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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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 Section 240.14a-11(c) or Section 240.14a-12
MACHEEZMO MOUSE RESTAURANTS, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(l), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed per Exchange Act Rules 14a-6(i)(4) and 0-11.
[ ] 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.
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MACHEEZMO MOUSE RESTAURANTS, INC.
Notice of Annual Meeting of Shareholders
to be Held September 25, 1996
To the Shareholders of Macheezmo Mouse Restaurants, Inc.:
The Annual Meeting of Shareholders of Macheezmo Mouse Restaurants, Inc., an
Oregon corporation, (the "Company") will be held at the Red Lion Lloyd Center
Hotel, 1000 NE Multnomah, Portland, Oregon on Wednesday, September 25, 1996 at
10:00 a.m. for the following purposes:
1. To elect six directors, each to serve until the next Annual Meeting of
Shareholders and until a successor has been elected and qualified (Proposal
No. 1);
2. To approve the adoption of the Macheezmo Mouse Restaurants, Inc.'s
1996 Stock Incentive Plan (Proposal No. 2); and
3. To transact such other business as may properly be brought before the
meeting or any adjournment or postponement thereof.
Only shareholders of record at the close of business on August 12, 1996 are
entitled to notice of and to vote at the meeting or any adjournments thereof.
Please sign and date the enclosed proxy and return it promptly in the enclosed
reply envelope. If you are able to attend the meeting, you may, if you wish,
revoke the proxy and vote personally on all matters brought before the meeting.
A list of shareholders will be available for inspection by the shareholders
commencing August 30, 1996 at the corporate headquarters of the Company, 1020 SW
Taylor Street, Suite 685, Portland, Oregon 97205.
By Order of the Board of Directors,
/s/ William S. Warren
William S. Warren,
Chairman of the Board
and Secretary
August 30, 1996
Portland, Oregon
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN
PERSON, PLEASE EXECUTE AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING
ENVELOPE SO THAT YOUR STOCK WILL BE VOTED. THE ENVELOPE REQUIRES NO POSTAGE IF
MAILED IN THE UNITED STATES.
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MACHEEZMO MOUSE RESTAURANTS, INC.
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 25, 1996
-------------------
The mailing address of the principal executive offices of the Company is 1020 SW
Taylor Street, Suite 685, Portland, Oregon 97205. The approximate date this
proxy statement and the accompanying proxy form are first being mailed to
shareholders is August 30, 1996.
SOLICITATION AND REVOCABILITY OF PROXY
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors of Macheezmo Mouse Restaurants, Inc., an Oregon
corporation, (the "Company") to be voted at the Annual Meeting of Shareholders
to be held at the time and place and for the purposes set forth in the
accompanying Notice of Annual Meeting. All proxies in the enclosed form that
are properly executed and received by the Company prior to or at the Annual
Meeting and not revoked will be voted at the Annual Meeting or any adjournments
thereof in accordance with the instructions thereon. Any proxy given pursuant
to this solicitation may be revoked by the person giving it at any time before
it is voted. Proxies may be revoked by (i) filing with the Secretary of the
Company, at or before the taking of the vote at the Annual Meeting, a written
notice of revocation bearing a later date than the date of the proxy, (ii) duly
executing a subsequent proxy relating to the same shares and delivering it to
the Secretary of the Company before the Annual Meeting or (iii) attending the
Annual Meeting and voting in person (although attendance at the Annual Meeting
will not in and of itself constitute a revocation of a proxy). Any written
notice revoking a proxy should be sent to Macheezmo Mouse Restaurants, Inc.,
1020 SW Taylor Street, Suite 685, Portland, Oregon 97205, Attention: William S.
Warren, Secretary, or hand delivered to the Secretary at or before the taking of
the vote at the Annual Meeting.
The cost of preparing, printing and mailing this Proxy Statement and of the
solicitation of proxies by the Company will be borne by the Company.
Solicitation will be made by mail and, in addition, may be made by directors,
officers and employees of the Company personally, or by telephone or telegram.
The Company will request brokers, custodians, nominees and other like parties to
forward copies of proxy materials to beneficial owners of stock and will
reimburse such parties for their reasonable and customary charges or expenses in
this connection.
THE COMPANY WILL PROVIDE TO ANY PERSON WHOSE PROXY IS SOLICITED BY THIS PROXY
STATEMENT, WITHOUT CHARGE, UPON WRITTEN REQUEST TO ITS CORPORATE SECRETARY AT
1020 SW TAYLOR STREET, SUITE 685, PORTLAND, OREGON 97205, ADDITIONAL COPIES OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED JULY 2,
1996.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The directors of the Company are elected at the Annual Meeting to serve until
their successors are elected and qualified. Each nominee is now serving as a
director of the Company. If a quorum of shareholders is present at the annual
meeting, the six nominees for election as directors who receive the greatest
number of votes cast at the meeting will be elected directors. Abstentions and
broker non-votes will have no effect on the results of the vote. Unless
otherwise instructed, proxy holders will vote the proxies they receive for the
nominees named below. If any of the nominees for director at the annual meeting
becomes unavailable for election for any reason, the proxy holders will have
discretionary authority to vote pursuant to the proxy for a substitute or
substitutes. The following table briefly describes the Company's nominees for
directors.
NAME AGE HAS BEEN A DIRECTOR SINCE
- ---- --- -------------------------
William S. Warren 44 1986
Joseph W. Angel 52 1992
David M. Bennett 51 1996
Diane G. Hall 52 1986
Joseph P. Micatrotto 45 1996
Jack B. Schwartz 59 1986
WILLIAM S. WARREN founded the Company in 1981 and served as Chief Executive
Officer and Secretary of the Company since its incorporation in July 1986 until
October 1995, and as the Chairman of the Board from November 1987 until October
1995. In October 1995, Mr. Warren resigned as Chief Executive Officer and
Chairman of the Board and was elected Founding Chairman, Director of Strategic
Planning and Secretary of the Company. In May 1996, Mr. Warren, in addition to
his existing positions, was re-elected to the position of Chairman of the Board.
He also served as President of the Company from April 1991 to November 1992.
Mr. Warren is a director of ESCO Corporation, a steel technology company.
JOSEPH W. ANGEL has served as a director of the Company since October 1992.
Since 1971 Mr. Angel has been Chairman of the Board and Chief Executive Officer
of Restaurant Management Northwest, Inc., a Burger King franchise that owns and
operates 32 Burger King restaurants in Portland, Oregon and Vancouver,
Washington. Since July 1992 Mr. Angel has served as Chief Executive Officer of
Quality Restaurants Northwest, Inc., a Chili's Grill & Bar franchise that owns
and operates Chili's Grill & Bar restaurants in Oregon and Washington. Since
1987 Mr. Angel has served as Chief Director of SIGNS NOW of Washington and
Oregon, a commercial computerized sign company.
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DAVID M. BENNETT has served as a director of the Company since May
1996 and as President and Chief Executive Officer since August 1996. Prior to
joining the Company, Mr. Bennett was President of Overhill Farms, Inc. a custom
manufacturer of frozen food products serving the airline, healthcare, food
service and retail markets. From 1994 to 1996, Mr. Bennett served as President
and Chief Operating Officer of Zuzu, Inc. in Dallas, Texas. From 1988 to 1993,
Mr. Bennett served as a Vice President of three separate divisions of
Host/Marriott Corporation. From 1987 to 1988, Mr. Bennett was the President and
Chief Operating Officer of Morgan Foods, Inc., a large restaurant franchise
company. From 1983 to 1987, Mr. Bennett was a Regional Vice President with Taco
Bell Corporation, a division of PepsiCo. From 1980 to 1983, Mr. Bennett served
as a group Vice President of Sambo's Inc.
DIANE G. HALL joined the Company in 1983 and served as Vice President in
charge of Research and Menu Development since the Company's incorporation in
July 1986, as Assistant Secretary of the Company since April 1987, and as a
director of the Company since September 1986. In 1996, Ms. Hall's title changed
to Vice President, Research and Menu Development, Assistant Secretary and
Director. Ms. Hall currently serves on the Oregon Health Sciences University
Dietetic Internship Advisory Committee and on the Board of Directors of
Sanitarians Registration Board for the State of Oregon and in 1992 served on the
American Heart Association's "Dine to Your Heart's Content" task force.
JOSEPH P. MICATROTTO has served as a director of the Company since May
1996. Mr. Micatrotto is currently President and Partner of Buca Ventures, Inc.,
owners and operators of Buca and Beepo Little Italy Restaurants. From 1993
until February 1996, Mr. Micatrotto served as President and Chief Executive
Officer of Panda Management Company, the operator of the largest Chinese
quick-service restaurant chain in the world. From 1980 to 1993, Mr. Micatrotto
held various executive management positions, including President and Chief
Executive Officer, at Chi-Chi's, Inc.
