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 REGISTRANT [X]
FILED BY A PARTY OTHER THAN THE REGISTRANT [ ] CHECK THE APPROPRIATE BOX:
[ ] PRELIMINARY PROXY STATEMENT
[X ] DEFINITIVE PROXY STATEMENT
[ ] DEFINITIVE ADDITIONAL MATERIALS
[ ] SOLICITING MATERIAL PURSUANT TO RULE 14A-11(C) OR RULE 14A-12
BENIHANA INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
BENIHANA INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X ] $125 PER EXCHANGE ACT RULE 0-11(C)(1)(II), 14A-6(I)(1), OR 14A-6(J)(2).
[ ] $500 PER EACH PARTY TO THE CONTROVERSY PURSUANT TO EXCHANGE ACT RULE 14A-
6(I)(3).
[ ] 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 0-11:1
4)PROPOSED MAXIMUM AGGREGATE VALUE OF TRANSACTION:
[ ]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:
- --------
1 SET FORTH THE AMOUNT ON WHICH THE FILING FEE IS
CALCULATED AND STATE HOW IT WAS DETERMINED.
<PAGE>
BENIHANA INC.
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders:
The Annual Meeting of the Stockholders of BENIHANA INC. (the
"Corporation") will be held at the Benihana Restaurant, 8727 S. Dixie Highway,
Miami, Florida 33143, on July 19, 1996, at 10:00 a.m. for the following
purposes:
1. For the election of Directors as follows (Proposal 1):
For the holders of the Corporation's Class A Common Stock, to
elect one Class I director for a term of three years;
For the holders of the Corporation's Common Stock, to elect one
Class I director for a term of three years and one Class III
director for a term of two years.
2. For the holders of the Corporation's Common Stock and Class A
Common Stock, voting together as a single class, to approve the adoption
of the 1996 Class A Stock Option Plan (Proposal 2).
3. For the holders of the Corporation's Common Stock and Class A
Common Stock, voting together as a single class, to ratify the
appointment of Deloitte & Touche LLP as the independent accountants of
the Corporation for the fiscal year ending March 30, 1997 (Proposal 3).
4. For the holders of the Corporation's Common Stock and Class A
Common Stock, voting together as a single class, to consider a
stockholder proposal to recommend that the two classes of common stock
be combined into a single class, which proposal is opposed by the Board
of Directors (Proposal 4).
5. To transact such other business as may properly be brought
before the Annual Meeting.
Stockholders of record at the close of business on Thursday, May 23,
1996 shall be entitled to notice of, and to vote at, the Annual Meeting as
provided above. A copy of the Annual Report to Stockholders for the fiscal year
ended March 31, 1996 is enclosed herewith.
You are cordially invited to attend the Annual Meeting. Whether or not
you plan to be present, kindly complete, date and sign the enclosed forms of
proxy with respect to all shares of Common Stock and Class A Common Stock which
you may own and mail them promptly in the enclosed return envelope to assure
that your shares of Common Stock and Class A Common Stock are represented. This
may save the Corporation the expense of further proxy solicitation. If you own
shares of both the Common Stock and Class A Common Stock, you will receive two
proxies, each of which must be dated, signed and returned as described above. If
you do attend the Annual Meeting, you may revoke your prior proxy and vote your
shares in person if you wish.
Dated: June 12, 1996
By Order of the Board of Directors
Darwin C. Dornbush
Secretary
1
<PAGE>
BENIHANA INC.
8685 Northwest 53rd Terrace
Miami, Florida 33166
PROXY STATEMENT
for
Annual Meeting of Stockholders
To Be Held on July 19, 1996
Your proxies are solicited by the Board of Directors of Benihana
Inc. (the "Corporation") for use at the Annual Meeting of Stockholders (the
"Meeting") to be held at the Benihana Restaurant, 8727 S. Dixie Highway, Miami,
Florida, 33143 at 10:00 a.m. on Friday, July 19, 1996 and at any adjournment or
adjournments thereof for the purposes set forth in the attached Notice of
Meeting. This Proxy Statement and the forms of proxy are being mailed to
stockholders on or about June 12, 1996.
The record date for determining the holders of the Corporation's
Common Stock, par value $.10 per share ("Common Stock"), and Class A Common
Stock, par value $.10 per share ("Class A Stock"), entitled to notice of and to
vote at the Meeting is the close of business on May 23, 1996.
At the Meeting, two Class I Directors are to be elected, each to
serve for a term of three years, and one Class III Director is to be elected to
serve for a term of two years, and until their respective successors have been
duly elected and qualified. (Proposal 1). The holders of the Corporation's
Common Stock are to vote separately as a class (with each share of Common Stock
having one vote per share) to elect one Class I Director and the Class III
Director. The holders of the Corporation's Class A Stock are to vote separately
as a class (with each share of Class A Stock having one vote per share) to elect
the other Class I director.
Holders of the Common Stock and Class A Stock are also being
asked to approve the adoption of the 1996 Class A Stock Option Plan (the "1996
Plan") (Proposal 2), to ratify the appointment of Deloitte & Touche LLP as the
independent accountants of the Corporation for the fiscal year ending March 30,
1997 (Proposal 3) and to consider a stockholder proposal to recommend that the
two classes of the Corporation's common stock be combined into a single class
(Proposal 4), in the case of each such proposal, voting together as a class
(with each share of Class A Stock having 1/10 vote per share and with each share
of Common Stock having one vote per share).
The Board of Directors recommends that the holders of the Common
Stock and Class A Stock vote FOR the election of the nominees for Class I
Directors and Class III Director of the Corporation named herein (Proposal 1),
FOR the approval of the adoption of the 1996 Plan (Proposal 2), FOR the
ratification of Deloitte & Touche LLP as the independent public accountants of
the Corporation (Proposal 3) and AGAINST the stockholder proposal to recommend
the combination of the two classes of the Corporation's common stock (Proposal
4).
Any proxy given pursuant to this solicitation may be revoked at
any time by the stockholder giving it, insofar as it has not been exercised, by
delivery to the Assistant Secretary of the Corporation of a written notice of
revocation bearing a date later than the proxy, by submission of a later dated
and properly executed proxy, or by voting in person at the Meeting. Attendance
at the Meeting will not, in and of itself, constitute a revocation of a proxy.
Any written notice revoking a proxy should be sent to Benihana Inc., 8685
Northwest 53rd Terrace, Miami, Florida 33166, Attention: Juan Garcia, Assistant
Secretary.
The voting securities of the Corporation consist solely of the
Common Stock and Class A Stock, of which 3,516,016 shares and 2,316,300 shares,
respectively, were issued and outstanding on May 23, 1996, the record date for
determining the stockholders entitled to a vote at the Meeting.
Shares represented at the Meeting by properly executed proxies
will be voted in accordance with the instructions indicated in such proxies
unless such proxies have previously been revoked. If no instructions are
indicated such shares will be voted (i) FOR the election of the two nominees of
the Board of Directors for the position of Class I Directors and the election of
the nominee of the Board of Directors for the position of Class III Director
(Proposal 1),
1
<PAGE>
(ii) FOR the approval of the adoption of the 1996 Plan (Proposal 2), (iii) FOR
the ratification of Deloitte & Touche LLP as the independent public accountants
of the Corporation (Proposal 3), and (iv) AGAINST the stockholder proposal to
recommend the combination of the two classes of the Corporation's common stock
(Proposal 4).
The Board of Directors is not aware of any other matters to be
brought before the Meeting. If, however, other matters are properly presented,
proxies representing shares of Common Stock and Class A Stock will be voted on
such matters in accordance with the best judgment of the proxy holders.
Votes at the meeting will be tabulated by two independent
inspectors of election appointed by the Corporation or the Corporation's
transfer agent. As a plurality of votes cast is required for the election of
directors, abstentions and broker non-votes will have no effect on the outcome
of such election. As the affirmative vote of a majority of votes represented by
the Common Stock and Class A Stock (voting together as a class, with each share
of Common Stock having one vote and each share of Class A Stock having 1/10
vote) in person or represented by proxy is necessary for the approval of
Proposal 2 (the approval of the adoption of the 1996 Plan), Proposal 3 (the
ratification of the Corporation's auditors) and Proposal 4 (the stockholder
proposal to recommend the combination of the two classes of common stock), an
abstention will have the same effect as a negative vote but "broker non-votes"
will have no effect on the outcome of the vote.
Brokers holding shares for beneficial owners must vote those
shares according to the specific instructions they receive from beneficial
owners. If specific instructions are not received, brokers may vote those shares
in their discretion, depending on the type of proposal involved. The Corporation
believes that, in accordance with New York Stock Exchange rules applicable to
such voting by brokers, brokers will have discretionary authority to vote with
respect to any shares as to which no instructions are received from beneficial
owners with respect to the election of directors and Proposal 3 but will not
have such discretionary authority with respect to Proposals 2 and 4. Shares as
to which brokers have not exercised such discretionary authority or received
instructions from beneficial owners are considered "broker non-votes."
PROPOSAL 1: ELECTION OF DIRECTORS
The Corporation's Certificate of Incorporation provides that the
Board of Directors shall be divided into three classes with the term of office
of one class expiring each year. The current directors have been elected to the
classes set forth opposite their names below. The terms of office of Robert B.
