SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or
Rule 14a-12
MORTON'S RESTAURANT
GROUP, INC.
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(Name of Registrant as Specified in Its Charter)
MORTON'S RESTAURANT GROUP,
INC.
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(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6 (i) (4)
and 0-11.
(1) Title of each class of securities to which transaction
applies:
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(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:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary proxy materials.
Check box if any part of the fee is offset as provided by
/ / Exchange Act Rule 0-11 (a) (2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
MORTON'S RESTAURANT GROUP, INC.
3333 NEW HYDE PARK ROAD
NEW HYDE PARK, NEW YORK 11042
Dear Stockholder:
You are cordially invited to the Annual Meeting of Stockholders of Morton's
Restaurant Group, Inc. to be held at 9:00 a.m. on Tuesday, May 9, 2000, at The
Garden City Hotel, 45 Seventh Street, Garden City, New York 11530.
The Notice of Meeting and Proxy Statement on the following pages cover the
formal business of the meeting, which includes proposals to (i) elect two
directors, (ii) ratify the re-appointment of KPMG LLP, certified public
accountants, as the Company's independent auditors for the fiscal year ending
December 31, 2000, and (iii) approve the adoption of the 2000 Stock Option Plan.
We hope that you will be able to attend the Annual Meeting in person. In any
event, in order that we may be assured of a quorum, we request that you
complete, sign, date and return the enclosed proxy as soon as possible. Your
vote is important regardless of the number of shares you own.
Sincerely,
[LOGO]
ALLEN J. BERNSTEIN
CHAIRMAN OF THE BOARD,
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
March 28, 2000
MORTON'S RESTAURANT GROUP, INC.
3333 NEW HYDE PARK ROAD
NEW HYDE PARK, NEW YORK 11042
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 9, 2000
------------------------
To the Stockholders of
MORTON'S RESTAURANT GROUP, INC.
The Annual Meeting of Stockholders of Morton's Restaurant Group, Inc. (the
"Company") will be held at The Garden City Hotel, 45 Seventh Street, Garden
City, New York 11530, at 9:00 a.m. on Tuesday, May 9, 2000, for the following
purposes:
1. to elect two directors to Class 2 of the Board of Directors to serve
three-year terms and until their successors are duly elected and qualified;
2. to ratify the re-appointment of KPMG LLP as the independent auditors
of the Company for the fiscal year ending December 31, 2000;
3. to consider and act upon a proposal to adopt the 2000 Stock Option
Plan; and
4. to consider and transact such other business as may properly be
brought before the meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March 23, 2000 will
be entitled to vote at the meeting.
Agnes Longarzo
SECRETARY
March 28, 2000
PLEASE SIGN, DATE AND RETURN YOUR PROXY PROMPTLY IN THE ENCLOSED, SELF-ADDRESSED
ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
PROXY STATEMENT
MORTON'S RESTAURANT GROUP, INC.
3333 NEW HYDE PARK ROAD
NEW HYDE PARK, NEW YORK 11042
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ANNUAL MEETING OF STOCKHOLDERS
MAY 9, 2000
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SOLICITATION OF PROXIES
The accompanying proxy is solicited by the Board of Directors of Morton's
Restaurant Group, Inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held at The Garden City Hotel, 45 Seventh
Street, Garden City, New York 11530, at 9:00 a.m., on Tuesday, May 9, 2000, or
at any adjournment or adjournments thereof (the "Annual Meeting").
A proxy that is properly submitted to the Company may be properly revoked at
any time before it is voted. Proxies may be revoked by (i) delivering to the
Secretary of the Company at or before the Annual Meeting a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a subsequent
proxy relating to the same shares of Common Stock and delivering it to the
Secretary of the Company at or 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 revocation of a proxy). A proxy which is
properly signed, submitted and not revoked will be voted for the nominees for
director named in proposal 1 and in favor of proposals 2 and 3 unless contrary
instructions are given, and such proxy may be voted by the persons named in the
proxy in their discretion upon such other business as may be properly brought
before the meeting.
The cost of soliciting proxies will be borne by the Company. In addition to
solicitation by mail, directors, officers and employees of the Company may
solicit proxies by telephone or otherwise. The Company has retained Corporate
Investor Communications, Inc. to assist it in soliciting proxies at an
anticipated cost of approximately $3,000. The Company will reimburse brokers or
other persons holding stock in their names or in the names of their nominees for
their charges and expenses in forwarding proxies and proxy material to the
beneficial owners of such stock. It is anticipated that the mailing of this
Proxy Statement will commence on or about April 1, 2000.
VOTING SECURITIES
The Company had outstanding 4,828,374 shares of common stock, par value $.01
per share ("Common Stock"), at the close of business on March 23, 2000, which
are the only securities of the Company entitled to be voted at the meeting. Each
share of Common Stock is entitled to one vote on each matter as may properly be
brought before the meeting. Only stockholders of record at the close of business
on March 23, 2000 will be entitled to vote.
VOTING PROCEDURES
The votes of stockholders present in person or represented by proxy at the
Annual Meeting will be tabulated by an inspector of elections appointed by the
Company. With regard to the election of directors, votes may be cast in favor of
or withheld from each nominee; votes that are withheld will be excluded entirely
from the vote and will have no effect. The nominees for directors of the Company
who receive the greatest number of votes cast by stockholders present in person
or represented by proxy at the Annual Meeting and entitled to vote thereon will
be elected directors of the Company.
Abstentions may be specified on all proposals except the election of
directors and will be counted as present for purposes of determining the
existence of a quorum. Since Proposals 2 and 3 must be approved
by the affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present, or represented and entitled to vote, at the Annual
Meeting, abstentions on these proposals will also have the effect of a negative
vote.
Under the rules of the New York Stock Exchange (NYSE), brokers who hold
shares in street name have the authority to vote on certain routine items even
when they have not received instructions from beneficial owners. Brokers that do
not receive instructions are entitled to vote on the non-contested election of
directors and ratification of auditors but may not vote shares held for
customers without specific instructions from such customers in respect of
approving a stock option amendment involving the issuance of stock or options to
directors, officers or employees in an amount that exceeds five percent of the
class of stock outstanding. With respect to Proposal 3, no broker may vote
shares held for customers without specific instructions from such customers.
Under applicable Delaware law, a broker non-vote will have no effect on the
outcome of the Proposals.
Shares of Common Stock held by stockholders who do not return a signed and
dated proxy and who do not attend the meeting in person will not be considered
present at the Annual Meeting, will not be counted towards a quorum and will not
be voted on any matter.
ELECTION OF DIRECTORS
(PROPOSAL 1)
The Certificate of Incorporation of the Company provides for the
classification of the Board of Directors into three classes, with the classes
being as nearly equal in number as possible. The current term of office of the
Class 2 directors will expire at the Annual Meeting; the current term of office
of the Class 3 directors will expire at the 2001 annual meeting; and the current
term of office of the Class 1 directors will expire at the 2002 annual meeting
(in each case, when their respective successors are duly elected and qualified).
The class of directors to be elected at each annual meeting will be elected for
a three-year term and the directors in the other classes will continue in
office.
The Certificate of Incorporation permits the Board of Directors to create
new directorships and to elect new directors therefor to serve for the full term
of the class of directors in which the new directorship was created. The by-laws
of the Company provide that a vacancy on the Board of Directors occurring from
an increase in the number of directors or otherwise may be filled by the vote of
a majority of directors then in office, though less than a quorum, or by a sole
remaining director.
The Company's by-laws provide that the Board of Directors shall consist of
not less than three nor more than nine directors. The Board of Directors has
fixed the number of directors at eight. The terms of Dr. John J. Connolly and
Mr. David B. Pittaway expire at the Annual Meeting. Dr. Connolly and
Mr. Pittaway have been renominated by the Board of Directors for election at the
Annual Meeting as Class 2 directors to serve (subject to the Company's by-laws)
until the election and qualification of their successors at the 2003 annual
meeting of stockholders. If any such person should be unwilling or unable to
serve as a director of the Company (which is not anticipated), the persons named
in the proxy will vote the proxy for substitute nominees selected by them unless
the number of directors to be elected has been reduced to the number of nominees
willing and able to serve.
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The following table sets forth information with respect to the nominees and
each of the directors whose term extends beyond the Annual Meeting, including
the year in which the nominees' terms would expire, if elected.
YEAR TERM EXPIRES,
NAME AGE DIRECTOR SINCE IF ELECTED, AND CLASS
- ---- -------- ---------------- ---------------------
Lee M. Cohn........................ 52 August 1997 2002 Class 1
Dianne H. Russell.................. 56 May 1993 2002 Class 1
Alan A. Teran...................... 54 May 1993 2002 Class 1
Dr. John J. Connolly............... 60 October 1994 2003 Class 2
David B. Pittaway.................. 48 December 1988 2003 Class 2
Allen J. Bernstein................. 54 December 1988 2001 Class 3
Thomas J. Baldwin.................. 44 November 1998 2001 Class 3
John K. Castle..................... 59 December 1988 2001 Class 3
Lee M. Cohn has been a Director of the Company since August 1997. Mr. Cohn
co-founded and has been the chief executive officer of Big 4 Restaurants, Inc.
since 1973. Mr. Cohn has served on the boards of Valley Big Brothers and the
Phoenix Ballet Company and is an active member of The Phoenix Thunderbirds, The
Fiesta Bowl Committee and the Young Presidents Organization (YPO). Mr. Cohn is a
director of Luther's Acquisition Corp. and Wilshire Restaurant Group, Inc.
