-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DwmkB011HSSaMPtaeqCgxnPkr38Py4ibk6NZ7zWK9DcU/JdCJymPzuxvTq0qAos/ p0cu29+Faq8+3ST3DBSw8g== 0000950130-01-504343.txt : 20010906 0000950130-01-504343.hdr.sgml : 20010906 ACCESSION NUMBER: 0000950130-01-504343 CONFORMED SUBMISSION TYPE: S-2 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20010905 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BENIHANA INC CENTRAL INDEX KEY: 0000935226 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 650538630 STATE OF INCORPORATION: DE FISCAL YEAR END: 0328 FILING VALUES: FORM TYPE: S-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-68946 FILM NUMBER: 1730856 BUSINESS ADDRESS: STREET 1: 8685 NW 53RD TERRACE CITY: MIAMI STATE: FL ZIP: 33166 BUSINESS PHONE: 3055930770 MAIL ADDRESS: STREET 1: 8685 NW 53RD TERRACE CITY: MIAMI STATE: FL ZIP: 33166 S-2 1 ds2.txt FORM S-2 As filed with the Securities and Exchange Commission on September 5, 2001 Registration No. 333- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- FORM S-2 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------- BENIHANA INC. (Exact name of registrant as specified in its charter) Delaware 65-0538630 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
----------------- 8685 Northwest 53rd Terrace Miami, Florida 33166 (305) 593-0770 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ----------------- Joel A. Schwartz, President Benihana Inc. 8685 Northwest 53rd Terrace Miami, FL 33166 (305) 593-0770 (Name, address, including zip code, and telephone number, including area code, of agent for service) ----------------- Copies to: Herschel S. Weinstein, Esq. Robert G. Minion, Esq. Dornbush Mensch Mandelstam &Schaeffer, LLP Steven M. Skolnick, Esq. 747 Third Avenue Lowenstein Sandler PC New York, New York 10017 65 Livingston Avenue (212) 759-3300 Roseland, New Jersey 07068-1791 (973) 597-2500
Approximate date of commencement of proposed sale to public: As promptly as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [_] If the registrant elects to deliver its latest annual report to security holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1) of this Form, check the following box. [_] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] . If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] . If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [_] . If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [_] CALCULATION OF REGISTRATION FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
Proposed Proposed Title of Each Class of Securities Amount Being Maximum Offering MaximumAggregate Amount of Being Registered Registered Price Per Share (1) Offering Price (1) Registration Fee - ------------------------------------------------------------------------------------------------------- Class A Common Stock, par value $.10 per share................ 862,500(2) $12.15 $10,479,375 $2,619.84 - -------------------------------------------------------------------------------------------------------
- -------- (1)Estimated solely for the purpose of determining the registration fee pursuant to Rule 457(c) of the Securities Act of 1933, based upon average of the high and low prices of the Class A Common Stock as represented on The Nasdaq National Market on August 30, 2001. (2)Includes 112,500 shares of Class A Common Stock which may be purchased by the Underwriters to cover over-allotments, if any. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Subject to completion, dated September 5, 2001 750,000 Shares BENIHANA INC. Class A Common Stock We are offering 750,000 shares of Class A Common Stock. Our Class A Common Stock has limited voting rights as compared to our Common Stock. See "Description of our Capital Stock." Our Class A Common Stock is traded on The Nasdaq National Market under the symbol "BNHNA." On August 30, 2001, the last sale price of a share of our Class A Common Stock as reported on The Nasdaq National Market was $12.40. Investing in our Class A Common Stock involves risks. See "Risk Factors" beginning on page 5.
Per Share Total --------- ----- Public offering price................ $ $ Underwriting discount................ $ $ Proceeds to Benihana, before expenses $ $
We have granted the underwriters a 45-day option to purchase up to an aggregate of 112,500 additional shares of Class A Common Stock on the same terms and conditions as set forth above solely to cover over-allotments, if any. The underwriters are offering the shares of our Class A Common Stock as described in "Underwriting." Delivery of the shares will be made on or about , 2001. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. LADENBURG THALMANN & CO. INC. RYAN, BECK & CO. ----------------- The date of this prospectus is , 2001 The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Inside Front Cover of Prospectus The inside front cover of the Prospectus is a foldout. A map identifying the locations by city and country of all restaurants owned, operated and franchised by Benihana, including the type of restaurant and the number of restaurants in each city, appears on the outside cover of the foldout. Below the map appears a photograph of customers eating at a Benihana restaurant. A picture of the interior of two Benihana restaurants appears on the left inside page of the foldout. The "red flower" symbol of Benihana appears above the pictures on the page. A picture of the interior of two Haru restaurants appears on the right inside page of the foldout. The Haru logo appears above the pictures on the page. PROSPECTUS SUMMARY This summary highlights selected information about us. It may not contain all of the information that you find important. You should carefully read this entire document, including "Risk Factors" and our consolidated financial statements and their related notes before making an investment decision. Unless otherwise indicated, all information in this prospectus assumes no exercise of the underwriters' over-allotment option. Our Company We have operated teppanyaki-style Japanese restaurants in the United States for over 36 years, and we believe we are the largest operator of teppanyaki-style restaurants in the country. Our core concept, the traditional Benihana restaurant, offers teppanyaki-style Japanese cooking in which fresh steak, chicken and seafood is prepared by a Benihana chef on a grill which forms a part of the table on which the food is served. Our Haru concept offers an extensive menu of distinctive Japanese fusion dishes in a high energy, urban atmosphere. In addition to traditional, high quality sushi and sashimi creations, Haru offers raw bar items and Japanese cuisine, including New York strip steak with wasabi croquette, spicy shallots and ginger sauce, garlic shrimp and crispy duck. We currently: . own and operate 52 Benihana and Benihana Grill teppanyaki-style Japanese dinnerhouse restaurants, including one restaurant we operate under the name The Samurai; . franchise others to operate 16 additional Benihana restaurants; . own and operate four Haru restaurants in New York City, offering Japanese dining, featuring sushi and sashimi; and . own and operate three Sushi Doraku by Benihana restaurants, in which customers select their favorite sushi "kaiten" style from a continuous conveyor system. We own the related United States trademarks and service marks to the names "Benihana," "Benihana of Tokyo" and the "red flower" symbol and we have the exclusive rights to own, develop and license Benihana and Benihana Grill restaurants in the United States (other than Hawaii), Central and South America and the islands of the Caribbean Sea. We have also filed an application to register the "Haru" trademark. Sales by our owned restaurants were approximately $161.9 million for the fiscal year ended April 1, 2001, as compared to approximately $136.4 million for the prior fiscal year, and were approximately $50.5 million for the 16 week period ended July 22, 2001, as compared to approximately $46.7 million for the comparable period in the prior fiscal year. Our net income for the fiscal year ended April 1, 2001 was approximately $9.1 million, as compared to approximately $8.7 million for the prior fiscal year, and was approximately $2.4 million for the 16 week period ended July 22, 2001 and for the comparable period for the prior year. We have also achieved 37 consecutive quarters of same store sales growth and customer count increases. We are incorporated under the laws of the State of Delaware. Our principal executive offices are located at 8685 Northwest 53rd Terrace, Miami, Florida 33166 and our telephone number is (305) 593-0770. Strategy The critical elements of our growth strategy are as follows: Selectively Pursue Restaurant Growth. We believe that our Benihana concept has broad appeal and that, as a result, we have significant opportunities to expand our business. We plan to capitalize on our broad customer appeal and strong brand recognition within the casual dining segment by opening new restaurants, selectively acquiring existing Asian-theme restaurants in major U.S. markets and franchising new restaurant locations. We are currently developing or have under construction three new Benihana restaurants in Westbury, New York, and Irving and Woodlands, Texas, and one new Haru restaurant in New York City. Maintain Strong Unit Economics. Our experienced management team intends to maintain attractive store margins due to sustained sales growth and effective cost controls. Continue To Build Brand Awareness And Customer Loyalty. We intend to continue to provide marketing and promotional support to sustain and grow our reputation for distinctive value, quality food and customer satisfaction. Provide Strong Management Support. Led by Joel Schwartz, our Chief Executive Officer, our senior management team has an average of 15 years with our company and is experienced in developing and operating distinctive, high-volume casual dining establishments. The Offering Class A Common Stock to be offered... 750,000 shares Total Class A Common Stock to be outstanding after this offering(1)... 3,755,380 shares Total Common Stock to be outstanding after this offering (2).............. 3,280,202 shares Use of proceeds...................... To reduce bank debt, to construct or acquire additional restaurants, and for working capital and general corporate purposes, including capital expenditures for existing restaurants. Nasdaq National Market symbols....... Class A Common Stock--BNHNA Common Stock --BNHN - -------- (1)Does not include (i) 1,542,271 shares of Class A Common Stock issuable upon exercise of outstanding options and warrants to purchase shares of Class A Common Stock with an average exercise price of $10.85 per share, (ii) 3,280,202 shares of Class A Common Stock issuable upon conversion of the Common Stock, and (iii) 80,500 shares of Class A Common Stock issuable upon conversion of shares of Common Stock which are issuable upon exercise of outstanding options to purchase shares of Common Stock. (2)Does not include 80,500 shares of Common Stock issuable upon exercise of outstanding options to purchase shares of Common Stock with an average exercise price of $7.29 per share. 2 Summary Financial Information The following historical consolidated financial information, except for the information provided for the 16 week periods ended July 16, 2000 and July 22, 2001, have been derived from our historical consolidated financial statements that have been audited by Deloitte & Touche LLP, our independent auditors. The historical consolidated financial information for the 16 week periods ended July 16, 2000 and July 22, 2001 are derived from our unaudited consolidated financial statements. The unaudited financial information includes all adjustments, consisting of only normal recurring accruals, which our management considers necessary for a fair presentation of our financial position and results of operations for these periods. Operating results for the 16 week period ended July 22, 2001 are not necessarily indicative of the results that may be expected for any other period. Our fiscal year consists of 52 or 53 weeks and ends on the Sunday closest to March 31/st/. The first fiscal quarter of each fiscal year consists of 16 weeks and subsequent quarters each consist of 12 weeks, except in the case of a 53 week fiscal year, in which the last quarter consists of 13 weeks. The following summary consolidated financial information should be read in conjunction with our consolidated financial statements and their related notes incorporated by reference in this prospectus. 3 Benihana Inc. Summary Financial Information
Fiscal Year Ended Quarter Ended ------------------------------------------------ ---------------------- March 30, March 29, March 28, March 26, April 1, July 16, July 22, 1997 1998 1999 2000 2001 2000 2001 --------- --------- --------- --------- -------- ----------- ----------- (unaudited) (in thousands, except per share data) Consolidated Statement of Earnings Data: Total revenues......................... $85,204 $ 99,757 $119,149 $137,477 $163,243 $47,069 $50,935 Cost of sales.......................... 21,658 25,894 30,964 36,588 43,301 13,062 13,226 Restaurant operating expenses.......... 47,057 53,846 65,188 74,088 89,427 25,434 28,711 Selling, general & administrative expenses.............................. 8,359 9,914 11,343 11,402 13,690 3,961 4,351 Interest expense, net.................. 904 1,076 1,644 1,297 1,233 462 339 Minority Interest...................... 81 40 26 (7) Income before taxes.................... 7,179 8,862 9,998 13,455 14,099 3,529 3,628 Net income............................. 4,947 5,940 6,518 8,733 9,091 2,435 2,447 Pro forma net income (2)............... 4,947 6,104 7,031 9,364 9,989 2,711 2,447 Basic earnings per common share........ 0.81 0.96 1.06 1.41 1.47 0.39 0.39 Diluted earnings per common share...... 0.77 0.93 1.02 1.32 1.38 0.37 0.38 Pro forma diluted earnings per common share (2)...................... 0.77 0.96 1.10 1.42 1.52 0.41 0.38 Other Financial Data: EBITDA (1)............................. $10,510 $ 12,938 $ 15,529 $ 19,101 $ 20,510 $ 5,461 $ 5,504 Cash flows provided by (used in): Operating activities................. 6,300 11,245 12,726 15,811 14,918 4,371 3,480 Investing activities................. (2,853) (24,218) (7,230) (18,109) (14,567) (4,592) (4,886) Financing activities................. (1,126) 7,099 (4,981) 1,779 (581) 1,024 1,366 Percentage increase in comparable store sales................................. 3.9% 8.6% 7.8% 10.6% 10.6% 11.3% 5.5% At Fiscal Year End ------------------------------------------------ At July 16, At July 22, 1997 1998 1999 2000 2001 2000 2001 --------- --------- --------- --------- -------- ----------- ----------- (unaudited) (in thousands, except operating data) Consolidated Balance Sheet Data: Total assets........................... 40,562 58,157 60,868 75,445 85,929 79,207 89,147 Long-term debt including current maturities............................ 6,543 16,840 12,407 14,646 14,645 15,812 16,082 Stockholders' equity................... 22,754 28,223 34,699 43,545 52,685 46,030 55,277 Other Operating Data: Number of restaurants at end of period. 38 49 51 53 56 55 58
- -------- (1)EBITDA, or earnings before interest, taxes on income and depreciation and amortization is a common measurement used by financial statement users to compare one company's performance to another's before considering financing and tax structure and depreciation and amortization policies. EBITDA is not intended to represent cash flow from operations as defined by accounting principles generally accepted in the United States of America and may not be comparable among different companies because of computational and classification differences. (2)Pro forma effect given to net income and diluted earnings per share for each of the fiscal years presented and for the 16 week period ended July 16, 2000 to give comparable effect for the adoption of SFAS 142 in the 16 week period ended July 22, 2001. 4 RISK FACTORS You should carefully consider these risk factors in addition to our consolidated financial statements. In addition to the following risks, there may also be risks that we do not yet know of or that we currently think are immaterial that may also impair our business operations. If any of the following risks occur, our business, financial condition or operating results could be adversely affected, the trading price of our Class A Common Stock could decline and you might lose all or part of your investment. Changes in consumer preferences or discretionary consumer spending could negatively impact our operating results. Our restaurants feature teppanyaki-style Japanese food and sushi in a family friendly, casual environment. Our continued success depends, in part, upon the popularity of these foods and this style of casual dining. Shifts in consumer preferences away from this cuisine or dining style could materially adversely affect our future profitability. Also, our success depends to a significant extent on numerous factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. Adverse changes in these factors could reduce customer traffic or impose practical limits on pricing, either of which could materially adversely affect our operating results and cash flow. Our growth strategy requires us to open or acquire new restaurants and we may not be able to successfully achieve such growth. Our growth strategy requires us to open or acquire new restaurants. The success of our growth strategy depends on a number of factors, some of which are beyond our control, including our ability to: . identify and obtain suitable locations; . negotiate favorable real estate acquisition or lease terms; . recruit and retain skilled management personnel and Benihana chefs; . secure required governmental approvals and permits; . compete for restaurant sites; . timely develop new restaurants; and . secure adequate financing. The failure to manage our growth effectively could materially adversely affect our operations and financial condition. We continually evaluate the opening of new restaurants. However, there can be no assurance that we will be able to open all of our planned new restaurants, that such restaurants will be opened on budget or on a timely basis, or that such newly opened restaurants can be operated profitably. Our strategy of acquiring other related restaurants for growth may not succeed and may adversely affect our financial condition and results of operations. Our strategy of growth through acquisitions of related restaurants presents risks that could materially adversely affect our business and financial performance, including: . the diversion of our management's attention; . our ability to assimilate the operations and personnel of the acquired restaurants; . the contingent and latent risks associated with the past operations of, and other unanticipated problems arising in, the acquired restaurants; . the need to expand management, administration, and operational systems; and . increased competition for acquisition opportunities and qualified employees. 5 We cannot predict whether: . we will be able to acquire additional restaurants on terms favorable to us; . we will be able to successfully integrate the operations of any new restaurants into our business; . we will realize any anticipated benefits of completed acquisitions; or . there will be substantial unanticipated costs associated with new acquisitions. In addition, future acquisitions by us may result in: . potentially dilutive issuances of our equity securities; . the incurrence of additional debt; and . the recognition of potential impairment of goodwill and other intangible assets. As has been our practice in the past, we continuously evaluate and seek to acquire assets or equity of certain related restaurants. However, we have not reached any agreement or arrangement with respect to any particular acquisition and we may not be able to complete any additional acquisition. This may reduce our growth. Benihana of Tokyo is able to effectively control Benihana through the election of a majority of the members of our board of directors. Immediately following the completion of this offering, Benihana of Tokyo will beneficially own approximately 46.8% of our outstanding shares of Common Stock, or approximately 42.0% of our outstanding voting power. Our Class A Common Stock, voting as a class, has the right to elect one-fourth of the members of our board of directors, rounded to the next higher number of directors, and our Common Stock, voting as a class, has the right to elect the remaining members of our board of directors. Of our current seven member board, five members are elected by the holders of our Common Stock and two members are elected by the holders of our Class A Common Stock. As a result, Benihana of Tokyo is able to effectively control Benihana through the election of a majority of our directors. Our Class A Common Stock has limited voting rights as compared to our Common Stock. In addition to the limited voting rights with respect to the election of directors described above, the shares of Class A Common Stock offered hereby also possess limited voting rights as compared to the shares of Common Stock with respect to others matters submitted to our stockholders for approval. The shares of Class A Common Stock have only one-tenth of a vote per share on all matters, other than the election of directors, which may be voted on by our stockholders voting together as a single class with the holders of our Common Stock which have one vote per share. Because Benihana of Tokyo will beneficially own shares of Common Stock representing approximately 42.0% of our outstanding voting power following this offering, Benihana of Tokyo will be able to influence significantly the outcome of mergers, sales of assets or other corporate transactions or matters submitted for stockholder approval. As a result, our other stockholders may have little influence over matters submitted for stockholder approval. Our growth prospects in certain locations may be limited by our franchise agreements and the ownership of the Benihana concept and name by Benihana of Tokyo in certain geographic locations. We own the rights to the Benihana concept, name and trademarks in the United States, Central and South America and the islands of the Caribbean Sea. Benihana of Tokyo, our largest stockholder, continues to own exclusive rights to the Benihana concept, name and trademarks in countries outside of the United States, Central and South America and the islands of the Caribbean Sea. In addition, Benihana of Tokyo has been granted an exclusive, royalty-free franchise for the Benihana concept and trademarks in the State of Hawaii. We do not control Benihana of Tokyo's use of the Benihana trademarks in countries outside of the United States, Central and South America, the islands of the Caribbean Sea and Hawaii and have no interest in such rights. 6 We have granted franchisees the right to use the Benihana name and marks in certain areas in the United States, South America and the islands of the Caribbean Sea and the terms of these franchises, which includes the Las Vegas market, preclude us from opening competing Benihana restaurants in the proximity of the franchised restaurant. The limits on our geographic expansion as a result of the rights of Benihana of Tokyo and our franchisees may adversely impact our growth prospects. In addition, our business may be adversely affected by Benihana of Tokyo's and our franchisees': . use of the Benihana name and trademarks in a manner inconsistent with our use of the Benihana name and trademarks; . failure to maintain the food quality and service level at their Benihana restaurants as exists at the Benihana restaurants we own and operate; . failure to adhere to local and national laws, rules and regulations in which their Benihana restaurants are located; and . failure to vigorously defend the Benihana name and trademarks against acts of infringement by third parties. The loss of our key personnel may adversely affect our business. We are dependent on the active participation of Joel A. Schwartz, our President and Chief Executive Officer, Taka Yoshimoto, our Executive Vice President-Operations, and Kevin Y. Aoki, our Vice President-Marketing. We cannot assure that any of our management personnel, including Messrs. Schwartz, Yoshimoto and Aoki, will continue to devote sufficient time to our business. The loss of services of, or a material reduction in the amount of time devoted to our business by, these individuals could adversely affect our operations and financial condition. Competition for qualified executive officers is intense. In addition, if we are unable to attract, retain and motivate other highly skilled employees, our business and prospects could be materially adversely affected. We do not have key man insurance for Messrs. Schwartz, Yoshimoto or Aoki. We are subject to extensive government regulation which can be costly, time consuming and subject us to unanticipated delays. The restaurant industry is subject to extensive federal, state and local government regulation relating to: . the preparation and sale of food and alcoholic beverages; . health, fire, sanitation, building and zoning codes; . employer/employee relations, including minimum wage requirements, unemployment, overtime, workers' compensation, working conditions, safety standards and citizenship requirements; and . access to our restaurants by disabled persons. We also may be subject in certain states to "dram shop" statutes, which generally provide a person injured by an intoxicated person the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. Termination of the liquor license for any restaurant would adversely affect the revenues for that restaurant. Difficulties in obtaining and maintaining necessary governmental approvals, the failure to obtain or retain, or a delay in obtaining, food and liquor licenses or any other governmental approvals could also materially adversely affect our operating results. More stringent and varied requirements, particularly at the local level, may result in increases in the costs of and time required for opening new restaurants, and difficulties in obtaining necessary licenses or permits could cause delays in or cancellations of new restaurant openings. Our operating costs are also affected by increases in minimum wages, unemployment tax rates, mandatory health care coverage and similar matters over which we have no control. 