Greenberg and Taka Yoshimoto as Class I Directors will expire at the Meeting.
Messrs. Greenberg and Yoshimoto are proposed to be re-elected as Class I
Directors, each to hold office for a three year term as set forth in the
Corporation's Certificate of Incorporation and until his successor shall have
been duly elected and qualified. The term of office of Darwin C. Dornbush as a
Class III director will also expire at the Meeting because Mr. Dornbush was
appointed as a director by the Board of Directors and, under the Corporation's
Certificate of Incorporation, directors appointed by the Board serve only until
the next annual meeting of stockholders. Mr. Dornbush is proposed to be
re-elected as a Class III Director to hold office for a two year term as set
forth in the Corporation's Certificate of Incorporation and until his successor
shall have been duly elected and qualified.
The Corporation's Certificate of Incorporation also provides
that when the Board of Directors is divided into at least two classes, as is
presently the case, the holders of the Class A Stock vote separately as a class
to elect 25% (or the next higher whole number) of each class of the Board;
provided, however, the number of directors so elected by the holders of the
Class A Stock may not exceed 25% (or the next higher number) of the entire Board
and holders of the Class A Stock do not vote for the election of directors at
any meeting of stockholders if the terms of offices of directors so elected by
such holders representing at least 25% of the Board of Directors do not expire
at such meeting. Holders of the Common Stock vote separately as a class for the
remainder of each class of the Board. The Board of Directors currently consists
of seven members, of which two members (25% of the Board, rounded to the nearest
whole director) are Class A Directors. Messrs. Robert B. Greenberg, a Class I
Director, and John E. Abdo, a Class II Director, currently serve as Class A
Directors.
At the Meeting, holders of the Class A Stock will vote
separately as a class with respect to the election of the Class I Director
designated as a Class A Director, Robert B. Greenberg. Holders of the Common
Stock will vote separately as a class with respect to the election of the other
Class I Director, Taka Yoshimoto and with respect to the election of the Class
III director, Darwin C. Dornbush.
2
<PAGE>
The persons named as proxies in the enclosed form of proxy have
been selected by the Board of Directors. It is intended that the shares
represented by the proxies, unless authorization is withheld, shall be voted for
the election as Directors of the nominees set forth in the following table, who
have been designated by the Board of Directors and who are presently Directors
of the Corporation. Although it is not contemplated that such nominees will be
unable to serve, should such a situation arise prior to the balloting at the
Meeting, the persons named in the proxy will vote the shares represented by the
proxy for such substitute nominee(s) as they deem advisable.
The following table sets forth certain information with respect
to the nominees for the position of Class I and Class III Directors:
Name Age Position with the Corporation
Robert B. Greenberg (1) 52 Class I Director
Taka Yoshimoto (2) 50 Class I Director, Executive
Vice President Operations
Darwin C. Dornbush (3) 66 Class III Director
(1) Mr. Greenberg is currently, and has been since mid-1994, the President
and a Director of Sterling Vision, Inc., and Sterling Vision of
California, Inc., the franchisor of the Sterling Optical, Ipco
Optical, Site for Sore Eyes, and other optical chains. For the five
years prior thereto, Mr. Greenberg served as President of Natural
Licensing Cosmetics, Inc., and its predecessor, the licensor of
i-Natural cosmetic products. Mr. Greenberg has served as a director
of the Corporation since May, 1995 and served as a director of
Benihana National Corp. ("BNC"), a predecessor of the Corporation
since 1983. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
(2) Mr. Yoshimoto has served as Executive Vice President and a director of
the Corporation since May, 1995. He served as Executive Vice president
of BNC from 1989 to 1995 and as the Director of Operations from June
1985 until August 1989. Mr. Yoshimoto served as a director of BNC
since 1990.
(3) Mr. Dornbush is currently and has been for more than the past five
years a partner in the law firm of Dornbush Mensch Mandelstam
& Schaeffer, LLP. He has served as the Secretary and a Director of
the Corporation since 1995, as Secretary of BNC since 1983 and as
Secretary and a Director of Benihana of Tokyo, Inc. ("BOT") since
1980. Mr. Dornbush is also a director of Cantel Industries, Inc.
The following table sets forth certain information with respect to the
remaining Class II and Class III Directors, each of whom will continue in
office, and the executive officers of the Corporation.
Name Age Position with the Corporation
Rocky H. Aoki (1) 57 Class III Director,
Chairman of the Board
Joel A. Schwartz (2) 55 Class III Director, President
Irwin K. Chapman (3) 68 Class II Director
John E. Abdo (4) 52 Class II Director
Michael R. Burris (5) 46 Vice President - Finance and Treasurer
No executive officer of the Corporation has any family relationship to any
other.
- ----------------
3
<PAGE>
(1) Mr. Aoki has been Chairman of the Board of Directors of the Corporation
since May, 1995. He has been the Chairman and Chief Executive Officer
of BOT, since its incorporation in 1963, and beneficially owns all of
its outstanding stock. See "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS." Mr. Aoki has served as Chairman of the Board of
Directors of BNC since its organization in 1982.
(2) Mr. Schwartz has been President and a Director of the Corporation since
May, 1995. He has served as President and Director of BNC since 1982
and served as the Executive Vice President of BOT from September 1980
until May 1983.
(3) Mr. Chapman is and has been for more than the past five years, an
independent financial consultant. Mr. Chapman has served as a
director of the Corporation since May, 1995, and as a director of BNC
since 1983.
(4) Mr. Abdo is currently, and has been for more than the past five years,
President of Wellington Construction & Realty, Inc., a real estate
development and construction company headquartered in South Florida.
Mr. Abdo is also Vice Chairman of the Board of Directors and Chairman
of the Executive Committee of BankAtlantic Bancorp, Inc., the holding
company for BankAtlantic. Mr. Abdo is Vice Chairman of the Board of
Directors and Chairman of the Executive Committee for BankAtlantic,
FSB. Mr. Abdo is Vice Chairman of the Board of Directors of BFC
Financial Corporation, the controlling stockholder of BankAtlantic
Bancorp, Inc. Additionally, Mr. Abdo is Chairman of the Board of
Coconut Code, Inc., a computer software company specializing in the
restaurant industry. Mr. Abdo has served as a director of the
Corporation since May, 1995, and as a director of BNC since 1990.
(5) Mr. Burris was appointed as Vice President - Finance and Treasurer of
the Corporation and BNC effective January 1, 1995. Through October,
1994 and for the five years prior thereto, Mr. Burris was a partner
with the accounting firm of Deloitte & Touche LLP and its predecessor.
COMMITTEES; MEETINGS OF THE BOARD OF DIRECTORS
The Corporation has a Compensation Committee, an Audit Committee and a
Stock Option Committee. Each such committee consists of directors who are not
employed by the Corporation: Robert B. Greenberg and Irwin K. Chapman in the
case of the Audit Committee, Robert B. Greenberg, John E. Abdo and Darwin C.
Dornbush in the case of the Compensation Committee and Irwin Chapman and John E.
Abdo in the case of the Stock Option Committee. The Audit Committee reviews the
arrangements and scope of the Corporation's year-end audit, reviews the
Corporation's internal accounting practices and controls and the recommendations
of the Corporation's auditors and makes recommendations to management based on
its review. The Compensation Committee reviews and approves management
compensation and the Stock Option Committee administers the Corporation's Stock
Option Plans. The Audit Committee met on 3 occasions and the Compensation
Committee and Stock Option Committees met on 1 occasion during the fiscal year
ended March 31, 1996.
During the fiscal year ended March 31, 1996, there were 3 meetings of
the Board of Directors. No Director attended fewer than 75% of the meetings of
the Board.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is information relating to the beneficial ownership of
the Corporation's Common Stock and Class A Stock by all persons known by the
Corporation to own beneficially more than 5% of the Corporation's Common Stock
and Class A Stock issued and outstanding as at May 23, 1996 and by all executive
officers and directors of the Corporation. Except as otherwise noted, the named
person owns directly and exercises sole voting power and investment discretion
over the shares listed as beneficially owned by such person.