Dianne H. Russell has been a Director of the Company since May 1993.
Ms. Russell is a Senior Vice President and Manager of the Merchant Banking
Operations of Imperial Bank in Boston. Formerly, Ms. Russell was President of
Hyde Boston Capital, a financial consulting company, since January 1992, and
before that, a Senior Vice President and Department Executive at BankBoston,
N.A., a national bank, where she was employed from 1975 to 1991. Ms. Russell is
the Chairman of the Financial Advisory Board of the Commonwealth of
Massachusetts.
Alan A. Teran has been a Director of the Company since May 1993. Mr. Teran
was the President of Cork 'N Cleaver Restaurants from 1975 to 1981. Since 1981,
Mr. Teran has been a principal in private restaurant businesses. Mr. Teran is
currently a Director of Good Times, Inc. and Charlie Browns Acquisition Corp.
and previously served on the Board of Boulder Valley Bank and Trust.
Dr. John J. Connolly has been a Director since October 1994. He is the
President and Chief Executive Officer of Castle Connolly Medical LTD since 1992.
He previously served as President and CEO of New York Medical College for over
ten years. He is a Fellow of the New York Academy of Medicine and a member of
the New York Academy of Science. He serves on the President's Advisory Council
of the United Hospital Fund, as a Director of Funding First and as a Director of
the New York Business Group on Health. He also has served as Chairman of the
Board of Trustees of St. Francis Hospital in Poughkeepsie and as a member of the
Board of Trustees of St. Agnes Hospital in White Plains. He is a fellow of the
New York Academy of Medicine and is a Director, founder and past Chairman of the
American Lyme Disease Foundation. Dr. Connolly serves as a Trustee emeritus and
past Chairman of the Board of the Culinary Institute of America and Director of
the Westchester County Association. Dr. Connolly also presently serves as a
Director of Dearborn Risk Management, Charlie Browns Acquisition Corp. and as
Chairman and a Director of AlphaGene, Inc.
David B. Pittaway has been a Director of the Company since December 1988. He
was a Vice President from December 1988 through May 1993 and Assistant Secretary
from May 1988 through September 1993. Mr. Pittaway is Senior Managing Director
and has been Vice President and Secretary of Castle Harlan, Inc., a private
merchant bank in New York City since February 1987. Mr. Pittaway has been Vice
President and Secretary of Branford Castle, Inc., an investment company, since
October 1986. From 1987 to 1998 he was Vice President and Chief Financial
Officer and a director of Branford Chain, Inc., a marine wholesale company,
where he is now a director and Vice Chairman. Prior thereto, Mr. Pittaway was
Vice President of Strategic Planning and Assistant to the President of Donaldson
Lufkin & Jenrette, Inc.
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Mr. Pittaway is also a director of Commemorative Brands, Inc., Equipment Support
Services, Inc., Charlie Browns Acquisition Corp., Luther's Acquisition Corp. and
Wilshire Restaurant Group, Inc.
Allen J. Bernstein has been Chairman of the Board of the Company since
October 1994 and Chief Executive Officer and a Director of the Company since
December 1988. He has been President of the Company since September 1997 and was
previously President of the Company from December 1988 through October 1994.
Mr. Bernstein has worked in many various aspects of the restaurant industry
since 1970. Mr. Bernstein is also a director of Dave and Busters, Inc., Charlie
Browns Acquisition Corp., Luther's Acquisition Corp. and Wilshire Restaurant
Group, Inc.
Thomas J. Baldwin was elected a Director of the Company in November 1998 and
Executive Vice President in January 1997. He previously served as Senior Vice
President, Finance of the Company since June 1992, and Vice President, Finance
since December 1988. In addition, Mr. Baldwin has been Chief Financial Officer,
Assistant Secretary and Treasurer of the Company since December 1988. His
previous experience includes seven years at General Foods Corp., now a
subsidiary of Kraft General Foods/Philip Morris Companies, Inc., where he worked
in various financial management and accounting positions, and two years at
Citicorp where he served as Vice President responsible for strategic planning
and financial analysis at a major corporate banking division. Mr. Baldwin is
currently a director of Charlie Browns Acquisition Corp. Mr. Baldwin is a
licensed certified public accountant in the State of New York.
John K. Castle has been a Director of the Company since December 1988.
Mr. Castle is Chairman and Chief Executive Officer of Branford Castle, Inc., an
investment company formed in 1986. Since 1987, Mr. Castle has been Chairman of
Castle Harlan, Inc., a private merchant bank in New York City. Immediately prior
to forming Castle Harlan, Inc., Mr. Castle was President and Chief Executive
Officer and a Director of Donaldson Lufkin & Jenrette, Inc., one of the nation's
leading investment banking firms. Mr. Castle is a Director of Sealed Air
Corporation, Commemorative Brands, Inc., Universal Compression, Inc.,
AdobeAir, Inc., Wilshire Restaurant Group, Inc. and a Managing Director of
Statia Terminals Group, N.V. Mr. Castle is a member of the Corporation of the
Massachusetts Institute of Technology and is also a trustee of the New York
Presbyterian Hospital, Inc. and the Whitehead Institute of Biomedical Research.
Formerly, Mr. Castle was a Director of The Equitable Life Assurance Society and
the New York Medical College (for 11 years he was Chairman of the Board).
MEETINGS OF THE BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors of the Company held six meetings during the fiscal
year ended January 2, 2000 ("fiscal 1999"). Each current director attended at
least 75% of the aggregate number of all meetings of the Board of Directors and
committees of which he or she was a member during such year.
The Board of Directors has created three standing committees: a three-member
Executive Committee, a three-member Audit Committee and a three-member
Compensation and Stock Option Committee.
The Executive Committee has, and may exercise between meetings of the Board
of Directors, all the power and authority of the Board of Directors in the
management of the business affairs of the Company, subject to certain
limitations. The Executive Committee held four meetings in fiscal 1999. Its
members are Allen J. Bernstein, John K. Castle and David B. Pittaway.
The Audit Committee recommends to the Board of Directors the engagement of
the independent auditors, and has the authority to review with the auditors and
with the Company's management all matters relating to the annual audit of the
Company. The Audit Committee held two meetings in fiscal 1999. Its members are
David B. Pittaway, Dianne H. Russell and Alan A. Teran.
The Compensation and Stock Option Committee has the authority to review and
approve the remuneration arrangements for executive officers and employees of
the Company, review the benefit plans for employees and select participants,
approve awards under, interpret and administer the employee
4
benefit plans of the Company. The Compensation Committee held five meetings in
fiscal 1999. Its members are John K. Castle, Lee M. Cohn and John J. Connolly.
The Board of Directors does not have a nominating committee. Changes in
directors are considered by the whole Board of Directors.
The Company's Certificate of Incorporation provides that nominations for the
election of directors may be made by any stockholder in writing, delivered or
mailed to the Secretary of the Company, Morton's Restaurant Group, Inc., 3333
New Hyde Park Road, New Hyde Park, New York 11042, not less than 45 days nor
more than 60 days prior to the meeting, except that if less than 55 days notice
or prior public disclosure of the meeting is given or made to stockholders, such
written notice shall be received not later than the close of business on the
tenth day following the day on which notice of the meeting was mailed or such
public disclosure was made, whichever first occurs. Each notice shall set forth
all information regarding each nominee proposed in such notice that would be
required to be included in a proxy statement soliciting proxies for the proposed
nominee (including such person's written consent to serve as a director if so
elected) and certain information about the stockholder proposing to nominate
that person. If the Chairman of the meeting determines that a nomination was not
made in accordance with the nomination procedure, such nomination will be
disregarded.
5
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of March 23, 2000,
with respect to the beneficial ownership of the Company's Common Stock of each
director, each nominee for director, each named executive officer in the summary
compensation table under "Executive Compensation" below, all executive officers
and directors as a group, and each person known by the Company to be the
beneficial owner of 5% or more of the Company's Common Stock. This information
is based upon information received from or on behalf of the named individuals or
entities.