7 Intense competition in the restaurant industry may adversely affect our operating results. The casual dining segment of the restaurant industry is expected to remain intensely competitive with respect to price, service, location, and the type and quality of food. Each of our restaurants competes directly or indirectly with locally-owned restaurants as well as regional and national chains, and several of our significant competitors are larger or more diversified and have substantially greater resources than we do. It is also anticipated that growth in the industry will result in continuing competition for available restaurant sites as well as in attracting and retaining qualified management level operating personnel. Our failure to comply with state and federal law relating to the franchising of Benihana restaurants could subject us to liability to franchisees and to fines and penalties. We are subject to various state and federal laws relating to the franchisor-franchisee relationship. Although we believe we are in compliance with these laws, the failure by us to comply with these laws could subject us to liability to franchisees and to fines or other penalties imposed by governmental authorities. In addition, although our franchise agreements give us the right to protect our reputation and trademarks by enforcing strict standards of operation against our franchisees, there can be no assurance that such standards will be complied with at all times or that our efforts to enforce such standards, if necessary, will be successful. Our operations are susceptible to changes in food and supply costs which could adversely affect our margins. Our profitability depends, in part, on our ability to anticipate and react to changes in food and supply costs. Any increase in distribution prices could cause our food or supply costs to increase. In addition, various factors beyond our control, including adverse weather conditions and governmental regulations, could also cause our food and supply costs to increase. If we are unable to anticipate and react to changes in our food and supply costs by adjusting our purchasing practices, our margins will be reduced and our operating results and cash flows could be adversely affected. Our business may be adversely affected by infringement of our proprietary rights or by legal actions to enforce or defend our proprietary rights. In the United States, the "Benihana" and "Benihana of Tokyo" names and the "red flower" symbol are owned by us and are registered in the United States Patent and Trademark Office and in certain other foreign countries. We have also filed an application to register the "Haru" trademark. Each of these proprietary rights are material to our business. We may not be able to prevent misappropriation of our tradenames and trademarks or protect our other intellectual property. In addition, Benihana of Tokyo and our franchisees have certain rights with respect to this intellectual property which limit our use of such proprietary rights in the locations in which Benihana of Tokyo or such franchisees operate. If we are unable to protect our proprietary rights, such inability could materially adversely affect our operations and financial condition. Litigation may be necessary to: . enforce our intellectual property rights; . protect our trade secrets; . determine the scope and validity of such intellectual property rights; and . defend claims of infringement of other parties' proprietary rights. Litigation could result in substantial costs and diversion of management time and resources and could materially adversely affect our operations and financial condition. 8 Our Shareholder Rights Plan, staggered board of directors and governing provisions in our certificate of incorporation and bylaws could tend to discourage takeover or acquisition proposals not supported by our board of directors. We adopted a Shareholder Rights Plan and declared a distribution of one Preferred Share Purchase Right for each share of our Common Stock and Class A Common Stock outstanding as of February 26, 1997 and for each share issued by us after such date. The purchase rights would operate to create substantial dilution to a potential acquiror who seeks to make an acquisition of Benihana if our board of directors believes the terms of the offer by such acquiror are inadequate or structured in a coercive manner. Prior to becoming exercisable, the purchase rights are evidenced by the certificates representing the Common Stock and Class A Common Stock and may not be separately traded. The purchase rights become exercisable on the tenth day, or such later date as our board of directors may determine, after public announcement that a person or a group, subject to certain exceptions, has acquired 20% or more of the outstanding shares of Common Stock or an announcement of a tender offer that would result in beneficial ownership by a person or a group of 20% or more of the outstanding shares of Common Stock. Our certificate of incorporation provides for three classes of directors to be elected on a staggered basis, which also enables existing management to exercise significant control over our affairs. Our board of directors also has the authority, without further action by the stockholders, to issue up to 5,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. The existence of our rights plan, our staggered board of directors, our ability to issue shares of preferred stock and other provisions of our certificate of incorporation and bylaws, including our advance notice requirements for stockholder proposals and director nominations and our choice to be governed by the business combination provisions of Delaware corporate law, could tend to discourage takeover or acquisition proposals not supported by our current board of directors. We do not intend to pay dividends to our stockholders. We have not paid any cash dividends on our Common Stock or Class A Common Stock and do not expect to do so in the foreseeable future. In addition, our credit facility prohibits the payment of cash dividends on our common equity without the consent of our lender. Future sales of our common equity may depress our stock price. Sales of a substantial number of shares of our common equity in the public market could cause a reduction in the market price of our Class A Common Stock and Common Stock. We had 3,005,380 and 3,280,202 shares of Class A Common Stock and Common Stock, respectively, issued and outstanding as of August 31, 2001. As of that date, substantially all of those shares were eligible for sale under Rule 144 or are otherwise freely tradeable. In addition, options and warrants to purchase 1,542,271 and 80,500 shares of Class A Common Stock and Common Stock, respectively, were outstanding as of August 31, 2001. As of August 31, 2001, 1,303,493 and 80,500, respectively, of those stock options and warrants were vested and the remainder will vest within the next two years. We may also issue additional shares of common equity in connection with our business and may grant additional stock options to our employees, officers, directors and consultants under our stock option plan. If a significant portion of the shares of our Common Stock or Class A Common Stock were sold in the public market, the market value of our Class A Common Stock could be adversely affected. 9 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This prospectus contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements typically are identified by use of terms such as "may," "will," "should," "plan," "expect," "anticipate," "estimate" and similar words, although some forward-looking statements are expressed differently. Forward-looking statements represent our management's judgment regarding future events. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. All statements other than statements of historical fact included in, or incorporated by reference into, this prospectus regarding our business, financial position, business strategy, budgets, plans, or objectives for future operations are forward-looking statements. We cannot guarantee the accuracy of the forward-looking statements, and you should be aware that our actual results could differ materially from those contained in the forward-looking statements due to a number of factors, including the statements under "Risk Factors" set forth above. INCORPORATION OF CERTAIN INFORMATION BY REFERENCE The SEC allows us to "incorporate by reference" into this prospectus the information we file with the SEC, which means that we can disclose important information to you by referring to those documents. The information incorporated by reference is an important part of this prospectus. We incorporate by reference the following documents we filed with the SEC: . Our Annual Report on Form 10-K/A for the fiscal year ended April 1, 2001 (including information specifically incorporated by reference into our Form 10-K/A from our 2001 Annual Report to Stockholders and Proxy Statement for our 2001 Annual Meeting of Stockholders); and . Our Quarterly Report on Form 10-Q for the fiscal 16-week period ended July 22, 2001. We are delivering along with this prospectus a copy of our most recent Annual Report on Form 10-K/A and Quarterly Report on Form 10-Q. You may request a copy of the documents we are incorporating by reference, at no cost, by writing or telephoning us at the following address: Benihana Inc. 8685 Northwest 53rd Terrace Miami, Florida 33166 (305) 593-0770 Attention: Assistant Secretary You should rely only on the information incorporated by reference or provided in this prospectus and any supplement. We have not authorized anyone else to provide you with different information. 10 USE OF PROCEEDS The net proceeds to us from the sale of the shares of Class A Common Stock offered under this prospectus are estimated to be approximately $8.4 million, or approximately $9.7 million if the underwriters' over-allotment option is exercised in full, assuming a public offering price of $12.40 per share, the closing price of the Class A Common Stock on The Nasdaq National Market on August 30, 2001, and after deducting the underwriting discount and estimated offering expenses. We intend to use approximately $8.0 million of the net proceeds to reduce indebtedness under our revolving credit facility. Amounts outstanding under this facility bear interest at a variable rate, at our option equal to either the lenders' base rate or LIBOR plus a variable spread. At August 30, 2001, $16.5 million was outstanding under the revolving facility and with a weighted average interest rate of approximately 4.6% per annum. The revolving credit facility and the associated term loan facility have a final maturity date of March 31, 2004. Following repayment of such indebtedness, the $8.0 million applied to the reduction of the revolving credit facility will be available for re-borrowing under the revolving credit facility. We intend to use the remaining proceeds and amounts available under our revolving credit facility to construct or acquire additional restaurants and for working capital and general corporate purposes, including capital expenditures for existing restaurants. While we continue to explore acquisition opportunities, we have not reached any agreement or arrangement with respect to any particular acquisition, and there can be no assurance that any additional acquisitions will be consummated. Pending such uses, we plan to invest the net proceeds of this offering in short term, investment grade, interest-bearing securities. Since we cannot specify with certainty the precise manner in which the net proceeds will be allocated, we will have broad discretion in the application of the net proceeds. 11 CAPITALIZATION The following table sets forth at July 22, 2001: . our actual capitalization; and . our capitalization as adjusted to give effect to the sale of the 750,000 shares of Class A Common Stock offered hereby, the receipt of the estimated net proceeds from this offering and the application of the net proceeds to repay a portion of our outstanding debt obligations, all based on an assumed public offering price of $12.40 per share, the closing price of the Class A Common Stock on The Nasdaq National Market on August 30, 2001. See "Use of Proceeds." This capitalization excludes the following shares as of July 22, 2001: . 1,542,271 shares of Class A Common Stock issuable upon exercise of outstanding options and warrants to purchase shares of Class A Common Stock; . 3,280,202 shares of Class A Common Stock issuable upon conversion of the Common Stock; and . 80,500 additional shares of Common Stock issuable upon exercise of outstanding options to purchase shares of Common Stock. 12 This table should be read in conjunction with our consolidated financial information and their related notes incorporated by reference in this prospectus.
As of July 22, 2001 Actual As Adjusted ------- ----------- (in thousands) Cash.................................................................................. $ 895 $ 1,262 ------- ------- Long-term debt(1)..................................................................... 16,000 8,000 ------- ------- Stockholders' equity: Preferred Stock -- $1.00 par value; authorized -- 5,000,000 shares; issued and outstanding -- 0 shares actual; issued and outstanding -- 0 shares as adjusted..... -- -- Common Stock -- $.10 par value; convertible into Class A Stock authorized -- 12,000,000 shares; issued and outstanding, excluding 9,177 shares held in treasury, -- 3,280,202 shares actual; issued and outstanding, excluding 9,177 shares held in treasury, -- 3,280,202 shares as adjusted.......................................... 328 328 Class A Stock -- $.10 par value; authorized -- 20,000,000 shares; issued and outstanding -- 3,004,380 shares actual; issued and outstanding -- 3,754,380 shares as adjusted........................................................................ 300 375 Additional paid-in capital......................................................... 14,870 23,162 Retained earnings.................................................................. 39,778 39,778 ------- ------- Total Stockholders' Equity......................................................... 55,276 63,643 ------- ------- Total Capitalization............................................................... $72,171 $72,905 ======= =======
- -------- (1)Consists of bank indebtedness under the Credit Agreement. 13 PRICE RANGE OF OUR COMMON EQUITY Our Class A Common Stock and Common Stock trade on The Nasdaq National Market under the symbols "BNHNA" and "BNHN," respectively. The following table sets forth the range of high and low sales prices for our Class A Common Stock and the Common Stock for the periods indicated, as reported on The Nasdaq National Market:
High Low ------- ------ Class A Common Stock Fiscal Year Ended March 26, 2000 First Quarter.......................... $ 13.75 $10.63 Second Quarter......................... 15.50 13.50 Third Quarter.......................... 15.63 13.75 Fourth Quarter......................... 14.25 13.00 Fiscal Year Ended April 1, 2001 First Quarter.......................... $ 16.00 $ 7.75 Second Quarter......................... 13.63 9.25 Third Quarter.......................... 11.38 6.88 Fourth Quarter......................... 11.63 8.13 Fiscal Year Ending March 31, 2002 First Quarter.......................... $ 14.10 $ 8.21 Second Quarter through August 30, 2001. 14.25 11.28 Common Stock Fiscal Year Ended March 26, 2000 First Quarter.......................... $14.00 $11.50 Second Quarter......................... 15.50 13.75 Third Quarter.......................... 15.63 13.38 Fourth Quarter......................... 14.75 13.25 Fiscal Year Ended April 1, 2001 First Quarter.......................... $ 16.00 $10.56 Second Quarter......................... 14.00 11.25 Third Quarter.......................... 13.00 9.00 Fourth Quarter......................... 12.13 10.25 Fiscal Year Ending March 31, 2002 First Quarter.......................... $ 14.00 $ 9.82 Second Quarter through August 30, 2001. 14.05 12.15
On August 30, 2001, the last reported sales prices of our Class A Common Stock and Common Stock on The Nasdaq National Market were $12.40 and $12.55, respectively. On August 30, 2001 there were approximately 335 holders of record of the Class A Common Stock and 249 holders of record of the Common Stock. 14 BUSINESS General We have operated teppanyaki-style Japanese restaurants in the United States for over 36 years, and we believe we are the largest operator of teppanyaki-style restaurants in the country. Our core concept, the traditional Benihana restaurant, offers teppanyaki-style Japanese cooking in which fresh steak, chicken and seafood is prepared by a Benihana chef on a grill which forms a part of the table on which the food is served. Our Haru concept offers an extensive menu of Japanese fusion dishes in a high energy, urban atmosphere. In addition to traditional, high quality sushi and sashimi creations, Haru offers raw bar items and Japanese cuisine, including New York strip steak with wasabi croquette, spicy shallots and ginger sauce, garlic shrimp and crispy duck. We currently: . own and operate 52 Benihana and Benihana Grill teppanyaki-style Japanese dinnerhouse restaurants, including one restaurant under the name The Samurai; . franchise others to operate 16 additional Benihana restaurants; . own and operate four Haru restaurants in New York City, offering Japanese dining, featuring sushi and sashimi; and . own and operate three Sushi Doraku by Benihana restaurants, in which customers select their favorite sushi "kaiten" style from a continuous conveyor system. We own the related United States trademarks and service marks to the names "Benihana," "Benihana of Tokyo" and the "red flower" symbol and we have the exclusive rights to own, develop and license Benihana and Benihana Grill restaurants in the United States (other than Hawaii), Central and South America and the islands of the Caribbean Sea. Sales by our owned restaurants were approximately $161.9 million for the fiscal year ended April 1, 2001, as compared to approximately $136.4 million for the prior fiscal year, and were approximately $50.5 million for the 16 week period ended July 22, 2001, as compared to approximately $46.7 million for the comparable period in the prior fiscal year. Our net income for the fiscal year ended April 1, 2001 was approximately $9.1 million, as compared to approximately $8.7 million for the prior fiscal year, and was approximately $2.4 million for the 16 week period ended July 22, 2001 and for the comparable period for the prior year. We have also achieved 37 consecutive quarters of same store sales growth and customer count increases. Strategy The critical elements of our growth strategy are as follows: Selectively Pursue Restaurant Growth. We believe that our Benihana concept has broad appeal and that, as a result, we have significant opportunities to expand our business selectively. We plan to capitalize on our broad customer appeal and strong brand recognition within the casual dining segment by opening new restaurants, selectively acquiring existing Asian-theme restaurants in major U.S. markets and franchising new restaurant locations. We are currently developing or have under construction three new Benihana restaurants in Westbury, New York, and Irving and Woodlands, Texas, and one new Haru restaurant in New York City. Maintain Strong Unit Economics. Our experienced management team intends to maintain attractive store margins due to sustained sales growth and effective cost controls. Continue To Build Brand Awareness And Customer Loyalty. We will continue to provide marketing and promotional support to sustain and grow our reputation for distinctive value, quality food and customer satisfaction. 15 Provide Strong Management Support. Led by Joel Schwartz, our Chief Executive Officer, our senior management team has an average of 15 years with our company and is experienced in developing and operating distinctive, high-volume casual dining establishments. The Benihana Concept The Benihana concept offers casual dining in a distinctive Japanese atmosphere enhanced by the unique entertainment provided by our highly-skilled Benihana chefs who prepare fresh steak, chicken and seafood in traditional Japanese style at the customer's table. Most of our Benihana restaurants are open for both lunch and dinner. The Benihana restaurants have a limited menu offering a full course meal consisting of an appetizer, soup, salad, tea, rice, a vegetable, an entree of steak, seafood, chicken or any combination of them and a dessert. Specific menu items may be different in the various restaurants depending upon the local geographic market. The servings are portion controlled to provide consistency in quantities served to each customer. Alcoholic beverages, including speciality mixed drinks, wines and beers, and soft drinks are available. The average check size per person was $23.35 in fiscal 2001. During fiscal 2001, beverage sales in both the lounges and dining rooms accounted for approximately 17% of our total restaurant sales. Sushi is offered at all of our traditional restaurants at either separate sushi bars or at the teppanyaki grills. An entire teppan table generally seats eight customers. The chef is assisted in the service of the meal by the waitress or waiter who takes beverage and food orders. An entire dinnertime meal takes approximately one hour and thirty minutes. Of the 52 Benihana restaurants: . 35 are located in freestanding, special use restaurant buildings; . 6 are located in shopping centers; and . 11 are located in office or hotel building complexes. The freestanding restaurants were built to our specifications as to size, style and interior and exterior decor. The other locations were adapted to the Benihana interior decor. The freestanding, traditional Benihana restaurant units, which are generally one story buildings, average approximately 8,000 square feet and are constructed on a lot of approximately 1.25 to 1.50 acres. The shopping center, office building and hotel-based Benihana restaurants are of similar size, but differ somewhat in appearance from location to location in order to conform to the appearance of the buildings in which they are located. A typical Benihana restaurant has 18 teppan tables and seats from 86 to 178 customers in the dining rooms and 8 to 120 customers in the bar lounge areas. In addition to the Benihana restaurant recently opened in June 2001 in Wheeling, Illinois, we anticipate opening three new Benihana restaurants in Westbury, New York, and Irving and Woodlands, Texas in fiscal 2002. The Haru Concept The Haru concept offers an extensive menu of distinctive Japanese fusion dishes in a high energy, urban atmosphere. In addition to traditional, high quality sushi and sashimi creations, Haru offers raw bar items and Japanese cuisine, including New York strip steak with wasabi croquette, spicy shallots and ginger sauce, garlic shrimp and crispy duck. Haru also offers delivery and takeout. The average check size per person was $27.92 in fiscal 2001. Two Haru restaurants were operating in fiscal 2001, and two new Haru restaurants opened in May and August 2001. We expect to open an additional Haru restaurant in fiscal 2002. We own 80% of the subsidiary that operates the Haru restaurants. The Sushi Doraku by Benihana Concept The Sushi Doraku by Benihana concept offers sushi "kaiten" style. At a kaiten bar, customers select their favorite sushi items from a continuously revolving conveyor system. The average check size per person was $14.20 in fiscal 2001. We have three Sushi Doraku by Benihana restaurants in operation and we do not currently have plans for expansion. Restaurant Operations Our Benihana and Sushi Doraku restaurants are centrally managed by our Executive Vice President-Restaurant Operations and are divided among seven geographic regions, each managed by a regional manager. 