NONQUALIFIED STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (the "AGREEMENT") is made between XXXX'X
RESTAURANT GROUP, INC., a Delaware corporation (the "COMPANY"), and Xxxxx Xxxxxx
(the "EXECUTIVE").
The Company considers that its interests will be served by granting the
Executive an option to purchase shares of common stock of the Company as an
inducement for the Executive's effective performance of services for the
Company. The Board of Directors of the Company (the "BOARD") has adopted, and
the stockholders have approved, the 1995 Stock Option Plan of Furr's/Xxxxxx'x
Incorporated (the "PLAN"), a copy of which is attached hereto and incorporated
by reference herein. The Executive has been designated as a participant in the
Plan.
IT IS AGREED:
1. Subject to the terms of the Plan, on October 9, 2001 (the "DATE OF
GRANT"), the Company hereby grants to the Executive an option (the "OPTION")
to purchase 400,000 shares of the common stock of the Company, $.01 par value
per share, at a price of $3.00 per share as to 200,000 shares ("TRANCHE A")
and at a price of $3.75 per share as to 200,000 shares ("TRANCHE B"), such
number of shares and exercise prices being subject to adjustment as provided
in the Plan (the "OPTION PRICE"). The Option is exercisable according to the
following schedule:
(a) On the day after the first anniversary of the Date of Grant,
the Option may be exercised with respect to up to ? of the shares subject to
the Option included in Tranche A and ? of the shares subject to the Option
included in Tranche B; and
(b) After each succeeding anniversary of the Date of Grant, the
Option may be exercised with respect to up to an additional ? of the shares
subject to the Option in each of Tranche A and Tranche B, so that after the
expiration of the third anniversary of the Date of Grant the Option will have
been vested in full; and
(c) to the extent not exercised, installments will be cumulative,
and may be exercised in whole or in part; and
(d) the Option will become fully vested and exercisable upon the
termination of the Executive's status as the Company's Chief Executive Officer
at any time within twelve months following the occurrence of a "change of
control," other than a termination of Executive's employment by the Company
for "cause" or by the Executive other than for "good reason," as such terms
are defined in the Employment Agreement between Executive and the Company of
even date herewith.
A "CHANGE OF CONTROL" of the Company will be deemed to exist upon the
occurrence of any of the following events, if, as a result of such event, or
within twelve months thereafter, the
individuals who constituted the Board immediately prior to such event no
longer constitute a majority of the members of the Board:
(i) The Company is merged, consolidated or reorganized (each a
"COMBINATION") into or with another corporation or other legal person and as a
result of such merger, consolidation or reorganization less than 50% of the
voting securities of the remaining corporation or legal person or its ultimate
parent immediately after such transaction is available to be received by all
shareholders of the Company on a pro rata basis and is actually received in
respect of or exchange for voting securities of the Company pursuant to such
transactions, excluding any Combination with any person or group, or an
affiliate of a person or group, owning at least ten percent (10%) of the
common stock of the Company as of October 1, 2001 (a "RELATED PARTY").
(ii) The Company sells all or substantially all of its assets to
any other corporation or other legal person (other than a Related Party) and
as a result of such sale less than 50% of the combined voting securities of
such corporation or legal person or its ultimate parent immediately after such
transaction is available to be received by all shareholders of the Company on
a pro rata basis and is actually received in respect of or exchange for voting
securities of the Company pursuant to such sale; or
(iii) Any person or group (including any "person" or "group" as
such terms are used in Section 13 or Section 14 of the Securities Exchange Act
of 1934 and the regulations thereunder (the "EXCHANGE ACT")), excluding from
such "group" any Related Party, has become the beneficial owner (as the term
"beneficial owner" is defined under the Exchange Act) of voting securities
which, when added to any voting securities already owned by such person, would
represent in the aggregate 50% or more of the then outstanding voting
securities of the Company. "Voting securities" means common stock and any
other security which carries, or which is at the time of determination
convertible into or exercisable to acquire a security that carries, the right
to vote upon the election of the board of directors of the Company, with the
number of such voting securities to be determined by reference to the number
of votes that the holder could cast in the election of directors on a fully
converted or exercised basis.