SHARES OF
COMMON STOCK PERCENT OF
NAME BENEFICIALLY OWNED (1) CLASS (2)
- ---- ---------------------- ----------
Thomas J. Baldwin (3)........................... 69,930 1.44%
John T. Bettin.................................. 9,170 *
Allen J. Bernstein (3).......................... 449,955 8.99%
John K. Castle.................................. 5,178 *
Lee M. Cohn..................................... 1,000 *
Dr. John J. Connolly............................ 400 *
Klaus W. Fritsch (3)............................ 26,425 *
David B. Pittaway............................... 3,132 *
Dianne H. Russell............................... 500 *
Allan C. Schreiber (3).......................... 22,875 *
Alan A. Teran................................... 200 *
FMR Corp. (4)(6)................................ 818,900 16.96%
Lazard Freres & Co. LLC (4)..................... 492,500 10.20%
Capital Research and Management Company (4)..... 485,000 10.04%
Massachusetts Financial Services Company (4).... 426,000 8.82%
Baron Capital Group, Inc. (4)................... 375,000 7.77%
Brinson Partners, Inc. (4)...................... 372,904 7.72%
Goldman, Sachs & Co. (4)........................ 358,000 7.41%
Chartwell Investment Partners (4)............... 270,404 5.60%
Executive Officers and Directors as a Group
(12 Persons) (5).............................. 603,290 11.83%
- ------------------------
* Represents less than 1%.
(1) Unless otherwise noted, the beneficial owners listed have sole voting and
investment power over the shares listed.
(2) Percent of Class based upon 4,828,374 outstanding shares of Common Stock
plus, for those persons who hold options to acquire shares of Common Stock,
the number of shares of Common Stock beneficially owned by such person as of
March 23, 2000.
(3) Includes beneficial ownership of shares of Common Stock issuable upon
exercise of outstanding incentive stock options issued under the Stock
Option Plan as follows: Thomas J. Baldwin (27,750), Allen J. Bernstein
(178,750), Klaus W. Fritsch (26,425), and Allan C. Schreiber (22,875).
Excludes shares of Common Stock issuable upon exercise of incentive stock
options issued under the Stock Option Plan which are not exercisable by
May 23, 2000.
(4) Shares of Common Stock beneficially owned by FMR Corp., Lazard Freres & Co.
LLC ("Lazard"), Capital Research and Management Co. ("CRM"), Massachusetts
Financial Services Company ("MFS"), Baron Capital Group, Inc. ("BCG"),
Brinson Partners, Inc. ("Brinson"), and Goldman, Sachs & Co. ("GS&C"), are
listed according to reports on Schedule 13G as of December 31, 1999 filed on
February 14, 2000, February 15, 2000, February 14, 2000, February 11, 2000,
February 15, 2000, February 11, 2000, and February 11, 2000, respectively.
Shares of Common Stock beneficially owned by Chartwell Investment Partners
("Chartwell") are listed according to a report filed on Schedule 13F as of
December 31, 1999 filed on February 15, 2000.
Based upon information set forth in such report on Schedule 13G filed by
FMR Corp., FMR Corp. and Fidelity Management & Research Company
("Fidelity"), a wholly-owned subsidiary of FMR Corp., each of which is the
beneficial owner of 818,900 shares or 16.96% of the Common Stock as a result
of acting as an investment advisor to several investment companies. Members
of the Edward C. Johnson 3(rd)family, FMR Corp., through its control of
Fidelity, and the aforementioned
6
investment companies each has sole dispositive power over these 818,900
shares. The ownership of two investment companies, Fa Value Strategies Fund
and Fidelity Low-Priced Stock Fund, amounted to 424,800 shares or 8.80% and
360,000 shares or 7.46%, respectively, of the Common Stock. The power to
vote such shares resides with the aforementioned investment companies'
Boards of Trustees.
Based upon information set forth in such report on Schedule 13G filed by
Lazard, Lazard has sole voting and sole dispositive power over 492,500
shares or 10.20% of the Common Stock.
Based upon information set forth in such report on Schedule 13G filed by
CRM, CRM has sole dispositive power over 485,000 shares or 10.04% of the
Common Stock as a result of acting as investment advisor to SmallCap World
Fund, Inc. which has sole voting power over 415,000 or 8.60% of these
shares.
Based upon information set forth in such report on Schedule 13G filed by
MFS, MFS has sole voting and sole dispositive power over 426,000 shares or
8.82% of the Common Stock. MFS Series Trust II--MFS Emerging Growth Fund is
also a beneficial owner of these 426,000 shares.
Based upon information set forth in such report on Schedule 13G filed by
BCG, BCG is the beneficial owner of 375,000 shares or 7.77% of the Common
Stock. Baron Small Cap Fund, an investment company advised by BCG has shared
voting and dispositive power over these 375,000 shares and Mr. Ronald Baron
through his control of BCG has shared voting and dispositive power over
these 375,000 shares.
Based upon information set forth in such report on Schedule 13G filed by
Brinson, Brinson is the beneficial owner of 372,904 shares or 7.72% of the
Common Stock and has sole voting and shared dispositive power over these
shares as a result of acting as investment advisor. UBS AG through its
control of Brinson, its wholly-owned subsidiary, is also a beneficial owner
of these 372,904 shares.
Based upon information set forth in such report on Schedule 13G filed by
GS&C, GS&C has shared voting and dispositive power over 358,000 shares or
7.41% of the Common Stock. Goldman Sachs Trust, on behalf of Goldman Sachs
Small Cap Value Fund, is a beneficial owner of 240,000 or 4.97%, of these
shares.
Based upon information set forth in such report on Schedule 13F filed by
Chartwell, Chartwell has sole voting power over 270,404 shares or 5.60% of
the Common Stock.
(5) Includes beneficial ownership of 270,325 shares of Common Stock issuable in
the aggregate upon exercise of outstanding incentive and non-qualified stock
options issued under the Stock Option Plan to officers of the Company.
Excludes shares of Common Stock issuable upon exercise of incentive and
non-qualified stock options issued under the Stock Option Plan which are not
exercisable by May 23, 2000.
(6) Pursuant to the terms of the Company's Rights Plan, dated December 15, 1994
(the "Rights Plan"), the rights issued thereunder have not become
exercisable as a result of the beneficial ownership held by FMR Corp.
exceeding 15%. In accordance with the terms of the Rights Plan, the rights
issued thereunder will not become exercisable upon a stockholder's
beneficial ownership exceeding 15% of the outstanding stock of the Company
if the increase above 15% is caused by the Company's repurchase of stock.
The beneficial ownership of FMR Corp. has increased above 15% as a result of
repurchases of stock by the Company. Any further purchases of stock by FMR
Corp. would activate the Rights Plan. The Company has notified FMR Corp. of
this fact. Management of FMR Corp. has indicated that it does not intend to
purchase any additional shares of stock in the Company. The Company will
continue to monitor the beneficial ownership percentages of FMR Corp. and
other significant shareholders and notify those shareholders of the
possibility of triggering the Rights Plan.
The address of each of the directors, nominees for director and executive
officers named in the table above is c/o Morton's Restaurant Group, Inc., 3333
New Hyde Park Road, New Hyde Park, NY 11042. The addresses for the other 5%
beneficial owners of the Company's Common Stock are as follows: FMR Corp., 82
Devonshire Street, Boston, MA 02109; Lazard Freres & Co. LLC, 30 Rockefeller
Plaza, New York, NY 10020; Capital Research & Management Co., 333 South Hope
Street, Los Angeles, CA 90071; Massachusetts Financial Services Company, 500
Boylston Street, Boston, MA 02116; Baron Capital Group, Inc., 767 Fifth Avenue,
24(th) Floor, New York, NY 10153; Brinson Partners, Inc., 209 South LaSalle,
Chicago, IL 60604; Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004 and
Chartwell Investment Partners, 1235 Westlakes Drive, Suite 330, Berwyn, PA
19312.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, for the Company's last three fiscal years
(ended January 2, 2000, January 3, 1999, and December 28, 1997), the
compensation of those persons who were, at January 2, 2000, (i) the chief
executive officer, and (ii) the other four most highly compensated executive
officers of the Company (together the "Named Officers"):
LONG TERM
COMPENSATION
AWARDS
------------
ANNUAL COMPENSATION (1) SECURITIES
------------------------------ UNDERLYING ALL OTHER
SALARY BONUS OPTIONS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) (#) ($)
- --------------------------- -------- -------- -------- ------------ ------------
Allen J. Bernstein.................... 1999 $625,000 $350,000 65,000 $43,121(2)(3)
Chairman of the Board, President 1998 $472,508 $270,000 130,000 $43,959(4)(5)
and Chief Executive Officer 1997 $408,762 $236,000 50,000 $43,936(6)(7)
Thomas J. Baldwin..................... 1999 $244,923 $160,000 30,000 $ 2,860(2)(3)
Executive Vice President, Chief 1998 $239,596 $125,000 56,000 $ 3,678(4)(5)
Financial Officer, Assistant
Secretary 1997 $204,808 $115,000 20,000 $ 3,645(6)(7)
and Treasurer
Allan C. Schreiber.................... 1999 $172,615 $ 90,000 6,500 $ 2,860(2)(3)
Senior Vice President, Development 1998 $147,926 $ 85,000 13,000 $ 3,678(4)(5)
1997 $141,549 $ 42,000 5,000 $ 3,424(6)(7)
Klaus W. Fritsch...................... 1999 $149,307 $150,000 7,000 $ 2,560(3)
Vice Chairman and Co-Founder, 1998 $129,846 $ 75,000 12,700 $ 3,398(5)
Morton's of Chicago, Inc. 1997 $124,816 $ 60,000 5,000 $ 3,375(7)
John T. Bettin........................ 1999 $229,826 $ 55,000 10,000 --
President, Morton's of Chicago, Inc. 1998 $ 93,565 -- 50,000 --
1997 -- -- -- --
- ------------------------
(1) Includes cash bonuses paid in the referenced fiscal year with respect to
services rendered in the prior fiscal year. Excludes cash bonuses paid in
the following fiscal year with respect to services rendered in the
referenced fiscal year. Cash bonuses paid in 2000 with respect to services
rendered in 1999, which bonuses are excluded from 1999 bonuses, are as
follows: Allen J. Bernstein ($375,000), Thomas J. Baldwin ($175,000), Allan
C. Schreiber ($105,000), Klaus W. Fritsch ($100,000) and John T. Bettin
($140,000).