JACK B. SCHWARTZ has served as a director of the Company since September
1986. Mr. Schwartz has been a partner in the law firm of Newcomb, Sabin,
Schwartz & Landsverk since 1968. Mr. Schwartz is a director of Cascade
Corporation, a manufacturer of materials handling equipment.
Directors do not receive any fees for serving on the Company's Board of
Directors or any committee thereof but are reimbursed for reasonable expenses
incurred in attending meetings. Officers are appointed by the Board of
Directors and serve at its discretion.
The Board of Directors met five times during the fiscal year ended July 2, 1996.
During the period for which each director was a member of the Board or any
committee thereof, each director attended at least 75 percent of the aggregate
of the meetings of the Board of Directors and the committees of which the
director was a member. The Company maintains an Executive Committee, an Audit
Committee and a Compensation Committee.
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The Executive Committee was comprised of Mr. Angel, Mr. Bird and Mr. Duca for a
majority of the year. Mr. Duca resigned in May 1996 and Mr. Bird resigned in
June 1996. Messrs. Bennett, Micatrotto and Warren joined the Executive
Committee in May 1996. Mr. Micatrotto currently serves as the Chairperson of
the Executive Committee. During fiscal 1996, the Executive Committee was
responsible for the day to day executive management of the Company. The
Executive Committee met 16 times during fiscal 1996.
The Audit Committee was comprised of Mr. Angel, Mr. Bird and Mr. Bliss for a
majority of the fiscal year. Mr. Bliss resigned in May 1996 and Mr. Bird
resigned in June 1996. In June 1996, Mr. Bennett and Mr. Warren joined the
Audit Committee. The Audit Committee oversees actions taken by the Company's
independent auditors. The Audit Committee met three times in fiscal 1996.
The Compensation Committee was comprised of Mr. Duca, Mr. Schwartz and Mr.
Warren for a majority of the year. Mr. Duca resigned in May 1996 and Mr.
Micatrotto joined the Compensation Committee in June 1996. The Compensation
Committee reviews the compensation of the Company's executive officers and makes
recommendations to the Board of Directors regarding compensation. The
Compensation Committee also administers the Amended and Restated 1986 Stock
Incentive Plan (the "Plan") and recommends grants under the Plan to the Board of
Directors. The Compensation Committee met one time in fiscal 1996.
The Company does not have a nominating committee of the Board of Directors.
Shareholders who wish to submit names for consideration for Board membership
should do so in writing addressed to the Board of Directors, c/o William S.
Warren, Secretary, Macheezmo Mouse Restaurants, Inc., 1020 SW Taylor Street,
Suite 685, Portland, Oregon 97205.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE ELECTION OF THE
NOMINEES NAMED IN THIS PROXY STATEMENT.
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PROPOSAL NO. 2
ADOPTION OF THE MACHEEZMO MOUSE RESTAURANTS, INC.
1996 STOCK OPTION PLAN
On August 20, 1996 the Board of Directors adopted a resolution approving the
1996 Stock Incentive Plan (the "Plan"). The Plan provides for the issuance to
selected employees, officers and directors of the Company or any subsidiary of
the Company of various forms of equity-based incentive compensation, including
stock options, stock or cash bonuses and stock appreciation rights. At August
20, 1996, total employees eligible to participate in the Plan included 4
officers, 3 outside directors and 240 other employees. The total number of
shares of Common Stock that may be issued under the Plan, whether or not upon
exercise of options granted under the Plan, are 250,000 shares. The Board of
Directors believes the availability of stock options and other forms of equity
based incentive compensation as contemplated in the Plan is an important factor
in the Company's ability to attract and retain experienced key employees,
directors and other key contributors and to provide incentives for them to exert
their best efforts for the Company.
Certain provisions of the Plan are described below. The complete text of the
Plan is attached to this proxy statement as Appendix A.
DESCRIPTION OF THE PLAN
ELIGIBILITY. All employees, officers and directors of the Company and its
subsidiaries are eligible to participate in the Plan. Also eligible are
non-employee agents, consultants, advisors, persons involved in the sale or
distribution of the Company's products and independent contractors of the
Company or any subsidiary.
ADMINISTRATION. The Plan is administered by the Board of Directors, which
may promulgate rules and regulations for the operation of the Plan and generally
supervises the administration of the Plan. The Board of Directors may delegate
to a committee of the Board of Directors or specified officers of the Company,
or both, authority to administer the Plan, except that only the Board of
Directors may amend, modify or terminate the Plan. References to the Board of
Directors in this description of the Plan include any Committee or officer(s) to
whom the Board of Directors has delegated such authority. The Board of Directors
has delegated to the Compensation Committee of the Board (the "Committee")
general authority for making option grants. The Committee determines
individuals to whom option grants are made under the Plan and the price and
terms of any such grants.
TERM OF PLAN. The Plan will continue until all shares available for
issuance under the Plan have been issued and all restrictions on such shares
have lapsed. The Board of Directors may suspend or terminate the Plan at any
time.
STOCK OPTIONS. The Board of Directors determines the persons to whom
options are granted, the option price, the number of shares to be covered by
each option, the period of each option, the times at which options may be
exercised and whether the option is an incentive stock option ("ISO") or a
nonqualified stock option ("NSO"). If the option is an ISO, the option price
cannot be less than the fair market
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value of the Common Stock on the date of grant. If an optionee with respect to
an ISO at the time of grant owns stock representing more than 10 percent of the
combined voting power of the Company, the option price may not be less than 110
percent of the fair market value of the Common Stock on the date of grant. In
addition, the Plan limits the amount of ISOs that may become exercisable in any
year under the Plan (and any other incentive stock plan of the Company) to
$100,000 per optionee (based on the fair market value of the stock on the date
of grant). No monetary consideration is paid to the Company upon the granting
of options.
Options granted under the Plan generally continue in effect for the period fixed
by the Board of Directors, except that ISOs may not be not exercisable after the
expiration of 10 years from the date of grant, and no ISOs may be granted under
the Plan more than 10 years after the date the Plan was effective. Options are
exercisable in accordance with the terms of an option agreement entered into at
the time of grant and, unless otherwise determined by the Board of Directors
with respect to NSOs, are nontransferable except on death of a holder. NSOs may
also be transferred pursuant to a domestic relations order as defined under the
Internal Revenue Code of 1986, as amended, or Title I of the Employee Retirement
Income Security Act. Options may be exercised only while an optionee is
employed by the Company or a subsidiary, except in the case of termination of
employment by reason of death or disability (in which case an option may be
exercised until it expires) or within 30 days following termination for any
reason other than death or disability. The Plan provides that the Board of
Directors may extend the 30-day exercise period for any period up to the
expiration date of the option and may increase the number of shares for which
the option may be exercised up to the total number underlying the option. The
purchase price for each share purchased pursuant to exercise of options must be
paid in cash, including, with the consent of the Board of Directors, cash that
may be the proceeds of a loan from the Company, or, with the consent of the
Board of Directors, in shares of Common Stock valued at fair market value, in
restricted stock, in performance units or other contingent awards denominated in
either stock or cash, in deferred compensation credits, or in other forms of
consideration. Upon the exercise of an option, the number of shares subject to
the option and the number of shares available under the Plan for future option
grants are reduced by the number of shares with respect to which the option is
exercised.
STOCK OPTION GRANTS TO NON-EMPLOYEE DIRECTORS. The Plan provides for
automatic option grants to non-employee directors. A non-employee director is a
person who is not an employee of the Company or any subsidiary. Newly elected
non-employee directors who have not previously served on the Company's Board of
Directors receive an automatic initial option to purchase 25,000 shares of the
Company's Common Stock. These options have exercise prices equal to the fair
market value of the Company's Common Stock as of the date of grant, have terms
of five years, and are exercisable immediately in an amount up to 20 percent of
the shares covered by the option and thereafter in amounts not to exceed 1.67
percent of the shares covered by the option per calendar month.
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STOCK BONUS AWARDS. The Board of Directors may award Common Stock as a
stock bonus under the Plan. The Board of Directors may determine the persons to
receive awards, the number of shares to be awarded and the time of the award.
Stock received as a stock bonus is subject to the terms, conditions and
restrictions determined by the Board of Directors at the time the stock is
awarded.
RESTRICTED STOCK. The Plan provides that the Company may issue restricted
stock in such amounts, for such consideration, subject to such restrictions and
on such terms as the Board of Directors may determine.