4
<PAGE>
<TABLE>
<CAPTION>
COMMON STOCK
Name (and address if applicable of Position with Amount and Nature of
Beneficial Owners, Officers and Directors the Corporation Beneficial Ownership Percent of Class
- ----------------------------------------- --------------- -------------------- ----------------
<S> <C> <C> <C>
Benihana of Tokyo, Inc. Stockholder 1,830,405(1) 52.1%
8685 Northwest 53rd Terrace
Miami, Florida 33166
Trust U/W Vincent Terranova Stockholder 547,136 15.6%
33 South Park Terrace
Congers, New York 10920
Carl J. Terranova Stockholder 252,350 7.2%
159 Chrystie Street
New York, NY 10002
Rocky H. Aoki Chairman of the 7,500(1) *
Board/Director
Joel A. Schwartz President/Director 47,510(2) 1.3%
Irwin K. Chapman Director 17,000(3) *
Robert B. Greenberg Director 10,440(4) *
Taka Yoshimoto Executive Vice 7,000(5) *
President-Restaurant
Operations/Director
John E. Abdo Director 21,250(6) *
Michael Burris Vice President 25,000(7) *
Darwin C. Dornbush Secretary 1,000(1,8) *
All (8) directors and 1,967,105(1,9) 54.4%
officers as a group
CLASS A COMMON STOCK
<CAPTION>
Name (and address if applicable) of Position with Amount and Nature of
Beneficial Owners, Officers and Directors the Corporation Beneficial Ownership Percent of Class
- ----------------------------------------- --------------- -------------------- ----------------
<S> <C> <C> <C>
Benihana of Tokyo, Inc. Stockholder 300,000(1, 10) 13.0%
8685 Northeast 53rd Terrace
Miami, Florida 33166
Carl J. Terranova Stockholder 340,300 14.7%
159 Chrystie Street
New York, NY 10002
Trust U/W Vincent Terranova Stockholder 523,500 22.6%
33 South Park Terrace
Congers, New York 10920
Kennedy Capital Stockholder 324,600 14.0%
Management
10829 Olive Boulevard
St. Louis, Missouri 63141
Rocky H. Aoki Chairman of the 23,100(1) 1.0%
Board/Director
John E. Abdo Director 242,000(11) 10.4%
Michael Burris Vice President - 3,500 *
Finance
All (8) officers and directors 568,600(1,11) 24.5%
as a group
* less than 1%.
</TABLE>
(1) Rocky H. Aoki, who is Chairman of the Board and a director of BOT and
the Corporation, is the beneficial owner of all of the outstanding
shares of the capital stock of BOT (the "BOT Stock"). The BOT Stock is
held in a voting trust of which Messrs. Aoki, Darwin C. Dornbush, the
Secretary and a Director of the Corporation, and Katsu Aoki, Mr. Aoki's
mother, are the trustees. By reason of such position such individuals
may be deemed to share beneficial ownership of the BOT Stock and the
shares of the Corporation owned by BOT.
(2) Includes 10 shares owned by Mr. Schwartz's son, as to which Mr.
Schwartz disclaims beneficial interest. Includes options to acquire
32,500 shares which Mr. Schwartz currently has the right to exercise.
(3) Includes 16,250 shares subject to stock options owned by Mr. Chapman
which are exercisable within 60 days; does not include 1,250 shares
subject to stock options not exercisable within 60 days.
(4) Includes 640 shares owned by Mr. Greenberg's wife and 8,750 shares
subject to options owned by Mr. Greenberg which are exercisable within
60 days; does not include 1,250 shares subject to options not
exercisable within 60 days.
(5) Includes 5,000 shares subject to options owned by Mr. Yoshimoto which
are currently exercisable.
(6) Includes 11,250 shares subject to options owned by Mr. Abdo which are
exercisable within 60 days; does not include 1,250 shares subject to
options not exercisable within 60 days.
(7) Comprised of 25,000 shares subject to options owned by Mr. Burris
which are currently exercisable.
(8) Does not include 12,500 shares subject to options owned by
Mr. Dornbush which are not exercisable within 60 days.
(9) Includes an aggregate of 98,750 shares of Common Stock subject to
options owned by such directors and officers which are exercisable
within 60 days; does not include 16,250 shares subject to options not
exercisable within 60 days.
(10) Comprised of 300,000 shares receivable upon conversion of 2,000 shares
of the Corporation's Convertible Preferred Stock owned by BOT.
(11) Includes 200,000 shares subject to a currently exercisable warrant
owned by a trust, of which Mr. Abdo is the sole trustee and
beneficiary. This Warrant was purchased from a third party in a private
transaction.
Rules promulgated by the Securities and Exchange Commission (the "SEC")
govern the reporting of securities transactions by directors, executive officers
and holders of 10% or more of the Corporation's Common Stock or Class A Stock.
Based solely upon its review of copies of reports filed with the SEC and
received by the Corporation, the Corporation believes that its directors and
executive officers have filed all required reports on a timely basis, but it
does not appear that such reports were filed during the fiscal year ended March
31, 1996 by Carl J. Terranova and Trust U/W Vincent Terranova who are holders of
10% or more of one or more classes of the Corporation's common stock. The
holdings of each such stockholder were, however, reported on Schedules 13G filed
with the SEC for the fiscal year ended March 31, 1996
6
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended March 31,
1996, March 26, 1995 and March 27, 1994, compensation paid by the Corporation
and its predecessors (including salaries attributed to the restaurants acquired
from BOT in 1995; See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS") to the
Chief Executive Officer and to the other executive officers of the Corporation
who received more than $100,000 in salary and bonus during fiscal year 1996,
including salary, bonuses, stock options and certain other compensation:
<TABLE>
SUMMARY COMPENSATION TABLE
Annual Compensation
<CAPTION>
Long Term Compensation(1)
Name and Principal Position Year Salary Bonus Payouts(1) Options
- --------------------------- ---- ------ ----- ---------- -------
<S> <C> <C> <C> <C> <C>
$ $ $ #
Rocky H. Aoki, Chairman of 1996 350,000 10,000
the Board(2) 1995 350,000 7,500
1994 500,000
Joel A. Schwartz, President(3) 1996 247,884 8,500
1995 188,462 7,500
1994 188,462
Taka Yoshimoto, Executive 1996 127,404 7,000
Vice President(4) 1995 91,538 5,000
1994 91,538
Michael R. Burris, Vice 1996 127,404 3,500 10,000
President - Finance and 1995 50,481(5) 15,000
Treasurer(4)
</TABLE>
(1) The Corporation has a long term Administrative Incentive Compensation
Plan and Employee Stock Option Plans described herein. No awards were
made prior to March 31, 1996 under the Administrative Incentive
Compensation Plan. The Corporation does not award stock appreciation
rights or restricted stock awards.
(2) Pursuant to the terms of an employment agreement with the Corporation
executed on March 18, 1986 and amended as of February 9, 1990, Mr.
Aoki, the Chairman of the Board of the Corporation, was employed by BNC
at an annual salary of $200,000. That agreement, as amended, expired on
March 31, 1995. Effective May 15, 1995 the Corporation entered into a
new five year employment agreement that calls for annual compensation
of $350,000. The Corporation is the beneficiary of a $5,000,000 key-man
life insurance policy on Mr. Aoki's life. Proceeds of any such
insurance may not entirely eliminate the adverse effect to the
Corporation from the loss of Mr. Aoki's services. The agreement
provides for annual salary increases based on cost-of-living
adjustments and bonuses and additional salary increases as may be
determined by the Board from time to time. The agreement also provides
that if the Corporation should experience a "change-in-control" (as
defined), Mr. Aoki will have the right to terminate his employment and
receive severance pay equal to his base compensation for the remainder
of the term of the agreement. Mr. Aoki is prohibited from competing
with the Corporation for a period of three years after any termination
of his employment with the Corporation.
(3) Joel Schwartz, the President of the Corporation, is employed by the
Corporation on a full-time basis at an annual salary of $230,000,
pursuant to the terms of a five year employment agreement with the
Corporation entered into effective May 15, 1996. The agreement provides
for annual salary increases based on cost-of-living adjustments and
bonuses and additional salary increases as may be determined by the
Board from time to time. Mr. Schwartz is prohibited from competing with
the Corporation for a period of one year after any termination of his
employment with the Corporation.
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<PAGE>
(4) Pursuant to the terms of an Employment Agreement entered into as of
April 1, 1995, Mr. Yoshimoto, Executive Vice President of the
Corporation, is employed at an annual salary of $125,000. Pursuant to
the terms of an Employment Agreement entered into as of January 1,
1995, Mr. Burris, Vice President of Finance and Treasurer of the
Corporation, is employed at an annual salary of $125,000. Messrs.
Yoshimoto and Burris are each prohibited from competing with the
Corporation for a period of one year after certain terminations of
employment with the Corporation.
(5) Mr. Burris' employment with the Corporation commenced January 1, 1995.
Stock Options
The Corporation maintains an active stock option plan for employees,
the 1994 Employees' Stock Option Plan (the "1994 Plan"), and a second active
plan for directors, the Directors' Stock Option Plan (the "Directors' Plan), see
"Directors' Compensation." The 1994 Plan makes available for grant options to
purchase 500,000 shares of Common Stock; of such options, options to purchase
10,000 shares have been granted and options to purchase 490,000 shares are
available for grant. As of March 31, 1996, options to purchase 67,400 shares of
Common Stock were outstanding under previous employee stock option plans of the
Corporation.
The purpose of the 1994 Plan is to enable the Corporation to attract,
retain and motivate key employees and directors by providing them an equity
participation in the Corporation. Employees of BOT are also eligible to
participate in the 1994 Plan. The 1994 Plan provides for incentive stock options
(ISO's) under Section 422A of the Internal Revenue Code of 1986, as amended, and
for options which are not ISO's. Options granted under the 1994 Plans may not
have terms exceeding ten years and, in the case of the options which are ISO's,
may not provide for an option exercise price of less than 100% of the fair
market value of the Corporation's Common Stock on the day of the grant. In the
1995 merger of BNC into a subsidiary of the Corporation (the "Reorganization"),
each option to purchase shares of BNC stock under BNC's stock option plans
automatically became an outstanding option to purchase an equal number of shares
of Common Stock of the Corporation at the price provided by such options.