(2) Represents or includes the dollar value of insurance premiums paid by the
Company with respect to term life insurance for the benefit of: Allen J.
Bernstein ($40,561), Thomas J. Baldwin ($300), and Allan C. Schreiber
($300).
(3) Includes employer contributions made by the Company pursuant to the Morton's
Group Profit Sharing and Cash Accumulation Plan and Trust (the "Morton's
Plan"), which is a retirement plan intended to be qualified under Sections
401(a) and 401(k) of the Internal Revenue Code of 1986, as amended, for the
benefit of: Allen J. Bernstein ($2,560), Thomas J. Baldwin ($2,560), Allan
C. Schreiber ($2,560), and Klaus W. Fritsch ($2,560).
(4) Represents or includes the dollar value of insurance premiums paid by the
Company with respect to term life insurance for the benefit of: Allen J.
Bernstein ($40,561), Thomas J. Baldwin ($280) and Allan C. Schreiber ($280).
8
(5) Includes employer contributions made pursuant to the Plan for the benefit
of: Allen J. Bernstein ($3,398), Thomas J. Baldwin ($3,398), Allan C.
Schreiber ($3,398) and Klaus W. Fritsch ($3,398).
(6) Represents or includes the dollar value of insurance premiums paid by the
Company with respect to term life insurance for the benefit of: Allen J.
Bernstein ($40,561), Thomas J. Baldwin ($270) and Allan C. Schreiber ($270).
(7) Includes employer contributions made by the Company pursuant to the Plan for
the benefit of: Allen J. Bernstein ($3,375), Thomas J. Baldwin ($3,375),
Allan C. Schreiber ($3,154) and Klaus W. Fritsch ($3,375).
OPTIONS GRANTED IN LAST FISCAL YEAR
The following table sets forth, for fiscal 1999, information concerning
grants of stock options to the Named Officers:
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------------- VALUE AT ASSUMED RATES
NUMBER OF OF STOCK PRICE
SHARES % OF TOTAL APPRECIATION FOR OPTION
UNDERLYING OPTIONS GRANTED TERM
OPTIONS GRANTED TO EMPLOYEES IN EXERCISE PRICE EXPIRATION -----------------------
NAME (#) (1) FISCAL YEAR (2) ($/SHARE) DATE 5% ($) 10% ($)
- ---- --------------- --------------- -------------- ---------- --------- -----------
Allen J. Bernstein........ 65,000 31.1% $13.813 11/18/09 $564,634 $1,430,844
Thomas J. Baldwin......... 30,000 14.4% $13.813 11/18/09 $260,600 $ 660,389
Allan C. Schreiber........ 6,500 3.1% $13.813 11/18/09 $ 56,463 $ 143,084
Klaus W. Fritsch.......... 7,000 3.4% $13.813 11/18/09 $ 60,807 $ 154,091
John T. Bettin............ 10,000 4.8% $13.813 11/18/09 $ 86,867 $ 220,130
- ------------------------
(1) Represents options granted under the Stock Option Plan and nonqualified
stock options. Such options vest and become exercisable with respect to 25%
of the shares subject thereto two years after the date of grant and,
thereafter, options with respect to 25% of the shares subject thereto will
vest and become exercisable on each of the third, fourth and fifth
anniversary of the date of grant, provided that the grantee remains in the
employ of the Company. Vested options may not be exercised beyond three
months after the grantee ceases to be employed by the Company.
(2) Based on a total of 208,700 options granted to 86 employees of the Company.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth, for fiscal 1999, information concerning the
exercise of options by the Named Officers and the value of unexercised options
of the Named Officers:
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END (#) AT FY-END ($)(1)
ACQUIRED ON VALUE --------------------------------- ---------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------------- ------------- ----------- -------------
Allen J. Bernstein....... 81,205 $1,329,123 137,500 257,500 $610,938 $365,626
Thomas J. Baldwin........ -- -- 12,500 108,500 $ 36,094 $153,750
Allan C. Schreiber....... -- -- 13,750 35,750 $ 44,219 $ 71,563
Klaus W. Fritsch......... -- -- 21,250 28,450 $101,094 $ 47,344
John T. Bettin........... -- -- -- 60,000 -- $ 16,875
- ------------------------
(1) Based upon the closing sale price of $15.50 per share of the Company's
Common Stock on January 2, 2000 on the New York Stock Exchange and
calculated net of the respective option exercise price.
9
The Company has not awarded stock appreciation rights to any employee and
has no long term incentive plans, as that term is defined in the regulations of
the Securities and Exchange Commission (the "SEC"). The Company has a stock
option plan and bonus plans. During fiscal 1999, the Company did not adjust or
amend the exercise price of stock options awarded to the Named Officers, whether
through amendment, cancellation or replacement grants, or other means. Also, the
Company presently has no defined benefit or actuarial plans covering any
employees of the Company.
COMPENSATION OF DIRECTORS
Each non-officer director of the Company is entitled to receive directors'
fees at the rate of $15,000 per year. All directors are reimbursed for actual
expenses incurred in connection with attendance at meetings of the Board of
Directors or committees of the Board.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL CONTRACTS
Pursuant to a Second Amended and Restated Employment Agreement dated as of
February 28, 1995, as amended on October 1, 1998, between the Company and Allen
J. Bernstein, Mr. Bernstein serves as Chairman of the Board, President and Chief
Executive Officer of the Company. His current annual base salary of $625,000 is
subject to minimum adjustments based upon increases in the Consumer Price Index
for Urban Wage Earners and Clerical Workers. In addition, Mr. Bernstein is
eligible to receive an annual bonus of up to 120% of his base salary based upon
the Company attaining a profitability target, which in the discretion of the
Board of Directors may be based on net income, operating income, net cash flow
(adjusted for nonrecurring items) or any other basis it considers appropriate.
Mr. Bernstein's employment agreement is terminable by the Company upon
60 months written notice or at any time for Cause (as defined in his employment
agreement) and by Mr. Bernstein in the event of non-payment of amounts due under
the agreement or if he is assigned duties inconsistent with his capacity as
Chief Executive Officer of the Company. In the event of such a termination by
Mr. Bernstein or in the event of a termination by the Company for any reason
other than Cause, death or disability, Mr. Bernstein is entitled to receive
either (i) severance pay for a 60 month period following such termination or the
delivery of the Company's notice of termination (the "Measuring Date"), in an
amount equal to his base salary, a pro-rated bonus for the year of termination
plus continuance of certain fringe benefits or (ii) at Mr. Bernstein's election
(the "Election"), a lump-sum payment equal to 60 multiplied by $67,800. Upon
Mr. Bernstein's acquisition of alternative employment, the Company's monthly
obligation to Mr. Bernstein will be reduced to $50,600 (if Mr. Bernstein has not
made the Election). If, however, Mr. Bernstein had made the Election and
acquires alternative employment, he shall repay to the Company an amount equal
to the product of $17,366 and a number equaling the difference between 60 and
the number of months between the Measuring Date and the date Mr. Bernstein
commences such new employment.