16 Food preparation in the restaurants is supervised by eight regional chefs. Our Haru restaurants are locally managed in New York, under the supervision of our Chief Executive Officer. Each restaurant has a manager and one or more assistant managers responsible for the operation of the restaurant, including personnel matters, local inventory purchasing, maintenance of quality control standards, cleanliness and service. Specific strict guidelines as documented in restaurant operations manuals are followed to assure consistently high quality in customer service and food quality from location to location. Operating specifications are used for quality of ingredients, preparation of food, maintenance of premises and employee conduct and are incorporated in manuals used by the managers, assistant managers and head chefs. Food products and portion size are regularly and systematically tested for quality and compliance with our standards. Certain seafood items are purchased in bulk for most of the restaurants under which a certain quantity is purchased at a specific price. Most of the other food products are purchased in local markets. Substantially all of our restaurant operating supplies are purchased centrally and distributed to the restaurants from our warehouse or a bonded warehouse. Our chefs are trained in the teppanyaki or sushi style of cooking and customer service in training programs lasting from eight to twelve weeks. A portion of the training is spent working in a restaurant under the direct supervision of an experienced head chef. The program includes lectures on our method of restaurant operations and training in both tableside and kitchen food preparation as applied in our restaurants. Manager training is similar except that the manager trainee is given in-depth exposure to each position in the restaurant. Other categories of employees are trained by the manager and assistant manager at the restaurant. Ongoing continuing education programs and seminars are provided to restaurant managers and chefs to improve restaurant quality and implement changes in operating policy or menu listings. We use various incentive compensation plans pursuant to which key restaurant personnel share in the results of operations at both a local and company-wide level. Marketing We utilize television, radio, billboard and print media to: . promote our restaurants; . strengthen our brand identity; and . maintain high name recognition. The advertising programs are tailored to each local market and to print media focused on the business traveler. The advertising program is designed to emphasize the inherently fresh aspects of a Benihana meal and the entertainment value of the food preparation at the table. In fiscal year 2001, we expended $6.2 million on advertising and other marketing, approximately 3.8% of our net sales. The entertainment value of the Benihana method of food preparation and service is emphasized to distinguish Benihana from other restaurant concepts. Franchising We have, from time to time, franchised experienced restaurant operators in markets in which we consider expansion to be of benefit to the Benihana system. We have begun to more aggressively pursue franchising opportunities, particularly in Central and South America and the islands of the Caribbean Sea where we own the rights to the Benihana trademarks and system. Franchisees bear all direct costs involved in the development, construction and operation of their restaurants. We provide franchisee support for: . site selection; . prototypical architectural plans; . interior and exterior design and layout; 17 . training, marketing and sales techniques; and . opening assistance. All franchisees are required to operate their restaurants in accordance with Benihana standards and specifications including menu offerings, food quality and preparation. The current standard franchise agreement provides for payment to us of a non-refundable franchise fee of $30,000 to $50,000 per restaurant and royalties of 3% to 6% of gross sales. In fiscal year 2001 revenues from franchising were approximately $1.4 million and in the 16 week period ended July 22, 2001, revenues from franchising were approximately $469,000. To comply with the terms of the franchise agreements, we are prohibited from opening additional restaurants within certain areas in which our existing franchisees have the exclusive right to open additional restaurants and operate their existing Benihana restaurants. In general, such franchise agreements currently provide for an initial payment to us with respect to each new restaurant opened by a franchisee and continuing royalty payments to us based upon a percentage of a franchisee's gross sales from each such restaurant throughout the term of the franchise. We anticipate that two new franchised Benihana restaurants will open in fiscal 2002: one in Edison, New Jersey and the other in Caracas, Venezuela. Trade Names and Service Marks Benihana is Japanese for "red flower." In the United States, the "Benihana" and "Benihana of Tokyo" names and "red flower" symbol, which we believe to be of material importance to our business, are owned by us and are registered in the United States Patent and Trademark Office and certain foreign countries. We also own registered trademarks for Samurai, Kyoto brands and the "Sushi Doraku by Benihana" concept. Additionally, we have filed an application to register the "Haru" trademark. Benihana of Tokyo, our largest stockholder and originator of the Benihana concept in the United States, continues to own the rights to the Benihana name and trademarks outside of the United States, Central and South America and the islands of the Caribbean Sea. Benihana of Tokyo is also the operator of a Benihana restaurant in Honolulu under an exclusive, royalty-free franchise. We have no financial interest in any restaurant operated or franchised by Benihana of Tokyo. Employees At August 19, 2001, we employed 3,265 persons, of which 3,205 were restaurant employees and 60 were corporate personnel. Most employees, except restaurant management and corporate management personnel, are paid on an hourly basis. We also employ some restaurant personnel on a part-time basis to provide the services necessary during the peak periods of restaurant operations. We believe our relationship with our employees is good. Properties Of the 59 restaurants we operate, six are owned, four are in buildings we own on leased properties, and 49 are in leased premises. These leases require either a specific monthly rental, or a minimum rent and additional rent based upon a percentage of gross sales. In addition, three Benihana restaurants are under construction in Westbury, New York, and Irving and Woodlands, Texas and one Haru restaurant is under construction in New York City, New York. Generally, these leases are "triple net" leases which pass increases in property operating expenses, such as real estate taxes and utilities, through to us as tenant. Expiration dates of these leases, including renewal options, range from December 2001 to March 2027. 18 The following chart identifies the locations of our owned and franchised restaurants: Owned Indiana California Indianapolis Anaheim Kentucky Burlingame Louisville City of Industry Maryland Concord Bethesda Cupertino Michigan Encino Dearborn Monterey Farmington Hills Newport Beach Troy Ontario Minnesota Sacremento (Benihana Grill) Golden Valley San Diego New Jersey San Francisco Short Hills Santa Monica Cherry Hills Torrance New York Colorado New York (2) Denver New York (Haru--4) D.C. Manhasset Washington Ohio Florida Cincinnati (2) Fort Lauderdale Cleveland Fort Lauderdale (Sushi Doraku) Oregon Miami Beach Beaverton Miami Beach (Sushi Doraku) Pennsylvania Miami Pittsburgh Miami (Samurai) Tennessee Orlando Memphis Stuart Texas Georgia Dallas Atlanta (2) Dallas (Benihana Grill) Illinois Houston (2) Chicago Sugarland (Benihana Grill) Chicago (Sushi Doraku) Utah Lombard Salt Lake City Schaumberg Wheeling Franchised Texas Alaska Austin Anchorage San Antonio Arkansas Washington Little Rock Seattle California Wisconsin Beverly Hills Milwaukee Florida Aruba Key West Peru Hawaii Lima Honolulu/(1)/ Venezuela Nevada Caracas (2) Las Vegas Reno Pennsylvania Harrisburg
- -------- /(1)/Royalty free franchise to Benihana of Tokyo. 19 MANAGEMENT Following are our executive officers and directors:
Name Age Position with Company ---- --- --------------------- Joel A. Schwartz.. 60 President, Chief Executive Officer and a Director Taka Yoshimoto.... 55 Executive Vice President--Operations and a Director Michael R. Burris. 52 Senior Vice President--Finance and Treasurer Kevin Y. Aoki..... 33 Vice President--Marketing and a Director Juan C. Garcia.... 37 Vice President--Controller John E. Abdo...... 58 Director Norman Becker..... 63 Director Darwin C. Dornbush 71 Secretary and Director Max Pine.......... 67 Director
Joel A. Schwartz has served as our President, Chief Executive Officer and a director since 1998. Mr. Schwartz became our predecessor's President and a director in 1983. Taka Yoshimoto has served as our Executive Vice President since 1992 and a director since 1990. From 1989 to 1992, Mr. Yoshimoto served as one of our Vice Presidents. Mr. Yoshimoto served as our predecessor's Director of Operations from 1985 until 1989. Michael Burris has served as our Senior Vice President--Finance and Treasurer and Chief Financial Officer since 1999. From 1995 to 1999, Mr. Burris served as our Vice President--Finance and Treasurer and Chief Financial Officer. Prior to his appointment with Benihana, Mr. Burris was a partner with Deloitte & Touche LLP. Kevin Aoki has served as our Vice President--Marketing and a director since 1998. Prior to 1998, Mr. Aoki served as General Manager of Benihana of Tokyo, the originator of the Benihana concept and a principal stockholder. From 1993 through 1996, Mr. Aoki served as Unit Manager for our Chicago and Dallas restaurants and as Manager of Sales for our New York region. Mr. Aoki is the son of Rocky H. Aoki, the founder of Benihana. Juan Garcia has served as our Vice President-Controller since 1999. From 1994 to 1999, Mr. Garcia served as our Controller, and from 1989 to 1994 he served as our Assistant Controller. John Abdo has been a director since 1990. Mr. Abdo has been principally employed as the Vice Chairman of BankAtlantic since April 1987, Chairman of the Executive Committee of BankAtlantic since October 1985 and a director of BankAtlantic since 1984. He has been a director of the BFC Financial Corporation since 1988 and Vice Chairman of the Board of the BFC Financial Corporation since 1993. He has been a director and Vice Chairman of the Board of BankAtlantic Bancorp, Inc. since 1994 and President of Levitt Corporation (f/k/a BankAtlantic Development Corporation), a wholly owned subsidiary of BankAtlantic, since 1985. BankAtlantic Bancorp. is the corporate parent of Ryan, Beck & Co., LLC, one of the underwriters in this offering. He has served as President and Chief Executive Officer of the Abdo Companies, Inc., a real estate development, construction and real estate brokerage firm, for more than five years. Norman Becker has been a director since 1997. Mr. Becker is currently, and has been for more than ten years, self-employed in the practice of public accounting. Prior thereto, Mr. Becker was a partner with Touche Ross & Co., the predecessor of Deloitte & Touche LLP, for a period in excess of 10 years. In addition, Mr. Becker is an officer and director of Ram Ventures Holding Corp. and New Systems Inc. Darwin C. Dornbush has served as a director since 1995 and a director of our principal stockholder, Benihana of Tokyo, since 1980. He has served as our Secretary since 1983. Mr. Dornbush is currently, and has 20 been for more than the past five years, a partner in the law firm of Dornbush Mensch Mandelstam & Schaeffer, LLP. Mr. Dornbush is also a director of Cantel Medical Corp. Max Pine has served as a director since February 2001. In April 2001, after seven years with Patricof & Co. and BNY Capital Markets, Mr. Pine launched Aries Associates to concentrate exclusively on advising restaurant industry chief executive officers and doing due diligence projects for financial investors. Prior to 1994, he was employed by Restaurant Associates Corp., a New York City-based diversified full-service restaurant company, for 25 years, and served as Chief Executive Officer from 1988 to 1994. 21 PRINCIPAL STOCKHOLDERS The following is information relating to the beneficial ownership of our Common Stock and Class A Common Stock prior to the offering, and as adjusted to give effect to the sale of the Class A Common Stock offered hereby, by: . all persons we know who own beneficially more than 5% of our Common Stock or Class A Common Stock outstanding as of August 31, 2001; . our executive officers; . our directors; and . all executive officers and directors as a group. For purposes of the table below, beneficial ownership is determined in accordance with rules of the SEC. Each beneficial owner's percentage ownership of Common Stock or Class A Common Stock is determined by assuming that options, warrants and other convertible securities (other than the Common Stock) that are held by such person (but not those held by any other person) and that are exercisable or convertible within 60 days of August 31, 2001 have been exercised within or converted. Options, warrants and other convertible securities that are not exercisable within 60 days of August 31, 2001 have been excluded. Unless otherwise noted, we believe that all persons named in the above table have sole voting and investment power with respect to all shares of Common Stock and/or Class A Common Stock beneficially owned by them. Common Stock
Amount and Nature of Percent Name (and address if applicable) of Beneficial Owners, Officers and Directors Beneficial Ownership (1) of Class - ----------------------------------------------------------------------------- ------------------------ -------- Benihana of Tokyo, Inc. 8685 Northwest 53rd Terrace Miami, Florida 33166..................................... 1,535,668(2) 46.8% Trust U/W Vincent Terranova(3) 33 South Park Terrace Congers, New York 10920.................................. 569,436 17.4% Carl J. Terranova(3) 159 Chrystie Street New York, New York 10002................................. 354,100 10.8% FMR Corp.(3) 82 Devonshire Street Boston, Massachusetts 02109.............................. 347,400 10.6% Joel A. Schwartz........................................... 38,333(4) 1.2% Taka Yoshimoto............................................. 8,000 * Juan Garcia................................................ -0- * John E. Abdo............................................... 27,500 * Norman Becker.............................................. 2,500 * Michael R. Burris.......................................... 26,000 * Kevin Y. Aoki.............................................. 50(2) * Darwin C. Dornbush......................................... 17,500(2) * Max Pine................................................... -0- * All (9) directors and officers as a group.................. 1,655,551(2) 49.4%
- -------- * Less than 1% 22
Class A Common Stock Prior to Offering ------------------------- Amount and Nature Percent of Name (and address if applicable) of of Beneficial Percent Class After Beneficial Owners, Officers and Directors Ownership (5)(6) of Class Offering - ----------------------------------------- ----------------- -------- ----------- Trust U/W Vincent Terranova(3) 33 South Park Terrace Congers, New York 10920.................. 213,900 7.1% 5.7% FMR Corp.(3) 82 Devonshire Street Boston, Massachusetts 02109.............. 266,800 8.9% 7.1% Goldman Sachs & Co. (3) on behalf of Goldman Sachs Asset Management 85 Broad Street New York, New York 10004................. 552,500 18.4% 14.7% Special Situations Fund III L.P. 153 East 53rd Street New York, New York 10022................. 206,100(7) 6.4% 5.2% Gilder Gagnan Howe & Co., LLC(3) 1775 Broadway New York, New York 10019................. 193,684 6.4% 5.2% Dalton Griener Hartman Maher & Co., Inc.(3) 565 5th Avenue New York, New York 10017................. 186,100 6.2% 5.0% Joel A. Schwartz........................... 303,333 9.2% 7.5% Taka Yoshimoto............................. 188,333 5.9% 4.8% Kevin Y. Aoki.............................. 33,833 1.1% * Michael R. Burris.......................... 147,633(8) 4.7% 3.8% Juan C. Garcia............................. 83,833 2.7% 2.2% John E. Abdo............................... 258,299(9) 8.5% 6.8% Norman Becker.............................. 32,166 1.1% * Darwin C. Dornbush......................... 24,333(2) * * Max Pine................................... 5,000 * * All (9) directors and officers as a group.. 1,076,765(5) 28.0% 23.4%
- -------- * less than 1% 23 Notes - -------- (1)Beneficial ownership in this table includes the following shares of Common Stock which may be purchased by exercise of options which are presently exercisable: Mr. Schwartz--7,500 shares; Mr. Abdo--17,500 shares; Mr. Becker--2,500 shares; Mr. Burris--25,000 shares; Mr. Dornbush--17,500 shares; all officers and directors as a group--70,000 shares. (2)The capital stock of Benihana of Tokyo is held in a voting trust. Kevin Aoki, Vice President-Marketing and a director of Benihana, Darwin C. Dornbush, the Secretary and a director of Benihana, Grace Aoki, Kevin Aoki's sister, and Kyle Aoki, Kevin Aoki's brother, are the trustees of this voting trust. In addition, beneficial interest in the Benihana of Tokyo stock is held by a trust of which Kevin Aoki, Kyle Aoki, Grace Aoki and Darwin C. Dornbush are the trustees. By reason of such positions such individuals may be deemed to share beneficial ownership of the Benihana of Tokyo stock and the shares of our stock owned by Benihana of Tokyo. (3)Based solely upon reports on Schedule 13G or 13F filed by or on behalf of such persons. In the case of the report by Goldman, Sachs & Co., such report was on behalf of Goldman Sachs Asset Management relating to accounts managed or advised by Goldman Sachs Asset Management. In such Schedule 13G, Goldman, Sachs & Co. on behalf of Goldman Sachs Asset Management disclaims beneficial ownership of such shares. (4)Includes 10 shares of Common Stock owned by Mr. Schwartz's son, as to which shares Mr. Schwartz disclaims beneficial ownership. (5)Shares of our Common Stock are convertible at any time into shares of our Class A Common Stock at the option of the holder. Therefore, each beneficial owner of our Common Stock may be deemed the beneficial owner of the same number of shares of our Class A Common Stock in addition to the shares of Class A Common Stock shown on the preceding table. For purposes of the Class A Common Stock ownership table, the potential conversion of Common Stock into Class A Common Stock has been excluded. (6)Beneficial ownership in this table includes the following shares of Class A Common Stock which may be purchased by exercise of options which are presently exercisable or which will become exercisable within 60 days of August 31, 2001: Mr. Schwartz--303,333 shares; Mr. Yoshimoto--188,333 shares; Mr. Aoki--33,333 shares; Mr. Burris--138,333 shares; Mr. Garcia--83,833 shares; Mr. Abdo--29,999 shares; Mr. Becker--31,666 shares; Mr. Dornbush--23,333 shares; Mr. Pine--5,000 shares; all officers and directors as a group--837,163 shares. (7)Includes 200,000 shares issuable upon exercise of a warrant. (8)Includes 1,000 shares of Class A Common Stock owned by Mr. Burris' wife; Mr. Burris disclaims beneficial ownership of such shares. (9)Includes 185,800 shares owned by a trust of which Mr. Abdo is the sole trustee and beneficiary. 24 DESCRIPTION OF OUR CAPITAL STOCK Set forth below is a summary of the terms of our capital stock. Such summary is qualified in its entirety by reference to our certificate of incorporation and by-laws and to the applicable provisions of the General Corporation Law of the State of Delaware. Our authorized capital stock currently consists of 12,000,000 shares of Common Stock, par value $.10 per share, 20,000,000 shares of Class A Common Stock, par value $.10 per share, and 5,000,000 shares of preferred stock, par value $1.00 per share. Common Stock We have two classes of common stock, called "Common Stock" and "Class A Common Stock." We are authorized to issue 12,000,000 shares of Common Stock and 20,000,000 shares of Class A Common Stock. No preemptive, subscription or redemption rights pertain to either shares of Class A Common Stock or Common Stock. All of the outstanding shares of Class A Common Stock, are, and the shares to be issued in this offering will be, fully paid and non-assessable. The two classes of stock are identical except: . The Class A Common Stock, voting as a class, is entitled to elect one-fourth of our board of directors (rounded to the next higher number of directors) and the Common Stock votes as a class to elect the remaining members of our board of directors. Of our current seven member board, five members are elected by the holders of the Common Stock and two members are elected by the holders of the Class A Common Stock. . Our Class A Common Stock is entitled to one-tenth of a vote per share, and our Common Stock is entitled to one vote per share, on all matters other than the election of directors. . Our Common Stock is convertible into Class A Common Stock on a share-for-share basis. . Our Class A Common Stock is entitled to receive dividends per share not less than the amount paid per share on the Common Stock. We have never paid dividends on either class of stock. As of August 31, 2001, 3,280,202 shares of Common Stock and 3,005,380 shares of Class A Stock were outstanding, exclusive of existing options and warrants. Benihana of Tokyo owns 1,535,668 shares, or 46.8% of our Common Stock, representing 42.9% of our outstanding voting power prior to the completion of this offering. As a result of such ownership, Benihana of Tokyo has the ability to influence significantly the election of five of our directors and the outcome of corporate transactions or other matters submitted for stockholder approval. Preferred Stock None of the 5,000,000 shares of preferred stock authorized by our certificate of incorporation will be issued or outstanding upon completion of the offering. Our board of directors has the authority to issue preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, dividend rates, conversion rights, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series of the designation of such series, without further vote or action by the stockholders. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change in control of Benihana without further action by the stockholders and may adversely affect the voting and other rights of the holders of common stock, including the loss of voting control to others. Antitakeover Effects of Provisions of the Charter, By-laws and Certain Other Agreements Stockholders' rights and related matters are governed by Delaware law and our certificate of incorporation and by-laws. Certain provisions of Delaware law and our certificate of incorporation and by-laws, which are summarized below, may discourage or make more difficult a takeover attempt that a stockholder might consider in its best interest. Such provisions may also adversely affect prevailing market prices for the common stock. 25 Staggered Board of Directors Our certificate of incorporation provides that our board of directors is divided into three classes, each elected for a three-year term. This provision could discourage a takeover attempt because at no time is a majority of the board of directors standing for re-election. Advance Notice Requirements for Stockholder Proposals and Director Nominations Our by-laws contain advance notice procedures with regard to stockholder proposals and the nomination, other than by or at the direction of the board of directors or a committee thereof, of candidates for election as directors. These procedures provide that notice of stockholder proposals and stockholder nominations for the election of directors at an annual meeting must be in writing and received by our Secretary no later than 60 days nor more than 90 days prior to such annual meeting (or if less than 70 days' notice of a meeting of stockholders is given, stockholder proposals and nominations must be delivered to the Secretary no later than the close of business on the tenth day following the day notice was mailed). The notice of stockholder nominations must set forth certain information about each nominee who is not an incumbent director. Business Combination Provisions We are subject to a Delaware statute regulating "business combinations," defined to include a broad range of transactions, between Delaware corporations and "interested stockholders," defined as persons who have acquired at least 15% of a corporation's stock. Under such statute, a corporation may not engage in any business combination with any interested stockholder for a period of three years after the date such person became an interested stockholder unless certain conditions are satisfied. The statute contains provisions enabling a corporation to avoid the statute's restrictions. We have not sought to "elect out" of the statute, and therefore, the restrictions imposed by such statute will apply to us. Limitation of Liability of Directors and Officers Our certificate of incorporation provides that a director or officer will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director or officer, except for liability (i) for any breach of the director's or officer's duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for the unlawful payment of dividends, stock purchases or redemptions or (iv) for any transaction from which the director or officer derived an improper personal benefit. While our certificate of incorporation provides directors and officers with protection from awards for monetary damages for breaches of their duty of care, it does not eliminate such duty. Accordingly, our certificate of incorporation will have no effect on the availability of equitable remedies such as an injunction or rescission based on a director's or officer's breach of his duty of care. Preferred Stock Purchase Rights We have a Shareholder Rights Plan and declared a distribution of one Preferred Share Purchase Right for each outstanding share of our Common Stock and Class A Common Stock as of February 26, 1997 and for each share issued by us thereafter. The rights operate to create substantial dilution to a potential acquirer who seeks to make an acquisition, the terms of which our board of directors believes is inadequate or structured in a coercive manner. 26 Prior to becoming exercisable, the rights are evidenced by the certificates representing the common stock and may not be separately traded. The rights become exercisable on the tenth day, or such later date as the board of directors may determine, after public announcement that a person or a group, subject to certain exceptions, has acquired 20% or more of the outstanding Common Stock or an announcement of a tender offer that would result in beneficial ownership by a person or a group of 20% or more of the common stock. Transfer Agent First Union National Bank of North Carolina is the transfer agent and registrar of our Common Stock and Class A Common Stock. 27 UNDERWRITING The underwriters named below, for whom Ladenburg Thalmann & Co. Inc. and Ryan, Beck & Co., LLC are acting as the representatives, have agreed, subject to the terms and conditions of the underwriting agreement, to purchase from us, and we have agreed to sell to the underwriters, the respective number of shares of Class A Common Stock set forth opposite their names below:
Number Underwriter of Shares ----------- --------- Ladenburg Thalmann & Co. Inc. Ryan, Beck & Co., LLC........ Total..................... 750,000
The underwriting agreement provides that the obligations of the underwriters to purchase the shares of Class A Common Stock included in this offering are subject to approval of legal matters by counsel as well as to other conditions. The underwriters are obligated to purchase all of the shares, other than those covered by the over-allotment option described below, if they purchase any of the shares of Class A Common Stock. The underwriters propose to offer some of the shares of Class A Common Stock directly to the public at the public offering price set forth on the cover page of this prospectus and some of the shares of Class A Common Stock to certain dealers at the public offering price less a concession not in excess of $ per share. The underwriters may allow, and such dealers may reallow, a concession not in excess of $ per share on sales to certain other dealers. If all of the shares of Class A Common Stock are not sold at the public offering price, the underwriters may change the public offering price and the other selling terms. We have granted to the underwriters an option, exercisable within 45 days of the date of this prospectus, to purchase up to an aggregate of 112,500 additional shares of Class A Common Stock at the public offering price less the underwriting discount. The underwriters may exercise the option solely for the purpose of covering over-allotments, if any, in connection with this offering. To the extent the option is exercised, in whole or in part, each underwriter will be obligated, subject to various conditions, to purchase a number of additional shares approximately proportionate to its initial purchase commitment. The following table summarizes the per share and total underwriting discounts and commissions . we will pay to the underwriters assuming no exercise of the underwriters' over-allotment option; and . we will pay to the underwriters assuming the full exercise of the underwriters' over-allotment option.