The following information is furnished for the fiscal year ended March
31, 1996 with respect to the only executive officer of the Corporation who was
granted stock options during the fiscal year ended 1996 that received more than
$100,000 in salary and bonuses during the fiscal year ended 1996. The following
options were granted under the 1994 Plan on October 21, 1995 pursuant to an
employment contract with Mr. Burris.
<TABLE>
<CAPTION>
% of Total
Options Potential Realized Value at
Number Granted to Assumed Annual Rates of
of Employees in Option Expiration Stock Appreciation for
Options Fiscal Year Price Date Option Term
------- ------------ ------ ---------- ---------------------------
5% 10%
-- ---
<S> <C> <C> <C> <C> <C> <C>
Michael Burris 10,000 100% $10.25 October 31, 2005 $64,500 $163,500
8
</TABLE>
<PAGE>
Aggregated Option Exercise in Fiscal 1996 and Fiscal Year End Option Values
The following information is furnished for the fiscal year ended March
31, 1996 for stock option exercises during such fiscal year and the value
realized upon exercise and redemption of the named executive officers during the
fiscal year ended March 31, 1996 and the value of outstanding options held of
such executive officer as of March 31, 1996.
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised in the
Options at 3/31/96 Money Options at 3/31/96
Shares --------------------- ---------------------------
Acquired On Value Non- Non-
Name Exercise (#) Realized ($) Exercisable (#) Exercisable (#) Exercisable ($) Exercisable ($)
---- ------------ ------------ --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Rocky H. Aoki 7,500 48,150 -0- -0- -0- -0-
Joel A. Schwartz -0- -0- 32,500 -0- 237,813 -0-
Taka Yoshimoto 500 1,250 5,000 -0- 41,875 -0-
Michael R. Burris -0- -0- 25,000 -0- 86,875 -0-
</TABLE>
Deferred Compensation Plans
In fiscal 1996 the Corporation implemented a deferred compensation plan
whereby certain key executives may elect to defer up to 20% of their salary and
up to 100% of their bonus until retirement or age 55, whichever is later,
disability or death. Employees may select from various investment options from
their account balances. Investment earnings are credited to their accounts.
Incentive Plan
Restaurant Incentive Plan. The Corporation maintains an incentive bonus
program under which certain of its administrative and restaurant employees,
based on their performance, may be eligible for cash rewards.
Under the restaurant incentive program, the awards are divided among
restaurant management personnel and chefs who have been determined to have
contributed significantly to the Corporation's operating goals. In addition,
incentive bonuses of small numbers of shares of Common Stock are also offered to
selected restaurant employees.
Administrative Incentive Compensation Plan. Under the Administrative
Incentive Compensation Plan, awards are allocated to employees in its Miami
headquarters, including executive officers, if the Corporation exceeds a certain
targeted return on equity. The purpose of the plan is to align the interests of
management and the Corporation's stockholders by providing incentives, which are
directly related to identified operating objectives, to the officers and
administrative employees of the Corporation and its subsidiaries upon whose
judgment, initiative and efforts the Corporation largely depends for the
successful conduct of its business. Awards are made by the Compensation
Committee of the Board of Directors and the senior management of the Corporation
out of a bonus pool which is a predetermined percentage of the amount by which
the Corporation's Net Income After Taxes exceeds the amount required for the
targeted return on equity. For awards in excess of $1,000, one third of the
amounts awarded is paid immediately to the employee and the remaining two thirds
is payable over the succeeding two years. Amounts allocated under the plan may
be taken in cash, deferred in a non-qualified deferred compensation plan, or be
used to purchase the Corporation's Common Stock at 85% of its market value.
For purposes of this Plan, the return on equity is computed by dividing
after tax income (computed before allocations to the Incentive Compensation
Plan) by the amount of stockholders' equity as of the beginning of the year. The
target rate of return on equity, which is approved annually by the Compensation
Committee of the Board of Directors, was 15% for the fiscal year ended March 31,
1996 which rate represented a Net Income After Taxes of $1,831,000. For the
fiscal year ended March 31, 1996, $503,000 was accrued under the plan for
payment of bonuses to employees, including executive officers. As of the date
hereof, no allocation of this bonus pool to participants has been made. The
amount of the cash award for any individual is capped at 50% of the employee's
eligible salary, which is defined as the amount of ordinary salary less 40% of
the FICA salary base.
9
<PAGE>
Directors' Compensation
Non-employee directors of the Corporation receive directors fees of
$7,500 a year plus $650 for each meeting attended and $500 for each committee
meeting attended. All directors are reimbursed for expenses incurred on behalf
of the Corporation.
In addition, each director who is not an employee of the Corporation
participates in the Directors' Plan pursuant to which options to purchase 2,500
shares of Common Stock at $2.875 per share were granted to each such
non-employee director on February 11, 1994 and additional options to purchase
2,500 shares of Common Stock at $7.375 were granted to each such non-employee
director on May 1, 1995, and pursuant to which options to purchase an additional
2,500 shares of Common Stock will be automatically granted annually to each such
non-employee director on the date of the Corporation's Annual Meeting of
Stockholders. Each option granted under the Director's Plan has an exercise
price equal to the fair market value of the Common Stock on the date of grant,
is for a term of 10 years and becomes exercisable as to 50% of the number of
shares covered thereby on each of the first two anniversaries of the date of
grant. The Directors' Plan authorizes the grant of options to purchase an
aggregate of 50,000 shares of Common Stock; as of March 31, 1996, options to
purchase an aggregate of 15,000 shares of Common Stock had been granted under
the Directors' Plan.
Compensation Committee Interlocks
and Insider Participation
The Corporation's Compensation Committee consists of each of John E.
Abdo, Robert Greenberg and Darwin C. Dornbush, each of whom is a non-employee
member of the Corporation's Board of Directors.
Effective July 1, 1992, the Corporation licensed a computer software
program from Coconut Code, Inc. for use in performing certain accounting
functions. The license requires the Corporation to pay an aggregate license fee
of approximately $63,000 over the 48-month period commencing July 1, 1992. Mr.
John E. Abdo, a director of the Corporation, and a member of the Compensation
Committee, is the Chairman of the Board of Coconut Code, Inc. and beneficially
owns approximately 32.667% of its common equity. Management believes that the
terms of the license agreement are competitive for comparable computer software
systems.
REPORT ON EXECUTIVE COMPENSATION BY THE
COMPENSATION COMMITTEE AND STOCK OPTION COMMITTEE
Compensation Policy. The Corporation's Compensation Committee is
responsible for setting and administering the policies which govern annual
executive salaries, raises and bonuses. In addition, the Corporation's Stock
Option Committee is responsible for administering the Corporation's Employee
Stock Option Plans. The Compensation Committee consists of each of John E.
Abdo, Robert B. Greenberg and Darwin C. Dornbush, each of whom is a
non-employee member of the Corporation's Board of Directors. The Stock Option
Committee consists of Irwin K. Chapman and Robert B. Greenberg.
The policy of the Compensation Committee is to recommend compensation
for the Corporation's Chief Executive Officer and the Corporation's other
executive officers, reflecting the contribution of such executives, to the
Corporation's growth in sales and earnings, and the implementation of the
Corporation's strategic plans for growth. In addition, in order to assure the
Corporation's ability to attract and retain managerial talent, an attempt is
made to keep compensation competitive with compensation offered by other
restaurant companies of comparable quality, size and performance.
Long-term incentive compensation policy consists of the award of stock
options under the Corporation's stock option plans, which serve to identify the
reward for executive performance with increases in value for stockholders and
bonuses under the Corporation's Administrative Incentive Compensation Plan.
Corporation's Performance and Chief Executive Officer Compensation.
Executive compensation for the fiscal year ended March 31, 1996 consisted of
base salary and bonus. The Compensation Committee met on 1 occasion during such
fiscal year. All compensation paid to the Chief Executive Officer and to the
Corporation's other executive officers during the fiscal year ended March 31,
1996 was in accordance with the terms of written employment agreements with such
officers. New employment agreements, reflecting increased based salary, were
10
<PAGE>
entered into with each of Messrs. Aoki, Schwartz and Yoshimoto during the fiscal
year. These new agreements reflect the increased responsibilities resulting from
the acquisition of 17 Corporation owned and 4 licensed restaurants from BOT in
May, 1995, which acquisition increased the scope of the Corporation's
operations. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS." The Stock
Option Committee awarded stock options only to Mr. Burris during such fiscal
year. Such award was required by Mr. Burris' Employment Agreement.
Compensation Committee and Stock Option Committee
John E. Abdo
Irwin K. Chapman
Robert B. Greenberg
Darwin C. Dornbush
PERFORMANCE GRAPH
Comparision of five year cumulative return* among Benihana Inc., The NASDAQ
stock market-US index and a peer group
Mar-91 Mar-92 Mar-93 Mar-94 Mar-95 Mar-96
Benihana Inc. 100 133 181 229 552 886
NASDAQ stock market-US 100 127 147 158 176 239
Peer group 100 91 67 79 54 38
*$100 invested on 03/31/91 in stock or index-
including reinvestment of dividends.
Fiscal year ending March 31.