Effective December 15, 1994, the Company entered into change of control
agreements with Allen J. Bernstein and Thomas J. Baldwin (the "Change of Control
Agreements"). The Change of Control Agreements have a three-year term, subject
to automatic renewal for additional three-year periods on each third anniversary
of the Agreements unless the Company gives the executive at least 60 days' prior
notice that the Agreement will not be so extended. Pursuant to these Agreements,
the Company agrees to continue the executive in its employ for a three-year
period (the "Continuation Period") following a "Change of Control" (as is
defined in the applicable Change of Control Agreement). If, during the
Continuation Period, the executive's employment is terminated by the Company
other than for "Cause" (as defined in the applicable Change of Control
Agreement) or if the executive terminates his employment with the Company for
"Good Reason" (as defined in the applicable Change of Control Agreement), the
Company is required to make a cash lump sum payment to the executive equal to
2.99 times his base salary amount, as computed under the Internal Revenue Code
of 1986, as amended (the "Internal Revenue Code"), less any severance payments
payable to such executive pursuant to employment agreements, where applicable;
subject to reduction to the extent the total amount received by the executive
under the
10
Change of Control Agreements and any other agreement by reason of a Change of
Control would constitute a "parachute payment" under Section 280G(b)(2) of the
Internal Revenue Code. In addition, for a period of at least three years after
such termination the Company is required to continue to provide the executive
with welfare benefits similar to those received by him when employed by the
Company. In general, an individual's base amount as used above is the average
annual compensation included in the gross income of such individual for the most
recent five taxable years ending before a Change of Control.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation and Stock Option Committee of the Board of Directors
consists of John K. Castle, Lee M. Cohn and Dr. John J. Connolly. No member of
the Compensation and Stock Option Committee is a former or current officer or
employee of the Company or any of its subsidiaries. In addition, except as set
forth below, there are no relationships among the Company's executive officers,
members of the Compensation and Stock Option Committee or entities whose
executives serve on the Board of Directors or the Compensation and Stock Option
Committee that require disclosure under applicable Securities and Exchange
Commission regulations. During fiscal 1999, in exchange for consulting services
provided by the Company to Wilshire Restaurant Group, Inc. ("Wilshire") and
Castle Harlan Partners III, L.P. ("CHPIII") in connection with CHPIII's
formation of Wilshire and Wilshire's acquisition of Marie Callender Pie
Shops, Inc., a chain of restaurants based in California, the Company received a
$375,000 consulting fee from Wilshire and is entitled, for a nominal amount, to
purchase common and preferred stock of Wilshire. Mr. Allen J. Bernstein,
Mr. John J. Castle, Mr. Lee M. Cohn, and Mr. David B. Pittaway are Directors of
the Company and also are members of the Board of Directors of Wilshire.
Mr. Allen J. Bernstein, Chairman, President and Chief Executive Officer of the
Company, and Mr. Thomas J. Baldwin, Executive Vice President of the Company,
each received individual consulting fees from Wilshire in January 2000 and are
entitled to purchase shares of common and preferred stock of Wilshire. CHPIII is
indirectly controlled by Mr. John K. Castle, a Director of the Company.
COMPENSATION COMMITTEE REPORT
OVERVIEW AND PHILOSOPHY. The Compensation and Stock Option Committee (the
"Committee") is composed entirely of non-management directors. It has been
delegated the authority to review and approve the remuneration arrangements for
the Chief Executive Officer and each of the other executive officers of the
Company. In addition, the Committee reviews the benefit plans for employees of
the Company and administers the Stock Option Plan and approves grants to be made
in connection therewith.
The Company's executive compensation is based upon three primary components:
base salary, annual bonuses and grants of stock options. Such compensation also
includes participation in various benefit plans generally available to employees
of the Company. The objectives of the Committee in determining the type and
amount of such executive officer compensation are to attract and retain superior
talent and to align the interests of management with the best interests of
stockholders.
To motivate management to enhance profitability and stockholder returns, the
Chief Executive Officer and other officers are paid an annual bonus based upon
the Company attaining certain performance-related targets as described below,
and participation in the Stock Option Plan provides the executive officers with
the opportunity to build substantial ownership interest in the Company.
Changes to Section 162(m) of the Internal Revenue Code may, effective for
tax years beginning on or after January 1, 1994, limit the Company's deductions
for any remuneration in excess of $1 million that is paid to certain executive
officers. The Committee intends that the deduction for any compensation paid to
any executive officer for the 1999 fiscal year will not be limited by
Section 162(m) of the Code.
CASH COMPENSATION. Cash compensation typically consists of a base salary
plus an annual performance bonus. The base salary for the Chief Executive
Officer is fixed under such officers' employment agreement which is described
above under the caption "Employment Contracts and Change of Control
11
Contracts." The base salary for the other executive officers and annual
performance bonuses are also determined by the Committee, in each case based
upon prevailing economic and business conditions and opportunities, performance
by comparable organizations, performance of individual executives, stockholder
value and such other criteria as the Committee deems relevant. No particular
weightings are assigned by the Committee to any such factors. The Company paid
bonuses to the Named Officers as described above in the Summary Compensation
Table under the caption "Executive Compensation."
STOCK OPTIONS. The executive officers, as well as other employees of the
Company, are eligible to participate in the Stock Option Plan and may also
receive non-qualified stock options. The purpose of issuing stock options is to
motivate and retain employees who are responsible for attaining the primary
long-term performance goals of the Company. Stock options are administered by
the Committee. The Committee believes that awards of stock options provide the
necessary long-term incentive to focus managers on building profitability and
stockholder value. The Committee has the authority to determine the individuals
to whom stock options are awarded, the terms upon which option grants shall be
made and the number of shares subject to each option, all subject to the terms
and conditions consistent with the Stock Option Plan. The Committee granted
non-qualified options and options under the Stock Option Plan to five executive
officers as described above under the caption "Options Granted in Last Fiscal
Year."
In determining base salaries and annual bonuses, the Committee considered
the individual experience and performance of each executive officer as well as
the competitive marketplace to hire and retain qualified executives at the
appropriate level relative to the position, responsibilities and performance of
such executives. The Committee sets base salaries at levels which the Committee
believes are competitive with those of comparable executives at similarly
situated corporations.
OTHER COMPENSATION. The Company provides certain other benefits, such as
health insurance, to the executive officers that are generally available to
Company employees.
In addition, during fiscal 1994 the Company entered into Change of Control
Agreements with certain of its executive officers as described above under the
caption "Employment Contracts and Change of Control Contracts."
In addition, certain executive officers are eligible to participate in the
Morton's Plan, which is described above in note 3 to the Summary Compensation
Table. Within certain limits prescribed by the Morton's Plan and applicable law,
the Company may authorize discretionary employer contributions subject to
certain limits, pro rata based upon compensation to eligible employees to a
retirement account. The Company made profit sharing contributions to all of the
Named Officers, as described above in the "Summary Compensation Table."
CHIEF EXECUTIVE OFFICER'S COMPENSATION. The base salary of the Chief
Executive Officer is fixed under his employment agreement. The employment
agreement, amended and restated as of February 28, 1995, and as amended on
October 1, 1998, is terminable by the Company upon 60 months' written notice.
The bonus paid thereunder is determined by the Committee based upon certain
performance-related targets being obtained. At the beginning of each fiscal year
the Committee establishes the profitability target which, in its discretion, may
be based on net income, operating income, net cash flow (adjusted for
nonrecurring items) or any other basis it considers appropriate. No particular
weightings are assigned by the Committee to any such factors. The Chief
Executive Officer is eligible to receive an annual bonus of up to 120% of his
base salary based upon the Company attaining such target. The payment of an
annual bonus and granting of options to the Chief Executive Officer are designed
to motivate the Chief Executive Officer to enhance profitability and stockholder
returns.
12
The Company also entered into a Change of Control Agreement with the Chief
Executive Officer as described above under the caption "Employment Contracts and
Change of Control Contracts" in fiscal 1994.
John K. Castle
Lee M. Cohn
John J. Connolly
Members of the Compensation
and Stock Option Committee
PERFORMANCE GRAPH
Set forth below is a line-graph presentation comparing the cumulative
stockholder return, calculated on a dividend reinvested basis, for the Company's
Common Stock, against the cumulative total returns of the NASDAQ Composite Stock
Index and the Nation's Restaurant News Stock Index for the period from
December 31, 1994 through January 2, 2000. The graph assumes $100 was invested
in the Company's Common Stock, the NASDAQ Composite Stock Index and the Nation's
Restaurant News Stock Index on December 31, 1994. Note that historic stock price
performance is not necessarily indicative of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
MORTON'S RESTAURANT GROUP, INC. COMMON STOCK,
NASDAQ COMPOSITE AND NATION'S RESTAURANT NEWS STOCK INDICES
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
DEC-94 DEC-95 DEC-96 DEC-97 DEC-98 DEC-99
Morton's Restaurant Group, Inc. Common Stock Index $100.0 $93.8 $133.3 $164.6 $157.3 $129.2
NASDAQ Composite Stock Index $100.0 $140.3 $173.9 $213.1 $300.4 $556.0
Nation's Restaurant News Stock Index $100.0 $140.3 $142.6 $154.6 $211.5 $199.8
13
CERTAIN TRANSACTIONS
On October 21, 1996, Fleet National Bank ("Fleet") (formerly known as
BankBoston, NA), which was previously the sole provider of the Company's
$75.0 million credit facility, as amended, syndicated a portion of the credit
facility to Imperial Bank. Ms. Dianne Russell is a senior officer of Imperial
Bank as well as a Director of Morton's Restaurant Group, Inc. Fleet has also
syndicated portions of the credit facility to First Union Corporation and Chase
Manhattan Bank.
See also "Executive Compensation--Compensation Committee Interlocks and
Insider Participation."
APPOINTMENT OF AUDITORS
(PROPOSAL 2)
Subject to ratification by stockholders at the Annual Meeting, the Board of
Directors of the Company, upon recommendation of the Audit Committee, has
re-appointed KPMG LLP as independent auditors to audit the books and accounts of
the Company for the fiscal year ending December 31, 2000.