STOCK APPRECIATION RIGHTS. Stock appreciation rights ("SARs") may be
granted under the Plan. SARs may, but need not, be granted in connection with
an option grant under the Plan. A SAR gives the holder the right to payment
from the Company of an amount equal in value to the excess of the fair market
value on the date of exercise of a share of Common Stock over its fair market
value on the date of grant, or if granted in connection with an option, the
option price per share under the option to which the SAR relates.
A SAR is exercisable only at the time or times established by the Board of
Directors. If a SAR is granted in connection with an option, it is exercisable
only to the extent and on the same conditions that the related option is
exercisable. Payment by the Company upon exercise of a SAR may be made in
Common Stock valued at its fair market value, in cash, or partly in stock and
partly in cash, as determined by the Board of Directors. The Board of Directors
may withdraw any SAR granted under the Plan at any time and may impose any
condition upon the exercise of a SAR or adopt rules and regulations from time to
time affecting the rights of holders of SARs.
The existence of SARs, as well as certain bonus rights described below, would
require charges to income over the life of the right based upon the amount of
appreciation, if any, in the market value of the Common Stock of the Company
over the exercise price of shares subject to exercisable SARs or bonus rights.
CASH BONUS RIGHTS. The Board of Directors may grant cash bonus rights
under the Plan in connection with (i) options granted or previously granted,
(ii) SARs granted or previously granted, (iii) stock bonuses awarded or
previously awarded and (iv) shares sold or previously sold under the Plan.
Bonus rights may be used to provide cash to employees for the payment of taxes
in connection with awards under the Plan.
PERFORMANCE UNITS. The Board of Directors may grant performance units
consisting of monetary units that may be earned in whole or in part if the
Company achieves goals established by the Board of Directors over a designated
period of time, but in any event not more than 10 years. Payment of an award
earned may be in cash or stock or both and may be made when earned, or vested
and deferred, as the Board of Directors determines.
FOREIGN QUALIFIED GRANTS. Awards under the Plan may be granted to eligible
persons residing in foreign jurisdictions. The Board of Directors may adopt
supplements to the Plan necessary to comply with the applicable laws of foreign
jurisdictions and to afford participants favorable treatment under those laws,
but no award may be granted
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under any supplement with terms that are more beneficial to the participants
than the terms permitted by the Plan.
CHANGES IN CAPITAL STRUCTURE. The Plan provides that if the outstanding
Common Stock of the Company is changed into or exchanged for a different number
or kind of shares or other securities because of any reorganization, merger,
consolidation, plan of exchange, recapitalization, reclassification, stock
split-up, combination of shares or dividend payable in shares, the Board of
Directors will make appropriate adjustments to the number and kind of shares
available for awards under the Plan. In addition, the Board of Directors will
make appropriate adjustment in the number and kind of shares as to which
outstanding options and stock appreciation rights (or unexercised portions of
them) are exercisable, so that the optionee's proportionate interest before and
after the occurrence of the event is maintained. However, the Board of
Directors has no obligation to make any adjustment that would or might result in
the issuance of fractional shares, and any fractional shares resulting from any
adjustment may be disregarded or provided for in any manner determined by the
Board of Directors. In the event of dissolution of the Company or a merger,
consolidation or plan of exchange affecting the Company, in lieu of providing
for options and stock appreciation rights described above, the Board of
Directors may, in its sole discretion, provide a 30-day period before such event
during which optionees will have the right to exercise options and stock
appreciation rights in whole or in part without any limitation on
exercisability, after which period all unexercised options and stock
appreciation rights will immediately terminate.
TAX CONSEQUENCES
Certain options authorized to be granted under the Plan are intended to qualify
as ISOs for federal income tax purposes. Under federal income tax law currently
in effect, the optionee will recognize no income upon grant or upon a proper
exercise of the ISO. If an employee exercises an ISO and does not dispose of
any of the option shares within two years following the date of grant and within
one year following the date of exercise, any gain realized on subsequent
disposition of the shares will be treated as income from the sale or exchange of
a capital asset. If an employee disposes of shares acquired upon exercise of an
ISO before the expiration of either the one-year holding period or the two-year
waiting period, any amount realized will be taxable as ordinary compensation
income in the year of such disqualifying disposition to the extent that the
lesser of the fair market value of the shares on the exercise date or the fair
market value of the shares on the date of disposition exceeds the exercise
price. The Company will not be allowed any deduction for federal income tax
purposes at either the time of the grant or exercise of an ISO. Upon any
disqualifying disposition by an employee, the Company will generally be entitled
to a deduction to the extent the employee realized ordinary income.
Certain options authorized to be granted under the Plan will be treated as NSOs
for federal income tax purposes. Under federal income tax law currently in
effect, no income is realized by the grantee of an NSO until the option is
exercised. At the time of exercise of an NSO, the optionee will realize
ordinary compensation income, and the Company will generally be entitled to a
deduction, in the amount by which the market value of the shares subject to the
option at the time of exercise exceeds the exercise price. The Company is
required to withhold on the income amount. Upon the sale of
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shares acquired upon exercise of an NSO, the excess of the amount realized from
the sale over the market value of the shares on the date of exercise will be
taxable.
An employee who receives stock in connection with the performance of services
will generally realize taxable income at the time of receipt unless the shares
are substantially nonvested for purposes of section 83 of the Internal Revenue
Code of 1986, as amended, and no section 83(b) election is made. If the shares
are not vested at the time of receipt, the employee will realize taxable income
in each year in which a portion of the shares substantially vest, unless the
employee elects under section 83(b) within 30 days after the original transfer.
The Company will generally be entitled to a tax deduction in the amount
includable as income by the employee at the same time or times as the employee
recognizes income with respect to the shares. The Company is required to
withhold on the income amount. A participant who receives a cash bonus right
under the Plan will generally recognize income equal to the amount of the cash
bonus paid at the time of receipt, and the Company will generally be entitled to
a deduction equal to the income recognized by the participant.
Section 162(m) of the Internal Revenue Code of 1986, as adopted in 1993, limits
to $1,000,000 per person the amount that the Company may deduct for compensation
paid to any of its most highly compensated officers in any year. Under IRS
regulations, compensation received through the exercise of an option or a SAR is
not subject to the $1,000,000 limit if the option or SAR and the Plan meet
certain requirements. One requirement is shareholder approval at least once
every five years of per-employee limits on the number of shares as to which
options and SARs may be granted.
RECOMMENDATION BY THE BOARD OF DIRECTORS
The Board of Directors recommends that the Plan be approved. The affirmative
vote of the holders of a majority of the shares of Common Stock present and
entitled to vote on the matter is required to approve this Proposal 2.
Abstentions have the same effect as "no" votes in determining whether the
amendment is approved. Broker non-votes are counted for purposes of determining
whether a quorum exists at the Annual Meeting but are not counted and have no
effect on the results of the vote on Proposal 2. The proxies will be voted for
or against the proposal or as an abstention, in accordance with the instructions
specified on the proxy form. If no instructions are given, proxies will be
voted for approval of the Plan.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The record date for determination of shareholders entitled to receive notice of
and to vote at the Annual Meeting is August 12, 1996. At the close of business
on August 12, 1996, 3,935,479 shares of Common Stock of the Company were
outstanding and entitled to vote at the Annual Meeting.
The following table sets forth certain information regarding the beneficial
ownership of the Common Stock of the Company as of July 31, 1996 by (i) persons
known to the Company to be the beneficial owner of more than 5% of the Company's
Common Stock, (ii) each of the Company's directors and nominees for director,
(iii) each executive officer of the Company named in the Summary Compensation
Table and (iv) all directors and executive officers of the Company as a group.
Unless otherwise noted in the footnotes to the table, the persons named in the
table have sole voting and investment power with respect to all outstanding
shares of Common Stock shown as beneficially owned by them.
COMMON STOCK (A)
-----------------------------------
PERCENT OF
NUMBER OF SHARES
SHAREHOLDER SHARES OUTSTANDING
- ---------------------------------------- -----------------------------------
William S. Warren (A) 1,155,658 29.4%
1020 SW Taylor Street, Suite 685
Portland, Oregon 97205
Maurice J. Duca (B) 428,062 10.9%
1485 E. Valley Rd., Suite J.
Santa Barbara, CA 93150
Timothy K. Bliss 227,558 5.8%
1485 E. Valley Rd., Suite J.
Santa Barbara, CA 93150
Rex Bird (C) 200,502 5.1%
6823 SE 32nd Avenue
Portland, Oregon 97202
Ms. Diane Hall 110,000 2.8%
1020 SW Taylor Street, Suite 685
Portland, Oregon 97205
Mr. Jack Schwartz (D) 26,500 *
Newcomb Sabin Schwartz & Landsverk
421 SW Sixth, Suite 1212
Portland, Oregon 97204
Mr. Joseph W. Angel 15,000 *
1410 SW Jefferson Street
Portland, Oregon 97201
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COMMON STOCK (A)
-----------------------------------
PERCENT OF
NUMBER OF SHARES
SHAREHOLDER SHARES OUTSTANDING
- ---------------------------------------- -----------------------------------
Mr. David M. Bennett (E) 6,666 *
1020 SW Taylor Street, Suite 685
Portland, Oregon 97205
Mr. Joseph P. Micatrotto (E) 6,666 *
1440 Glencoe Drive
Arcadia, California 91006
All executive officers and directors
as a group (8 persons) (F) 1,524,222 38.1%
- -----------------------
* Less than one percent.