This Peer Group consists of Sizzler International Inc. (SZ), Max & Erma's
Restaurants, Inc. (MAXE), Ark Restaurants Corp. (ARKR) and Chart House
Enterprises Inc. (CHT).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
BOT and Mr. Rocky H. Aoki, collectively, own shares which have
approximately 52% of the votes represented by the Corporation's Common Stock,
which class elects 75% of the directors and, therefore, BOT and Mr. Aoki are
able to control the Corporation through the election of a majority of its
directors. The exercise of currently outstanding warrants to purchase shares of
Class A Stock will not substantially diminish BOT's voting control of the
Corporation.
Rocky H. Aoki, the Chairman of the Board of Directors of the
Corporation, beneficially owns all of the outstanding stock of BOT. Mr. Aoki's
shares in BOT are subject to a voting trust agreement. The trustees (any two of
whom have the power to vote the shares) are Mr. Aoki, Katsu Aoki (Mr. Aoki's
mother), and Darwin C.
Dornbush, the Secretary and a Director of the Corporation.
The Corporation originally acquired a substantial portion of its assets
(including 11 Benihana restaurants) from BOT in 1983. On May 15, 1995 the
Corporation, pursuant to the terms of an Agreement and Plan of Reorganization
dated as of December 27, 1994 and amended as of March 17, 1995 (the
"Reorganization Agreement") by and among the Corporation, BNC Merger Corp., a
Delaware corporation and the Corporation's wholly owned subsidiary ("Mergerco"),
BNC, and BOT, acquired 17 company-owned and 4 licensed Benihana restaurants (the
"BOT Restaurants") from BOT and all rights to the Benihana name and BOT's trade
names, service marks and proprietary systems in the United States (except for
rights related to the State of Hawaii described below) and Central and South
America and the islands in the Caribbean Sea (the "Territory") for consideration
consisting
11
<PAGE>
of (i) $3,000,000 in cash, (ii) 2,000 shares of the Corporation's Series A
Convertible Preferred Stock which has an aggregate liquidation preference of
$2,000,000 and is convertible into 300,000 shares of the Corporation's Class A
Stock, (iii) 76,905 shares of the Corporation's Common Stock and (iv) a 7 1/2%,
5-year, unsecured promissory note of the Corporation in the principal amount of
$650,000. In addition the Corporation assumed the ordinary course of business
liabilities of BOT relating to the BOT Restaurants of approximately $6,307,000
(including capitalized lease obligations) at May 15, 1995. Simultaneously
therewith and also pursuant to the Reorganization Agreement, Mergerco was merged
into BNC and BNC became a wholly owned subsidiary of the Corporation. Under the
terms of the Reorganization Agreement, each BNC stockholder became entitled to
receive one share of the Common Stock of the Corporation for each share of BNC
Common Stock owned and one share of the Class A Stock of the Corporation for
each share of BNC Class A Common Stock owned and each option or warrant to
acquire shares of BNC stock became an identical option or warrant to purchase
the same number of shares of the same class of the Corporation's stock at the
same price.
Under the Reorganization Agreement, BOT retained its ownership to a
Benihana restaurant in Honolulu, Hawaii (the "Honolulu Restaurant") and all
rights to the Marks and related intellectual property outside the Territory. The
Corporation also granted to BOT a perpetual license to operate the Honolulu
Restaurant and an exclusive license to own and operate Benihana restaurants in
Hawaii (the "Hawaiian Restaurants"). This license is royalty free with respect
to any Hawaiian Restaurant beneficially owned by Mr. Aoki. The Corporation has a
right of first refusal to purchase any Hawaiian Restaurant or any joint venture
or sublicensing thereof proposed to be made by BOT with an unaffiliated third
party; and, in the event any Hawaiian Restaurant is sold, sublicensed or
transferred to a third party not affiliated with Mr. Aoki, the Corporation will
be entitled to receive royalties from such restaurant equal to 6% of gross
revenues.
At the time of the Reorganization, the Corporation entered into
employment agreements with each of Rocky H. Aoki and Joel Schwartz providing
for their services as the Corporation's Chairman of the Board and President,
respectively. Each employment agreement has an initial term expiring 5 years
and the base salary of Messrs. Aoki and Schwartz shall be $350,000 and
$230,000, per annum, respectively. See "Executive Compensation."
BOT and BNC entered into an agreement (terminated in connection with
the Reorganization) (the "Services Agreement") that governed their previous
business relationship. In general, the Services Agreement required BOT to
provide BNC with certain administrative and management services (including
office facilities and services, administration of certain insurance programs,
and advertising services) and required BNC to reimburse BOT for the direct and
indirect costs reasonably incurred by BOT in providing the same. Such services
were provided only to the extent required by BNC. Pursuant to the Services
Agreement, all transactions or other arrangements between the two companies
(other than those covered by the License described above) were on terms at least
as favorable to BNC as those that could have been negotiated with unrelated
parties for comparable services or products. The Services Agreement further
provided that BNC would not be required to make loans to BOT or assume any
liability with respect to guarantees for the benefit of BOT or any BOT affiliate
and that BOT will not be required to make any loans or advances to, or
guarantees for the benefit of the Corporation.
BNC and an affiliate of BOT were parties to a management agreement
pursuant to which BNC provided certain managerial services with respect to a
Benihana restaurant owned by such subsidiary in London, England. BNC and such
subsidiary terminated this management agreements as of January 5, 1992, as of
which date approximately $410,000 was due and payable to the Corporation
pursuant to the terms of the agreement. BNC has received a note from BOT
providing for the payment of this amount over a 10-year period in equal monthly
installments, together with interest thereon at the rate of 8% per annum. As of
March 31, 1996 approximately $266,000 of the principal balance remained
outstanding under such note.
Effective July 1, 1992, BOT and BNC licensed a computer software
program from Coconut Code, Inc. for use in performing certain accounting
functions. The license requires BNC to pay an aggregate license fee of
approximately $115,000 over a 48-month period commencing July 1, 1992. The
license fee was paid in full as of March 31, 1996. Mr. John E. Abdo, a director
of the Corporation, is the Chairman of the Board of Coconut Code, Inc. and
beneficially owns approximately 33% of its common equity. Management believes
that the terms of the license agreement are competitive for comparable computer
software systems.
12
<PAGE>
PROPOSAL 2: APPROVAL OF ADOPTION OF THE 1996 CLASS A STOCK OPTION PLAN
The Corporation's Board of Directors has unanimously adopted, submitted
for stockholder approval, and recommended that the stockholders approve, a 1996
Class A Stock Option Plan (the "1996 Plan") for the issuance to employees and
other providers of services to the Corporation (other than non-employee
directors) of options to purchase an aggregate of 300,000 shares of the
Corporation's Class A Stock. The Board of Directors believes approval of the
adoption of the 1996 Plan to be in the best interests of the Corporation because
it gives to the Corporation an increased supply of Options for compensation of
personnel and the flexibility to grant Options to purchase Class A Stock.
The existing 1994 Plan makes available Options to purchase 500,000
shares of Common Stock. As of March 31, 1996 Options had been granted under the
1994 Plan to purchase an aggregate of 10,000 shares of Common Stock and Options
to purchase an additional 67,400 shares of Common Stock were outstanding under
previous employee stock option plans of the Corporation. See "EXECUTIVE
COMPENSATION - Stock Options." In addition, the Directors' Plan makes available
Options to purchase 50,000 shares of Common Stock. As of March 31, 1996 Options
had been granted under the Directors' Plan to purchase an aggregate of 15,000
shares of Common Stock. See "EXECUTIVE COMPENSATION - Directors Compensation."
The Corporation's Stock Option Committee has made no determination as
to who would receive the Options under the 1996 Plan and is reserving all of
such Options for future grants.
Description of the 1996 Plan
The following description of the 1996 Plan is qualified in its entirety
by reference to the 1996 Plan, a copy of which is attached to this Proxy
Statement as Exhibit A and is incorporated by reference herein. Attention is
particularly directed to the description therein of the prices, expiration dates
and other material conditions upon which the options may be granted and
exercised.
Options granted under the 1996 Plan may either be Incentive Stock
Option ("ISO's") pursuant to which the recipient receives certain tax benefits
or non-ISO's. The 1996 Plan provides, among other things, that options may be
granted to purchase shares of Class A Stock at a price per share fixed by the
Board of Directors and, in the case of an ISO, at not less than the fair market
value of the applicable class of the Corporation's Class A Stock on the date of
option grant (110% of such fair market value in the case of optionees holding
10% or more of the combined voting rights of the Corporation's securities). For
grants to officers or directors, the price will be the minimum price described
in the preceding sentence.
The Stock Option Committee may grant Options to such persons to
purchase the number of shares as the Stock Option Committee may determine. As
non-employee members of the Board, the members of the Stock Option Committee are
ineligible to receive grants of options under the 1996 Plan. At the discretion
of the Stock Option Committee, Options are for a term not to exceed 10 years.
Options may be exercised by the payment in full in cash or by, with approval of
the Stock Option Committee, payment of par value in cash with a note for the
balance or in exchange for previously issued shares the Corporation of Class A
Stock valued, for this purpose an its market value at the time of exchange.