A representative of KPMG LLP is expected to be present at the meeting to
respond to appropriate questions and will have an opportunity to make a
statement if he or she desires to do so.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present, or represented and entitled to vote, at the Annual
Meeting, is required to approve Proposal 2.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE THEIR SHARES FOR
RATIFICATION OF THE RE-APPOINTMENT OF AUDITORS.
PROPOSED ADOPTION OF THE 2000 STOCK OPTION PLAN
(PROPOSAL 3)
The Board of Directors proposes that the stockholders approve the adoption
of the 2000 Stock Option Plan. The essential features of the 2000 Stock Option
Plan are outlined below. Copies of the 2000 Stock Option Plan are available upon
request to the Secretary of the Company. The proposed 2000 Stock Option Plan is
attached as Appendix A hereto. The proposed 2000 Stock Option Plan was adopted
by the Board of Directors on January 25, 2000, subject to stockholder approval.
DESCRIPTION OF THE STOCK OPTION PLAN
PURPOSE. The purpose of the Stock Option Plan is to motivate and retain key
employees who are responsible for the attainment of the primary long-term
performance goals of the Company.
GENERAL ADMINISTRATION. The 2000 Stock Option Plan must be administered by
a committee of the Board of Directors comprised of two or more disinterested
directors (the "Administrator") within the meaning of Rule 16b-3 promulgated
under Section 16(b) of the Securities Exchange Act of 1934, as amended (the
"Act") and provides for grants of "incentive stock options" ("ISOs") as defined
under the Internal Revenue Code, and nonqualified stock options ("NQSOs").
Options granted to employees under the 2000 Stock Option Plan have a maximum
term of ten years, and are not transferable except by will or pursuant to the
laws of descent and distribution. The Compensation and Stock Option Committee of
the Board of Directors currently administers the 2000 Stock Option Plan.
ELIGIBILITY. Any employee, consultant or director is eligible for selection
by the Administrator as participants in the Plan.
TERMS AND CONDITIONS OF THE OPTIONS; VESTING. The number of options granted
under the 2000 Stock Option Plan and the exercise price of NQSOs is determined
by the Administrator. The exercise price of an
14
option shall be the fair market value of the shares subject to the option on the
date of the grant. The 2000 Stock Option Plan provides that options vest and
become exercisable with respect to 25% of the shares subject thereto two years
after the date of the grant. Thereafter, options with respect to 25% of the
shares subject thereto will vest and become exercisable on each of the third,
fourth and fifth anniversary of the date of the grant. Options immediately vest
and become exercisable upon a Change of Control.
PAYMENT OF EXERCISE PRICE. The exercise price with respect to any option
must be paid either (i) in cash, (ii) by delivering Common Stock already owned
by the optionee for a period of six months or more and having a total fair
market value on the date of such delivery equal to the option price, or
(iii) by a combination of (i) and (ii) above.
TERMINATION OF EMPLOYMENT; DEATH. If an optionee ceases to be employed by
the Company for any reason (other than death) such optionee has the right to
exercise any vested options within three months after termination of employment.
In the event of the optionee's death, the executor or administrator of the
optionee's estate may exercise any vested options within three months after the
date of the optionee's death. All options that have been granted to an optionee
which have not vested as of the date of the optionee's termination of employment
or death, as the case may be, shall terminate as of such date.
ADJUSTMENTS. The 2000 Stock Option Plan provides that in the event of any
change in the Common Stock by reason of any stock dividend, recapitalization,
reorganization, merger, consolidation, split-up, combination, exchange of shares
or similar change affecting the Common Stock, the number and kind of shares
subject to option in outstanding option agreements and the purchase price per
share shall be appropriately adjusted consistent with such change in such manner
as the Board of Directors may deem equitable to prevent substantial dilution or
enlargement of the rights granted to, or available for, participants in the
Stock Option Plan.
AMENDMENT AND TERMINATION. The 2000 Stock Option Plan provides that the
Board of Directors may, with prospective or retroactive effect, amend, suspend
or terminate the 2000 Stock Option Plan or any portion thereof; provided,
however, that no such amendment, suspension or termination deprives any
participant of any right with respect to any option granted thereunder without
such participant's consent.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE ISSUANCE AND EXERCISE OF OPTIONS
INCENTIVE STOCK OPTIONS. All options that qualify under the rules of
Section 422 of the Internal Revenue Code will be entitled to "incentive stock
option" treatment. In general, neither the grant nor the exercise of an ISO
granted under the 2000 Stock Option Plan will result in taxable income to the
employee or a deduction to the Company. The sale of Common Stock received
pursuant to the exercise of such an option will result in a long-term capital
gain or loss to the employee equal to the difference between the amount realized
on the sale and the exercise price and will not result in a tax deduction to the
Company. To receive ISO treatment, the employee must not dispose of the Common
Stock within two years after the option is granted and must hold the Common
Stock itself for at least one year after the transfer of such Common Stock to
such employee.
If Common Stock acquired pursuant to the exercise of an ISO is disposed of
by the employee prior to the expiration of two years from the date of grant of
the ISO or within one year from the date such Common Stock is transferred to the
employee upon option exercise (a "disqualifying disposition"), any gain realized
by the employee generally will be taxable at the time of such disqualifying
disposition as (i) ordinary income to the extent of the difference between the
option price and the lesser of (a) the fair market value of the Common Stock on
the date the ISO is exercised, (or, with respect to officers, directors and
persons deemed to be beneficial owners of more than 10% of the Common Stock, the
date when the restrictions of Section 16(b) of the Act lapse (generally six
months after the date of grant)) or (b) the amount realized on such
disqualifying disposition and (ii) short-term or long-term capital gain to the
extent of any excess of the amount realized on the disposition over the fair
market value of the Common Stock on
15
the date that the incentive stock option is exercised. The Company will be
entitled to a deduction equal to the amount of ordinary income recognized by the
employee at the time such income is recognized. Any capital gain realized by the
employee will be long-term or short-term capital gain depending on the
employee's holding period of the stock disposed of.
Certain employees may be subject to an "alternative minimum tax" as a result
of the exercise of an incentive stock option. In general, the tax base for the
alternative minimum tax is "alternative minimum taxable income" which is defined
as the employee's adjusted gross income, as modified by certain adjustments,
plus "tax preference" items for the year, reduced by certain deductions. This
amount is then reduced by an "exemption amount" and is subject to tax at a
specified rate. The "exemption amount" is reduced, but not below zero, depending
on the individual's "alternative minimum taxable income". The alternative
minimum tax is imposed to the extent that it exceeds an individual's regular tax
liability. For purposes of the alternative minimum tax the difference between
the fair market value of the acquired Common Stock on the exercise date and the
exercise price of the option must be included in alternative minimum taxable
income for the year in which the option is exercised. The employee will then
have a basis in the Common Stock for alternative minimum tax purposes equal to
the exercise price of the option plus the amount of income recognized for
alternative minimum tax purposes.
Payment for Common Stock upon the exercise of an incentive stock option may
be made in whole or in part with other shares of Common Stock. In such a case,
in general, if an employee uses stock acquired pursuant to the exercise of an
incentive stock option to acquire other stock in connection with the exercise of
an incentive stock option, it may result in ordinary income if the stock so used
has not met the minimum statutory holding period necessary for favorable tax
treatment as an incentive stock option.
NON-QUALIFIED STOCK OPTIONS. With respect to NQSOs, generally, no taxable
income will be recognized by the optionee, and no deduction will be allowed to
the Company, upon the grant of an option. Except as described in the following
paragraph, upon exercise of a NQSO a participant will recognize an amount of
ordinary income, and the Company will be entitled to a corresponding tax
deduction, equal to the amount by which the fair market value of the shares on
the exercise date exceeds the option price. This income will constitute wages
subject to withholding of applicable taxes.
If a NQSO granted under the 2000 Stock Option Plan is held by a participant
who is subject to the provisions of Section 16 of the Act (I.E., an officer (as
defined under Section 16(a) of the Act), a director or a person deemed to be a
beneficial owner of greater than 10% of the Common Stock, hereinafter referred
to as a "Reporting Person"), the stock received by the Reporting Person may be
subject to the restrictions of Section 16(b) of the Act if Common Stock received
with respect to the NQSO is sold within six months after the later of the grant
date and the date the stockholders approved the Stock Option Plan or if the NQSO
is exercised at a time when the NQSO is "out of the money." In such a case,
neither the Reporting Person nor the Company will incur tax consequences at the
time of exercise unless the Reporting Person elects to be taxed currently
pursuant to Section 83(b) of the Internal Revenue Code. If such an election is
made within 30 days after the transfer of such shares pursuant to the exercise
of the option, the Reporting Person will recognize ordinary income immediately
(and the Company will be entitled to a corresponding tax deduction) as described
in the preceding paragraph. If such an election is not made, the Reporting
Person will recognize ordinary income (and the Company will be entitled to a
corresponding deduction) when the restrictions of Section 16(b) of the Act lapse
(generally six months after the grant date). The amount of income that will be
recognized upon lapse of the restriction of Section 16(b) of the Act (and the
amount of the deduction that will be allowed to the Company) will equal the
amount by which the fair market value of the Common Stock on the lapse date
exceeds the option price of the NQSO. In any case, the income taxable to the
Reporting Person will be subject to withholding of applicable taxes.