(A) Includes 66,668 shares held in trust for Mr. Warren's children and 225,000
shares held by Mr. Warren's former wife.
(B) Includes 119,887 shares held by Investment Group of Santa Barbara Money
Purchase Pension Plan for the benefit of Mr. Duca, 76,437 shares held by
Mr. Duca's wife and 22,938 shares held in trust for Mr. Duca's children.
(C) Includes 60,000 shares held by Mr. Bird's wife, 350 shares held by Mr.
Bird's children and 50,151 shares subject to an option which is currently
exercisable. Pursuant to its terms, such option expires on September 6,
1996.
(D) Includes 1,500 shares held in trust for Mr. Schwartz's children.
(E) Consists of 6,666 shares subject to an option exercisable within 60 days of
July 31, 1996.
(F) Includes a total of 66,713 shares subject to options exercisable within 60
days of July 31, 1996.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following table identifies the current executive officers of the Company,
the positions which they hold, and the year in which they began serving in their
respective capacities.
POSITION HELD
NAME AGE CURRENT POSITION(S) WITH COMPANY SINCE
- --------------------------------------------------------------------------------
David M. Bennett 51 President and Chief Executive 1996
Officer
Diane G. Hall 52 Vice President, Research and Menu 1987
Development, Assistant Secretary
and Director
Alice E. Price 42 Vice President of Finance and 1994
Controller
William S. Warren 44 Chairman of the Board and 1996
Secretary
For information on the business background of Messrs. Bennett and Warren and Ms.
Hall, see "Nominees for Director" above.
ALICE E. PRICE joined the Company in April 1991 as has served as Vice
President of Finance of the company since July 1994 and as Controller of the
Company since June 1992. Prior to joining the Company, Ms. Price was employed
by the accounting firm of Laventhol & Horwath. Ms. Price is a certified public
accountant.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides certain summary information concerning compensation
awarded to, earned by or paid to the Company's Chief Executive Officer and each
of the four other most highly compensated executive officers of the Company who
earned more than $100,000 determined as of the end of the last fiscal year and
any ex-officers for whom disclosure would have been provided except for the fact
that the individual was not serving as an executive officer at the end of the
fiscal year (hereafter referred to as the "named executive officers") for the
fiscal years ended June 28, 1994, June 27, 1995 and July 2, 1996.
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------
All Other
Compensation
Name and Principal Position (A) Year Salary($) Bonus($) ($)
- ----------------------------------- ------ ---------- --------- -----------
William S. Warren 1996 168,500 -- --
Chairman of the Board, Chief 1995 165,000 35,000 --
Executive Officer and Secretary (B) 1994 120,000 -- --
Rex Bird (C) 1996 101,000 -- 58,000
President and Chief 1995 100,000 -- --
Operating Officer 1994 84,500 -- --
(A) No other executive officer earned more than $100,000 during fiscal 1996.
(B) No cash compensation was paid to Mr. Warren for fiscal 1994. The estimated
value of Mr. Warren's services was recorded as a compensation expense to
the Company and a credit to paid-in capital.
(C) Salary includes amounts earned for fiscal 1996 through June 1996, the
month of Mr. Bird's resignation. All other compensation includes a
severance payment totaling $58,000.
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OPTION GRANTS
There were no options granted to the named executive officers in fiscal 1996.
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning the exercise of options
during fiscal 1996 and unexercised options held as of the end of the fiscal
year, with respect to the named executive officers.
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
Number of
Securities
Underlying
Unexercised Value of Unexercised
Shares Options In-The-Money Options
Acquired Value At FY-End (#) At FY-End
On Exercise Realized Exercisable/ Exercisable/
Name (#) ($) Unexercisable Unexercisable (A)
- ----------------- ----------- --------- -------------- ----------------------
William S. Warren 0 -- -- -- -- --
Rex Bird 0 -- (B) 50,151 -- $112,839 --
(A) Options are "in-the-money" at the fiscal year-end if the fair market value
of the underlying securities on such date exceeds the exercise price of the
option. The amounts set forth represent the difference between the fair
market value of the securities underlying the options on July 2, 1996 based
on the last sale price of $2.75 per share of Common Stock on that date (as
reported on the Nasdaq National Market) and the exercise price of the
options, multiplied by the applicable number of options.
(B) Pursuant to its terms, such option expires on September 6, 1996.
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DIRECTOR COMPENSATION
Directors do not receive any cash fees for serving on the Company's Board of
Directors or any committee thereof but are reimbursed for reasonable expenses
incurred in attending meetings.
During fiscal 1996, Mr. Bennett and Mr. Micatrotto were each granted options
exercisable for a total of 50,000 shares of the Company's Common Stock at a
price of $2.50 per share, the fair market value of the Company's Common Stock,
as quoted on the Nasdaq National Market System, on the date of grant.
Also during fiscal 1996, Mr. Bennett received consulting fees of $2,000 and Mr.
Micatrotto received consulting fees of $16,000 as compensation for taking on
additional responsibilities for managing the Company during a period of
management transition at the Company.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
EMPLOYMENT CONTRACTS
In August 1996, the Company entered into an employment agreement with its
President and Chief Executive Officer, Mr. David Bennett, wherein Mr. Bennett is
guaranteed a base salary at the rate of $200,000 per year for the next three
years. In addition to the base salary, Mr. Bennett will be paid annual
incentive compensation equal to 10 to 15 percent of the Company's income from
continuing operations as defined in the agreement. Upon signing the agreement,
Mr. Bennett received an option exercisable for 100,000 shares of the Company's
Common Stock at an exercise price equal to the fair market value of the
Company's Common Stock on the date of grant. Mr. Bennett was also paid a
signing bonus of $25,000.
If the Company should terminate Mr. Bennett's employment during the term of this
agreement without cause, or if Mr. Bennett shall voluntarily terminate his
employment as a result of the malfeasance of other officers or directors, the
Company shall pay him an amount equal to 50 percent of all base salary earned
through the date of termination, but in no event more than one year's base
salary. Mr. Bennett shall also be entitled to wages and benefits earned through
the date of termination, including incentive compensation earned through the
date of termination for the fiscal year in progress.
The agreement also contains certain noncompete, nonsolicitation and
confidentiality provisions.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors, executive officers and persons who own more than 10% of the
outstanding Common Stock of the Company to file with the Securities and Exchange
Commission reports of changes in ownership of the Common Stock of the Company
held by such persons. Officers, directors and greater than 10% shareholders are
also required to furnish the Company with copies of all forms they file under
this regulation. Based solely on a review of the copies of the reports received
by the Company and on written representations of certain reporting persons, the
Company understands that all persons required to report under Section 16(a) of
the Securities Exchange Act of 1934 filed timely reports during the fiscal year
ended July 2, 1996, except for Ms. Hall who failed to timely file a Form 4,
Statement of Changes in Beneficial Ownership.
INDEPENDENT PUBLIC ACCOUNTANTS
Representatives of Price Waterhouse LLP will be at the Annual Meeting and will
be available to respond to appropriate questions. They do not plan to make any
statement but will have the opportunity to make a statement if they wish.
SHAREHOLDER PROPOSALS
Any proposal by a shareholder of the Company to be considered for inclusion in
proxy materials for the Company's 1997 Annual Meeting of Shareholders must be
received in proper form by the Company at its principal office no later than
June 2, 1997.
DISCRETIONARY AUTHORITY
The Board of Directors of the Company is not aware of any matters other than the
aforementioned matters that will be presented for consideration at the Annual
Meeting. If other matters properly come before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy to vote thereon in
accordance with their best judgment.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, SHAREHOLDERS WHO
DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY IN THE REPLY ENVELOPE PROVIDED.
By Order of the Board of Directors,
/s/ William S. Warren
William S. Warren,
Chairman of the Board
and Secretary
August 30, 1996
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APPENDIX A
MACHEEZMO MOUSE RESTAURANTS, INC.