Notwithstanding paragraphs (a) and (b) of this Section 1, the foregoing
vesting schedule can be accelerated by action of the board of directors of the
Company in its discretion.
2. The Option granted to the Executive under this Agreement will not be
transferable or assignable by the Executive other than by will or the laws of
descent and distribution, and will be exercisable during the Executive's
lifetime only by the Executive.
3. The Option, to the extent such rights will not previously have been
exercised, will terminate and become null and void (except in the case of the
occurrence of a Change of Control as provided below) on the earliest of: (a)
the last day within the ten year period commencing on the Date of Grant (the
"EXPIRATION DATE"); (b) the date that is 90 days after the date of termination
of the Executive's service as Chief Executive Officer of the Company for any
reason other than death or disability, as defined in the plan ("DISABILITY");
(c) the date that is 180 days after the date
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of the termination of the Executive's service as Chief Executive Officer of
the Company because of death or Disability. In the event of the termination of
the Executive's service as Chief Executive Officer of the Company for any
reason prior to the Expiration Date, the Option will not continue to vest
after such termination; provided that if a Change of Control of the Company
occurs within 180 days after the date of termination of the Executive's
employment by the Company without "cause," as defined in Executive's
Employment Agreement of even date, or within 180 days after the date of
termination of the Executive's employment by Executive for "good reason," as
defined in Executive's Employment Agreement of even date, then the Option will
not be deemed to have terminated, and will continue to vest, and will be
exercisable, until the date that is ten (10) business days after the date of
the Change of Control of the Company. Upon the death of the Executive, the
Executive's executors, administrators or any person or persons to whom this
Option may be transferred by will or by the laws of descent and distribution,
will have the right to exercise the Option with respect to the number of
shares that the Executive would have been entitled to exercise if the
Executive were still alive.
4. This Agreement may not be changed or terminated orally but only by an
agreement in writing signed by the party against whom enforcement of any such
change or termination is sought.
5. The Company will not be deemed by the grant of the Option (as
distinguished from a separate employment agreement, if any) to be required to
continue the Executive's service or to nominate the Executive for election as
a director.
6. The Executive will not have any rights as a stockholder with respect
to any shares covered by the Option until the date of the issuance of the
stock certificate or certificates to the Executive for such shares following
exercise of the Option pursuant to its terms and conditions and payment for
the shares. No adjustment will be made for dividends or other rights for which
the record date is prior to the date such certificate or certificates are
issued.
7. The Executive consents to the placing on the certificate for any
shares covered by the Option of an appropriate legend restricting resale or
other transfer of such shares except in accordance with the Securities Act of
1933 and all applicable rules thereunder.
8. In the event of any difference of opinion concerning the meaning or
effect of the Plan or this Agreement, such difference will be resolved by the
committee referred to in the Plan.
9. The validity, construction and performance of this agreement will be
governed by the laws of the State of Delaware. Any invalidity of any provision
of this Agreement will not affect the validity of any other provision.
10. All offers, notices, demands, requests, acceptances or other
communications hereunder will be in writing and will be deemed to have been
duly made or given if mailed by registered or certified mail, return receipt
requested. Any such notice mailed to the Company must be addressed to its
principal office, and any notice mailed to the Executive must be addressed to
the Executive's residence address as it appears on the books and records of
the Company or to such other address as either party may hereafter designate
in writing to the other.
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11. This Agreement will, except as herein stated to the contrary, inure
to the benefit of and bind the legal representatives, successors and assigns
of the parties hereto.
12. This Option is a nonqualified stock option and is not intended to be
governed by section 422 of the Internal Revenue Code of 1986, as amended.
13. In accepting this Option, the Executive accepts and agrees to be
bound by all the terms and conditions of the Plan that pertain to nonqualified
stock options granted under the Plan.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
to be effective as of the Date of Grant.
THE COMPANY:
XXXX'X RESTAURANT GROUP, INC.
By:
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Xxxxxx Xxxxxx, Chairman of the Board
EXECUTIVE:
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Xxxxx Xxxxxx
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