OTHER TAX MATTERS. Upon the death of an employee who has not exercised his
options, the value of such unexercised options will be includable in the
employee's estate for Federal estate tax purposes. Upon the exercise of such an
option which is a NQSO, the holder will recognize compensation income as
16
described above, and will be allowed a deduction based upon any estate tax paid
with respect to the value of the options.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of Common
Stock of the Company present, or represented and entitled to vote, at the Annual
Meeting, is required for approval of the adoption of the 2000 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE THEIR SHARES FOR
APPROVAL OF THE ADOPTION OF THE STOCK OPTION PLAN.
STOCKHOLDERS' PROPOSALS
Proposals of stockholders to be presented at the annual meeting to be held
in 2001 must be received by November 22, 2000 in order for such proposals to be
considered for inclusion in the Proxy Statement and form of proxy relating to
such meeting. Stockholders who do not present proposals for inclusion in the
Proxy Statement but who still intend to submit a proposal at the 2001 annual
meeting, and stockholders who intend to submit nominations for directors at the
meeting, are required to notify the Secretary of the Company of their proposal
or nominations, and provide certain other information, in accordance with and
during the time period set forth in the Company's Certificate of Incorporation
and By-laws. See "Election of Directors--Meetings of the Board of Directors and
Committees" for a brief summary of the procedure and time period for submitting
nominations for directors. Additional information and a copy of the Certificate
of Incorporation and By-laws may be obtained from the Secretary of the Company,
Morton's Restaurant Group, Inc., 3333 New Hyde Park Road, New Hyde Park, New
York 11042.
REPORTING UNDER SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership on
Forms 3, 4 and 5 with the SEC. Executive officers, directors and greater than
10% stockholders are required to furnish the Company with copies of all Forms 3,
4 and 5 they file. Based solely on the Company's review of the copies of such
Forms it has received and written representations from certain reporting persons
that they were not required to file Forms 5 for specified fiscal years, the
Company believes that all of its executive officers, directors and greater than
10% stockholders complied with all Section 16(a) filing requirements applicable
to them during the Company's fiscal year ended January 2, 2000.
OTHER BUSINESS
The management of the Company is not aware of any other matters to be
brought before the Annual Meeting. However, if any other matters are properly
brought before the Annual Meeting, the persons named in the enclosed form of
proxy will have discretionary authority to vote all proxies with respect to such
matters in accordance with their best judgment.
INCORPORATION BY REFERENCE
To the extent that this Proxy Statement has been or will be specifically
incorporated by reference into any filing by the Company under the Securities
Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, the
sections of the Proxy Statement entitled "Compensation Committee Report" and
"Performance Graph" shall not be deemed to be so incorporated unless
specifically otherwise provided in any such filing.
17
ANNUAL REPORT ON FORM 10-K
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JANUARY 2, 2000, TOGETHER WITH FINANCIAL STATEMENTS AND SCHEDULES, AS FILED WITH
THE SEC ARE AVAILABLE TO STOCKHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST
ADDRESSED TO THOMAS J. BALDWIN, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER, MORTON'S RESTAURANT GROUP, INC., 3333 NEW HYDE PARK ROAD, NEW HYDE
PARK, NEW YORK 11042.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS
ARE URGED TO FILL IN, SIGN AND RETURN THE ACCOMPANYING FORM OF PROXY IN THE
ENCLOSED ENVELOPE.
By order of the Board of Directors
Agnes Longarzo
SECRETARY
March 28, 2000
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EXHIBIT A
MORTON'S RESTAURANT GROUP, INC.
2000 STOCK OPTION PLAN
1. PURPOSE. The purpose of the Morton's Restaurant Group, Inc. 2000 Stock
Option Plan is to motivate employees, consultants and directors to use their
best efforts on behalf of Morton's Restaurant Group, Inc. and to retain such
employees, consultants and directors.
2. DEFINITIONS. When used herein, the following terms shall have the
following meanings:
"Administrator" means a committee of the Board comprised of two or more
disinterested directors, within the meaning of Securities and Exchange
Commission Rule 16b-3, duly appointed to administer the Plan.
"Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange Act.
"Board" means the Board of Directors of the Corporation.
"Change of Control" mean either of the following events: (a) any Person
becomes the Beneficial Owner, directly or indirectly, of securities
representing a majority of the combined voting power of the Corporation's
then outstanding securities generally entitled to vote for the election of
members of the Board or (b) as a result of a cash tender offer, merger or
other business combination, sale of assets or contested election, or any
combination of the foregoing transaction (a "Transaction"), the individuals
who were members of the Board immediately before the Transaction shall cease
to constitute a majority of the Board of the Corporation or of any successor
to the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means Common Stock ($.01 par value) of the Corporation.
"Corporation" means Morton's Restaurant Group, Inc., a Delaware
corporation.
"Effective Date" means May 10, 2000.
"Exchange Act" means the Securities Exchange Act of 1934, as amended or
any successor statute thereto.
"Fair Market Value" means on any day, with respect to Common Stock which
is (i) listed on a United States securities exchange, the last sales price
of such stock on such day on the largest United States securities exchange
on which such stock shall have traded on such day, or if such day is not a
day on which a United States securities exchange is open for trading, on the
immediately preceding day on which such securities exchange was so open,
(ii) not listed on a United States securities exchange but is included in
the NASDAQ National Market System, the last sales price of such stock on
such day, or if such day is not a trading day, on the immediately preceding
trading day, or (iii) neither listed on a United States securities exchange
nor included in the NASDAQ National Market System, the fair market value of
such stock as determined from time to time by the Board in its sole
discretion.
"Incentive Stock Option" means an Option that is designated by the
Administrator as an incentive stock option and qualifies as such within the
meaning of Section 422 of the Code and is granted by the Administrator to a
Participant.
"Nonqualified Stock Option" means an Option, which is not an Incentive
Stock Option, granted by the Administrator to a Participant.
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"Option" means a right granted under the Plan to a Participant to
purchase a stated number of shares of Common Stock as an Incentive Stock
Option or Nonqualified Stock Option.
"Option Period" means the period within which the Option may be
exercised pursuant to the Plan.
"Participant" means an employee, consultant or director of the
Corporation or any subsidiary corporation who is selected to participate in
the Plan in accordance with Section 4.
"Person" means any individual, partnership, firm, trust, corporation or
similar entity. When two or more Persons act as a partnership, limited
partnership, syndicate or other group for the purpose of acquiring, holding
or disposing of securities of the Corporation, such partnership, limited
partnership, syndicate or group shall be deemed a Person.
"Plan" means the Morton's Restaurant Group, Inc. Stock Option Plan.
3. ADMINISTRATION. The Plan shall be administered by the Administrator.
Subject to the provisions of the Plan, the Administrator shall have the
authority to:
(a) select the Participants;
(b) determine the number of shares of Common Stock to be optioned to each
Participant; provided, however, that no Option shall be granted after the
expiration of the period of ten years from the Effective Date;
(c) determine whether each Option shall be an Incentive Stock Option or a
Nonqualified Stock Option; and
(d) establish from time to time regulations for the administration of the
Plan, interpret the Plan, delegate in writing administrative matters to
committees of the Board or to others, and make such other determinations
and take such other action, as it deems necessary or advisable for the
administration of the Plan.
All decisions, actions and interpretations of the Administrator shall be
final, conclusive and binding upon all parties.
4. PARTICIPATION. Participants in the Plan shall be those employees,
consultants or directors of the Corporation or any subsidiary corporation who
have been notified in writing by the Administrator that they have been selected
to participate in the Plan; provided, however, that no employee who owns more
than 10% of the total combined voting power of all classes of stock of the
Corporation or of its parent or subsidiary corporation, determined at the time
the Option is proposed to be granted, shall be eligible for the grant of an
Incentive Stock Option; and provided further that Incentive Stock Options may
only be granted to employees of the Corporation or its subsidiaries.
5. SHARES SUBJECT TO THE PLAN. Options may be granted by the Administrator
to Participants from time to time to purchase not more than an aggregate of
550,000 shares of Common Stock and 550,000 such shares shall be reserved for
Options granted under the Plan (subject to adjustment as provided in
Section 7(i)); provided that the aggregate number of shares of Common Stock that
may be granted to any single individual in the form of Options under the Plan
shall not exceed 250,000 shares. The shares issued upon the exercise of Options
granted under the Plan may be authorized and unissued shares, shares held in the
treasury of the Corporation, or shares purchased on the open market by the
Corporation (at such time or times and in such manner as it may determine). The
Corporation shall be under no obligation to acquire Common Stock for
distribution to Participants before payment in shares of Common Stock is due. If
any Option granted under the Plan shall be cancelled or expire, new options may
thereafter be granted covering such shares.