Paid by Us, No Paid by Us Exercise of Full Exercise of Over-Allotment Option Allotment Option --------------------- ---------------- Per Share $ $ Total.... $ $
We estimate that the total expenses of the offering payable by us, excluding underwriting discounts and commissions, will be approximately $ . The representatives will also receive a non-accountable expense allowance of $75,000 payable by us to the representatives. The underwriters have not received and will not receive from us any other item of compensation or expense in connection with this offering considered by the National Association of Securities Dealers, Inc. to be underwriting compensation under its rules of fair practice. In connection with the public offering of 400,000 shares of Class A Common Stock owned by Benihana of Tokyo, our principal stockholder, in May 2001, Ladenburg Thalmann acted as underwriter, and Ryan, Beck acted as a broker-dealer. Ladenburg Thalmann received underwriting discounts and commissions of approximately 28 $185,500 and a non-accountable expense allowance of $75,000 from Benihana of Tokyo and Ryan, Beck received discounts and commissions of approximately $26,500. Ryan, Beck is a subsidiary of BankAtlantic Bancorp, of which John Abdo, one of our directors, serves as Vice Chairman and Chairman of the Executive Committee. We and certain of our executive officers and directors and Benihana of Tokyo have agreed, with exceptions, not to sell publicly or transfer any shares of Class A Common Stock for a period of 90 days after the date of this prospectus without first obtaining the written consent of Ladenburg Thalmann, on behalf of the underwriters. Specifically, we and these other individuals and entities have agreed not to directly or indirectly: . offer, pledge, sell or contract to sell any shares of Class A Common Stock; . sell any option or contract to purchase any shares of Class A Common Stock; . grant any option, right or warrant for the sale of any shares of Class A Common Stock; . lend or otherwise dispose of or transfer any shares of Class A Common Stock; or . enter into any swap or other agreement that transfers, in whole or in part, the economic consequence of ownership of any shares of Class A Common Stock whether any such swap or transaction is to be settled by delivery of shares or other securities, in cash or otherwise. This lockup provision applies to shares of Class A Common Stock and to securities convertible into or exchangeable or exercisable for or repayable with shares of Class A Common Stock. It also applies to shares of Class A Common Stock owned now or acquired later by the person executing the agreement or for which the person executing the agreement later acquires the power of disposition. The restriction described above will not apply if an individual or entity sells or transfers shares of Class A Common Stock in a private transaction in which the transferee agrees to be bound by the terms of such lock up. Benihana of Tokyo and certain of our executive officers and directors beneficially owning more than 5% of any class of our equity securities have agreed that, for a period of one year from the date of this prospectus, if such entity or person desires to sell any of our securities in accordance with Rule 144 under the Securities Act, such securities shall be sold under Rule 144 through either of the representatives. In connection with this offering, the underwriters may purchase and sell shares of Class A Common Stock in the open market. These transactions may include over-allotment, syndicate covering transactions and stabilizing transactions. An over-allotment involves syndicate sales of shares of Class A Common Stock in excess of the number of shares to be purchased by the underwriters in the offering, which creates a syndicate short position. Syndicate covering transactions involve purchases of shares of Class A Common Stock in the open market after the distribution has been completed in order to cover syndicate short positions. Stabilizing transactions consist of certain bids or purchases of Class A Common Stock made for the purpose of preventing or slowing a decline in the market price of the Class A Common Stock while the offering is in progress. In addition, the underwriters may impose penalty bids, under which they may reclaim the selling concession from a syndicate member when the shares of Class A Common Stock originally sold by such syndicate member are purchased in a stabilizing transaction or syndicate covering transaction to cover syndicate short positions. Similar to other purchase transactions, these activities may have the effect of raising or maintaining the market price of the Class A Common Stock or preventing or slowing a decline in the market price of the Class A Common Stock. As a result, the price of the Class A Common Stock may be higher than the price that might otherwise exist in the open market. 29 Neither we nor the underwriter make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the Class A Common Stock. In addition, neither we nor the underwriters make any representation that the underwriters will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice. We have agreed to indemnify the underwriters against liabilities, including liabilities under the Securities Act of 1933, or to contribute to payments the underwriters may be required to make in respect of any of those liabilities. In connection with this offering, the underwriters may engage in passive market making transactions in the Class A Common Stock on The Nasdaq National Market in accordance with Rule 103 of Regulation M under the Exchange Act during a period before the commencement of offers or sales of the Class A Common Stock and extending through the completion of distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker's bid, that bid must then be lowered when specified purchase limits are exceeded. 30 LEGAL MATTERS Dornbush Mensch Mandelstam & Schaeffer, LLP, New York, New York, will pass on certain legal matters in connection with the offering, including the validity of the issuance of the shares being offered hereby. Darwin C. Dornbush, a partner in Dornbush Mensch Mandelstam & Schaeffer, LLP., is our Secretary and one of our directors and owns, beneficially and of record, 1,000 shares of the Class A Common Stock and has options to purchase 17,500 shares of our Common Stock and 23,333 shares of Class A Common Stock. Mr. Dornbush is also a trustee of a voting trust which is the record owner of all of the issued and outstanding stock of Benihana of Tokyo, which owns 1,535,668 shares (46.8%) of our Common Stock. Certain legal matters relating to the Class A Common Stock will be passed on for the underwriters by Lowenstein Sandler PC of Roseland, New Jersey. EXPERTS The consolidated financial statements incorporated in this prospectus by reference from our Annual Report on Form 10-K/A for the year ended April 1, 2001 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and current reports, proxy statements and other information with the SEC. You can inspect and copy these reports, proxy statements and other information at the public reference facilities of the SEC, 450 Fifth Street, N.W., Washington, D.C. 20549; 7 World Trade Center, Suite 1300, New York, New York 10048; and Suite 1400, Citicorp Center, 500 W. Madison Street, Chicago, Illinois 60661-2511. You can also obtain copies of these materials from the public reference section of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The SEC also maintains a web site that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC (http://www.sec.gov). You can inspect reports and other information we file at the office of the National Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. We have filed a registration statement on Form S-2 and related exhibits with the SEC under the Securities Act of 1933. The registration statement contains additional information about us and the shares of Class A Common Stock. You may inspect the registration statement and exhibits without charge at the office of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and you may obtain copies from the SEC at prescribed rates. 31 Back Cover of the Prospectus A photograph of a Benihana chef cooking at a teppan table appears on the inside of the back cover of the Prospectus. - -------------------------------------- - -------------------------------------- You should rely only on the information contained in or incorporated by reference into this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with any different or additional information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus is not an offer to sell nor is it seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is correct only as of the date of this prospectus regardless of the time or the delivery of this prospectus or any sale of these securities. ----------------- TABLE OF CONTENTS
Page ---- Prospectus Summary..................... 1 Summary Financial Information.......... 3 Risk Factors........................... 5 Special Note Regarding Forward-Looking Statements........................... 10 Incorporation of Certain Information By Reference............................ 10 Use of Proceeds........................ 11 Capitalization......................... 12 Price Range of Our Common Equity....... 14 Business............................... 15 Management............................. 20 Principal Stockholders................. 22 Description of Our Capital Stock....... 25 Underwriting........................... 28 Legal Matters.......................... 31 Experts................................ 31 Where You Can Find More Information.... 31
- -------------------------------------- - -------------------------------------- - -------------------------------------- - -------------------------------------- 750,000 shares Class A Common Stock BENIHANA INC. ----------------- PROSPECTUS , 2001 ----------------- LADENBURG THALMANN & CO. INC. RYAN, BECK & CO. - -------------------------------------- - -------------------------------------- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The following statements sets forth the estimated costs and expenses (other than the underwriting discount) in connection with the distribution of the securities being registered, all of which will be borne by the Company: Registration Fee................................. $ 2,620 NASD Filing Fee.................................. 1,548 Nasdaq Listing Fee............................... 17,250 Printing......................................... 50,000 Accounting Fees and Expenses..................... 30,000 Underwriters Non-Accountable Expense Allowance... 75,000 Legal Fees and Expenses.......................... 135,000 Consulting Fees.................................. 50,000 Blue Sky Fees and Expenses (including legal fees) 10,000 Miscellaneous.................................... 3,582 -------- Total......................................... $375,000
Item 15. Indemnification of Directors and Officers Under Section 145 of the Delaware Corporation Law, the Company may, subject to various exceptions and limitations, indemnify its directors and officers if any such director or officer is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (including an action by or in the right of the Company by reason of fact that he is or was a director or officer of the Company), or is or was serving at the request of the Company as a director or officer of another corporation, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except in the case of any action by or in the right of the Company to procure a judgment in its favor, as to any matter which such person shall have been adjudicated to be liable for negligence or misconduct in the performance of his duty. The Company shall indemnify each of its directors or officers to the extent that they have been successful on the merits or otherwise in the defense of any such action, suit or proceeding, or in defense of any claim, issue or matter therein, against expenses (including attorneys' fees) actually and reasonably incurred by them in connection therewith. In addition, Delaware law permits a corporation to limit or eliminate the liability of a director to the corporation and its shareholders for negligent breaches of such director's fiduciary duties in certain circumstances. The foregoing statement is qualified in its entirety by the detailed provisions of Section 45 and 102 of the Delaware Corporation Law. The Company's Certificate of Incorporation and By-Laws contain provisions with respect to the indemnification of directors and officers which provide for indemnification to the full extent provided by Delaware law as described above, including a provision which eliminates the liability of directors for negligent breaches of their fiduciary duties to the Company in certain circumstances. Item 16. Exhibits 1.01 Form of Underwriting Agreement. 2.01 Amended and Restated Agreement and Plan of Reorganization, dated as of December 29, 1994 and amended as of March 17, 1995 among Benihana National Corp. ("BNC"), Benihana of Tokyo, Inc. ("BOT"), the Company and BNC Merger Corp. Incorporated by reference to Exhibit 2.01 to the Company's Registration Statement on Form S-4, Registration No. 33-88295, made effective March 23, 1995 (the "S-4").
II-1 4.01 Form of Certificate representing shares of the Company's Common Stock. Incorporated by reference to Exhibit 4.02 to the S-4. 4.02 Form of Certificate representing shares of the Company's Class A Common Stock. Incorporated by reference to Exhibit 4.03 to the S-4. 4.03 Form of Warrant for 200,000 shares of Class A Stock issued to Douglas M. Rudolph dated December 1, 1997. Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K dated December 1, 1997 (the "Rudy's 8-K"). 4.04 Warrant Agreement dated as of December 1, 1997 between the Company and Douglas M. Rudolph. Incorporated by reference to Exhibit 4.1 of the Rudy's 8-K. 4.05 Amendment dated February 15, 2001 to Warrant Agreement dated December 1, 1997 between Douglas M. Rudolph and the Company. Incorporated by reference to Exhibit 4.05 of the Company's Annual Report on Form 10-K/A for the fiscal year ended April 1, 2001 (the "2001 10-K"). 5.01 Opinion of Dornbush Mensch Mandelstam & Schaeffer, LLP. 10.01 License Agreement, dated as of May 15, 1995 between BNC and BOT. Incorporated by reference to Exhibit 10.01 to the S-4. 10.02 BNC's 1985 Employees' Stock Option Plan. Incorporated by reference to Appendix II to BNC Proxy Statement for its Annual Meeting of Stockholders held on December 11, 1985. Incorporated by reference to Exhibit 10.06 to the S-4. 10.03 1994 Employees' Stock Option Plan. Incorporated by reference to Exhibit 10.07 to the S-4. 10.04 Directors' Stock Option Plan. Incorporated by reference to Exhibit 10.08 to the S-4. 10.05 1996 Class A Stock Option Plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on July 19, 1996. 10.06 1997 Class A Stock Option Plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on August 27, 1998 (the "1998 Proxy Statement"). 10.07 Amendments to the Directors' Stock Option Plan. Incorporated by reference to Exhibit B to the 1998 Proxy Statement. 10.08 2000 Employees' Class A Common Stock Option Plan. Incorporated by reference to Exhibit A to Benihana Inc. Proxy Statement for its Annual Meeting of Stockholders held on August 3, 2000. 10.09 Credit Agreement dated December 1, 1997 by and among Benihana Inc., the Guarantors (as listed and defined therein), and First Union National Bank, as Agent and Lender. Incorporated by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K for the fiscal year ended March 28, 1999. 10.10 Stockholders Agreement dated as of December 6, 1999 by and among Haru Holding Corp., BNC, Mei Ping Matsumura and the Estate of Arthur Cutler. 10.11 Benihana Incentive Compensation Plan. Incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996. 10.12 Employment Agreement dated April 1, 2001 between Joel A. Schwartz and the Company. Incorporated by reference to Exhibit 10.07 of the 2001 10-K. 10.13 Employment Agreement dated April 1, 2001 between Taka Yoshimoto and the Company. Incorporated by reference to Exhibit 10.12 of the 2001 10-K. 10.14 Employment Agreement dated January 1, 1995 between Michael Burris and the Company. Incorporated by reference to Exhibit 10.10 to the S-4.
II-2 10.15 Employment Agreement dated October 19, 1998 between Kevin Aoki and the Company. Incorporated by reference to Exhibit 10.19 of the Company's Annual Report on Form 10-K for the fiscal year ended March 26, 2000 (the "2000 10-K"). 10.16 Employment Agreement dated September 1, 2000 between Juan C. Garcia and the Company. Incorporated by reference to Exhibit 10.15 of the 2001 10-K. 10.17 Consulting Agreement dated April 1, 2001 between Rocky H. Aoki and the Company. Incorporated by reference to Exhibit 10.23 of the 2001 10-K. 10.18 Amendment No. 1 dated December 11, 1997 to Employment Agreement dated January 1, 1995 between Michael R. Burris and the Company. Incorporated by reference to Exhibit 10.18 of the Company's Annual Report on Form 10-K for the fiscal year ended March 29, 1998. 10.19 Amendment No. 2 dated September 1, 1998 to Employment Agreement dated January 1, 1995 between Michael R. Burris and the Company. 10.20 Amendment No. 1 dated January 25, 2000 to Employment Agreement dated October 19, 1998 between Kevin Aoki and the Company. Incorporated by reference to Exhibit 10.20 to the 2000 10-K. 10.21 Amendment No. 2 dated April 1, 2001 to Employment Agreement dated October 19, 1998 between Kevin Aoki and the Company. Incorporated by reference to Exhibit 10.14 to the 2001 10-K. 10.22 Amendment No. 2 dated April 1, 2001 to Employment Agreement dated September 1, 2000 between Juan C. Garcia and the Company. Incorporated by reference to Exhibit 10.22 to the 2001 10-K. 13.01 The Company's Annual Report on Form 10-K/A for the fiscal year ended April 1, 2001. 13.02 The Company's Quarterly Report on Form 10-Q for the 16 week period ended July 22, 2001. 23.01 Consent of Deloitte & Touche LLP. 23.02 Consent of Dornbush Mensch Mandelstam & Schaeffer, LLP. Included in Exhibit 5.01. 24.01 Power of Attorney. Set forth on the Signature Page to this Registration Statement.