All shares available under the 1996 Plan are subject to adjustments
that may be made for a merger, recapitalization, stock dividend, stock split or
other similar change affecting the number of outstanding shares of Class A
Stock. Shares subject to an option that lapses, terminates or is forfeited will
be available for future options or awards.
The Board of Directors may at any time amend, suspend, or discontinue
the 1996 Plan; provided that certain amendments may not be made by the Board of
Directors without approval of the stockholders. Amendments may not alter an
outstanding option without the consent of the optionee.
Federal Income Tax Consequences
Under the present Internal Revenue Code the Federal income tax
consequences of the grant and exercise of options to purchase shares of the
Corporation's Class A Stock under the 1996 Plan, and the sale of such shares,
will depend upon whether or not the option is an ISO. No tax is imposed on the
grantee, and no deduction is
13
<PAGE>
available to the Corporation, at the time of grant of an option. Upon the
exercise of an option (other than an ISO), generally the grantee will be treated
as receiving compensation (and the Corporation will be entitled to a deduction)
equal to the excess of the fair market value of the related shares at the time
of exercise over the exercise price. If shares of the Class A Stock are
delivered by the optionee in exercise of an option (other than an ISO), no
amount will be includable in the optionee's gross income with respect to the
number of shares received, up to the number delivered, and the optionee's basis
in the number of shares so acquired will be the same as the optionee's basis in
the number of shares delivered; the fair market value of any additional shares
so received will be includable in the optionee's gross income and this amount
will become the basis for those shares. According to proposed regulations issued
by the Internal Revenue Service, the fair market value of any additional shares
received upon the exercise of an ISO by delivery of shares of the Corporation's
Class A Stock would not be includable in the optionee's gross income and the
optionee's basis for such additional shares will be zero. Finally, a corporate
insider subject to the six-month period described in Section 16(b) of the
Securities Exchange Act of 1934 may postpone the realization of income from an
exercise until six months after the exercise, with the amount includable in the
optionee's gross income determined at the end of the six months period, by not
electing to have the amounts includable in the optionee's gross income
determined the time of exercise.
Although an individual can receive an unlimited number of ISO's during
any calendar year, the aggregate fair market value (determined at time of option
grant) of the stock with respect to which ISO's first become exercisable during
any calendar year (under all of the Corporation's Plans) cannot exceed $100,000
per individual. An optionee will not realize taxable income for federal income
tax purposes upon the exercise of an ISO (but such exercise may subject such
optionee to the alternate minimum tax) provided the optionee does not dispose of
the shares acquired upon the exercise within two years from the date of grant or
within one year from the date of exercise. If these conditions are met, the
Corporation will not be entitled to a deduction in connection with the grant or
the exercise of the option.
The net capital gain realized on the resale or disposition of the
shares is subject to tax at the same rate as ordinary income, except that an
individual's net capital gains will be subject to a maximum tax rate of 28%. If
the optionee disposes of the shares within the two or one year periods mentioned
above, the optionee will realize taxable ordinary income in an amount equal to
any excess of the fair market value of the shares on the date of exercise (or
the amount realized on disposition, if less) over the option price, and the
Corporation will be allowed a corresponding deduction as in the case of a
non-ISO.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE IN FAVOR
OF THE APPROVAL OF THE ADOPTION OF THE 1996 CLASS A STOCK OPTION PLAN
PROPOSAL 3: RATIFICATION OF DELOITTE & TOUCHE LLP AS ACCOUNTANTS
The firm of Deloitte & Touche LLP, or its predecessor Touche Ross &
Co., has audited the financial statements of the Corporation and its predecessor
since its formation in 1982 and the Board of Directors desires to continue the
services of that firm for the current fiscal year ending March 30, 1997. The
affirmative vote of a majority of the votes cast on the proposal at the Meeting
is required to ratify such appointment. This vote is not required by the
Corporation's Certificate of Incorporation or By-Laws. However, the Board of
Directors will appoint other independent public accountants if the appointment
of Deloitte & Touche LLP is not approved by a majority of the votes of the
shares represented and voting thereon at the Meeting. A representative of
Deloitte & Touche LLP is expected to be present at the Meeting and will have the
opportunity to make a statement if he or she wishes and will be available to
respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF
THE APPOINTMENT OF DELOITTE & TOUCHE LLP.
14
<PAGE>
PROPOSAL 4: STOCKHOLDER PROPOSAL RELATING TO RECAPITALIZATION
James K. Swofford, Box 391, Benton, Illinois 62812, a holder of Common
Stock or Class A Stock having a value of at least $1,000, has stated his
intention to submit the following proposal for consideration at the Annual
Meeting of Stockholders. The proposal and supporting statement, which the Board
of Directors and the Corporation oppose, are set forth below.
"RESOLVED that the Stockholders of New Benihana
recommend that the Board of Directors take the necessary steps
to eliminate the two classes of Common Stock in the
Corporation and combine the two classes into one."
SUPPORTING STATEMENTS:
"There is basically no difference between the Common
Stock and the Class A Common Stock except for voting rights."
"The Corporation's Common Stock is convertible into
Class A Common Stock on a one-for-one basis."
"The Corporation would save both time and expense by
having only one type of Common Stock; both stocks are $.10 par
value and there should be less recordkeeping paperwork and
answering questions involved if the two were combined."
"The Corporation and ultimately the shareholders gain
nothing by having two classes of Common Stock and combining
them would simplify matters for everyone."
"If you agree, please mark your proxy for this
Resolution."
BOARD OF DIRECTORS RECOMMENDATION
THE BOARD RECOMMENDS A VOTE AGAINST THIS PROPOSAL FOR THE FOLLOWING
REASONS:
The common equity of the Corporation has consisted of two classes of
Common Stock since 1987. Shares of both classes represent identical equity
interests in the Corporation, except that shares of the Class A Stock possess
1/10 vote with respect to most matters as to which shares of the Common Stock
and Class A Stock are entitled to vote. In addition, holders of the Class A
Stock vote separately as a class to elect 25% of the Corporation's Board of
Directors.
The Corporation notes that no additional recordkeeping, paperwork or
responding to questions (or related time and expense) is incurred in maintaining
the Corporation's existing capital structure and accordingly, no savings would
result to the Corporation from the elimination of this capital structure.
Further, the Board of Directors believes that the elimination of this
dual class capital structure would eliminate a valuable and flexible financing
tool possessed by the Corporation. In certain circumstances, the dual class
capitalization permits acquisitions for equity securities (rather than for cash
or indebtedness) and the raising of equity capital, in each case without
significantly affecting the existing voting control of the Corporation or the
stability of the Corporation's plans and policies. In fact, the Corporation was
able to raise approximately $7 million in equity financing in 1987 through the
offering of shares of the Class A Stock, a warrant to purchase shares of Class A
Stock was issued in connection with the Corporation's favorable 1989
restructuring of its senior bank debt and, in 1995, the Corporation completed
the combination of the United States operations of Benihana of Tokyo, Inc. with
the Corporation's predecessor, Benihana National Corp., in part through the
reservation for issuance of shares of Class A Stock. In addition, the 1996 Plan
being recommended by the Board of Directors for stockholder approval at the
meeting (Proposal 2 herein) is based on the availability of Class A Stock.
15
<PAGE>
Finally, stockholders should note that the stockholder proposal, if
adopted, merely constitutes a recommendation to the Board of Directors to
eliminate the Corporation's existing capital structure and will not operate, by
itself, to cause such elimination. Any decision to revise the Corporation's
capital structure remains the responsibility of the Board of Directors, subject
to stockholder approval at a subsequent meeting of stockholders, in accordance
with its responsibility to maximize the value of the Corporation in the best
interests of all stockholders.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST THE STOCKHOLDER PROPOSAL.
ANNUAL REPORT
The Corporation's 1996 Annual Report is being mailed to stockholders
contemporaneously herewith.
STOCKHOLDER PROPOSALS
Stockholder proposals which are intended for inclusion in the
Corporation's Proxy Statement for the Meeting to be held in 1997 should be
addressed to the Assistant Secretary of the Corporation at 8685 Northwest 53rd
Terrace, Miami, Florida 33166, and must be received no later than February 13,
1997.
PROXY STATEMENT EXPENSES
Proxies will be solicited by mail. Certain officers and regular
employees of the Corporation may solicit the return of proxies by telephone,
telegraph or personal interview. No such officers and regular employees of the
Corporation will receive additional compensation for their soliciting efforts.
Brokerage houses will be requested to forward the soliciting materials to
beneficial owners. The expenses in connection with the solicitation of the
accompanying forms of proxy, including the cost of preparing, printing and
mailing the Notice of Meeting, Proxy Statement and forms of proxy either have
been or will be borne by the Corporation.
FORM 10-K
THE CORPORATION WILL PROVIDE WITHOUT CHARGE TO EACH STOCKHOLDER, UPON
WRITTEN REQUEST DIRECTED TO JUAN GARCIA, ASSISTANT SECRETARY, AT 8685 NORTHWEST
53RD TERRACE, MIAMI, FLORIDA 33166, A COPY OF THE CORPORATION'S ANNUAL REPORT ON
FORM 10-K (INCLUDING THE FINANCIAL STATEMENT AND THE SCHEDULES THERETO) FOR THE
FISCAL YEAR ENDED MARCH 31, 1996.
