WALLER, age 58, has been a director of the Company since January
1995. Mr. Waller was President of Wilsons from 1983 through March 1992 when he
was promoted to Chairman and Chief Executive Officer. Mr. Waller is also a
director of Grand Casinos, Inc. and of Damark International, Inc.
PROXIES AND VOTING
The affirmative vote of the holders of the greater of (a) a majority of the
outstanding shares of Common Stock of the Company present and entitled to vote
on the election of directors or (b) a majority of the voting power of the
minimum number of shares entitled to vote that would constitute a quorum for
transaction of business at the meeting, is required for election to the Board of
each of the six nominees named above. A shareholder who abstains with respect to
the election of directors is considered to be present and entitled to vote on
the election of directors at the meeting, and is in effect casting a negative
vote, but a shareholder (including a broker) who does not give authority to a
Proxy to vote, or withholds authority to vote,on the election of directors,
shall not be considered present and entitled to vote on the election of
directors.
All shares represented by proxies will be voted FOR the election of the
foregoing nominees unless a contrary choice is specified. If any nominee should
withdraw or otherwise become unavailable for reasons not presently known, the
proxies which would have otherwise been voted for such nominee will be voted for
such substitute nominee as may be selected by the Board of Directors.
3
<PAGE> 6
EXECUTIVE COMPENSATION
The following table sets forth the cash and noncash compensation from
January 1, 1995 through December 28, 1997 awarded to or earned by the Chief
Executive Officer and the four most highly compensated executive officers other
than the Chief Executive Officer during such period:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
---------------------------------- SECURITIES
FISCAL SALARY OTHER ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION YEAR $ COMPENSATION $ OPTIONS(1)
--------------------------- ------ ------ -------------- ----------
<S> <C> <C> <C> <C>
Lyle Berman....................................... 1997 $ 0 $ 0 450,000
Chairman of the Board and Chief Executive
Officer 1996 0 0 0
1995 0 0 0
Steven W. Schussler............................... 1997 149,231 26,877 112,500
Executive Vice President -- Development 1996 129,231 28,000 0
1995 110,769 22,514 112,500
Ercu Ucan......................................... 1997 149,231 27,068 112,500
Executive Vice President -- Retail 1996 129,231 28,000 0
1995 115,000 23,000 112,500
Gregory C. Carey(2)............................... 1997 142,500 54,737(3) 75,000
Chief Operating Officer 1996 109,116 19,106 30,000
1995 94,458 0 90,000
Mark S. Robinow(4)................................ 1997 125,846 22,572 60,000
Chief Financial Officer 1996 113,692 23,600 0
1995 6,346 4,231 135,000
</TABLE>
- -------------------------
(1) Adjusted to reflect the Company's three-for-two stock split effective
January 15, 1998.
(2) Mr. Carey became Chief Operating Officer in March 1998. Previously and since
August 1996, Mr. Carey was Senior Vice President-Operations.
(3) Other Annual Compensation consists of $32,237 relocation reimbursements and
a $22,500 bonus.
(4) Mr. Robinow began his employment with the Company in November 1995.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information concerning the grant of
stock options to the Company's executive officers named in the Summary
Compensation Table during the last fiscal year. All stock option grants are
adjusted to reflect the Company's three-for-two stock split effective January
15, 1998.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS STOCK PRICE APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OR OPTION TERM(2)
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME GRANTED(1) FISCAL YEAR ($/SH)(1) DATE 5% 10%
---- ------------------ ------------- ----------- ---------- -- ---
<S> <C> <C> <C> <C> <C> <C>
Lyle Berman.......... 450,000 24.4 $21.42 9/29/2007 $6,061,915 $15,362,084
Steven W. Schussler.. 112,500 6.1 21.42 9/29/2007 1,515,479 3,840,521
Ecru Ucan............ 112,500 6.1 21.42 9/29/2007 1,515,479 3,840,521
Gregory C. Carey..... 75,000 4.1 21.42 9/29/2007 1,010,319 2,560,347
Mark S. Robinow...... 60,000 3.3 21.42 9/29/2007 808,255 2,048,278
</TABLE>
- -------------------------
(1) All options were granted at a price equal to the fair market value of the
Company's Common Stock on the date of grant. Options become exercisable in
three equal annual increments beginning on the first anniversary of the date
of grant.
(2) Amounts shown in these columns have been derived by multiplying the exercise
price by the annual appreciation rate shown (compounded for the term of the
options), multiplying the result by the number of shares covered by the
options, and subtracting the aggregate exercise price of the options. The
dollar amount set forth under this heading are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission, and
therefore are not intended to forecast possible future appreciation, if any,
of the Company's stock price.