1996 STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of this Stock Incentive Plan (the "Plan") is to
enable Macheezmo Mouse Restaurants, Inc. (the "Company") to attract and retain
the services of (1) selected employees, officers and directors of the Company or
of any subsidiary of the Company and (2) selected nonemployee agents,
consultants, advisors, persons involved in the sale or distribution of the
Company's products and independent contractors of the Company or any subsidiary.
2. SHARES SUBJECT TO THE PLAN. Subject to adjustment as provided below
and in paragraph 13, the shares to be offered under the Plan shall consist of
Common Stock of the Company, and the total number of shares of Common Stock that
may be issued under the Plan shall not exceed 250,000 shares. The shares issued
under the Plan may be authorized and unissued shares or reacquired shares. If
an option, stock appreciation right or performance unit granted under the Plan
expires, terminates or is canceled, the unissued shares subject to such option,
stock appreciation right or performance unit shall again be available under the
Plan. If shares sold or awarded as a bonus under the Plan are forfeited to the
Company or repurchased by the Company, the number of shares forfeited or
repurchased shall again be available under the Plan.
3. EFFECTIVE DATE AND DURATION OF PLAN.
(a) EFFECTIVE DATE. The Plan shall become effective when adopted by
the Board of Directors (the "Effective Date"), but no option, stock appreciation
right or performance unit granted under the Plan shall become exercisable until
the Plan is approved by the shareholders of the Company. Subject to this
limitation, options, stock appreciation rights and performance units may be
granted and shares may be awarded as bonuses or sold under the Plan at any time
after the Effective Date and before termination of the Plan.
(b) DURATION. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions on
such shares have lapsed. The Board of Directors may suspend or terminate the
Plan at any time except with respect to options, stock appreciation rights,
performance units and shares subject to restrictions then outstanding under the
Plan. Termination shall not affect any right of the Company to repurchase
shares or the forfeitability of shares issued under the Plan.
4. ADMINISTRATION.
(a) BOARD OF DIRECTORS. The Plan shall be administered by the Board
of Directors of the Company, which shall determine and designate from time to
time the individuals to whom awards shall be made, the amount of the awards and
the other terms and conditions of the awards. Subject to the provisions of the
Plan, the Board of Directors may from time to time adopt and amend rules and
regulations relating to administration of the Plan, advance the lapse of any
waiting period, accelerate any exercise date, waive or modify any restriction
applicable to shares (except those restrictions imposed by law) and make all
other determinations in the judgment of the Board of Directors necessary or
desirable for the administration of the Plan. The interpretation and
construction of the
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provisions of the Plan and related agreements by the Board of Directors shall
be final and conclusive. The Board of Directors may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any related
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and it shall be the sole and final judge of such expediency.
(b) COMMITTEE. The Board of Directors may delegate to a committee of
the Board of Directors or specified officers of the Company, or both (the
"Committee") any or all authority for administration of the Plan. If authority
is delegated to a Committee, all references to the Board of Directors in the
Plan shall mean and relate to the Committee except (i) as otherwise provided by
the Board of Directors and (ii) that only the Board of Directors may terminate
or amend the Plan as provided in paragraphs 3 and 15.
5. TYPES OF AWARDS; ELIGIBILITY. The Board of Directors may, from time
to time, take the following action, separately or in combination, under the
Plan: (i) grant Incentive Stock Options, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), as provided in
paragraphs 6(a) and 6(b); (ii) grant options other than Incentive Stock Options
("Non-Statutory Stock Options") as provided in paragraphs 6(a) and 6(c);
(iii) award stock bonuses as provided in paragraph 7; (iv) sell shares subject
to restrictions as provided in paragraph 8; (v) grant stock appreciation rights
as provided in paragraph 9; (vi) grant cash bonus rights as provided in
paragraph 10; (vii) grant performance units as provided in paragraph 11 and
(viii) grant foreign qualified awards as provided in paragraph 12. Any such
awards may be made to employees, including employees who are officers or
directors, and to other individuals described in paragraph 1 who the Board of
Directors believes have made or will make an important contribution to the
Company or any subsidiary of the Company; provided, however, that only employees
of the Company shall be eligible to receive Incentive Stock Options under the
Plan. The Board of Directors shall select the individuals to whom awards shall
be made and shall specify the action taken with respect to each individual to
whom an award is made. At the discretion of the Board of Directors, an
individual may be given an election to surrender an award in exchange for the
grant of a new award. No employee may be granted options or stock appreciation
rights under the Plan for more than an aggregate of 100,000 shares of Common
Stock in connection with the hiring of the employee or 50,000 shares of Common
Stock in any calendar year otherwise.
6. OPTION GRANTS.
(a) GENERAL RULES RELATING TO OPTIONS.
(i) TERMS OF GRANT. The Board of Directors may grant options
under the Plan. With respect to each option grant, the Board of Directors shall
determine the number of shares subject to the option, the option price, the
period of the option, the time or times at which the option may be exercised and
whether the option is an Incentive Stock Option or a Non-Statutory Stock Option.
At the time of the grant of an option or at any time thereafter, the Board of
Directors may provide that an optionee who exercised an option with Common Stock
of the Company shall automatically receive a new option to purchase additional
shares equal to the number of shares surrendered and may specify the terms and
conditions of such new options.
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<PAGE>
(ii) EXERCISE OF OPTIONS. Except as provided in
paragraph 6(a)(iv) or as determined by the Board of Directors, no option granted
under the Plan may be exercised unless at the time of such exercise the optionee
is employed by or in the service of the Company or any subsidiary of the Company
and shall have been so employed or provided such service continuously since the
date such option was granted. Absence on leave or on account of illness or
disability under rules established by the Board of Directors shall not, however,
be deemed an interruption of employment or service for this purpose. Unless
otherwise determined by the Board of Directors, vesting of options shall not
continue during an absence on leave (including an extended illness) or on
account of disability. Except as provided in paragraphs 6(a)(iv) and 13,
options granted under the Plan may be exercised from time to time over the
period stated in each option in such amounts and at such times as shall be
prescribed by the Board of Directors, provided that options shall not be
exercised for fractional shares. Unless otherwise determined by the Board of
Directors, if the optionee does not exercise an option in any one year with
respect to the full number of shares to which the optionee is entitled in that
year, the optionee's rights shall be cumulative and the optionee may purchase
those shares in any subsequent year during the term of the option.
(iii) NONTRANSFERABILITY. Each Incentive Stock Option and, unless
otherwise determined by the Board of Directors, each other option granted under
the Plan by its terms shall be nonassignable and nontransferable by the
optionee, either voluntarily or by operation of law, except by will or by the
laws of descent and distribution of the state or country of the optionee's
domicile at the time of death or, for options other than Incentive Stock
Options, pursuant to a domestic relations order as defined under the Code or
Title I of the Employee Retirement Income Security Act.
(IV) TERMINATION OF EMPLOYMENT OR SERVICE.
(A) GENERAL RULE. Unless otherwise determined by the Board
of Directors, in the event the employment or service of the optionee with
the Company or a subsidiary terminates for any reason other than because of
physical disability or death as provided in subparagraphs 6(a)(iv)(B) and
(C), the option may be exercised at any time before the expiration date of
the option or the expiration of 30 days after the date of such termination,
whichever is the shorter period, but only if and to the extent the optionee
was entitled to exercise the option at the date of such termination.
(1) AMENDMENT OF EXERCISE PERIOD APPLICABLE TO
TERMINATION. The Board of Directors, at the time of grant or at any time
thereafter, may extend the 30-day exercise period any length of time not
longer than the original expiration date of the option, and may increase
the portion of an option that is exercisable, subject to such terms and
conditions as the Board of Directors may determine.
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(B) TERMINATION BECAUSE OF TOTAL DISABILITY. Unless
otherwise determined by the Board of Directors, in the event of the
termination of employment or service because of total disability, the
option may be exercised at any time before the expiration date of the
option, but only if and to the extent the optionee was entitled to exercise
the option at the date of such termination. The term "total disability"
means a mental or physical impairment which is expected to result in death
or which has lasted or is expected to last for a continuous period of 12
months or more and which causes the optionee to be unable, in the opinion
of the Company and two independent physicians, to perform his or her duties
as an employee, director, officer or consultant of the Company and to be
engaged in any substantial gainful activity. Total disability shall be
deemed to have occurred on the first day after the Company and the two
independent physicians have furnished their opinion of total disability to
the Company.