Dated: June 12, 1996 Order of the Board of Directors
----------------------------------
By: Darwin C. Dornbush, Secretary
16
<PAGE>
BENIHANA INC.
Class A Common Stock
Proxy - For the Annual Meeting of Stockholders - July 19, 1996.
This Proxy is solicited on behalf of the Board of Directors.
The undersigned stockholder of BENIHANA INC., revoking any previous
proxy for such stock, hereby appoints Rocky H. Aoki, Joel A. Schwartz and Darwin
C. Dornbush, or any one of them, the attorneys and proxies of the undersigned,
with full power of substitution, and hereby authorizes them to vote all shares
of Class A Common Stock of BENIHANA INC. which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held on July 19, 1996 at 10:00
A.M. at the Benihana Restaurant, 8727 S. Dixie Highway, Miami, Florida 33143,
and any adjournments thereof on all matters coming before said meeting.
In the event no contrary instructions are indicated by the undersigned
stockholder, the proxies designated hereby are authorized to vote the shares as
to which the proxy is in accordance with the recommendations of the Board of
Directors set forth on this card.
The Board of Directors Recommends a Vote FOR Proposals 1 and 2 and 3
AGAINST Proposal 4.
-----
For each proposal, mark one box / X / in blue or black ink.
Proposal 1. Election of Directors.
FOR THE NOMINEE WITHHOLD AUTHORITY
Robert B. Greenberg
Class I Director
o o
1
<PAGE>
Proposal 2. Approval of the adoption of the 1996 Plan.
FOR AGAINST ABSTAIN
o o o
Proposal 3. Ratification of Deloitte & Touche LLP as Accountants.
FOR AGAINST ABSTAIN
o o o
Proposal 4. Stockholder Proposal to recommend to the Board of Directors
that the Corporation's two classes of Common Stock be combined into a single
class.
FOR AGAINST ABSTAIN
o o o
Please sign here exactly as your name(s) appear(s) on this Proxy.
- ----------------------------------------------------------------
(Signature)
- ----------------------------------------------------------------
(Signature)
Dated:____________________________
If signing for an estate, trust or corporation, title or capacity should be
stated. If shares are held jointly, each holder should sign. If a partnership,
sign in partnership name by authorized person.
2
<PAGE>
BENIHANA INC.
Common Stock
Proxy - For the Annual Meeting of Stockholders - July 19, 1996.
This Proxy is solicited on behalf of the Board of Directors.
The undersigned stockholder of BENIHANA INC., revoking any previous
proxy for such stock, hereby appoints Rocky H. Aoki, Joel A. Schwartz and Darwin
C. Dornbush, or any one of them, the attorneys and proxies of the undersigned,
with full power of substitution, and hereby authorizes them to vote all shares
of Common Stock of BENIHANA INC. which the undersigned is entitled to vote at
the Annual Meeting of Stockholders to be held on July 19, 1996 at 10:00 A.M. at
the Benihana Restaurant, 8727 S. Dixie Highway, Miami, Florida 33143, and any
adjournments thereof on all matters coming before said meeting.
In the event no contrary instructions are indicated by the undersigned
stockholder, the proxies designated hereby are authorized to vote the shares as
to which the proxy is given in accordance with the recommendation of the Board
of Directors set forth on this card.
The Board of Directors Recommends a Vote FOR Proposals 1 and 2 and 3
AGAINST Proposal 4.
----
For each proposal, mark one box / X / in blue or black ink.
Proposal 1. Election of Directors.
FOR THE NOMINEE WITHHOLD AUTHORITY
Taka Yoshimoto -
Class I Director
o o
Darwin C. Dornbush-
Class III Director
o o
1
<PAGE>
Proposal 2. Approval of the adoption of the 1996 Plan.
FOR AGAINST ABSTAIN
o o o
Proposal 3. Ratification of Deloitte & Touche LLP as Accountants.
FOR AGAINST ABSTAIN
o o o
Proposal 4. Stockholder Proposal to recommend to the Board of Directors
that the Corporation's two classes of Common Stock be combined into a single
class.
FOR AGAINST ABSTAIN
o o o
Please sign here exactly as your name(s) appear(s) on this Proxy.
- ----------------------------------------------------------------
(Signature)
- ----------------------------------------------------------------
(Signature)
Dated:____________________________
If signing for an estate, trust or corporation, title or capacity should be
stated. If shares are held jointly, each holder should sign. If a partnership,
sign in partnership name by authorized person.
2
<PAGE>
Exhibit A
BENIHANA INC.
1996 CLASS A STOCK OPTION PLAN
Adopted by Board of Directors
Effective
May 23, 1996
<PAGE>
BENIHANA INC.
1996 CLASS A STOCK OPTION PLAN
1. The Plan. This 1996 Class A Stock Option Plan
(the "Plan") is intended to encourage ownership of stock of Benihana Inc.
(the "Corporation") by specified employees of the Corporation and its
subsidiaries and to provide additional incentive for them to promote the
success of the business of the Corporation.
2. Stock Subject to the Plan. Subject to the provisions of
Paragraph 14 hereof, the total number of shares of Class A Common Stock, par
value $.10 per share, of the Corporation (the "Stock") which may be issued
pursuant to Incentive Stock Options (as hereinafter defined) and non-incentive
stock options granted under the Plan (the "Options") shall be 300,000. Such
shares of Stock may be, in whole or in part, either authorized and unissued
shares or treasury shares as the Board of Directors of the Corporation (the
"Board") shall from time to time determine. If an Option shall expire or
terminate for any reason without having been exercised in full, the unpurchased
shares covered thereby shall (unless the Plan shall have been terminated) again
be available for Options under the Plan.
3. Administration of the Plan. The Plan shall be administered
in all respects by a committee (the "Committee") composed of at least two
non-employee members of the Board who are designated by the Board, each of whom
shall be a "disinterested person" within the meaning of Rule 16b-3 promulgated
by the Securities and Exchange Commission, as the same (or any successor
regulation thereto) may be in effect from time to time, which Committee shall
have plenary authority, in its discretion, to determine the employees of the
Corporation and its subsidiaries to whom Options shall be granted ("Optionees"),
the number of shares to be subject to each Option (subject to the provisions of
Paragraph 2) and the terms of each Option. The Committee shall also have plenary
authority, subject to the express provisions of the Plan, to interpret the Plan,
to prescribe, amend and rescind any rules and regulations relating to the Plan
and to take such other action in connection with the Plan as it deems necessary
or advisable. The interpretation and construction by the Committee of any
provisions of the Plan or of any Option granted thereunder shall be final, and
no member of the Board shall be liable for any action or determination made in
good faith with respect to the Plan or any Option granted thereunder.
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<PAGE>
4. Employees Eligible for Options. All employees of the
Corporation or its subsidiaries, including all employees who are also directors
of the Corporation, and all employees of the Corporation's affiliate, Benihana
of Tokyo, Inc. In making the determination as to employees to whom Options shall
be granted and as to the number of shares to be covered by such Options, the
Committee shall take into account the duties of the respective employees, their
present and potential contributions to the success of the Corporation and such
other factors as it shall deem relevant in connection with accomplishing the
purposes of the Plan.
5. Term of Plan. The Plan shall terminate on, and no
Options shall be granted after, May 22, 2006, provided that the
Board may at any time terminate the Plan prior thereto.
6. Maximum Option Grant. With respect to Options which are
intended to qualify as Incentive Stock Options, the aggregate fair market value
(determined as of the time the Option is granted) of the Stock with respect to
which ISO's granted to any employee (whether under this Plan or under any other
stock option plan of the Corporation) become exercisable for the first time in
any year may not exceed $100,000. The number of shares of Stock for which any
employee may be granted Options under the Plan not treated as Incentive Stock
Options shall be unlimited.
7. Option Price. Each Option shall state the option price,
which shall be, in the case of Incentive Stock Options, not less than 100% of
the fair market value of the Stock on the date of the granting of the Option,
nor less than 110% in the case of an Incentive Stock Option granted to an
individual who, at the time the Option is granted, is a 10% Holder (as
hereinafter defined). The fair market value of shares of Stock shall be
determined by the Committee and shall be the mean between the high bid and low
asked prices of the Stock on the date of the granting of the Option as reported
by the National Quotation Bureau, Inc. or any similar organization.
8. Term of Options. The term of each Option shall be for a
maximum of ten years from the date of granting thereof, and a maximum of five
years in the case of an Incentive Stock Option granted to a 10% Holder, but may
be for a lesser period or be subject to earlier termination as hereinafter
provided.