4
<PAGE> 7
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table summarizes information with respect to options held by
the executive officers named in the Summary Compensation Table and the value of
the options held by such persons at the end of fiscal 1997. All numbers have
been adjusted to reflect a three-for-two stock split effected on January 15,
1998.
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES VALUE OPTIONS AT FY-END (#) FY-END ($)(1)
ACQUIRED ON REALIZED --------------------------- ---------------------------
NAME EXERCISE # $ EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lyle Berman............... -- -- 0 450,000 0 561,150
Steven W. Schussler....... 37,500 743,250 1,500 150,000 30,596 905,175
Ercu Ucan................. 120,000 1,860,750 348,750 150,000 7,854,041 905,175
Gregory C. Carey.......... 28,500 564,870 37,500 99,000 59,078 819,363
Mark S. Robinow........... 27,000 272,430 54,000 114,000 734,238 809,058
</TABLE>
- -------------------------
(1) Based upon the closing sales price as granted on the Nasdaq National Market
System, of the Company's Common Stock on December 26, 1997.
DIRECTOR COMPENSATION
Directors receive no fees for serving as directors. Pursuant to the
Company's 1997 Director Stock Option Plan, the Company granted options in
November 1997 to each of Messrs. Rogers and Waller to acquire 18,750 shares of
Common Stock at an exercise price of $24.08 per share. In September 1997, the
Company granted to Mr. Brimmer options, pursuant to the 1997 Director Stock
Option Plan, to acquire 37,500 shares of Common Stock at an exercise price of
$21.42 per share. In February 1995, the Company granted to each of Messrs.
Rogers and Waller options to acquire 56,250 shares of Common Stock at $2.27 per
share and in August 1996 granted to Mr. Brimmer to acquire 37,500 shares of
Common Stock at $16.43 per Share. All director options vest on a pro-rata basis
on the first, second and third anniversaries of the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Stock Option and Compensation Committee (the "Compensation
Committee") consists of David L. Rogers and Joel N. Waller. Messrs. Roger and
Waller are directors and executive officers of Wilsons. Lyle Berman, Chairman of
the Board and Chief Executive Officer of the Company is a director of Wilsons.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Decisions on compensation of the Company's executives generally have been
made by the Compensation Committee of the Board. Each member of the Compensation
Committee is a nonemployee director. All decisions by the Compensation Committee
relating to the compensation of the Company's executive officers are reviewed by
the full Board. Pursuant to rules designed to enhance disclosure of the
Company's policies toward executive compensation, set forth below is a report
prepared by the Compensation Committee addressing the compensation policies for
the Company for the year ended December 28, 1997 as they affected the Company's
executive officers.
The Compensation Committee's executive compensation policies are designed
to provide competitive levels of compensation that integrate pay with the
Company's annual objectives and long-term goals, reward above-average corporate
performance, recognize individual achievements, and assist the Company in
attracting and retaining qualified executives. Executive compensation is set at
levels that the Compensation Committee believes to be consistent with others in
the Company's industry.
5
<PAGE> 8
There are three elements in the Company's executive compensation program,
all determined by individual and corporate performance.
- Base salary compensation
- Annual incentive compensation
- Stock options
Total compensation opportunities are competitive with those offered by
employers of comparable size, growth and profitability in the Company's
industry.
Base salary compensation is determined by the potential impact the
individual has on the Company, the skills and experiences required by the job,
and the performance and potential of the incumbent in the job. To date, no
executive officer of the Company has received compensation that exceeds $1
million per year.
Annual incentive compensation for executives of the Company is based
primarily on corporate operating earnings and revenue growth and the Company's
positioning for future results, but also includes an overall assessment by the
Compensation Committee of executive management's performance, as well as market
conditions.
Awards of stock grants under the Company's 1995 Stock Option and
Compensation Plan (the "Plan") are designed to promote the identity of long-term
interests between the Company's executives and its shareholders and assist in
the retention of executives and other key employees. The Plan also permits the
Committee to grant stock options to key personnel. In October 1996, the
Compensation Committee adopted a policy whereby the Company's President is
authorized to make grants to non-executive employees, subject to established
criteria by the Compensation Committee and subject to the Compensation
Committee's ratification. Options become exercisable based upon criteria
established by the Company.
The Compensation Committee surveys employee stock option programs of
companies with similar capitalization to the Company prior to recommending the
grant of options to executives. While the value realizable from exercisable
options is dependent upon the extent to which the Company's performance is
reflected in the market price of the Company's Common Stock at any particular
point in time, the decision as to whether such value will be realized in any
particular year is determined by each individual executive and not by the
Compensation Committee. Accordingly, when the Compensation Committee recommends
that an option be granted to an executive, that recommendation does not take
into account any gains realized that year by that executive as a result of his
or her individual decision to exercise an option granted in a previous year.