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6. GRANTING OPTIONS. Options under the Plan may be granted to Participants
at such time or times as the Administrator shall determine. In the event that on
or after the tenth anniversary of the Effective Date there remain shares of
Common Stock authorized for use under the Plan which are not covered by Options,
such shares shall be available for use under a new stock option or other equity
compensation plan, or otherwise, as approved by the Board.
7. TERMS AND CONDITIONS OF OPTIONS. Each Option granted under the Plan
shall be evidenced by a written agreement, in form approved by the Administrator
which shall be subject to the following express terms and conditions and to such
other terms and conditions as the Administrator may deem appropriate:
(a) OPTION PERIOD. Each Option agreement shall specify that the Option
thereunder is granted for a period of ten (10) years from the date of
grant and shall provide that the Option shall expire on such ten
(10) year anniversary.
(b) OPTION PRICE. The Option price per share shall be the Fair Market Value
at the time the Option is granted.
(c) EXERCISE OF OPTION. Subject to Section 7(f) and 7(m) of the Plan,
Options shall become exercisable such that on the second anniversary from
the date of grant the amount exercisable shall be 25% and on each of the
third, fourth and fifth anniversaries from the date of grant the amount
exercisable shall cumulatively increase by 25%, as set forth in the
following schedule provided, however, that the Administrator may, in its
discretion, provide for such other exercisability schedules in a written
agreement for any Option or accelerate the exercisability of any Option
granted under the Plan.
YEARS FROM AMOUNT
DATE OF GRANT EXERCISABLE
- ------------- -----------
One......................................................... 0%
Two......................................................... 25%
Three....................................................... 50%
Four........................................................ 75%
Five........................................................ 100%
(d) LIMITATION ON AMOUNT OF INCENTIVE STOCK OPTIONS GRANTED. To the extent
that the aggregate Fair Market Value of stock with respect to which
Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (whether under the terms of the Plan
or any other stock option plan of the Corporation or of its parent or any
subsidiary corporation) exceeds $100,000, such Options shall be treated
as Nonqualified Stock Options. Fair Market Value shall be determined as
of the time the Option with respect to such stock is granted.
(e) PAYMENT OF OPTION PRICE UPON EXERCISE. The option price of the shares
as to which an Option shall be exercised shall be paid to the Corporation
at the time of exercise at the option of the Participant either (i) in
cash, or (ii) by delivering Common Stock of the Corporation already owned
by the optionee for a period of not less than six (6) months and having a
total Fair Market Value on the date of such delivery equal to the option
price or (iii) by delivering a combination of cash and such Common Stock
of the Corporation having a total Fair Market Value on the date of such
delivery equal to the option price.
(f) TERMINATION OF EMPLOYMENT OR RELATIONSHIP. In the event the employment
or relationship of a Participant terminates for any reason, the Options
granted to such Participant and which are exercisable as of the date of
termination of employment or relationship may be so exercised within
three (3) months after termination of employment or relationship and
shall then terminate. All Options that have been granted to a Participant
which are not exercisable as of the date of the Participant's termination
of employment or relationship shall terminate as of such date.
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(g) TRANSFERABILITY OF OPTIONS. No Option granted under the Plan and no
right arising under such Option shall be transferable other than by will
or by the laws of descent and distribution. During the lifetime of the
optionee an Option shall be exercisable only by him. Any Option
exercisable at the date of the Participant's death and transferred by
will or by the laws of descent and distribution shall be exercisable in
accordance with the terms of such Option by the executor or
administrator, as the case may be, of the Participant's estate for a
period of three (3) months after the date of the Participant's death and
shall then terminate. All Options not exercisable at the date of the
Participant's death shall terminate as of such date.
(h) INVESTMENT REPRESENTATION. Each Option agreement may contain an
undertaking that, upon demand by the Administrator for such a
representation, the optionee (or any person acting under Section 7(g))
shall deliver to the Administrator at the time of any exercise of an
Option a written representation that the shares to be acquired upon such
exercise are to be acquired for investment and not for resale or with a
view to the distribution thereof. Upon such demand, delivery of such
representation prior to the delivery of any shares issued upon exercise
of an Option shall be a condition precedent to the right of the optionee
or such other person to purchase any shares.
(i) ADJUSTMENTS IN EVENT OF CHANGE IN COMMON STOCK. In the event of any
change in the Common Stock by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation, split-up,
combination or exchange of shares, or of any similar change affecting the
Common Stock, the number and kind of shares which thereafter may be
optioned and sold under the Plan and the number and kind of shares
subject to Option in outstanding Option agreements and the purchase price
per share thereof shall be appropriately adjusted consistent with such
change in such manner as the Board may deem equitable to prevent
substantial dilution or enlargement of the rights granted to, or
available for, Participants in the Plan. Without limiting the generality
of the foregoing if the Corporation's common stock is recapitalized into
new multiple classes of common stock, the kind of shares subject to
Option shall be those common shares intended for broad general ownership
rather than any class of special super-voting or other control stock.
(j) OPTIONEES TO HAVE NO RIGHTS AS STOCKHOLDERS. No optionee shall have any
rights as a stockholder with respect to any shares subject to his Option
prior to the date on which he is recorded as the holder of such shares on
the records of the Corporation.
(k) PLAN AND OPTION NOT TO CONFER RIGHTS WITH RESPECT TO CONTINUANCE OF
EMPLOYMENT OR RELATIONSHIP. Neither the Plan nor any action taken
thereunder shall be construed as giving any individual the right to be
retained as an employee, consultant or director, nor shall it interfere
in any way with the right of the Corporation or any subsidiary to
terminate any Participant's employment or relationship at any time with
or without cause.
(l) OTHER OPTION PROVISIONS. The form of option agreement authorized by the
Plan may contain such other provisions as the Administrator may, from
time to time, determine.
(m) EFFECT OF A CHANGE OF CONTROL. Notwithstanding any of the other
provisions of Section 7 hereof, if there should be a Change of Control of
the Corporation, the Corporation shall give each Participant written
notice of such Change of Control as promptly as practicable (and, if
possible, prior to the effective date thereof) and all of the Options
granted to a Participant not currently exercisable shall become
immediately exercisable as of the effective date of such Change of
Control.
8. NO CLAIM OR RIGHT UNDER THE PLAN. No individual shall at any time have
the right to be selected as a Participant in the Plan nor, having been selected
as a Participant and granted an Option, to be granted any additional option.
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9. LISTING AND QUALIFICATION OF SHARES. The Plan, the grant and exercise of
Options thereunder, and the obligation of the Corporation to sell and deliver
shares under such Options, shall be subject to all applicable federal and state
laws, rules and regulations and to such approvals by any government or
regulatory agency as may be required. The Corporation, in its discretion, may
postpone the issuance or delivery of shares upon any exercise of an Option until
completion of any stock exchange listing, or other qualification of such shares
under any state or federal law, rule or regulation as the Corporation may
consider appropriate, and may require any Participant, beneficiary or legal
representative to make such representations and furnish such information as it
may consider appropriate in connection with the issuance or delivery of the
shares in compliance with applicable laws, rules and regulations.
10. TAXES. The Corporation may make such provisions and take such steps as
it may deem necessary or appropriate for the withholding of all federal, state,
local and other taxes required by law to be withheld with respect to Options
under the Plan including, but not limited to (a) reducing the number of shares
of Common Stock otherwise deliverable, based upon their Fair Market Value on the
date of exercise, to permit deduction of the amount of any such withholding
taxes from the amount otherwise payable under the Plan, (b) deducting the amount
of any such withholding taxes from any other amount then or thereafter payable
to a Participant, or (c) requiring a Participant, beneficiary or legal
representative to pay to the Corporation the amount required to be withheld or
to execute such documents as the Corporation deems necessary or desirable to
enable it to satisfy its withholding obligations as a condition of releasing the
Common Stock.
11. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be
personally liable by reason of any contract or other instrument executed by such
member or on his behalf in his capacity as a member of the Board or the
Administrator nor for any mistake of judgment made in good faith, and the
Corporation shall indemnify and hold harmless each employee, officer or director
of the Corporation to whom any duty or power relating to the administration or
interpretation of the Plan may be allocated or delegated, against any cost or
expense (including counsel fees) or liability (including any sum paid in
settlement of a claim with the approval of the Board) arising out of any act or
omission to act in connection with the Plan unless arising out of such person's
own fraud or bad faith.
12. AMENDMENT OR TERMINATION. The Board may, with prospective or
retroactive effect, amend, suspend or terminate the Plan or any portion thereof
at any time; provided, however, that no amendment, suspension or termination of
the Plan shall deprive any Participant of any right with respect to any Option
granted under the Plan without his written consent.
13. CAPTIONS. The captions preceding the sections of the Plan have been
inserted solely as a matter of convenience and shall not in any manner define or
limit the scope or intent of any provisions of the Plan.
14. GOVERNING LAW. The Plan and all rights thereunder shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within such State.
15. EFFECTIVE DATE. The Plan shall become effective as of the Effective
Date, subject to approval of the stockholders of the Corporation.
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