(C) TERMINATION BECAUSE OF DEATH. Unless otherwise
determined by the Board of Directors, in the event of the death of an
optionee while employed by or providing service to the Company or a
subsidiary, the option may be exercised at any time before the expiration
date of the option, but only if and to the extent the optionee was entitled
to exercise the option at the date of death and only by the person or
persons to whom such optionee's rights under the option shall pass by the
optionee's will or by the laws of descent and distribution of the state or
country of domicile at the time of death.
(D) FAILURE TO EXERCISE OPTION. To the extent that the
option of any deceased optionee or of any optionee whose employment or
service terminates is not exercised within the applicable period, all
further rights to purchase shares pursuant to such option shall cease and
terminate.
4
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(v) PURCHASE OF SHARES. Unless the Board of Directors
determines otherwise, shares may be acquired pursuant to an option granted under
the Plan only upon receipt by the Company of notice in writing from the optionee
of the optionee's intention to exercise, specifying the number of shares as to
which the optionee desires to exercise the option and the date on which the
optionee desires to complete the transaction, and if required in order to comply
with the Securities Act of 1933, as amended, containing a representation that it
is the optionee's present intention to acquire the shares for investment and not
with a view to distribution. Unless the Board of Directors determines
otherwise, on or before the date specified for completion of the purchase of
shares pursuant to an option, the optionee must have paid the Company the full
purchase price of such shares in cash (including, with the consent of the Board
of Directors, cash that may be the proceeds of a loan from the Company) or, with
the consent of the Board of Directors, in whole or in part, in Common Stock of
the Company valued at fair market value, restricted stock, performance units or
other contingent awards denominated in either stock or cash, promissory notes
and other forms of consideration. The fair market value of Common Stock
provided in payment of the purchase price shall be determined by the Board of
Directors. If the Common Stock of the Company is not publicly traded on the
date the option is exercised, the Board of Directors may consider any valuation
methods it deems appropriate and may, but is not required to, obtain one or more
independent appraisals of the Company. If the Common Stock of the Company is
publicly traded on the date the option is exercised, the fair market value of
Common Stock provided in payment of the purchase price shall be the closing
price of the Common Stock as reported in THE WALL STREET JOURNAL on the trading
day preceding the date the option is exercised, or such other reported value of
the Common Stock as shall be specified by the Board of Directors. No shares
shall be issued until full payment for the shares has been made. With the
consent of the Board of Directors, an optionee may request the Company to apply
automatically the shares to be received upon the exercise of a portion of a
stock option (even though stock certificates have not yet been issued) to
satisfy the purchase price for additional portions of the option. Each optionee
who has exercised an option shall immediately upon notification of the amount
due, if any, pay to the Company in cash amounts necessary to satisfy any
applicable federal, state and local tax withholding requirements. If additional
withholding is or becomes required beyond any amount deposited before delivery
of the certificates, the optionee shall pay such amount to the Company on
demand. If the optionee fails to pay the amount demanded, the Company may
withhold that amount from other amounts payable by the Company to the optionee,
including salary, subject to applicable law. With the consent of the Board of
Directors an optionee may satisfy this obligation, in whole or in part, by
having the Company withhold from the shares to be issued upon the exercise that
number of shares that would satisfy the withholding amount due or by delivering
to the Company Common Stock to satisfy the withholding amount. Upon the
exercise of an option, the number of shares reserved for issuance under the Plan
shall be reduced by the number of shares issued upon exercise of the option.
(b) INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be
subject to the following additional terms and conditions:
(i) LIMITATION ON AMOUNT OF GRANTS. No employee may be granted
Incentive Stock Options under the Plan if the aggregate fair market value,
on the date of grant, of the Common Stock with respect to which Incentive
Stock
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Options are exercisable for the first time by that employee during any
calendar year under the Plan and under any other incentive stock option
plan (within the meaning of Section 422 of the Code) of the Company or any
parent or subsidiary of the Company exceeds $100,000.
(ii) LIMITATIONS ON GRANTS TO 10 PERCENT SHAREHOLDERS. An
Incentive Stock Option may be granted under the Plan to an employee possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company or of any parent or subsidiary of the Company only if the option
price is at least 110 percent of the fair market value of the Common Stock
subject to the option on the date it is granted, as described in
paragraph 6(b)(iv), and the option by its terms is not exercisable after the
expiration of five years from the date it is granted.
(iii) DURATION OF OPTIONS. Subject to paragraphs 6(a)(ii) and
6(b)(ii), Incentive Stock Options granted under the Plan shall continue in
effect for the period fixed by the Board of Directors, except that no Incentive
Stock Option shall be exercisable after the expiration of 10 years from the date
it is granted.
(iv) OPTION PRICE. The option price per share shall be
determined by the Board of Directors at the time of grant. Except as provided
in paragraph 6(b)(ii), the option price shall not be less than 100 percent of
the fair market value of the Common Stock covered by the Incentive Stock Option
at the date the option is granted. The fair market value shall be determined by
the Board of Directors. If the Common Stock of the Company is not publicly
traded on the date the option is granted, the Board of Directors may consider
any valuation methods it deems appropriate and may, but is not required to,
obtain one or more independent appraisals of the Company. If the Common Stock
of the Company is publicly traded on the date the option is granted, the fair
market value shall be deemed to be the closing price of the Common Stock as
reported in THE WALL STREET JOURNAL on the day preceding the date the option is
granted, or if there has been no sale on that date, on the last preceding date
on which a sale occurred, or such other value of the Common Stock as shall be
specified by the Board of Directors.
(v) LIMITATION ON TIME OF GRANT. No Incentive Stock Option
shall be granted on or after the tenth anniversary of the Effective Date.
(c) NON-STATUTORY STOCK OPTIONS. Non-Statutory Stock Options shall
be subject to the following terms and conditions in addition to those set forth
in Section 6(a) above:
(i) OPTION PRICE. The option price for Non-Statutory Stock
Options shall be determined by the Board of Directors at the time of grant and
may be any amount determined by the Board of Directors.
(ii) DURATION OF OPTIONS. Non-Statutory Stock Options granted
under the Plan shall continue in effect for the period fixed by the Board of
Directors.
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(d) AUTOMATIC NON-EMPLOYEE DIRECTOR OPTION GRANTS.
(i) AUTOMATIC BOARD GRANTS. Each person who becomes a
Non-Employee Director after the Effective Date shall be automatically granted an
option to purchase 25,000 shares of Common Stock on the date he or she becomes a
Non-Employee Director, so long as such person has not previously served as a
director of the Company. A "Non-Employee Director" is a director who is not an
employee of the Company or any subsidiary.
(ii) EXERCISE PRICE. The exercise price of all options granted
pursuant to this paragraph 6(d) shall be equal to 100 percent of the fair market
value of the Common Stock determined pursuant to paragraph 6(b)(iv).
(iii) TERM OF OPTION. The term of each option granted pursuant to
this paragraph 6(d) shall be five years from the date of grant.
(iv) EXERCISABILITY. Until an option expires or is terminated
and except as provided in paragraphs 6(d)(v) and 13, an option granted under
this paragraph 6(d) shall be exercisable as follows: immediately in an amount
up to 20 percent of the shares covered by the option and thereafter in amounts
not to exceed 1.67 percent of the shares covered by the option per calendar
month.
(v) TERMINATION AS A DIRECTOR. If an optionee ceases to be a
director of the Company for any reason other than death or total disability, the
option may be exercised at any time before the expiration date of the option or
the expiration of 30 days after the last day the optionee served as a director,
whichever is the shorter period, but only if and to the extent the optionee was
entitled to exercise the option as of the last day the optionee served as a
director. If an optionee ceases to be a director of the Company because of
death or total disability, the option may be exercised at any time before the
expiration date of the option, but only if and to the extent the optionee was
entitled to exercise the option as of the last day the optionee served as a
director.
(vi) NONTRANSFERABILITY. Each option granted under this
paragraph 6(d) by its terms shall be nonassignable and nontransferable by the
optionee, either voluntarily or by operation of law, except by will or by the
laws of descent and distribution of the state or country of the optionee's
domicile at the time of death, and each option by its terms shall be exercisable
during the optionee's lifetime only by the optionee.
(vii) EXERCISE OF OPTIONS. Options may be exercised upon payment
of cash or shares of Common Stock of the Company in accordance with paragraph
6(a)(ii).
7. STOCK BONUSES. The Board of Directors may award shares under the Plan
as stock bonuses. Shares awarded as a bonus shall be subject to the terms,
conditions, and restrictions determined by the Board of Directors. The
restrictions may include restrictions concerning transferability and forfeiture
of the shares awarded, together with such other restrictions as may be
determined by the Board of Directors. The Board of Directors may require the
recipient to sign an agreement as a condition of the award, but may not require
the recipient to pay any monetary consideration other than amounts
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necessary to satisfy tax withholding requirements. The agreement may contain
any terms, conditions, restrictions, representations and warranties required by
the Board of Directors. The certificates representing the shares awarded shall
bear any legends required by the Board of Directors. The Company may require
any recipient of a stock bonus to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the recipient fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
recipient, including salary or fees for services, subject to applicable law.