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<PAGE>
9. Exercise of Options.
(a) An Option may be exercised from time to time
as to any part or all of the Stock to which the Optionee shall then be entitled
subject to any vesting schedule which may be set by the Committee at the time
such Option is granted; provided, however, that an Option may not be exercised
(A) as to less than 100 Shares at any time (or for the remaining Shares then
purchasable under the Option, if less than 100 Shares), (B) prior to the
expiration of six months from date of grant except in the case of the death or
disability of the Optionee, and (C) unless the Optionee shall have been in the
continuous employ of the Corporation or its subsidiaries from the date of the
granting of the Option to the date of its exercise, except as provided in
Paragraphs 12 and 13. The purchase price of the Stock issuable upon exercise of
an Option shall be paid in full at the time of the exercise thereof (i) in cash,
(ii) by the transfer to the Corporation of shares of its Stock with a fair
market value (as determined by the Committee) equal to the purchase price of the
Stock issuable upon exercise of such Option, or (iii) by delivery of cash and a
note as set forth in Subparagraph (b) below; provided, however, that payment as
set forth in clauses (ii) and (iii) are subject to approval by the Committee in
its sole discretion. The holder of an Option shall not have any rights as a
stockholder with respect to the Stock issuable upon exercise of an Option until
certificates for such Stock shall have been delivered to him after the exercise
of the Option.
(b) The Committee may, in its sole discretion,
determine with respect to any Option that it shall provide that the optionee
shall be entitled to pay for the shares purchased upon exercise of the option
upon the following terms and conditions:
(i) The price per share will be payable in
cash at least equal to the par value of the Stock covered by such
Option and the remainder with a promissory note (the "Note"), in form
satisfactory to counsel to the Corporation. The Note will mature and be
payable no later than on the tenth anniversary of the exercise date and
shall bear interest and be payable at such time or times as the
Committee may determine. The Optionee will have the right to prepay at
any time the entire, and from time to time any portion of, the unpaid
principal of the Note. No prepayment shall in any way obligate the
Corporation to forgive or accelerate the forgiveness of any portion of
the Note.
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<PAGE>
(ii) As part of its compensation program, the
Corporation may forgive on each annual anniversary of the exercise date
not less than 5% of the purchase price (but not accrued interest) by
crediting such amount against the principal of the Note (or will pay
the optionee such percentage of the purchase price in the event of
prepayment by the optionee) if, and only if, the Optionee is on such
date, and has at all times during the preceding twelve months been, an
active or retired employee of the Corporation or subsidiary corporation
of the Corporation. If an Optionee disposes of any of the shares
acquired upon exercise of any option granted in accordance with this
Subparagraph 9(b), the amount of any forgiveness on each subsequent
anniversary shall be reduced proportionately.
(iii) Whenever in the judgment of the Committee,
the profitability and financial and other conditions of the Corporation
are such as to justify such action, the Committee may increase or
accelerate to such date as it shall determine the forgiveness of all or
any portions of the Note. Such action is discretionary and is not
required regardless of the Corporation's financial condition or the
optionee's performance. Accrued interest if due on any portion of the
Note so forgiven shall be payable on the date to which forgiveness is
accelerated.
(iv) Upon the termination of employment of an
Optionee for any reason whatsoever, other than death, disability, or
retirement, the entire unpaid balance due on the Note shall become and
be immediately due and payable, with accrued interest, on the sixtieth
day after such termination. Upon the termination of employment of an
Optionee by reason of death, disability, or retirement, the payment
terms of the Note shall not accelerate and the Note shall remain the
obligation of the Optionee or the Optionee's estate.
(v) The Committee may, in its discretion, require the
Optionee to pledge the Stock acquired through exercise of the Option as
security for repayment of the Note.
10. Non-transferability of Options. Except as
provided in the following sentence, an Option shall not be
transferable otherwise than by will or the laws of descent and
distribution and is exercisable during the lifetime of the
employee only by him or his guardian or legal representative.
The Committee shall have discretionary authority to grant Options
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<PAGE>
which will be transferrable to members of an Optionee's immediate family,
including trusts for the benefit of such family members and partnerships in
which such family members are the only partners. A transferred Option shall be
subject to all of the same terms and conditions as if such Option had not been
transferred.
11. Form of Option. Each Option granted pursuant to the Plan
shall be evidenced by an agreement (the "Option Agreement") which shall clearly
identify the status of the Options granted thereunder (i.e., whether an
Incentive Stock Option or non-incentive stock option) and which shall be in such
form as the Committee shall from time to time approve. The Option Agreement
shall comply in all respects with the terms and conditions of the Plan and may
contain such additional provisions, including, without limitation, restrictions
upon the exercise of the Option, as the Committee shall deem advisable.
12. Termination of Employment. In the event that the
employment of an Optionee shall be terminated (otherwise than by reason of
death), such Option shall be exercisable (to the extent that such Option was
exercisable at the time of termination of his employment) at any time prior to
the expiration of a period of time not exceeding three months after such
termination, but not more than ten years (five years in the case of an Incentive
Stock Option granted to a 10% Holder) after the date on which such Option shall
have been granted. Nothing in the Plan or in the Option Agreement shall confer
upon the Optionee any right to be continued in the employ of the Corporation or
its subsidiaries or interfere in any way with the right of the Corporation or
any subsidiary to terminate or otherwise modify the terms of Optionee's
employment, provided, however, that a change in Optionee's duties or position
shall not affect such Optionee's Option so long as such Optionee is still an
employee of the Corporation or its subsidiaries.
13. Death of Optionee. In the event of the death of an
Optionee, any unexercised portion of this Option shall be exercisable (to the
extent that such Option was exercisable at the time of his death) at any time
prior to the expiration of a period not exceeding three months after his death
(or, in the case of an Option which is not an Incentive Stock Option, three
months after the appointment and qualification of Optionees legal
representative) but not more than ten years (five years in the case of an
Incentive Stock Option granted to a 10% Holder) after the date on which such
Option shall have been granted and only by such person or persons to whom such
deceased Optionee's rights
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<PAGE>
shall pass under such Optionee's will or by the laws of descent
and distribution.
14. Adjustments Upon Changes in Capitalization. In
the event of changes in the outstanding Stock of the Corporation
by reason of stock dividends, split-ups, recapitalizations,
mergers, consolidations, combinations or exchanges of shares,
separations, reorganizations or liquidations, the number and
class of shares or the amount of cash or other assets or
securities available upon the exercise of any Option granted
hereunder, the exercise price therefor, the maximum number of
Shares as to which Options may be granted to an employee and the
total number of shares which may be issued upon exercise of
Options under this Plan shall be correspondingly adjusted, to the
end that the Optionee's proportionate interest in the
Corporation, any successor thereto or in the cash, assets or
other securities into which Shares are converted or exchanged,
and the cost thereof, shall be maintained to the same extent, as
near as may be practicable, as immediately before the occurrence
of any such event. All references in this Plan to "Stock" from
and after the occurrence of such event shall be deemed for all
purposes of this Plan to refer to such other class of shares or
securities issuable upon the exercise of Options granted pursuant
hereto.
15. Shareholder Approval. This Plan is subject to and no
Options shall be exercisable hereunder until after the approval of this Plan by
the holders of a majority of the Common Stock and Class A Common Stock of the
Corporation voting together as a single class (with the holders of shares of
Class A Common Stock having 1/10 vote per share) at a duly held meeting of the
stockholders of the Corporation within twelve months after the date of the
adoption of the Plan by the Board.
16. Amendment of the Plan. The Board shall have complete power
and authority to modify or amend the Plan (including the form of Option
Agreement) from time to time in such respects as it shall deem advisable;
provided, however, that the Board shall not, without the approval of the votes
represented by a majority of the votes represented by the outstanding common
voting equity of the Corporation present or represented at a meeting duly held
in accordance with the applicable laws of the Corporation's jurisdiction of
incorporation and entitled to vote at a meeting of stockholders or by the
written consent of shareholders owning stock representing a majority of the
votes of the Corporation's outstanding stock, (i) increase the maximum number of
shares which in the aggregate are subject to Options under the Plan
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<PAGE>
(except as provided by Paragraph 14), (ii) extend the term of the Plan or the
period during which Options may be granted or exercised, (iii) reduce the Option
price, in the case of Incentive Stock Options, below 100% (110% in the case of
an Incentive Stock Option granted to a 10% Holder) of the fair market value of
the Stock issuance upon exercise of Options at the time of the granting thereof,
other than to change the manner of determining the fair market value thereof,
(iv) materially increase the benefits accruing to participants under the Plan,
or (v) modify the requirements as to eligibility for participation in the Plan.
No termination or amendment of the Plan shall, without the consent of the
individual Optionee, adversely affect the rights of such Optionee under an
Option theretofore granted to him or under such Optionee's Option Agreement.
17. Taxes. The Corporation may make such provisions as it may
deem appropriate for the withholding of any taxes which it determines is
required in connection with any Options granted under the Plan. The Corporation
may further require notification from the Optionees upon any disposition of
Stock acquired pursuant to the exercise of Options granted hereunder.
18. Code References and Definitions. Whenever reference is
made in this Plan to a section of the Internal Revenue Code, the reference shall
be to said section as it is now in force or as it may hereafter be amended by
any amendment which is applicable to this Plan. The term "subsidiary" shall have
the meaning given to the term "subsidiary corporation" by Section 425(f) of the
Internal Revenue Code. The terms "Incentive Stock Option" and "ISO" shall have
the meanings given to them by Section 422A of the Internal Revenue Code. The
term "10% Holder" shall mean any person who, for purpose of Section 422A of the
Internal Revenue Code owns more than 10% of the total combined voting power of
all classes of stock of the employer corporation or of any subsidiary
corporation.
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<PAGE>