Item 17. Undertakings. The undersigned registrant hereby undertakes: (a) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (b) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. II-3 For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-4 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Miami, State of Florida, on the 31st day of August, 2001. BENIHANA INC. /S/ JOEL A. SCHWARTZ By: _________________________________ Joel A. Schwartz, President POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Joel A. Schwartz and Michael R. Burris and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments (including post-effective amendments) to this Registration Statement, and to file the same, with all exhibits thereof, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them or his substitute or substitutes, may lawfully do or cause to be done by virtue thereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
Signature Title Date --------- ----- ---- /S/ JOEL A SCHWARTZ President, Chief Executive Officer August 31, 2001 - ---------------------- and Director (Principal Executive Joel A. Schwartz Officer) /S/ MICHAEL R. BURRIS Senior Vice President, Chief August 31, 2001 - ---------------------- Financial Officer and Treasurer Michael R. Burris (Principal Financial and Accounting Officer) /S/ TAKA YOSHIMOTO August 31, 2001 - ---------------------- Executive Vice President and Taka Yoshimoto Director /s/ KEVIN AOKI Vice President, Marketing and August 31, 2001 - ---------------------- Director Kevin Aoki /S/ JOHN E. ABDO Director August 31, 2001 - ---------------------- John E. Abdo /s/ NORMAN BECKER Director August 31, 2001 - ---------------------- Norman Becker /s/ MAX PINE Director August 31, 2001 - ---------------------- Max Pine /S/ DARWIN C. DORNBUSH Secretary and Director August 31, 2001 - ---------------------- Darwin C. Dornbush
II-5 EX-1.01 3 dex101.txt UNDERWRITING AGREEMENT Exhibit 1.01 750,000 Shares BENIHANA INC. Class A Common Stock UNDERWRITING AGREEMENT September __, 2001 Ladenburg Thalmann & Co. Inc. Ryan, Beck & Co. LLC as Representatives of the Several Underwriters c/o Ladenburg Thalmann & Co. Inc. 590 Madison Avenue New York, New York 10022 Dear Sirs: Benihana Inc., a Delaware corporation (the "Company"), proposes to issue and sell to the several underwriters named in Schedule A hereto (the "Underwriters") for whom Ladenburg Thalmann & Co. Inc. and Ryan, Beck & Co. LLC are acting as representatives (the "Representatives"), an aggregate of 750,000 shares (the "Firm Shares") of the Class A Common Stock, par value $.10 per share (the "Class A Stock"), of the Company. In addition, for the sole purpose of covering over-allotments in connection with the sale of the Firm Shares, the Company proposes to issue and sell to the Underwriters, at the Underwriters' option, up to an additional 112,500 shares of Class A Stock (the "Option Shares") as set forth herein. The term "Shares" as used herein, unless otherwise indicated, shall mean the Firm Shares and the Option Shares. SECTION 1. Representations, Warranties and Agreements of the Company. The Company represents, warrants and agrees that: (a) The Company meets the requirements for use of Form S-2 under the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations (the "Rules and Regulations") of the Securities and Exchange Commission (the "Commission") thereunder. A registration statement on Form S-2 (File No. 333-__________) and one or more amendments thereto with respect to the Shares have (i) been prepared by the Company in conformity with the requirements of the Securities Act, (ii) been filed with the Commission under the Securities Act and (iii) become effective under the Securities Act. Copies of such registration statement and each of the amendments thereto have been delivered by the Company to the Underwriters. As used in this Agreement, "Effective Time" means the date and the time as of which such registration statement, or the most recent post-effective amendment thereto, if any, was declared effective by the Commission; "Effective Date" means the date of the Effective Time; "Preliminary Prospectus" means each prospectus included in such registration statement, or amendments thereof, before it became effective under the Securities Act and any prospectus filed with the Commission by the Company with the consent of the Underwriters pursuant to Rule 424(a) of the Rules and Regulations; "Registration Statement" means such registration statement, as amended at the Effective Time, including all information contained or incorporated by reference in the final prospectus pursuant to Item 12 of Form S-2 under the Securities Act filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations and deemed to be a part of the registration statement as of the Effective Time pursuant to Rule 430A of the Rules and Regulations; and "Prospectus" means the prospectus in the form first used to confirm sales of Shares, including all information contained or incorporated by reference therein pursuant to Item 12 of Form S-2 under the Securities Act. If the Company has filed an abbreviated registration statement to register additional shares of Class A Stock pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"), then any reference herein to the term "Registration Statement" shall be deemed to include such Rule 462 Registration Statement. The Commission has not issued any order preventing or suspending the use of any Preliminary Prospectus. (b) The Registration Statement conforms, and the Prospectus and any further amendments or supplements to the Registration Statement or the Prospectus will, when they become effective or are filed with the Commission, as the case may be, conform in all material respects to the requirements of the Securities Act and the Rules and Regulations and do not and will not, as of the applicable effective date (as to the Registration Statement and any amendment thereto) and as of the applicable filing date (as to the Prospectus and any amendment or supplement thereto) contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading; provided that no representation or warranty is made as to information contained in or omitted from the Registration Statement or the Prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Underwriters specifically for inclusion therein. (c) The documents incorporated by reference in the Prospectus pursuant to Item 12 of Form S-2 under the Securities Act, at the time they were filed with the Commission, complied in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of the Commission thereunder and, when read together and with the other information in the Prospectus, at the time the Registration Statement becomes effective and at all times subsequent thereto up to the Closing Dates (as defined below), will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading, in each case after excluding any statement that does not constitute a part of the Registration Statement or the Prospectus pursuant to Rule 412 of the Securities Act. -2- (d) The Company and each of its subsidiaries (as defined in Section 15) have (i) been duly incorporated and are validly existing as corporations in good standing under the laws of their respective jurisdictions of incorporation, (ii) are duly qualified to do business and are in good standing as foreign corporations in each jurisdiction in which their respective ownership or lease of property or the conduct of their respective businesses requires such qualification, and (iii) all power and authority necessary to own or hold their respective properties and to conduct the businesses in which they are engaged, except, in the case of clauses (ii) and (iii), where the failure to so qualify and be in good standing as a foreign corporation or have such power or authority would not, singularly or in the aggregate, reasonably be expected to have a material adverse effect on the general affairs, management, consolidated financial position, stockholders' equity, results of operations, business or prospects of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). None of the Company's subsidiaries is a limited liability company. (e) The authorized, issued and outstanding capital stock of the Company as of July 22, 2001, is as set forth in the Prospectus under "Capitalization." All of the issued shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and conform in all material respects to the description thereof contained in the Prospectus; and all of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued and are fully paid and non-assessable. Except with respect to Haru Holding Corp. ("Haru") and each of its subsidiaries, all of the issued and outstanding shares of capital stock of each subsidiary of the Company are owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities or claims, except for the pledge of the capital stock of such subsidiaries by the Company under the Credit Agreement dated as of December 1, 1997 by and among the Company, First Union National Bank and the other parties thereto (the "Credit Facility"). The Company owns directly or indirectly, 80% of the issued and outstanding shares of capital stock of Haru and each of Haru's subsidiaries, free and clear of all liens, encumbrances, equities or claims, except for the pledge of the capital stock of Haru and such subsidiaries under the Credit Facility. Except as otherwise described in the Prospectus, there are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the Class A Stock pursuant to the Company's certificate of incorporation or by-laws or any agreement or other instrument. The capital stock of the Company conforms in all material respects to the description thereof contained in the Prospectus. (f) This Agreement has been duly authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law), and except insofar as the indemnification and contribution provisions hereof may be limited by considerations of public policy. -3- (g) The Company has all requisite power and authority to execute, deliver and perform its obligations under this Agreement. (h) The execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company or any of its subsidiaries is subject, nor will such actions result in any violation of the provisions of (i) the certificate of incorporation (or other equivalent organizational document) or by-laws (or other equivalent organizational document) of the Company or any of its subsidiaries or (ii) any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or any of its subsidiaries or any of their properties or assets; and except for the registration of the Shares under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws or by the National Association of Securities Dealers, Inc. (the "NASD") in connection with the purchase and distribution of the Shares by the Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby. (i) The Company has full power and authority to authorize, issue and sell the Shares to be sold by it hereunder. The Shares to be delivered on the Closing Dates have been duly and validly authorized, and when delivered and sold by the Company in accordance with the terms of this Agreement, will be duly and validly issued and outstanding, fully paid and nonassessable without any personal liability attaching to the ownership thereof, and will not have been issued and will not be owned or held in violation of or be subject to any preemptive rights or other similar right to subscribe for or purchase securities of the Company. The Underwriters will receive good title to the Shares purchased by them, respectively, free and clear of all liens, encumbrances, equities or claims or other defects of title whatsoever. The Shares to be sold by the Company will conform in all material respects to the description of such Shares contained in the Prospectus. No further approval or authority of the stockholders or the Board of Directors of the Company will be required for the issuance and sale of the Shares as contemplated herein. (j) Except as set forth in the Prospectus, there are no contracts, agreements or understandings between the Company and any person granting such person the right (other than rights which have been waived or satisfied) to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any -4- securities being registered pursuant to any other registration statement filed by the Company under the Securities Act. (k) Except as set forth in the Prospectus, the Company has not sold or issued any shares of Class A Stock during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or S of, the Securities Act other than shares issued pursuant to employee benefit plans, stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants. (l) Neither the Company nor any of its subsidiaries has sustained, since the date of the latest audited financial statements included or incorporated in the Prospectus, any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; and, since such date, there has not been any material change in the capital stock or long-term debt of the Company and its subsidiaries on a consolidated basis or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, consolidated financial position, stockholders' equity, results of operations, business or prospects of the Company and its subsidiaries taken as a whole, otherwise than as set forth or contemplated in the Prospectus. (m) The financial statements (including the related notes and supporting schedules) filed as part of the Registration Statement or included or incorporated in the Prospectus present fairly the financial condition and results of operations of the entities purported to be shown thereby, at the dates and for the periods indicated, and have been prepared in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved. The other financial information and data filed as part of the Registration Statement or included in the Prospectus is fairly presented and prepared on a basis consistent with such financial statements and the books and records of the Company. (n) Deloitte & Touche, LLP, who have certified certain financial statements of the Company, whose report is incorporated by reference in the Prospectus and who have delivered the initial letter referred to in Section 7(f) hereof, are independent public accountants as required by the Securities Act and the Rules and Regulations. (o) The Company and each of its subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them, in each case free and clear of all liens, encumbrances and defects, except such as are described in the Prospectus or such as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; all assets held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases, with such exceptions as are not material and do not materially interfere with the -5- use made and proposed to be made of such property and buildings by the Company and its subsidiaries taken as a whole. (p) The Company and each of its subsidiaries carry, or are covered by, insurance in such amounts and covering such risks as is adequate for the conduct of their respective businesses and the value of their respective properties and as is customary for companies engaged in similar businesses in similar industries. (q) The Company and each of its subsidiaries own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights and licenses necessary for the conduct of their respective businesses and have no reason to believe that the conduct of their respective businesses will conflict with, and have not received any notice of any claim of conflict with, any such rights of others, in each case except as could not reasonably be expected to have a Material Adverse Effect. (r) Except as set forth in the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries would reasonably be expected to have a Material Adverse Effect; and, to the best of the Company's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. (s) There are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described in the Prospectus or filed as exhibits to the Registration Statement or incorporated by reference as exhibits as permitted by the Rules and Regulations. (t) No relationship, direct or indirect, exists between or among the Company on the one hand, and the directors, officers, shareholders, customers or suppliers of the Company on the other hand, which is required to be described in the Prospectus which is not so described. (u) No labor disturbance by the employees of the Company exists or, to the knowledge of the Company, is imminent, which would reasonably be expected to have a Material Adverse Effect. (v) The Company is in compliance in all material respects with all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as amended, including the regulations and published interpretations thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for which the Company would have any material liability; the Company has not incurred and does not expect to incur liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from, any "pension plan" or -6- (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the regulations and published interpretations thereunder (the "Code"); and each "pension plan" for which the Company would have any liability that is intended to be qualified under Section 401(a) of the Code is so qualified in all material respects and, to the best of the Company's knowledge, nothing has occurred, whether by action or by failure to act, which would cause the loss of such qualification. (w) The Company has filed all federal, state and local income and franchise tax returns required to be filed through the date hereof (except where the failure to file would not reasonably be expected to have a Material Adverse Effect) and has paid all taxes due thereon, and no tax deficiency has been determined adversely to the Company or any of its subsidiaries which has had (nor does the Company have any knowledge of any tax deficiency which, if determined adversely to the Company or any of its subsidiaries, would reasonably be expected to have) a Material Adverse Effect. (x) Since the date as of which information is given in the Prospectus through the date hereof, and except as may otherwise be disclosed in the Prospectus, the Company has not (i) issued or granted any securities, (ii) incurred any material liability or obligation, direct or contingent, other than liabilities and obligations which were incurred in the ordinary course of business, (iii) entered into any material transaction not in the ordinary course of business or (iv) declared or paid any dividend on its capital stock. (y) The Company (i) makes and keeps accurate books and records and (ii) maintains internal accounting controls which provide reasonable assurance that (A) transactions are executed in accordance with management's authorization, (B) transactions are recorded as necessary to permit preparation of its financial statements and to maintain accountability for its assets, (C) access to its assets is permitted only in accordance with management's authorization and (D) the reported accountability for its assets is compared with existing assets at reasonable intervals. (z) Neither the Company nor any of its subsidiaries (i) is in violation of its certificate of incorporation (or other equivalent organizational document) or by-laws (or other equivalent organizational document), (ii) is in default in any respect, and no event has occurred which, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or by which it is bound or to which any of its properties or assets is subject or (iii) is in violation in any respect of any law, ordinance, governmental rule, regulation or court decree to which it or its property or assets may be subject or has failed to obtain any license, permit, certificate, franchise or other governmental authorization or permit necessary to the ownership of its property or to the conduct of its business except, in the case of clauses (ii) and (iii), for such defaults, violations and failures which would not, singularly or in the aggregate, reasonably be expected to have a Material Adverse Effect. -7- (aa) Neither the Company nor any of its subsidiaries, nor any director, officer, agent, employee or other person associated with or acting on behalf of the Company or any of its subsidiaries, has used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (bb) There has been no storage, disposal, generation, manufacture, refinement, transportation, handling or treatment of toxic wastes, medical wastes, hazardous wastes or hazardous substances by the Company or any of its subsidiaries (or, to the knowledge of the Company, any of their predecessors in interest) at, upon or from any of the property now or previously owned or leased by the Company or its subsidiaries in violation of any applicable law, ordinance, rule, regulation, order, judgment, decree or permit or which would require remedial action under any applicable law, ordinance, rule, regulation, order, judgment, decree or permit, except for any violation or remedial action which would not have, or would not be reasonably expected to have, singularly or in the aggregate with all such violations and remedial actions, a Material Adverse Effect; there has been no material spill, discharge, leak, emission, injection, escape, dumping or release of any kind onto such property or into the environment surrounding such property of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous substances due to or caused by the Company or any of its subsidiaries or with respect to which the Company or any of its subsidiaries have knowledge, except for any such spill, discharge, leak, emission, injection, escape, dumping or release which would not have or would not be reasonably likely to have, singularly or in the aggregate with all such spills, discharges, leaks, emissions, injections, escapes, dumpings and releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous substances" and "medical wastes" shall have the meanings specified in any applicable local, state, federal and foreign laws or regulations with respect to environmental protection. (cc) Neither the Company nor any subsidiary is an "investment company" as defined in the Investment Company Act of 1940, as amended. (dd) The Shares have been authorized for listing on the Nasdaq National Market. (ee) Neither the Company nor any subsidiary has taken or will take, directly or indirectly, any action designed to cause or result in, or which has constituted or which might reasonably be expected to constitute, the stabilization or manipulation, under the Exchange Act or otherwise, of the price of the Shares to facilitate the sale or the resale of the Shares hereby. (ff) Neither the Company nor any subsidiary does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Section 517.075 of the Florida Statutes, and all rules and regulations thereunder, relating -8- to issuers doing business in Cuba and the Company agrees to comply, and shall cause each of its subsidiaries to comply, with such statute if prior to the completion of the distribution of the Shares, the Company or any subsidiary commences doing such business. (gg) Neither the Company nor any subsidiary has distributed, nor will it distribute prior to the First Closing Date (as defined in Section 3(a) below) any offering material in connection with the offering and sale of the Shares other than the Preliminary Prospectus, the Prospectus, the Registration Statement or any other materials permitted by the Securities Act, if any. SECTION 2. Purchase of the Shares by the Underwriters. (a) On the basis of the representations and warranties contained in, and subject to the terms and conditions of, this Agreement, the Company agrees to issue and sell to the several Underwriters and each such Underwriter agrees, severally and not jointly, to buy from the Company at __________ per Share, at the place and time hereinafter specified, the respective number of Firm Shares set forth opposite the names of the Underwriters in Schedule A attached hereto plus any additional Shares which such Underwriters may become obligated to purchase pursuant to the provisions of Section 8 hereof. (b) In addition, subject to the terms and conditions of this Agreement, and upon the basis of the representations, warranties and agreements herein contained, the Company hereby grants an option to the several Underwriters to purchase all or any part of the Option Shares at the same price per Share as the Underwriters shall pay for the Firm Shares being sold pursuant to the provisions of subsection (a) of this Section 2. This option may be exercised within 45 days after the effective date of the Registration Statement upon notice by the Representatives to the Company advising as to the amount of Option Shares as to which the option is being exercised, the names and denominations in which the certificates for such Option Shares are to be registered and the time and date when such certificates are to be delivered. The number of Option Shares to be purchased by each Underwriter, if any, shall bear the same percentage to the total number of Option Shares being purchased by the several Underwriters pursuant to this subsection (b) as the number of Shares such Underwriter is purchasing bears to the total number of the Firm Shares being purchased pursuant to subsection (a) of this Section 2, as adjusted, in each case, by the Representatives in such manner as the Representatives may deem appropriate. The option granted hereunder may be exercised only to cover over-allotments in the sale by the Underwriters of Firm Shares referred to in subsection (a) above. In the event the Company declares or pays a dividend or distribution on its Class A Stock, whether in the form of cash, shares of Class A Stock or any other consideration, following the First Closing Date and prior to the Option Closing Date (as defined in Section 3(b) below), such dividend or distribution shall also be paid on the Option Shares on the Option Closing Date. SECTION 3. Delivery and Payment. (a) Delivery of the Firm Shares against payment therefor shall take place at the offices of Ladenburg Thalmann & Co. Inc. (or at such other place as may be designated by agreement between you and the -9- Company) at 10:00 a.m. New York time, on the third full business day after the Effective Date, or at such other time not earlier than three nor more than ten full business days thereafter as the Representatives and the Company shall determine. Such time and date of payment and delivery for the Firm Shares being herein called the "First Closing Date." (b) In addition, in the event the Underwriters exercise the option to purchase from the Company all or any portion of the Option Shares pursuant to the provisions of Section 2(b), then delivery of the Option Shares against payment therefor shall take place at the offices of Ladenburg Thalmann & Co. Inc. (or at such other place as may be designated by agreement between you and the Company) at such time and date as shall be determined by the Representatives but shall not be earlier than four nor later than ten full business days after the exercise of said option, nor in any event prior to the First Closing Date. Such time and date is referred to herein as the "Option Closing Date." (c) The Company will make the certificates for the securities comprising the Shares to be purchased by the Underwriters hereunder available to you for checking at least two full business days prior to the First Closing Date or the Option Closing Date, as the case may be (which are collectively referred to herein as the "Closing Dates"). The certificates shall be in such names and denominations as you may request, at least two full business days prior to the applicable Closing Date. Time shall be of the essence and delivery at the time and place specified in this Agreement is a further condition to the obligations of each Underwriter. (d) Payment for the Shares shall be made to or upon the order of the Company by certified or bank cashier's checks payable in New York Clearing House funds at the time and date of delivery of such Shares as required by the provisions of subsections (a) and (b) above or by wire transfer in immediately available funds to a bank account designated by the Company at least two business days prior to the First Closing Date or the Option Closing Date, as the case may be, against receipt of the definitive certificates in negotiable form for such Shares by the Representatives for the respective accounts of the several Underwriters registered in such names and in such denominations as the Representatives may request. (e) It is understood that you, individually and not as Representatives of the several Underwriters, may (but shall not be obligated to) make any and all payments required pursuant to this