With the consent of the Board of Directors, a recipient may deliver Common Stock
to the Company to satisfy this withholding obligation. Upon the issuance of a
stock bonus, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued.
8. RESTRICTED STOCK. The Board of Directors may issue shares under the
Plan for such consideration (including promissory notes and services) as
determined by the Board of Directors. Shares issued under the Plan shall be
subject to the terms, conditions and restrictions determined by the Board of
Directors. The restrictions may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the shares issued,
together with such other restrictions as may be determined by the Board of
Directors. All Common Stock issued pursuant to this paragraph 8 shall be
subject to a purchase agreement, which shall be executed by the Company and the
prospective recipient of the shares before the delivery of certificates
representing such shares to the recipient. The purchase agreement may contain
any terms, conditions, restrictions, representations and warranties required by
the Board of Directors. The certificates representing the shares shall bear any
legends required by the Board of Directors. The Company may require any
purchaser of restricted stock to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the purchaser fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
purchaser, including salary, subject to applicable law. With the consent of the
Board of Directors, a purchaser may deliver Common Stock to the Company to
satisfy this withholding obligation. Upon the issuance of restricted stock, the
number of shares reserved for issuance under the Plan shall be reduced by the
number of shares issued.
9. STOCK APPRECIATION RIGHTS.
(a) GRANT. Stock appreciation rights may be granted under the Plan
by the Board of Directors, subject to such rules, terms, and conditions as the
Board of Directors prescribes.
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(b) EXERCISE.
(i) Each stock appreciation right shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount equal in
value to the excess of the fair market value on the date of exercise of one
share of Common Stock of the Company over its fair market value on the date of
grant (or, in the case of a stock appreciation right granted in connection with
an option, the excess of the fair market value of one share of Common Stock of
the Company over the option price per share under the option to which the stock
appreciation right relates), multiplied by the number of shares covered by the
stock appreciation right or the option, or portion thereof, that is surrendered.
No stock appreciation right shall be exercisable at a time that the amount
determined under this subparagraph is negative. Payment by the Company upon
exercise of a stock appreciation right may be made in Common Stock valued at
fair market value, in cash, or partly in Common Stock and partly in cash, all as
determined by the Board of Directors.
(ii) A stock appreciation right shall be exercisable only at the
time or times established by the Board of Directors. If a stock appreciation
right is granted in connection with an option, the following rules shall apply:
(1) the stock appreciation right shall be exercisable only to the extent and on
the same conditions that the related option could be exercised; (2) upon
exercise of the stock appreciation right, the option or portion thereof to which
the stock appreciation right relates terminates; and (3) upon exercise of the
option, the related stock appreciation right or portion thereof terminates.
(iii) The Board of Directors may withdraw any stock appreciation
right granted under the Plan at any time and may impose any conditions upon the
exercise of a stock appreciation right or adopt rules and regulations from time
to time affecting the rights of holders of stock appreciation rights. Such
rules and regulations may govern the right to exercise stock appreciation rights
granted before adoption or amendment of such rules and regulations as well as
stock appreciation rights granted thereafter.
(iv) For purposes of this paragraph 9, the fair market value of
the Common Stock shall be determined as of the date the stock appreciation right
is exercised, under the methods set forth in paragraph 6(b)(iv).
(v) No fractional shares shall be issued upon exercise of a
stock appreciation right. In lieu thereof, cash may be paid in an amount equal
to the value of the fraction or, if the Board of Directors shall determine, the
number of shares may be rounded downward to the next whole share.
(vi) Each stock appreciation right granted in connection with an
Incentive Stock Option, and unless otherwise determined by the Board of
Directors, each other stock appreciation right granted under the Plan by its
terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by operation of law, except by will or by the laws of descent and
distribution of the state or country of the holder's domicile at the time of
death, and each stock appreciation right by its terms shall be exercisable
during the holder's lifetime only by the holder; provided, however, that a stock
appreciation right not granted in connection with an Incentive Stock Option
shall also be transferable pursuant to a domestic relations order as defined
under the Code or Title I of the Employee Retirement Income Security Act.
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(vii) Each participant who has exercised a stock appreciation
right shall, upon notification of the amount due, pay to the Company in cash
amounts necessary to satisfy any applicable federal, state and local tax
withholding requirements. If the participant fails to pay the amount demanded,
the Company may withhold that amount from other amounts payable by the Company
to the participant including salary, subject to applicable law. With the
consent of the Board of Directors a participant may satisfy this obligation, in
whole or in part, by having the Company withhold from any shares to be issued
upon the exercise that number of shares that would satisfy the withholding
amount due or by delivering Common Stock to the Company to satisfy the
withholding amount.
(viii) Upon the exercise of a stock appreciation right for shares,
the number of shares reserved for issuance under the Plan shall be reduced by
the number of shares issued. Cash payments of stock appreciation rights shall
not reduce the number of shares of Common Stock reserved for issuance under the
Plan.
10. CASH BONUS RIGHTS.
(a) GRANT. The Board of Directors may grant cash bonus rights under
the Plan in connection with (i) options granted or previously granted,
(ii) stock appreciation rights granted or previously granted, (iii) stock
bonuses awarded or previously awarded and (iv) shares sold or previously sold
under the Plan. Cash bonus rights shall be subject to rules, terms and
conditions as the Board of Directors may prescribe. Unless otherwise determined
by the Board of Directors, each cash bonus right granted under the Plan by its
terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by operation of law, except by will or by the laws of descent and
distribution of the state or country of the holder's domicile at the time of
death or pursuant to a domestic relations order as defined under the Code or
Title I of the Employee Retirement Income Security Act. The payment of a cash
bonus shall not reduce the number of shares of Common Stock reserved for
issuance under the Plan.
(b) CASH BONUS RIGHTS IN CONNECTION WITH OPTIONS. A cash bonus right
granted in connection with an option shall entitle an optionee to a cash bonus
when the related option is exercised (or terminates in connection with the
exercise of a stock appreciation right related to the option) in whole or in
part. If an optionee purchases shares upon exercise of an option and does not
exercise a related stock appreciation right, the amount of the bonus shall be
determined by multiplying the excess of the total fair market value of the
shares to be acquired upon the exercise over the total option price for the
shares by the applicable bonus percentage. If the optionee exercises a related
stock appreciation right in connection with the termination of an option, the
amount of the bonus shall be determined by multiplying the total fair market
value of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus percentage. The bonus percentage
applicable to a bonus right shall be determined from time to time by the Board
of Directors but shall in no event exceed 75 percent.
(c) CASH BONUS RIGHTS IN CONNECTION WITH STOCK BONUS. A cash bonus
right granted in connection with a stock bonus shall entitle the recipient to a
cash bonus payable when the stock bonus is awarded or restrictions, if any, to
which the stock is subject lapse. If bonus stock awarded is subject to
restrictions and is repurchased by the Company or forfeited by the holder, the
cash bonus right granted in connection with the
10
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stock bonus shall terminate and may not be exercised. The amount and timing of
payment of a cash bonus shall be determined by the Board of Directors.
(d) CASH BONUS RIGHTS IN CONNECTION WITH STOCK PURCHASES. A cash
bonus right granted in connection with the purchase of stock pursuant to
paragraph 8 shall entitle the recipient to a cash bonus when the shares are
purchased or restrictions, if any, to which the stock is subject lapse. Any
cash bonus right granted in connection with shares purchased pursuant to
paragraph 8 shall terminate and may not be exercised in the event the shares are
repurchased by the Company or forfeited by the holder pursuant to applicable
restrictions. The amount of any cash bonus to be awarded and timing of payment
of a cash bonus shall be determined by the Board of Directors.
(e) TAXES. The Company shall withhold from any cash bonus paid
pursuant to paragraph 10 the amount necessary to satisfy any applicable federal,
state and local withholding requirements.
11. PERFORMANCE UNITS. The Board of Directors may grant performance units
consisting of monetary units which may be earned in whole or in part if the
Company achieves certain goals established by the Board of Directors over a
designated period of time, but not in any event more than 10 years. The goals
established by the Board of Directors may include earnings per share, return on
shareholders' equity, return on invested capital, and such other goals as may be
established by the Board of Directors. In the event that the minimum
performance goal established by the Board of Directors is not achieved at the
conclusion of a period, no payment shall be made to the participants. In the
event the maximum corporate goal is achieved, 100 percent of the monetary value
of the performance units shall be paid to or vested in the participants.