In September 1997, the Compensation Committee granted options under the
Plan to purchase 450,000 shares of Common Stock to Lyle Berman, Chairman of the
Board and Chief Executive Officer, 112,500 shares each to Steven W. Schussler,
Senior Vice President -- Marketing and Development and Ercu Ucan, Senior Vice
President -- Retail, 75,000 to Gregory C. Carey, Chief Operating Officer, 60,000
to Mark S. Robinow, Senior Vice President and Chief Financial Officer, 75,000 to
Stephen Cohen, Vice President -- Real Estate and General Counsel and 52,500 to
Mark Bartholomay, Senior Vice President -- International, respectively. In
addition to providing incentives to these executive officers of the Company, the
Compensation Committee believed it is in the best long-term interests of the
Company's shareholders to provide incentives to Mr. Berman who has received no
compensation or other stock options from the Company since its inception.
DAVID L. ROGERS
JOEL N. WALLER
6
<PAGE> 9
STOCK PERFORMANCE GRAPH
The Securities and Exchange Commission requires that the Company include in
this Proxy Statement a line-graph presentation comparing cumulative, five-year
return to the Company's shareholders (based on appreciation of the market price
of the Company's Common Stock) on an indexed basis with (i) a broad equity
market index and (ii) an appropriate published industry or line-of-business
index, or peer group index constructed by the Company. The following
presentation compares the Company's Common Stock price in the period from April
7, 1995 (the date of the Company's initial public offering) to December 28,
1997, to the S&P 500 Stock Index and to a "peer group" index created by the
Company over the same period. The "peer group" index consists of the common
stock of: Applebee's International, The Cheesecake Factory, Brinker
International, Cracker Barrel, Dave & Buster's, Landry's Seafood Restaurant,
Lone Star Steakhouse & Saloon, Rock Bottom Restaurants, Show Biz Pizza Time and
Uno Restaurant Corp. These corporations are involved in various aspects of the
restaurant industry. The presentation assumes that the value of an investment in
each of the Company's Common Stock, the S&P 500 Index, and the peer group index
was $100 on April 7, 1995, and that any dividends paid were reinvested in the
same security.
<TABLE>
<CAPTION>
Measurement Period Rainforest
(Fiscal Year Covered) Cafe, Inc. Peer Group S&P 500
<S> <C> <C> <C>
4/7/95 100.00 100.00 100.00
12/29/95 547.73 199.54 123.84
12/31/96 640.90 116.67 152.26
12/31/97 899.99 130.37 203.05
</TABLE>
7
<PAGE> 10
CERTAIN TRANSACTIONS
During 1997, the Company paid an aggregate of approximately $76,254 to
Grand Casinos, Inc. for consulting fees paid for the services of Kenneth W.
Brimmer, President, Treasurer and Secretary of the Company. Lyle Berman is
Chairman of Grand Casinos, Inc. There is no written agreement between the
Company and Grand Casinos relating to such consulting services. Effective
January 1, 1998, Mr. Brimmer became a full-time employee of the Company.
During 1996, the Company executed a lease to develop a Rainforest Cafe at
Stratosphere in Las Vegas, Nevada. At such time, Mr. Berman, Chairman and Chief
Executive Officer of the Company, was Chief Executive Officer and a director of
Stratosphere Corporation and Chairman and Chief Executive Officer of Grand
Casinos, Inc., which owns a controlling interest in Stratosphere Corporation. In
March 1997, the Company announced that it did not expect that it would open a
Unit at Stratosphere because the contracted space is unlikely to be delivered
within the terms of the lease, and that such lease would be terminated.
In January 1997, the Company entered into a Joint Venture and License
Agreement with Elephant & Castle Group, Inc. ("Elephant & Castle"), a
Vancouver-based operator of restaurants and pubs. Pursuant to such agreement,
Elephant & Castle and the Company will each own 50% of a joint venture that will
open five Units over a seven year period. Pursuant to this agreement, the
Company received a non-refundable development fee and a five year option to
purchase up to 600,000 shares of Elephant & Castle Common Stock at $8.00 per
share. At the time the Company entered into such agreement, Martin J. O'Dowd was
President and Chief Operating Officer of the Company, and a director of Elephant
& Castle. Mr. O'Dowd is presently an employee of Elephant & Castle.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected Arthur Andersen LLP as independent public accountants for fiscal 1998.
Arthur Andersen LLP has been the independent public accountants for the Company
since November 10, 1995. A representative of Arthur Andersen LLP is expected to
attend the meeting and to have an opportunity to make a statement and respond to
appropriate questions from shareholders.