Section 3 on behalf of any Underwriter whose check or checks shall not have been received by the Representatives at the time of delivery of the Shares to be purchased by such Underwriter or Underwriters. Any such payment by you shall not relieve any such Underwriter or Underwriters of any of its or their obligations hereunder. SECTION 4. Offering of Shares by the Underwriters. It is understood that the Underwriters propose to make a public offering of the Shares at the price and upon the other terms set forth in the Prospectus. The Underwriters may, at their own expense, enter into one or more agreements, in their sole discretion, as they deem advisable, with -10- one or more broker-dealers who shall act as dealers in connection with such public offering. The Underwriters may from time to time change the public offering price after the closing of the public offering and increase or decrease the concessions and discounts to dealers as they may determine. SECTION 5. Further Agreements of the Company. The Company agrees: (a) To prepare the Prospectus in a form approved by the Underwriters and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission's close of business on the second business day following the execution and delivery of this Agreement or, if applicable, such earlier time as may be required by Rule 430A(a)(3) under the Securities Act; to make no further amendment or any supplement to the Registration Statement or to the Prospectus except as permitted herein; to advise the Underwriters, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Underwriters with copies thereof; to advise the Underwriters, promptly after it receives notice thereof, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus, of the suspension of the qualification of the Shares for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or the Prospectus or for additional information; and, in the event of the issuance of any stop order or of any order preventing or suspending the use of any Preliminary Prospectus or the Prospectus or suspending any such qualification, to use promptly its best efforts to obtain its withdrawal; (b) To furnish promptly to the Underwriters and to counsel for the Underwriters a signed copy of the Registration Statement as originally filed with the Commission, and each amendment thereto filed with the Commission, including all consents and exhibits filed therewith; (c) To deliver promptly to the Underwriters such number of the following documents as each Underwriter shall reasonably request: (i) conformed copies of the Registration Statement as originally filed with the Commission and each amendment thereto (in each case excluding exhibits) and (ii) each Preliminary Prospectus, the Prospectus and any amended or supplemented Prospectus; and, if the delivery of a prospectus is required at any time after the Effective Time in connection with the offering or sale of the Shares or any other securities relating thereto and if at such time any events shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary to amend or supplement the Prospectus in order to comply with the Securities Act, to notify the Underwriters and, upon its request, to prepare and furnish without charge to the Underwriters and to any dealer in securities as -11- many copies as the Underwriters may from time to time reasonably request of an amended or supplemented Prospectus which will correct such statement or omission or effect such compliance; (d) To file promptly with the Commission any amendment to the Registration Statement or the Prospectus or any supplement to the Prospectus that may, in the reasonable judgment of the Company or the Underwriters, be required by the Securities Act or requested by the Commission; (e) Prior to filing with the Commission any amendment to the Registration Statement or supplement to the Prospectus or any Prospectus pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to the Underwriters and counsel for the Underwriters and obtain the consent of the Underwriters to the filing, which consent shall not be unreasonably delayed or withheld; (f) As soon as practicable after the Effective Date, to make generally available to the Company's security holders and to deliver to the Underwriters an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 1l(a) of the Securities Act and the Rules and Regulations (including, at the option of the Company, Rule 158); (g) Upon the request of the Underwriters, for a period of two years following the Effective Date, to furnish to the Underwriters copies of all materials furnished by the Company to its shareholders generally and all public reports and all reports and financial statements furnished by the Company to the principal national securities exchange upon which the Class A Stock may be listed pursuant to requirements of or agreements with such exchange or to the Commission pursuant to the Exchange Act or any rule or regulation of the Commission thereunder; (h) Promptly from time to time to take such action as the Underwriters may reasonably request to qualify the Shares for offering and sale under the securities laws of such jurisdictions as the Underwriters may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of the Shares; provided that in connection therewith, the Company shall not be required to qualify as a foreign corporation, to submit to general taxation or to file a general consent to service of process in any jurisdiction; (i) For a period of 90 days from the date of the Prospectus, not to, directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of (or enter into any transaction or device which is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Class A Stock or securities convertible into or exchangeable for Class A Stock (other than (w) the Shares, (x) shares of Class A Stock issued pursuant to employee benefit plans, stock option plans or other employee compensation plans existing on the date hereof or pursuant to currently outstanding options, warrants or rights or upon conversion of shares of Common Stock, or (y) shares of Class A Stock or securities -12- convertible into or exchangeable for Class A Stock issued in a private placement transaction (provided that such shares shall not be publicly resold during the period of 90 days after the date of the Prospectus; provided, further, that the holder of shares issued in such a transaction shall furnish to the Underwriters at or prior to the time of such issuance a letter in the form of Exhibit A hereto)) or substantially similar securities, or sell or grant options, rights or warrants with respect to any shares of Class A Stock or securities convertible into or exchangeable for Class A Stock or substantially similar securities (other than the grant of options pursuant to benefit plans existing on the date hereof), or (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such shares of Class A Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Class A Stock or other securities, in cash or otherwise, in each case without the prior written consent of Ladenburg Thalmann & Co. Inc.; and to cause each executive officer and director of the Company and Benihana of Tokyo, Inc. ("BOT") to furnish to the Representatives, prior to the First Closing Date, a letter or letters, substantially in the form of Exhibit A hereto; (j) To take such steps as shall be necessary to ensure that neither the Company nor any subsidiary shall become an "investment company" as defined in the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission thereunder; (k) During the period of 90 days from the date of the Prospectus, to obtain an executed letter in the form of Exhibit A hereto from each new executive officer and director who has not previously executed such a letter; (l) The Company will apply the net proceeds from the sale of the Shares for the purposes set forth under "Use of Proceeds" in the Prospectus; and (m) Prior to the First Closing Date, the Company will make all filings required to obtain the listing of the Shares on the Nasdaq National Market and will effect and maintain such listing for at least five years from the date of this Agreement. SECTION 6. Expenses. (a) The Company agrees to pay (i) the Representatives a $75,000 non-accountable expense allowance to cover all of the Representatives' out-of-pocket expenses (the receipt of which is hereby acknowledged by the Representatives), (ii) the costs incident to the sale and delivery of the Shares and any taxes payable in that connection; (iii) the costs incident to the preparation, printing and filing under the Securities Act of the Registration Statement and any amendments and exhibits thereto; (iv) the costs of distributing the Registration Statement as originally filed and each amendment thereto and any post-effective amendments thereof (including, in each case, exhibits), any Preliminary Prospectus, the Prospectus and any amendment or supplement to the Prospectus, all as provided in this Agreement; (v) the costs of reproducing and distributing this Agreement and any other related documents in connection with the offering, purchase, sale and delivery of the Shares; (vi) the filing fees and expenses incident to securing the review by the National Association of Securities Dealers, Inc. of -13- the terms of sale of the Shares (including related fees and expenses of counsel to the Underwriters, which obligation shall be in addition to the obligation referred to in subparagraph (i) above); (vii) any applicable listing or other fees; (viii) the fees and expenses of qualifying the Shares under the securities laws of the several jurisdictions as provided in Section 5(h) and of preparing and distributing a Blue Sky Memorandum (including related fees and expenses of counsel to the Underwriters, which obligation shall be in addition to the obligation referred to in subparagraph (i) above); (ix) the costs and expenses (excluding costs and expenses of the Underwriters and their representatives) relating to investor presentations on any "road show" undertaken in connection with the marketing of the offering of the Shares including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations, travel and lodging expenses of the representatives and officers of the Company and any such consultants, and all other costs and expenses incident to the performance of the obligations of the Company under this Agreement, including all accounting and counsel fees and expenses incurred by the Company in connection with the offering of the Shares hereunder. Notwithstanding the foregoing, unless otherwise approved in advance by the Company, the fees and expenses of counsel to the Underwriters payable by the Company under subparagraphs (vi) and (viii), excluding filing fees in either case, shall be limited to $10,000 plus disbursements. (b) No person is entitled either directly or indirectly to compensation from the Company, from the Representatives or from any other person for services as a finder in connection with the proposed offering, and the Company agrees to indemnify and hold harmless the Representatives and the other Underwriters, against any losses, claims, damages or liabilities, joint or several (which shall, for all purposes of this Agreement, include, but not be limited to, all costs of defense and investigation and all attorneys' fees), to which the Representatives or such other Underwriter may become subject insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon the claim of any person (other than an employee of the party claiming indemnity) or entity that he or it is entitled to a finder's fee in connection with the proposed offering by reason of such person's or entity's influence or prior contact with the indemnifying party. SECTION 7. Conditions of Underwriter's Obligations. The obligations of the several Underwriters to purchase and pay for the Shares which they have respectively agreed to purchase hereunder on the respective Closing Date are subject (x) to the accuracy when made and as of the Closing Dates, of the representations and warranties of the Company contained herein (provided that, in the case of this clause (x), the obligations of the Underwriters hereunder shall be subject to the accuracy in all material respects of those representations and warranties that are not qualified as to materiality), (y) to the performance by the Company of its obligations hereunder and (z) to each of the following additional terms and conditions: (a) The Prospectus shall have been timely filed with the Commission in accordance with Section 5(a); no stop order suspending the effectiveness of the -14- Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and any request of the Commission for inclusion of additional information in the Registration Statement or the Prospectus or otherwise shall have been complied with. (b) The Underwriters shall not have discovered and disclosed to the Company on or prior to either of the Closing Dates that the Registration Statement or the Prospectus or any amendment or supplement thereto contains an untrue statement of fact which, in the opinion of Lowenstein Sandler PC, counsel for the Underwriters, is material or omits to state a fact which, in the opinion of such counsel, is material and is required to be stated therein or is necessary to make the statements therein not misleading. (c) All corporate proceedings and other legal matters incident to the authorization, form and validity of this Agreement, the Shares, the Registration Statement and the Prospectus, and all other legal matters relating to this Agreement and the transactions contemplated hereby shall be reasonably satisfactory in all material respects to counsel for the Underwriters, and the Company shall have furnished to such counsel all documents and information that they may reasonably request to enable them to pass upon such matters. (d) Dornbush Mensch Mandelstam & Schaeffer, LLP shall have furnished to the Underwriters its written opinion, as counsel to the Company, addressed to the Underwriters and dated the First Closing Date, in substantially the form attached hereto as Exhibit B. (e) All corporate proceedings and other legal matters relating to this Agreement, the Registration Statement, the Prospectus and other related matters shall be reasonably satisfactory to or approved by Lowenstein Sandler PC, counsel to the several Underwriters, and you shall have received from such counsel a signed opinion, dated as of the First Closing Date, together with copies thereof for each of the other Underwriters, in form and substance satisfactory to the Underwriters. The Company and each of its subsidiaries shall have furnished to counsel for the several Underwriters such documents as it may reasonably request for the purpose of enabling it to render such opinion. (f) At the time of execution of this Agreement, the Underwriters shall have received from Deloitte & Touche, LLP a letter, in form and substance satisfactory to the Underwriters, addressed to the Underwriters and dated the date hereof (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission and (ii) stating, as of the date hereof (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date hereof), the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants' "comfort letters" to underwriters in connection with registered public offerings. -15- (g) With respect to the letter of Deloitte & Touche LLP referred to in the preceding paragraph and delivered to the Underwriters concurrently with the execution of this Agreement (the "initial letter"), the Company shall have furnished to the Underwriters a letter (the "bring-down letter") of such accountants, addressed to the Underwriters and dated the First Closing Date (i) confirming that they are independent public accountants within the meaning of the Securities Act and are in compliance with the applicable requirements relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of the bring-down letter (or, with respect to matters involving changes or developments since the respective dates as of which specified financial information is given in the Prospectus, as of a date not more than five days prior to the date of the bring-down letter), the conclusions and findings of such firm with respect to the financial information and other matters covered by the initial letter and (iii) confirming in all material respects the conclusions and findings set forth in the initial letter. (h) The Company shall have furnished to the Underwriters a certificate, dated the First Closing Date, of its President and its Chief Financial Officer stating that: (i) The representations, warranties and agreements of the Company in Section 1 are true and correct as of the First Closing Date (provided that such representations, warranties and agreements that are not qualified as to materiality shall be true in all material respects); the Company has complied with all its agreements contained herein; and the conditions set forth in this Section 7 have been fulfilled; and (ii) They have carefully examined the Registration Statement and the Prospectus and, in their opinion (A) as of the Effective Date, the Registration Statement and the Prospectus did not include any untrue statement of a material fact and did not omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and (B) since the Effective Date no event has occurred which should have been set forth in a supplement or amendment to the Registration Statement or the Prospectus which was not so set forth therein. (i) Neither the Company nor any of its subsidiaries shall have sustained since the date of the latest audited financial statements included in the Prospectus (i) any loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus or (ii) since such date there shall not have been any change in the capital stock or long-term debt of the Company and its subsidiaries on a consolidated basis or any adverse change, or any development involving a prospective adverse change, in or affecting the general affairs, management, financial position, stockholders' equity or results of operations of the Company and its subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the effect of which, in any such case described in clause (i) or (ii), is, in the -16- judgment of the Underwriters, so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares being delivered on the respective Closing Date on the terms and in the manner contemplated in the Prospectus. (j) Subsequent to the execution and delivery of this Agreement there shall not have occurred any of the following: (i) trading in securities generally on the New York Stock Exchange or the American Stock Exchange or in the over-the-counter market, or trading in any securities of the Company on any exchange or in the over-the-counter market, shall have been suspended or minimum prices shall have been established on any such exchange or such market by the Commission, by such exchange or by any other regulatory body or governmental authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal or state authorities, (iii) the United States shall have become engaged in hostilities, there shall have been an escalation in hostilities involving the United States or there shall have been a declaration of a national emergency or war by the United States or (iv) there shall have occurred such a material adverse change in general economic, political or financial conditions (or the effect of international conditions on the financial markets in the United States shall be such) as to make it, in the judgment of the Underwriters, impracticable or inadvisable to proceed with the public offering or delivery of the Shares being delivered on the respective Closing Date on the terms and in the manner contemplated in the Prospectus. (k) The Shares shall be listed on the Nasdaq National Market. (l) Prior to the First Closing Date, the Underwriters shall have received from each executive officer and director of the Company and BOT, an executed letter in the form of Exhibit A pursuant to Section 5(i) hereto. (m) No action shall have been taken by the Commission or the NASD, the effect of which would make it improper, at any time prior to the respective Closing Date, for members of the NASD to execute transactions (as principal or agent) in the Shares and no proceedings for the taking of such action shall have been instituted or shall be pending, or, to the knowledge of the Representatives or the Company, shall be contemplated by the Commission or the NASD. The Company represents that at the date hereof it has no knowledge that any such action is in fact contemplated by the Commission or the NASD. The Company shall have advised the Underwriters of any NASD affiliation of any of its officers, directors, stockholders or their affiliates. (n) Upon exercise of the option provided for in Section 2(b) hereof, the obligations of the several Underwriters to purchase and pay for the Option Shares referred to therein will be subject (as of the date hereof and as of the Option Closing Date) to the following additional conditions: (i) The Registration Statement shall remain effective at the Option Closing Date, and no stop order suspending the effectiveness thereof shall have been issued and no proceedings for that purpose shall have been instituted or shall be pending, -17- or, to your knowledge or the knowledge of the Company, shall be contemplated by the Commission, and any reasonable request on the part of the Commission for additional information shall have been complied with to the satisfaction of counsel to the several Underwriters. (ii) At the Option Closing Date, Dornbush Mensch Mandelstam & Schaeffer, LLP shall have furnished to the Underwriters its written opinion as counsel to the Company addressed to the Underwriters, which opinion shall be dated the Option Closing Date and shall be substantially the same in scope and substance as the opinion furnished to you at the First Closing Date pursuant to Section 7(d) hereof, except that such opinion, where appropriate, shall cover the Option Shares. (iii) At the Option Closing Date there shall have been delivered to you a letter in form and substance satisfactory to you from Deloitte & Touche, LLP dated the Option Closing Date and addressed to the Underwriters confirming the information in their letter referred to in Section 7(f) hereof and stating that nothing has come to their attention during the period from the ending date of their review referred to in said letter to a date not more than five business days prior to the Option Closing Date, which would require any change in said letter if it were required to be dated the Option Closing Date. (iv) At the Option Closing Date, the Company shall have furnished to the Underwriters a certificate, dated the Option Closing Date, of its President and the Chief Financial Officer, in form and substance satisfactory to counsel for the Underwriters substantially the same in scope and substance as the certificates furnished to you at the First Closing Date pursuant to Section 7(h) hereof. (v) All proceedings taken at or prior to the Option Closing Date in connection with the sale and issuance of the Option Shares shall be satisfactory in form and substance to you and Lowenstein Sandler PC, counsel to the several Underwriters, shall have been furnished with all such documents, certificates, and opinions as you may reasonably request in connection with this transaction in order to evidence the accuracy and completeness of any of the representations, warranties or statements of the Company or its compliance with any of the covenants or conditions herein. All opinions, letters, evidence and certificates mentioned above or elsewhere in this Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form and substance reasonably satisfactory to counsel for the Underwriters. SECTION 8. Substitution of Underwriters. If any of the Underwriters shall for any reason not permitted hereunder cancel their obligations to purchase the Firm Shares hereunder, or shall fail to take up and pay for the number of Firm Shares set forth opposite their respective names in Schedule A hereto upon tender of such Firm Shares in accordance with the terms hereof, then: -18- (a) If the aggregate number of Firm Shares which such Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total number of Firm Shares, the other Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Firm Shares which such defaulting Underwriter or Underwriters agreed but failed to purchase. (b) If any Underwriter or Underwriters so default and the agreed number of Firm Shares with respect to which such default or defaults occurs is more than 10% of the total number of Firm Shares, the remaining Underwriters shall have the right to take up and pay for (in such proportion as may be agreed upon among them) the Firm Shares which the defaulting Underwriter or Underwriters agreed but failed to purchase. If such remaining Underwriters do not, at the First Closing Date, take up and pay for the Firm Shares which the defaulting Underwriter or Underwriters agreed but failed to purchase, the time for delivery of the Firm Shares shall be extended to the next business day to allow the remaining Underwriters the privilege of substituting within twenty-four hours (including nonbusiness hours) another underwriter or underwriters reasonably satisfactory to the Company. If no such underwriter or underwriters shall have been substituted as aforesaid, within such twenty-four hour period, the time of delivery of the Firm Shares may, at the option of the Company, be again extended to the next following business day, if necessary, to allow the Company the privilege of finding within twenty-four hours (including nonbusiness hours) another underwriter or underwriters to purchase the Firm Shares which the defaulting Underwriter or Underwriters agreed but failed to purchase. If it shall be arranged for the remaining Underwriters or substituted Underwriters to take up the Firm Shares of the defaulting Underwriter or Underwriters as provided in this Section 8, (i) the Company or the Representatives shall have the right to postpone the time of delivery for a period of not more than seven business days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus, or in any other documents or arrangements, and the Company agrees promptly to file any amendments to the Registration Statement or supplements to the Prospectus which may thereby be made necessary, and (ii) the respective numbers of Firm Shares to be purchased by the remaining Underwriters or substituted Underwriters shall be taken as the basis of the underwriting obligation for all purposes of this Agreement. If a default by one or more Underwriters shall occur and the remaining Underwriters shall not take up and pay for all the Firm Shares agreed to be purchased by the defaulting Underwriters or substitute another underwriter or underwriters as aforesaid, and the Company shall not find or shall not elect to seek another underwriter or underwriters for such Firm Shares as aforesaid, then this Agreement shall terminate. If, following exercise of the option provided in Section 2(b) hereof, any Underwriter or Underwriters shall for any reason not permitted hereunder cancel their obligations to purchase Option Shares at the Option Closing Date, or shall fail to take up and pay for the number of Option Shares, which they become obligated to purchase at the Option Closing Date upon tender of such Option Shares in accordance with the terms hereof, then the remaining Underwriters or substituted Underwriters may take up and pay -19- for the Option Shares of the defaulting Underwriters in the manner provided in this Section 8(b). If the remaining Underwriters or substituted Underwriters shall not take up and pay for all such Option Shares, the Underwriters shall be entitled to purchase the number of Option Shares for which there is no default or, at their election, the option shall terminate, and the exercise thereof shall be of no effect. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section 8. In the event of termination, there shall be no liability on the part of any nondefaulting Underwriter to the Company, provided that the provisions of this Section 8 shall not in any event affect the liability of any defaulting Underwriter to the Company arising out of such default. SECTION 9. Indemnification and Contribution. (a) The Company shall indemnify and hold harmless each Underwriter, its officers and employees and each person, if any, who controls any Underwriter within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof (including, but not limited to, any loss, claim, damage, liability or action relating to purchases and sales of Shares), to which such Underwriter, officer, employee or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto, (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, or in any Blue Sky application, any material fact required to be stated therein or necessary to make the statements therein not misleading or (iii) any act or failure to act or any alleged act or failure to act by such Underwriter in connection with, or relating in any manner to, the Shares or the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon matters covered by clause (i) or (ii) above (provided that the Company shall not be liable under this clause (iii) to the extent that it is determined in a final judgment by a court of competent jurisdiction that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Underwriter through its gross negligence or willful misconduct), and shall reimburse such Underwriter and each such officer, employee or controlling person promptly upon demand for any legal or other expenses reasonably incurred by such Underwriter, officer, employee or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of, or is based upon, any untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any such amendment or supplement, in reliance upon and in conformity with written information concerning such Underwriter furnished to the Company by or on behalf of such -20- Underwriter specifically for inclusion therein which information consists solely of the information specified in Section 9(e); and provided further that as to any Preliminary Prospectus, this indemnity agreement shall not inure to the benefit of such Underwriter, its officers or employees, or any person controlling the Underwriter, on account of any loss, claim, damage, liability or action arising from the sale of the Shares to any person by such Underwriter if such Underwriter failed to send or give a copy of the Prospectus, as the same may be amended or supplemented, to that person within the time required by the Securities Act, and the untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact in such Preliminary Prospectus was corrected in the Prospectus, unless such failure resulted from non-compliance by the Company with Section 5(c). The foregoing indemnity agreement is in addition to any liability which the Company may otherwise have to such Underwriter or to any officer, employee or controlling person of such Underwriter. (b) Each Underwriter, severally, but not jointly, shall indemnify and hold harmless the Company, its officers and employees, each of its directors, and each person, if any, who controls the Company within the meaning of the Securities Act, from and against any loss, claim, damage or liability, joint or several, or any action in respect thereof, to which the Company or any such director, officer or controlling person may become subject, under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Registration Statement or the Prospectus or in any amendment or supplement thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged omission to state in any Preliminary Prospectus, the Registration Statement or the Prospectus, or in any amendment or supplement thereto, any material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with written information concerning such Underwriter furnished to the Company by or on behalf of such Underwriter specifically for inclusion therein, and shall reimburse the Company and any such director, officer or controlling person for any legal or other expenses reasonably incurred by the Company or any such director, officer or controlling person in connection with investigating or defending or preparing to defend against any such loss, claim, damage, liability or action as such expenses are incurred. The foregoing indemnity agreement is in addition to any liability which such Underwriter may otherwise have to the Company or any such director, officer, employee or controlling person. (c) Promptly after receipt by an indemnified party under this Section 9 of notice of any claim or the commencement of any action, the indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under this Section 9, notify the indemnifying party in writing of the claim or the commencement of that action; provided, however, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have under this Section 9 except to the extent it has been materially prejudiced by such failure and, provided further, that the failure to notify the indemnifying party shall not relieve it from any liability which it may have to an -21- indemnified party otherwise than under this Section 9. If any such claim or action shall be brought against an indemnified party, and it shall notify the indemnifying party thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 9 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation; provided, however, that any indemnified party shall have the right to employ separate counsel in any such action and to participate in the defense thereof but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the employment thereof has been specifically authorized by the indemnifying party in writing, (ii) such indemnified party shall have been advised by such counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the indemnifying party and in the reasonable judgment of such counsel it is advisable for such indemnified party to employ separate counsel or (iii) the indemnifying party has failed to assume the defense of such action and employ counsel reasonably satisfactory to the indemnified party, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys at any time for all such indemnified parties, which firm shall be designated in writing by the Representatives, on behalf of the Underwriters, if the indemnified parties under this Section 9 consist of the Underwriters or the Underwriters' officers, employees or controlling persons, or by the Company, if the indemnified parties under this Section 9 consist of the Company or any of the Company's directors, officers, employees or controlling persons. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise, consent or judgment includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with the consent of the indemnifying party or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. -22- (d) If the indemnification provided for in this Section 9 shall for any reason be unavailable to or insufficient to hold harmless an indemnified party under Section 9(a) or 9(b) in respect of any loss, claim, damage or liability, or any action in respect thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other with respect to the statements or omissions which resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other with respect to such offering shall be deemed to be in the same proportion as the total net proceeds (before deducting expenses) from the offering of the Shares purchased under this Agreement received by the Company on the one hand, and the total underwriting discounts and commissions received by the Underwriters with respect to the Shares purchased under this Agreement on the other hand bear to the total gross proceeds from the offering of the Shares under this Agreement, in each case as described on the cover page of the Prospectus. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or the Underwriters, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contributions pursuant to this Section were to be determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section shall be deemed to include, for purposes of this Section 9(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 9(d), the Underwriters shall not be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public was offered to the public exceeds the amount of any damages which such Underwriter has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 9(e) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. (e) The Underwriters confirm and the Company acknowledges that the statements with respect to the public offering of the Shares by the Underwriters set forth in the _____ paragraph of the cover page and in paragraphs _______________ under the caption "Underwriting" in, the Prospectus are correct and constitute the only information -23- concerning the Underwriters furnished in writing to the Company by or on behalf of the Underwriters specifically for inclusion in the Registration Statement and the Prospectus. SECTION 10. Termination. (a) The obligations of the Underwriters hereunder may be terminated by the Underwriters by notice given to and received by the Company prior to delivery of and payment for the Shares if, prior to the First Closing Date or the Option Closing Date, any of the events described in Sections 7(i) or 7(j), shall have occurred or if the Underwriters shall decline to purchase the Shares for any reason permitted under this Agreement. (b) Termination of this Agreement under this Section 10 or Section 7 after the Shares have been purchased by the Underwriters hereunder shall be applicable only to the Option Shares. Termination of this Agreement shall be without liability of any party to any other party other than as provided in Sections 6, 9 and 11 hereof. Notwithstanding any such termination, the provisions of Sections 6, 9 and 11 hereof shall remain in effect. SECTION 11. Reimbursement of Underwriter's Expenses. If the Company shall fail to tender the Shares for delivery to the Underwriters by reason of any failure, refusal or inability on the part of the Company to perform any agreement on its part to be performed, or because any other condition of the Underwriters' obligations hereunder required to be fulfilled by the Company is not fulfilled, the Company will reimburse the Representatives for all reasonable out-of-pocket expenses (including reasonable fees and disbursements of counsel) incurred by the Representatives in connection with this Agreement and the proposed purchase of the Shares up to a maximum of $100,000 (less the amounts paid to the Representatives through such date as set forth in Section 6(a)), and upon demand, the Company shall pay the full amount thereof to the Representatives. If this Agreement is terminated pursuant to Section 10 by reason of the default of the Underwriters, the Company shall not be obligated to reimburse the Underwriters on account of those expenses. SECTION 12. Notices, Etc. All statements, requests, notices and agreements hereunder shall be in writing, and: (a) if to the Underwriters, shall be delivered or sent by mail, telex or facsimile transmission to Ladenburg Thalmann & Co. Inc., 590 Madison Avenue, New York, New York 10022, Attention: Director of Investment Banking (Fax: 212-409-2173), with a copy to Robert G. Minion, Esq., Lowenstein Sandler PC, 65 Livingston Avenue, Roseland, New Jersey 07068 (Fax: 973-597-2425), (b) if to the Company, shall be delivered or sent by mail, telex or facsimile transmission to the address of the Company set forth in the Registration Statement, Attention: Joel Schwartz, with a copy to Herschel S. Weinstein, Esq., Dornbush Mensch Mandelstam & Schaeffer, LLP, 747 Third Avenue, New York, New York 10017 (Fax: 212-753-7673). Any such statements, requests, notices or agreements shall take effect at the time of receipt thereof. SECTION 13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Underwriters, the Company and their -24- respective representatives and successors. This Agreement and the terms and provisions hereof are for the sole benefit of only those persons, except that (A) the representations, warranties, indemnities and agreements of the Company contained in this Agreement shall also be deemed to be for the benefit of the person or persons, if any, who control any Underwriter within the meaning of Section 15 of the Securities Act and (B) the indemnity agreement of the Underwriters contained in Section 9(b) of this Agreement shall be deemed to be for the benefit of directors, officers and employees of the Company, and any person controlling the Company within the meaning of Section 15 of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any person, other than the persons referred to in this Section 13 any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein. SECTION 14. Survival. The respective indemnities, representations, warranties and agreements of the Company and the Underwriters contained in this Agreement or made by or on behalf on them, respectively, pursuant to this Agreement, shall survive the delivery of and payment for the Shares and shall remain in full force and effect, regardless of any investigation made by or on behalf of any of them or any one controlling any of them. SECTION 15. Definition of the Terms "Business Day" and "Subsidiary". For purposes of this Agreement, (a) "business day" means each Monday, Tuesday, Wednesday, Thursday or Friday which is not a day on which banking institutions in New York are generally authorized or obligated by law or executive order to close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules and Regulations. SECTION 16. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of New York. SECTION 17. Counterparts. This Agreement may be executed in one or more counterparts and, if executed in more than one counterpart, the executed counterparts shall each be deemed to be an original but all such counterparts shall together constitute one and the same instrument. SECTION 18. Headings. The headings herein are inserted for convenience of reference only and are not intended to be part of, or to affect the meaning or interpretation of, this Agreement. -25- If the foregoing correctly sets forth the agreement among the Company and the Underwriters, please indicate your acceptance in the space provided for that purpose below. Very truly yours, BENIHANA INC. By:______________________________________ Name: Title: Accepted as Representatives of the several underwriters: LADENBURG THALMANN & CO. INC, as Underwriter By:______________________________________ RYAN, BECK & CO., LLC By:______________________________________ -26- SCHEDULE A ---------- Name of Underwriter Number of Shares - ------------------- ---------------- Ladenburg Thalmann & Co. Inc. Ryan, Beck & Co., LLC ------- Total 750,000 Exhibit A FORM OF LOCK-UP LETTER AGREEMENT August 24, 2001 Ladenburg Thalmann & Co. Inc. Ryan, Beck & Co., LLC c/o Ladenburg Thalmann & Co. Inc. 590 Madison Avenue New York, NY 10022 Dear Sirs: The undersigned understands that you propose to enter into an Underwriting Agreement (the "Underwriting Agreement") providing for the purchase by the underwriters named therein, (the "Underwriters"), for whom you are acting as representatives (the "Representatives") of up to 750,000 shares (the "Initial Shares") of Class A Common Stock, par value $.10 per share (the "Class A Stock"), of Benihana Inc., a Delaware corporation (the "Company"), from the Company, plus up to an additional 112,500 shares of Class A Stock (together with the Initial Shares, the "Shares") from the Company to cover over-allotment, if any, and that Underwriters, propose to offer the Shares to the public (the "Offering"). In consideration of the execution of the Underwriting Agreement by the Underwriters, and for other good and valuable consideration, the undersigned hereby irrevocably agrees that, without the prior written consent of Ladenberg Thalmann & Co. Inc., the undersigned will not, directly or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of) any shares of Class A Stock (including, without limitation, shares of Class A Stock that may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission and shares of Class A Stock that may be issued upon exercise of any option or warrant) or securities convertible into or exchangeable for Class A Stock or substantially similar securities owned by the undersigned on the date of execution of this Lock-Up Letter Agreement, on the date of the execution of the Underwriting Agreement or otherwise acquired during the Restricted Period (as defined below), or sell or grant options, rights or warrants with respect to any shares of Class A Stock or substantially similar securities (other than the grant of options pursuant to option plans existing on the date hereof) or (2) enter into any swap or other derivatives transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of such shares of Class A Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Class A Stock or other securities, in cash or otherwise, for a period of 90 days after the effective date of the Registration Statement relating to the Offering (the "Restricted Period"). Notwithstanding the foregoing, the undersigned may enter into a transaction described in clause (1) and (2) above, if such transaction is a private transaction in which the transferee agrees to be bound by all of the provisions of this Lock-Up Letter Agreement prior to such transfer. In furtherance of the foregoing, the Company and its Transfer Agent are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Lock-Up Letter Agreement. [In addition, the undersigned agrees that for a period of one year from the date of the execution of the Underwriting Agreement, in the event the undersigned wishes to sell any shares of Class A Stock after the completion of the Offering, in accordance with Rule 144 under the Securities Act of 1933, as amended ("Rule 144"), such shares shall be sold under Rule 144 through either of the Representatives.] It is understood that, if the Company notifies you that it does not intend to proceed with the Offering, if the Underwriting Agreement does not become effective, or if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of any Shares, the undersigned will be released from the undersigned's obligations under this Lock-Up Letter Agreement. The undersigned understands that the Company and the Underwriters will proceed with the Offering in reliance on this Lock-Up Letter Agreement. Whether or not the Offering actually occurs depends on a number of factors, including market conditions. Any Offering will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation among the Company and the Representatives, on behalf of the Underwriters. The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Letter Agreement and that, upon request, the undersigned will execute any additional documents necessary in connection with the enforcement hereof. Any obligations of the undersigned shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Very truly yours, Exhibit B --------- Opinion of Counsel to the Company 1. Each of the Company and each subsidiary of the Company listed on Schedule I attached hereto (each, a "Principal Subsidiary" and collectively, the "Principal Subsidiaries") (A) has been duly organized and is validly existing as a corporation in good standing under the laws of its jurisdiction of organization, (B) is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction in the United States in which its ownership or lease of property or the conduct of its business requires such qualification and (C) has all power and authority necessary to own or hold its properties and conduct the business in which it is engaged, except, in the case of clauses (B) and (C), where the failure to be so qualified and to be in good standing as a foreign corporation or to have such power or authority would not, singularly or in the aggregate, reasonably be expected to have a Material Adverse Effect. 2. The Company has an authorized capitalization as set forth in the Underwriting Agreement. All of the outstanding shares of capital stock of the Company and its subsidiaries have been duly and validly authorized and issued and are fully paid and non-assessable. To the best of such firm's knowledge, the Company is the sole stockholder of each Principal Subsidiary, except for Haru Holding Corp. (of which the Company is an 80% stockholder), and the Company holds such interests free and clear of all liens, encumbrances, equities or claims, except that the Company's interest in all of its subsidiaries is pledged as security for loans under the Credit Agreement. 3. There are no preemptive or other rights to subscribe for or to purchase, nor any restriction upon the voting or transfer of, any shares of the Class A Stock pursuant to the Company's certificate of incorporation or by-laws or any agreement or other instrument known to such counsel. 4. The Shares have been duly authorized and, when delivered in accordance with the terms of the Underwriting Agreement, will be duly and validly issued, fully paid and non-assessable, without any personal liability attaching to the ownership thereof and, to the best of such counsel's knowledge, will not have been issued and will not be owned or held in violation of or subject to any preemptive rights. Upon delivery of and payment for the Shares by the Underwriters in accordance with the terms of the Underwriting Agreement, each Underwriter will receive good title to the Shares purchased by it, free and clear of all liens, security interests, pledges, charges, encumbrances, stockholders' agreements, voting trusts or other defects of title whatsoever. 5. To the best of such counsel's knowledge and other than as set forth in the Prospectus or in documents incorporated by reference into the Prospectus, there are no legal or governmental proceedings pending to which the Company or any of its subsidiaries is a party or of which any property or assets of the Company or any of its subsidiaries is the subject which, if determined adversely to the Company or any of its subsidiaries, would be reasonably likely to have a Material Adverse Effect; and, to the best of such counsel's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others. 6. Such counsel has been advised by the Commission that the Registration Statement was declared effective under the Securities Act as of the date and time specified in such opinion; the Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules and Regulations specified in such opinion on the date specified therein and, to the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the Commission. 7. The Registration Statement, as of its effective date, and the Prospectus, as of its date, and any further amendments or supplements thereto made by the Company prior to any Closing Date (except for the financial statements, the notes thereto, supporting schedules and other financial or statistical data included therein or omitted therefrom, as to which such counsel need express no opinion) complied as to form in all material respects with the requirements of the Securities Act and the Rules and Regulations. 8. The statements contained in the Prospectus under the caption "Description of our Capital Stock", insofar as they purport to constitute summaries of the terms of the Company's capital stock (including the Shares) constitute accurate summaries of the terms of such capital stock in all material respects. 9. To the best of such counsel's knowledge, there are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or by the Rules and Regulations which have not been described or filed as exhibits to the Registration Statement. 10. The Underwriting Agreement has been duly authorized, executed and delivered by the Company. 11. To the best of such counsel's knowledge, except for such violations, defaults or failure of compliance which would not have a Material Adverse Effect, and except as disclosed in the Prospectus, neither the Company nor any Principal Subsidiary is in violation or breach of or default under (nor has an event occurred that with notice, lapse of time or both would constitute a default under), nor will the execution and delivery by the Company of the Underwriting Agreement and the consummation of the transactions contemplated thereby conflict with or result in a breach of, or constitute a default (or an event which with notice or lapse of time, or both, would constitute a default) under or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or any Principal Subsidiary pursuant to (a) the certificate of incorporation or by-laws of the Company or any Principal Subsidiary, (b) -2- any indenture, mortgage, deed of trust, loan agreement or other material agreement or instrument, franchise, license or permit known to such counsel and to which the Company or any Principal Subsidiary is a party or by which such entity's properties or assets may be bound, or (c) any law, statute, rule or regulation, or judgment, decree or order of any court or any government or regulatory agency or body having jurisdiction over the Company or any Principal Subsidiary or any of their properties or assets. 12. Except for the registration of the Shares under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state or foreign securities laws or by the NASD in connection with the purchase and distribution of the Shares by the Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of the Underwriting Agreement by the Company and the consummation of the transactions contemplated hereby, other than such consents, approvals, authorizations, orders, filings and registrations as have been made or obtained; and 13. To the best of such counsel's knowledge, except as otherwise disclosed in the Registration Statement, there are no contracts, agreements or understandings between the Company and any person granting such person the right (other than rights which have been waived or satisfied) to require the Company to file a registration statement under the Securities Act with respect to any securities of the Company owned or to be owned by such person or to require the Company to include such securities in the securities registered pursuant to the Registration Statement or in any securities being registered pursuant to any other registration statement filed by the Company under the Securities Act. 14. Neither the Company nor any Principal Subsidiary is, and upon the consummation of the transactions contemplated by the Agreement none of them will be, an "investment company" as defined pursuant to the Investment Company Act of 1940. In rendering such opinion, such counsel may state that its opinion is limited to matters governed by the Federal laws of the United States of America, the laws of the State of New York and the General Corporation Law of the State of Delaware and that such counsel is not admitted in the State of Delaware. The opinion of the Company's counsel shall also be to the effect that (x) such counsel has acted as counsel to the Company on a regular basis (other than with respect to certain regulatory matters), has acted as counsel to the Company in connection with previous financing transactions and has acted as counsel to the Company in connection with the preparation of the Registration Statement, (y) such counsel has participated in conferences with officials and other representatives of the Company, the Underwriters, counsel to the Underwriters and the Company's independent certified public accountants, at which the contents of the Registration Statement and the Prospectus and related matters were discussed, and (z) based on the foregoing, together with such counsel's examination of the Registration Statement and the Prospectus and its investigations made in connection with the -3- preparation of the Registration Statement and the Prospectus, no facts have come to the attention of such counsel which lead it to believe that, as of the Effective Date, the Registration Statement (other than the financial statements, the notes thereto, supporting schedules and other financial or statistical data included therein or omitted therefrom, as to which such counsel need express no opinion) contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that, as of its date and each Closing Date, the Prospectus (other than the financial statements, the notes thereto, supporting schedules and other financial or statistical data included therein or omitted therefrom, as to which such counsel need express no opinion) contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The foregoing opinion and statement may be qualified by a statement to the effect that such counsel does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement or the Prospectus (other than as set forth in clause 8 above). -4- EX-5.01 4 dex501.txt OPINION OF DORNBUSH MENSCH MANDELSTAM Exhibit 5.01 [Letterhead of Dornbush Mensch Mandelstam & Schaeffer, LLP] September 5, 2001 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: Benihana Inc.; Registration Statement on Form S-2 --------------------------- Gentlemen: We have been requested by Benihana Inc., a Delaware corporation (the "Company"), to furnish you with our opinion as to the matters hereinafter set forth in connection with the above-captioned registration statement (the "Registration Statement") relating to the sale of a maximum of 862,500 shares of the Company's Class A Common Stock, par value $.10 per share (the "Shares"), by the Company to the public. The maximum of 862,500 Shares includes 112,500 Shares which may be sold to cover over-allotments, if any. In connection with this opinion, we have examined the Registration Statement, the Certificate of Incorporation and By-laws of the Company, each as amended to date, copies of the records of corporate proceedings of the Company and such other documents as we have deemed necessary to enable us to render the opinion hereinafter expressed. Based upon and subject to the foregoing, we are of the opinion that the 862,500 Shares proposed to be sold by the Company, when issued, sold and paid for pursuant to and in the manner contemplated by the Registration Statement, will be validly authorized, legally issued, fully paid and non-assessable Shares. We render no opinion as to the laws of any jurisdiction other than the internal corporate law of the State of Delaware. Securities and Exchange Commission September 5, 2001 Page 2 We hereby consent to the use of this opinion as an exhibit to the Registration Statement and to the reference to our name under the caption "Legal Opinions" in the prospectus included in the Registration Statement. Very truly yours, DORNBUSH MENSCH MANDELSTAM & SCHAEFFER, LLP By: /s/ Herschel S. Weinstein ------------------------------------------ Herschel S. Weinstein, Partner EX-10.10 5 dex1010.txt STOCKHOLDERS AGREEMENT DATED AS OF DECEMEBER Exhibit 10.10 STOCKHOLDERS' AGREEMENT By and Among HARU HOLDING CORP. BENIHANA NATIONAL CORP. MEI PING MATSUMURA and ESTATE OF ARTHUR CUTLER Dated as of: December 9, 1999 STOCKHOLDERS' AGREEMENT STOCKHOLDERS' AGREEMENT dated as of the 6th day of December, 1999 by and --- among, Haru Holding Corp., a Delaware corporation whose address is c/o Benihana Inc., 8685 Northwest 53/rd/ Terrace, Miami, Florida 33166 (the "Company"), Benihana National Corp. ("BNC"), a Delaware corporation whose address is 8685 Northwest 53/rd/ Terrace, Miami, Florida 33166, Mei Ping Matsumura ("Matsumura"), an individual whose address is 8 Jean Drive, Englewood Cliffs, New Jersey 07632, and the Estate of Arthur Cutler ("Cutler"), whose address is c/o Alicart, Inc., 118 West 27/th/ Street, 10/th/ Floor, New York, New York 10001. Matsumura, Cutler and their permitted transferees are hereinafter sometimes referred to collectively as the "Minority Stockholders." R E C I T A L S : The authorized capital stock of the Company consists of one thousand (1,000) shares of issued and outstanding common stock, par value $.01 per share (the "Common Stock"), and one thousand (1,000) shares of preferred stock, par value $1.00 per share. There are no shares of preferred stock issued or outstanding. Prior to the date hereof, Matsumura and Tsu Wang ("Wang") were the record owners of all of the issued and outstanding Common Stock. Pursuant to a certain Stock Sale Agreement dated as of August 5, 1999 and amended as of November 12, 1999 (as amended, the "Sale Agreement"), by and among BNC, Matsumura and Wang, on the date hereof, Matsumura and Wang are selling eighty (80%) percent of the issued and outstanding Common Stock to BNC, so that, after giving effect to such sale, the Stock will be owned, beneficially and of record, as follows: BNC 800 Shares Matsumura 180 Shares Cutler 20 Shares ----- 1,000 Shares The foregoing also gives effect to making a previously held beneficial interest of Cutler of record. The Company, through two subsidiaries, Haru Amsterdam Avenue Corp, a New York corporation and Haru Third Avenue Corp., a New York corporation, operates Japanese sushi-style restaurants under the name Haru. A third subsidiary, 1501 Broadway Restaurant Corp, a New York corporation, is a tenant of space in which a third Haru restaurant will be established. The parties anticipate that the Company will be opening additional Haru restaurants as opportunities and finances permit. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties agree as follows: 1. Definitions. ----------- Capitalized terms not otherwise defined herein shall have the meanings set forth below: "Affiliate" of any person means another person controlling, controlled by or under common control with such person. "Amount of Company Debt" means, as of the end of the Pricing Fiscal Year, the total of all indebtedness (including all accrued and unpaid interest) of the Company and its subsidiaries (including, without limitation, indebtedness to stockholders of the Company and, in the case of indebtedness to BNC, all accrued and unpaid interest thereof computed at the rate of interest charged to BNC (or its -2- parent, Benihana Inc.) under their primary bank line of credit (which is, on the date hereof, with First Union National Bank)) other than accounts payable incurred in the ordinary course of business. "Board" means the Board of Directors of the Company. "Call Price" means (A) Five and One-Half (5 1/2) times (B) the Company's Consolidated Cash Flow for the Pricing Fiscal Year, from which total is subtracted (C) the Amount of Company Debt, which total is divided by (D) the number of shares of Common Stock outstanding as at the date of such computation. "Consolidated Amortization Expense" means the amortization expense of the Company and its Subsidiaries for the acquisition of intangibles (other than goodwill arising from a future acquisition by the Company or a Subsidiary), determined on a consolidated basis in accordance with GAAP. "Consolidated Cash Flow," for any period, means Consolidated Net Operating Income, (A) increased by the sum of (i) the Consolidated Interest Expense for such period, (ii) the Consolidated Income Tax Expense for such period, (iii) the Consolidated Depreciation Expense for such period, (iv) the Consolidated Amortization Expense for such period and (v) other non-cash items which reduced Consolidated Net Operating Income in such period and (B) decreased by the sum of the non-cash items which increased Consolidated Net Operating Income in such period. "Consolidated Depreciation Expense" means the depreciation expense of the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP. -3- "Consolidated Income Tax Expense," for any period, means the aggregate of the income tax expense of the Company and its Subsidiaries for such period (to the extent deducted in determining Consolidated Net Operating Income), determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense" means, for any period, the interest expense of the Company and its Subsidiaries accrued on Indebtedness of the Company or any Subsidiaries determined on a consolidated basis in accordance with GAAP. "Consolidated Net Operating Income" means, for any period, the aggregate net income of the Company and its Subsidiaries, determined on a consolidated basis in accordance with GAAP. "GAAP" means generally accepted accounting principles for the restaurant industry as in effect on the date of this Agreement, applied on a consistent basis throughout any given period of measurement. "Immediate Family" for each Minority Stockholder means such Minority Stockholder's spouse, parents, lineal descendants and siblings, and the spouses of any of the foregoing, and trusts solely for the benefit of one or more of the foregoing. "Member Representative" means Mei Ping Matsumura. "Pricing Fiscal Year" means the Company's fiscal year ended next preceding July 1, 2005. "Put Price" means (A) Four and One-Half (4 1/2) times (B) the Company's Consolidated Cash Flow for the Pricing Fiscal Year, from which total is subtracted (C) the Amount of Company Debt, which total is divided by (D) the number of shares of Common Stock outstanding as at the date of such computation. -4- "Subsidiary" means any corporation of which more than 50% of the voting stock or any partnership, limited liability company or joint venture of which 50% of the voting stock or profit interests, is owned or Controlled, directly or indirectly, by the Company or one or more Subsidiaries of the Company or a combination thereof. "Transfer" means any transfer, sale, gift, assignment, or bequest whether or not voluntary or by action of law including, without limitation, any transfers in enforcement of liens or judgments, sheriff's sales and sales in bankruptcy. 2. Corporate Governance. The Company shall be managed by a Board -------------------- consisting of four (4) directors. For so long as Matsumura owns her shares of the Stock, she shall have the right to nominate one (1) of such directors, and BNC shall have the right to nominate the remaining three (3) directors. Each of BNC, Cutler and Matsumura agree, for itself and its successors and assigns, to vote as stockholders in any election of directors, for the persons nominated as set forth in the preceding sentence. 3. Put Option of Minority Stockholders and Call Option of BNC. ---------------------------------------------------------- 3.1 At any time during the period commencing July 1, 2005 and ending on September 30, 2005, the Minority Stockholders shall have a one-time option ("Put Option") to sell to BNC, and to cause BNC to purchase, all, but not less than all, of the Common Stock owned by the Minority Stockholders (including any transferees) in its entirety. Such option shall be exercised by delivering to BNC a written notice (the "Put Notice") of exercise signed by all Minority Stockholders. 3.2 The purchase price for each share of Common Stock being sold by the Minority Stockholders pursuant to Section 3.1 shall be the Put Price. -5- 3.3 The closing of the sale of shares of Common Stock by the Minority Stockholders in consequence of the exercise of the Put Option shall take place at the offices of the Company or such other place as BNC shall elect at a date selected by BNC, which is not more than 15 days after the Put Price is determined and the Put Price shall be paid by BNC in cash on closing. 3.4 Provided the Minority Stockholders shall not have exercised their Put Option pursuant to the provisions of Section 3.1 hereof, BNC shall have a one-time option ("Call Option") exercisable commencing October 1, 2005 and ending December 31, 2005 to purchase all, but not less than all, of the Common Stock owned by the Minority Stockholders (including any transferees) in its entirety. Such option shall be exercised by delivering to the Member Representative a written notice (the "Call Notice") of exercise signed by BNC. 3.5 The purchase price for each share of Common Stock being purchased by BNC pursuant to Section 3.4 shall be the Call Price. 3.6 The closing of the purchase of shares of Common Stock owned by the Minority Stockholders by BNC in consequence of the exercise of the Call Option shall take place at the offices of the Company or such other place as BNC shall elect at a date selected by BNC, which is not more than fifteen (15) days after the Call Price is determined, and the Call Price shall be paid by BNC in cash on Closing. 3.7 The calculation of Consolidated Cash Flow of the Company shall be made in accordance with GAAP and the books and records of the Company's (and its subsidiaries) business shall be maintained in such a manner as to allow for such computation to be fairly determined. 3.8 Purchaser will deliver its calculation of Consolidated Cash Flow of the company to the Member Representative within seventy-five (75) days after the end of the Pricing -6- Fiscal Year. The Member Representative shall have ten (10) business days following delivery of the calculation of Consolidated Cash Flow for Pricing Fiscal Year to object to such calculation and the Member Representative will have access to BNC's work papers used in connection with the determination of Consolidated Cash Flow. If the Member Representative does not timely object, she will be deemed to have accepted such calculation. If the Member Representative does timely object, BNC and the Member Representative shall promptly commence good faith negotiations with the view to resolving such dispute or controversy, provided that, if such disputed controversy shall not have been resolved by - ------------- mutual agreement of the parties or their respective accountants within thirty (30) days after BNC's receipt of the Member Representative Notice of Objection, then either Purchaser or the Member's Representative shall have the right to submit the dispute to arbitration conducted in accordance with the Commercial Arbitration Rules or then existing rules for commercial arbitration of the American Arbitration Association. The arbitration shall be held in the City of New York before a single arbitrator who shall be selected by mutual agreement of the parties from among a list of seven potential arbitrators provided by the American Arbitration Association. If the parties cannot agree on an arbitrator from this first list, the parties hereto shall select an arbitrator for such arbitration from the second list of seven potential arbitrators provided by the American Arbitration Association with the Member Representative, on the one hand, and BNC, on the other, alternatively striking names, with the last name remaining to be the arbitrator so selected. The arbitration shall be binding and conclusive as between Purchaser and the Member Representative, absent fraud or manifest error. Each party shall bear its own fees and expenses in connection with any such arbitration and shall be responsible for paying one-half of the fees and expenses charged by the arbitrators. -7- 3.9 In exercising the Put Option set forth herein or in accepting payment for their Common Stock as a result of the exercise by BNC of the Call Option, each Minority Stockholder shall be deemed to have represented and warranted to BNC that such Minority Stockholder owns good title to the shares being sold free and clear of any and all liens, encumbrances and other rights, that such Minority Stockholder has the authority, power and capability to effect such sale and that after payment for such shares, and that BNC will have good and marketable title to said shares. 3.10 The Minority Stockholders acknowledge that BNC and its Affiliates presently serve sushi in the Benihana restaurants and operate separate sushi restaurants presently called "Sushi Doraku" and that these operations may be developed further and not included in the Company's business. 4. Restrictions On Transfer; Legends. --------------------------------- 4.1 Each of the Minority Stockholders agrees not to make any voluntary Transfer of the Common Stock owned by such Minority Stockholder without the written consent of BNC or as otherwise provided herein, except that such Minority Stockholder may make a voluntary Transfer by gift to a member of such Minority Stockholder's Immediate Family, provided that the recipient of such Transfer agrees in a writing (which is satisfactory in form and substance to BNC) to be bound by this Agreement with respect to such shares as if a signatory hereto. 4.2 In the event that any shares of Common Stock are Transferred involuntarily, or Transferred in violation of this Agreement, such Transfer will give to BNC the right, exercisable by written notice to the record owner of such shares, to purchase the shares so Transferred at a purchase price equal to the book value of such shares determined from the Company's financial statements as of the end of the Company's fiscal year preceding such Transfer. Such right shall be exercisable for three (3) years after BNC receives notice of any Transfer. -8- 4.3 Each certificate representing shares of Common Stock shall be stamped with a legend as follows: "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SHARES DESCRIBED IN AND SUBJECT TO A STOCKHOLDERS' AGREEMENT (THE "AGREEMENT"), DATED AS OF DECEMBER __, 1999, A COPY OF WHICH IS ON FILE AT THE OFFICE OF THE CORPORATION. SUCH AGREEMENT PROVIDES, AMONG OTHER THINGS, FOR CERTAIN RESTRICTIONS ON THE SALE, TRANSFER, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION OF THE SHARES REPRESENTED BY THIS CERTIFICATE, AND FOR CERTAIN RIGHTS OF THE CORPORATION OR OTHERS TO PURCHASE THE SHARES REPRESENTED BY THIS CERTIFICATE. THE CORPORATION WILL FURNISH TO THE OWNER OF THE SHARES REPRESENTED BY THIS CERTIFICATE UPON REQUEST, WITHOUT CHARGE, A COPY OF SUCH AGREEMENT." THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION IS NOT REQUIRED BY SAID ACT OR STATE LAWS. 5. Drag Along; Come Along. ---------------------- 5.1 As used in this Agreement, the term "Sale of Control Transaction" means any sale or transfer of Stock by BNC (including in such term for all purposes of this Section 5, the successors , assigns and Affiliates of BNC), or any sale and issuance of Common Stock by the Company, or any merger, consolidation or other corporate transaction which would result in BNC -9- and/or its affiliates beneficially owning less than fifty (50%) percent of the combined voting power of all shares of the capital stock of the Company entitled to vote generally in the election of directors of the Company. 5.2 BNC shall not enter into or complete any Sale of Control Transaction unless the Minority Stockholders are given the opportunity to participate therein (i.e., to sell for the same consideration and on the same terms as are applicable to the sale of shares of Stock owned by BNC, the same percentage of the shares of Stock beneficially owned by each Minority Stockholder as equals the percentage of the total number of shares of Stock owned by BNC which is to be sold by BNC in the Sale of Control Transaction). In addition, BNC shall have the right to require that each Minority Stockholder participate in the Sale of Control Transaction, and the Minority Stockholders agree to be bound to participate in such Sale of Control Transaction. 5.3 BNC shall give each Minority Stockholder written notice of any proposed Sale of Control Transaction (the "Sale Notice") at least fifteen (15) business days prior to the closing thereof. The Sale Notice shall contain a description of the proposed Sale of Control Transaction and the terms and conditions thereof, including a description of the consideration to be received by BNC for each share of Stock being sold by BNC in the Sale of Control Transaction, and shall state whether BNC is requiring the Minority Stockholders to participate in the Transaction. If the Sale of Control Notice does not state that the Minority Stockholders are required to participate in the Sale of Control Transaction, each Minority Stockholder shall nonetheless have the right to elect to do so by giving written notice of its election to do so to BNC not later than ten (10) days after the giving of the Sale of Control Notice. 6. Termination Of This Agreement. ----------------------------- -10- This Agreement shall terminate and be of no further force and effect upon the first to happen of the following: (i) Voluntary or involuntary dissolution and liquidation of the Company; (ii) The sale by the Company of any class of common shares of the Company for cash in a public offering registered under the Securities Act of 1933; (iii) The occurrence of a Sale of Control Transaction; or (iv) September 1, 2024. 7. Specific Performance. -------------------- Because the Common Stock will be closely held and the market therefor will be limited, the parties mutually acknowledge that irreparable injury would result if this Agreement were not performed according to its terms. Therefore, the parties acknowledge and agree that the respective rights and obligation hereunder shall be specifically enforceable in a court of equity by a decree of specific performance and appropriate injunctive relief may be applied for an granted in connection therewith, without requiring the posting of any bond or other security therefor and without requiring any showing of actual damage, or of likelihood or imminence of actual damage, or that monetary damages would not provide an adequate remedy. Any such equitable remedy shall be cumulative and not exclusive, and shall be in addition to any other remedies (including, without limitation, monetary damages for breach of contract) which any party may have under this Agreement or otherwise. -11- 8. General. ------- 8.1 Binding Nature. This Agreement shall be binding upon and -------------- inure to the benefit of the parties hereto and their respective heirs, executors, administrators, personal representatives and permitted successors and assigns, and shall be binding upon any person (including any corporation, association or other legal entity) to whom any shares of Common Stock are transferred (even if in violation of the provisions of this Agreement) and the heirs, executors, administrators and assigns of such person. 8.2 Entire Understanding. This Agreement, together with the Sale -------------------- Agreement, sets forth the entire understanding of the parties hereto with respect to the subject matter hereof and thereof and supersedes all prior agreements, arrangements and understandings, written and oral, among the parties hereto as to such subject matter. Except as specifically set forth herein, no party hereto has made or relied upon any representations, warranties, covenants or understandings of any other party hereto in entering into this Agreement. 8.3 No Waiver. The waiver by any party hereof of any breach of --------- any provision of this Agreement shall not constitute or operate as a waiver of any other breach of such provision or of any other provisions hereof, nor shall any failure to enforce any provision hereof operate as a waiver of such provision of any other provision hereof. 8.4 Other Documents. Each party hereto agrees to execute such --------------- further instruments and documents, and to take such further actions, as any other such party may reasonably require in order to effectuate the terms and purposes of this Agreement and the transactions contemplated hereby. -12- 8.5 Amendment. This Agreement may not be amended, nor may any --------- provisions hereof be modified or waived, except by an instrument duly signed by or on behalf of each party hereof. 8.6 Notices. All notices, demands and other communication ------- required or permitted to be given or made hereunder shall be deemed sufficiently given or made if sent by registered or certified mail, postage prepaid, return receipt requested, by hand delivery or by facsimile transmission, each party at the address set forth as follows: If to BNC or the Company: c/o Benihana Inc. 8685 Northwest 53/rd/ Terrace Miami, Florida 33166 Attn: Joel A. Schwartz, President If to Cutler: Ms Alice Cutler c/o Alicart, Inc., 118 West 27/th/ Street, 10/th/ Floor New York, New York 10001. If to Matsumura: Ms. Mei Ping Matsumura 8 Jean Drive Englewood Cliffs, New Jersey 07632 or at such other address or addresses as any party hereto shall designate by written notice to the other parties hereto, given in accordance with the provisions of this Section. Copies of all notices and other communications being sent to the Company or BNC shall be sent to Dornbush Mensch Mandelstam & Schaeffer, LLP, 747 Third Avenue, New York, New York 10017, Attention: Darwin C. Dornbush, and copies of all notices and other communications being sent to the Minority Stockholders shall be sent to Michael L. Paikin, Esq., 551 Fifth Avenue, New York, New York 10017. Except as otherwise expressly provided herein, any such notice, demand or other communication shall be deemed to have been duly given or made as of the date so mailed, as evidenced by the postmark on the envelope or the notation of time and date on the facsimile or hand -13- delivery receipt, as the case may be. Any such communication delivered otherwise than as provided above, and any notice of change of address hereunder, shall be deemed given or made only at the time actually received by the person to whom it is addressed. 8.7 Governing Law. This Agreement shall in all events be ------------- governed by and construed in accordance with the internal laws of the State of New York without reference to the principles of conflict of laws, irrespective of the particular forum in which an action may be brought to enforce or secure an interpretation of this Agreement and irrespective of the principal place of business, residence or domicile of any party hereto. 8.8 Headings. Section headings contained herein are inserted -------- for convenience of reference only and are not in any way intended to affect the meaning or interpretation of this Agreement. 8.9 Execution In Counterparts. This Agreement may be executed ------------------------- in any number of counterparts, each of which shall be deemed an original but all of which taken together shall constitute on and the same documents, and any party hereto may execute this Agreement by signing any such counterpart. 8.10 Reclassification, etc. The provisions of this Agreement --------------------- shall apply to any capital stock of the Company as may hereafter be issued or transferred to any Minority Stockholder in respect of his shares as a consequence of any exchange or reclassification of the Common Stock, corporate reorganization, recapitalization, consolidation or merger, shares split or shares dividend, or other like event. All references to shares of Common Stock will be deemed amended and adjusted to equitably adjust for any such exchange, reclassification, consolidation, merger, shares dividend, shares split or other like event. -14- 8.11 Gender. As used in this Agreement, words in the masculine ------ gender include the feminine and neuter genders, and vice versa, where the context so requires. 8.12 No Right Of Employment. No right of employment of any party ---------------------- hereto is implied either by ownership of shares of Common Stock or by any provision in this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement as of the day and year first above written. BENIHANA NATIONAL CORP. By: /s/ Joel A. Schwartz ------------------------- President -15- HARU HOLDING CORP. By: /s/ Joel A. Schwartz ---------------------------------- Joel Schwartz, President /s/ Mei Ping Matsumura ------------------------------------- Mei Ping Matsumura ESTATE OF ARTHUR CUTLER By: /s/ Alice Cutler ---------------------------------- Alice Cutler, Executrix -16- EX-10.19 6 dex1019.txt AMENDMENT NO. 1 DATED SEPTEMBER 1, 1998 Exhibit 10.19 AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT Amendment No. 2 dated as of September 1, 1998 to Employment Agreement dated January 1, 1995 and amended December 11, 1997 (as amended, the "Agreement") by and between Benihana Inc. and Michael R. Burris. Unless otherwise defined herein, capitalized terms shall have the respective meanings assigned to them in the Agreement. The parties agree that the Agreement shall be amended as follows: 1. The Agreement is amended by revising Section 1 of the Agreement as follows: 1.1. Subject to the terms and provisions of this Agreement, the Company will continue to employ the Employee for an extended term continuing until October 31, 2001 (the "Employment Period"). 2. The Agreement is amended by adding the following as Section 8: 8. Change In Control. ----------------- 8.1. In the event at any time after the Effective Date, a majority of the Board of Directors is composed of persons who are not "Continuing Directors", as hereinafter defined, and Employee's employment is terminated by the Company other than for one of the reasons set forth in Section 4 hereof, Employee shall not be obligated to seek employment to mitigate his damages, if any, to which he may be entitled for breach of this Agreement. 8.2 "Continuing Directors" shall mean (i) the directors of the Company at the close of business on September 1, 1998, and (ii) any person who was or is recommended to (A) succeed a Continuing Director or (B) become a director as a result of an increase in the size of the Board, in each case, by a majority of the Continuing Directors then on the Board. Except as modified herein, the Agreement remains in full force and effect in accordance with its terms without revocation or change. IN WITNESS WHEREOF, the undersigned have executed this Amendment No. 2 as of the date and year first above written. BENIHANA INC. By: /s/ Joel A. Schwartz -------------------------------- Joel A. Schwartz, President /s/ Michael R. Burris -------------------------------- Michael R. Burris -2- EX-23.01 7 dex2301.txt CONSENT OF DELOITTE & TOUCHE LLP. EXHIBIT 23.01 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Benihana Inc. on Form S-2 of our report dated May 18, 2001, incorporated by reference in the Annual Report on Form 10-K/A of Benihana Inc. for the year ended April 1, 2001 and to the reference to us under the headings "Summary Financial Information" and "Experts" in the Prospectus, which is part of this Registration Statement. Deloitte & Touche LLP Certified Public Accountants Miami, Florida September 4, 2001 -----END PRIVACY-ENHANCED MESSAGE-----