Partial achievement of the maximum goal may result in a payment or vesting
corresponding to the degree of achievement as determined by the Board of
Directors. Payment of an award earned may be in cash or in Common Stock or in a
combination of both, and may be made when earned, or vested and deferred, as the
Board of Directors determines. Deferred awards shall earn interest on the terms
and at a rate determined by the Board of Directors. Unless otherwise determined
by the Board of Directors, each performance unit granted under the Plan by its
terms shall be nonassignable and nontransferable by the holder, either
voluntarily or by operation of law, except by will or by the laws of descent and
distribution of the state or country of the holder's domicile at the time of
death or pursuant to a domestic relations order as defined under the Code or
Title I of the Employee Retirement Income Security Act. Each participant who
has been awarded a performance unit shall, upon notification of the amount due,
pay to the Company in cash amounts necessary to satisfy any applicable federal,
state and local tax withholding requirements. If the participant fails to pay
the amount demanded, the Company may withhold that amount from other amounts
payable by the Company to the participant, including salary or fees for
services, subject to applicable law. With the consent of the Board of Directors
a participant may satisfy this obligation, in whole or in part, by having the
Company withhold from any shares to be issued that number of shares that would
satisfy the withholding amount due or by delivering Common Stock to the Company
to satisfy the withholding amount. The payment of a performance unit in cash
shall not reduce the number of shares of Common Stock reserved for issuance
under the Plan. The number of shares reserved for issuance under the Plan shall
be reduced by the number of shares issued upon payment of an award.
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12. FOREIGN QUALIFIED GRANTS. Awards under the Plan may be granted to
such officers and employees of the Company and its subsidiaries and such other
persons described in paragraph 1 residing in foreign jurisdictions as the Board
of Directors may determine from time to time. The Board of Directors may adopt
such supplements to the Plan as may be necessary to comply with the applicable
laws of such foreign jurisdictions and to afford participants favorable
treatment under such laws; provided, however, that no award shall be granted
under any such supplement with terms which are more beneficial to the
participants than the terms permitted by the Plan.
13. CHANGES IN CAPITAL STRUCTURE. If the outstanding Common Stock of the
Company is hereafter changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason of
any reorganization, merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split-up, combination of shares or dividend payable in
shares, appropriate adjustment shall be made by the Board of Directors in the
number and kind of shares available for awards under the Plan. In addition, the
Board of Directors shall make appropriate adjustment in the number and kind of
shares as to which outstanding options and stock appreciation rights, or
portions thereof then unexercised, shall be exercisable, so that the optionee's
proportionate interest before and after the occurrence of the event is
maintained. However, dilution of stock options is intended to occur in the same
proportion as dilution of outstanding Common Stock. Notwithstanding the
foregoing, the Board of Directors shall have no obligation to effect any
adjustment that would or might result in the issuance of fractional shares, and
any fractional shares resulting from any adjustment may be disregarded or
provided for in any manner determined by the Board of Directors. Any such
adjustments made by the Board of Directors shall be conclusive. In the event of
dissolution of the Company or a merger, consolidation or plan of exchange
affecting the Company, in lieu of providing for options and stock appreciation
rights as provided above in this paragraph 13, the Board of Directors may, in
its sole discretion, provide a 30-day period before such event during which
optionees shall have the right to exercise options and stock appreciation rights
in whole or in part without any limitation on exercisability and upon the
expiration of such 30-day period all unexercised options and stock appreciation
rights shall immediately terminate.
14. CORPORATE MERGERS, ACQUISITIONS, ETC. The Board of Directors may also
grant options, stock appreciation rights, performance units, stock bonuses and
cash bonuses and issue restricted stock under the Plan having terms, conditions
and provisions that vary from those specified in this Plan provided that any
such awards are granted in substitution for, or in connection with the
assumption of, existing options, stock appreciation rights, stock bonuses, cash
bonuses, restricted stock and performance units granted, awarded or issued by
another corporation and assumed or otherwise agreed to be provided for by the
Company pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.
15. AMENDMENT OF PLAN. The Board of Directors may at any time, and from
time to time, modify or amend the Plan in such respects as it shall deem
advisable because of changes in the law while the Plan is in effect or for any
other reason. Except as provided in paragraphs 6(a)(iv), 9 and 13, however, no
change in an award already granted shall be made without the written consent of
the holder of such award.
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<PAGE>
16. APPROVALS. The obligations of the Company under the Plan are subject
to the approval of state and federal authorities or agencies with jurisdiction
in the matter. The Company shall use its best efforts to take steps required by
state or federal law or applicable regulations, including rules and regulations
of the Securities and Exchange Commission and any stock exchange on which the
Company's shares may then be listed, in connection with the grants under the
Plan. The foregoing notwithstanding, the Company shall not be obligated to
issue or deliver Common Stock under the Plan if such issuance or delivery would
violate applicable state or federal securities laws.
17. EMPLOYMENT AND SERVICE RIGHTS. Nothing in the Plan or any award
pursuant to the Plan shall (i) confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or interfere in any
way with the right of the Company or any subsidiary by whom such employee is
employed to terminate such employee's employment at any time, for any reason,
with or without cause, or to decrease such employee's compensation or benefits,
or (ii) confer upon any person engaged by the Company any right to be retained
or employed by the Company or to the continuation, extension, renewal, or
modification of any compensation, contract, or arrangement with or by the
Company.
18. RIGHTS AS A SHAREHOLDER. The recipient of any award under the Plan
shall have no rights as a shareholder with respect to any Common Stock until the
date of issue to the recipient of a stock certificate for such shares. Except
as otherwise expressly provided in the Plan, no adjustment shall be made for
dividends or other rights for which the record date occurs before the date such
stock certificate is issued.
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<PAGE>
MACHEEZMO MOUSE RESTAURANTS, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON SEPTEMBER 25, 1996
The undersigned hereby appoints William S. Warren and David M. Bennett, and each
of them, proxies with power of substitution to vote on behalf of the undersigned
all shares that the undersigned may be entitled to vote at the annual meeting of
shareholders of Macheezmo Mouse Restaurants, Inc. (the "Company") on September
25, 1996 and any adjournments thereof, with all powers that the undersigned
would possess if personally present, with respect to the following:
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED ON THE REVERSE
HEREOF, BUT IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF DIRECTORS AND FOR PROPOSAL NO. 2. THE PROXIES MAY VOTE IN THEIR
DISCRETION AS TO OTHER MATTERS THAT MAY COME BEFORE THIS MEETING.
Please Note: Any shares of stock of the Company held in the name of fiduciaries,
custodians or brokerage houses for the benefit of their clients may only be
voted by the fiduciary, custodian or brokerage house itself--the beneficial
owner may not directly vote or appoint a proxy to vote the shares and must
instruct the person or entity in whose name the shares are held how to vote
the shares held for the beneficial owner. Therefore, if any shares of stock of
the Company are held in "street name" by a brokerage house, only the brokerage
house, at the instructions of its client, may vote or appoint a proxy to vote
the shares.
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FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as /X/
indicated in
this example
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR
EACH OF THE NOMINEES NAMED BELOW AND FOR PROPOSAL NO. 2.
1. PROPOSAL 1 -- Election of Directors
FOR all nominees listed below WITHHOLD AUTHORITY to vote
(except as marked to the contrary below) for all nominees listed below
/ / / /
(Instructions: To withhold authority to vote for any individual
nominee, strike a line through nominee's name in the list below.)
William S. Warren, Joseph W. Angel, David M. Bennett, Diane G. Hall,
Joseph P. Micatrotto, Jack B. Schwartz
FOR AGAINST ABSTAIN
2. To approve the adoption of the / / / / / /
Macheezmo Mouse Restaurants, Inc.
1996 Stock Incentive Plan.
Upon such other matters as may properly come before, or incident to the
conduct of the Annual Meeting, the Proxy holders shall vote in such
manner as they determine to be in the best interests of the Company.
Management is not presently aware of any such matters to be presented
for action at the meeting.
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Shares
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Dated
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Signature(s)
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Print Name(s)
Please date and sign as name is imprinted hereon, including designation
as executor, trustee, etc., if applicable. A corporation must sign its
name by the president or other authorized officer.
The Annual Meeting of Shareholders of Macheezmo Mouse Restaurants, Inc.
will be held on September 25, 1996 at 10:00 a.m., Pacific Daylight Time,
at the Red Lion Lloyd Center Hotel, 1000 NE Multnomah, Portland, Oregon.
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FOLD AND DETACH HERE