PROPOSALS OF SHAREHOLDERS
All proposals of shareholders intended to be presented at the 1999 Annual
Meeting of Shareholders of the Company must be received by the Company at its
executive offices on or before December 7, 1998.
OTHER MATTERS
BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors held five meetings during the fiscal year ended
December 28, 1997. The Company has an Audit Committee and a Compensation
Committee, but does not have a nominating committee of the Board of Directors.
The Company's Audit Committee, which consists of Messrs. David L. Rogers
and Joel N. Waller, held one meeting and took action pursuant to written actions
during the fiscal year ended December 28, 1997. The Audit Committee recommends
to the full Board the engagement of the independent accountants, reviews the
audit plan and results of the audit engagement, reviews the independence of the
auditors, and reviews the adequacy of the Company's system of internal
accounting controls.
The Company's Compensation Committee, which consists of Messrs. David L.
Rogers and Joel N. Waller, held three meetings and took action pursuant to
written actions during the fiscal year ended December 28, 1997. The Compensation
Committee reviews the Company's remuneration policies and practices, makes
recommendations to the Board in connection with all compensation matters
affecting the
8
<PAGE> 11
Company and administers the Company's 1995 Stock Option and Compensation Plan
and the Company's Employee Stock Purchase Plan.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC") and the Nasdaq National Market. Officers, directors and greater than
ten percent shareholders are required by SEC regulation to furnish the Company
with copies of all Section 16(a) forms they file. Based solely on review of the
copies of such forms furnished to the Company, or written representations that
no Forms 5 were required, the Company believes that during the fiscal year ended
December 28, 1997, all Section 16(a) filing requirements applicable to its
officers, directors and greater than ten-percent beneficial owners were complied
with; except for the following late filings: Mr. Bartholomay filed a Form 3,
which was due on February 28, 1997, on March 4, 1997 and Mr. Robinow reported a
May transaction, which was due on June 10, 1997 on June 17, 1997.
SOLICITATION
The Company will bear the cost of preparing, assembling and mailing the
proxy, Proxy Statement, Annual Report and other material which may be sent to
the shareholders in connection with this solicitation. Brokerage houses and
other custodians, nominees and fiduciaries may be requested to forward
soliciting material to the beneficial owners of stock, in which case they will
be reimbursed by the Company for their expenses in doing so. Proxies are being
solicited primarily by mail, but, in addition, officers and regular employees of
the Company may solicit proxies personally, by telephone, by telegram or by
special letter.
The Board of Directors does not intend to present to the meeting any other
matter not referred to above and does not presently know of any matters that may
be presented to the meeting by others. However, if other matters come before the
meeting, it is the intent of the persons named in the enclosed proxy to vote the
proxy in accordance with their best judgment.
By Order of the Board of Directors
RAINFOREST CAFE, INC.
Kenneth W. Brimmer,
Secretary
9
<PAGE> 12
RAINFOREST CAFE, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS -- MAY 18, 1998
The undersigned, a shareholder of Rainforest Cafe, Inc., hereby
appoints Kenneth W. Brimmer and Mark S. Robinow, and each of them, as
proxies, with full power of substitution, to vote on behalf of the
undersigned the number of shares which the undersigned is then
entitled to vote, at the Annual Meeting of Shareholders of Rainforest
Cafe, Inc. to be held at the Marriott Hotel, Minneapolis City Center,
30 South Seventh Street, Minneapolis, Minnesota, on May 18, 1998, at
8:45 a.m., and at any and all adjournments thereof, with all the
powers which the undersigned would possess if personally present,
upon:
1. Election of Directors:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY
(except as marked to vote for all nominees to
the contrary listed below
Lyle Berman, Kenneth W. Brimmer, David L. Rogers, Steven W.
Schussler, Ercu Ucan, Joel N. Waller.
INSTRUCTION:To withhold authority to vote for any individual nominee
write that nominee's name on the space provided below.
----------------------------------------------------------------------
2. Upon such other business as may properly come before the
meeting or any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL NOMINEES
The undersigned hereby revokes all previous proxies relating to
the shares covered hereby and acknowledges receipt of the Notice and
Proxy Statement relating to the Annual Meeting of Shareholders.
(Continued, and TO BE COMPLETED AND SIGNED on the reverse side)
(Continued from other side)
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. When
properly executed, this proxy will be voted on the proposals set forth
herein as directed by the shareholder, but if no direction is made in
the space provided, this proxy will be voted FOR the election of all
nominees for director.
Dated , 1998
-------------------------------
Signature
-------------------------------
Signature if held jointly
(Shareholder must sign exactly
as the name appears at left.
When signed as a corporate
officer, executor,
administrator, trustee,
guardian, etc., please give
full title as such. Both joint
tenants must sign.)
