EXHIBIT 1
Stock Option Agreement
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STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of the 6th day of April, 1994 (the "Grant
Date") by and between XXXXXX X. XXXXXX, ("Xxxxxx") and XXXXXXX X. XXXXX
("Optionee");
W I T N E S S E T H:
RECITALS
A. In recognition of Optionee's past services benefitting Xxxxxx,
Xxxxxx hereby grants Optionee an option to purchase certain shares of common
stock of Silver Diner Development, Inc. (the "Company") owned by Xxxxxx on the
terms and conditions set forth below.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set
forth in this Agreement Xxxxxx hereby grants to Optionee, as of the Grant Date,
a stock option (the "Option") to purchase up to 600 shares (the "Optioned
Shares") of the Common Stock, par value $.10 per share, of the Company ("Common
Stock") from time to time during the option term at the option price of $120 per
share (the "Option Price").
2. Option Term. The specified term of the Option shall be the period
commencing on the Grant Date and, unless earlier terminated as provided herein,
terminating at 5:00 P.M., Washington, D.C. time on the day immediately preceding
the tenth (10th) anniversary of the Grant Date (the "Expiration Time"). Upon the
expiration of the option term or upon its earlier termination as provied herein,
the Option shall cease to be exercisable and have no further force or effect
whatsoever.
3. Option Nontransferable; Exception. The Option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution. If Optionee shall die, all Options may, unless earlier
terminated in accordance with their terms, be exercised by the personal
representative of the Optionee's estate or by a person who acquired the right to
exercise such Option by bequest or inheritance or otherwise by reason of death
of the Optionee, at any time within nine (9) months after the date of death of
the Optionee, but in no event later than the date of expiration of the Option,
provided that during the lifetime of the Optionee any option granted to him may
be exercised only by the Optionee.
4. Exercisability. The Option may be exercised in whole at any
time or in part from time to time until the Expiration Time.
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5. Manner of Exercising Option.
(a) In order to exercise the Option with respect to all or any
part of the Optioned Shares for which the Option is at the time exercisable,
Optionee (or in the case of exercise after Optionee's death, the Optionee's
executor, administrator, heir or legatee, as the case may be) must take the
following actions:
(i) Provide Xxxxxx with written notice of such
exercise, specifying the number of Optioned Shares with respect to
which the Option is being exercised;
(ii) Pay the Option Price for the Optioned Shares
being purchased in cash or by check payable to the order of Xxxxxx;
(iii) Furnish Xxxxxx appropriate documentation that
the person or persons exercising the Option, if other than Optionee,
have the right to exercise the Option on behalf of and for Optionee.
The Exercise Date shall be the date on which Xxxxxx receives written notice of
the exercise of the Option together with payment of the Option Price for the
Optioned Shares being purchased.
6. Successors and Assigns. Except to the extent otherwise
provided in Paragraph 3 hereof, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs,
devisees, legal representatives and assigns of Optionee and Xxxxxx.
7. Governing Law. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Virginia.
8. Warranties and Obligations of Optionee.
(a) Optionee represents, warrants and agrees that Optionee
will acquire and hold the shares purchased on exercise of the Option for his own
account for investment and not with the view to the resale or distribution
thereof, except for resales or distributions in accordance with federal and
state securities laws, and that Optionee will not, at any time or times,
directly or indirectly, offer, sell, distribute, pledge, or otherwise grant a
security interest in or otherwise dispose of or transfer all, any portion of or
any interest in, any shares purchased on exercise of the Option (or solicit an
offer to buy, take in pledge or otherwise acquire or receive, all or any portion
thereof), except pursuant to either (i) a Registration Statement on an appro
priate form under the Securities Act of 1933, as amended (the "Act"), which
Registration Statement has become effect and is current with respect to the
shares being offered or sold, or (ii) a specific exemption from the registration
requirements of the Act, the availability of which exemption shall be the
subject matter of an opinion of counsel reasonably acceptable to Xxxxxx
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that no registration under the Act is required with respect to such offer, sale,
distribution, pledge, grant or other disposition or transfer.
(b) Optionee acknowledges that Optionee understands that (i)
the Option has been granted and the shares to be sold to Optionee upon exercise
of the Option will be sold to Optionee pursuant to exemptions from the
registration requirements in the Act and in this connection Xxxxxx is relying in
part on the representations set forth in this Agreement; (ii) such shares must
be held indefinitely unless they are registered or an exemption from
registration becomes available under the Act and the securities laws of any
state; (iii) neither Xxxxxx nor the Company is under any obligation to register
such shares or to comply with any exemption from such registration, including
those portions of Rule 144 under the Act to be complied with by the issuer; (iv)
if Rule 144 is available for sales of such shares, and there is no assurance
that Optionee will ever be able to sell under Rule 144, such sales in reliance
upon Rule 144 may be made only after the shares have been held for the requisite
holding period and then only in limited amounts in accordance with the
conditions of that Rule, all of which must be met; (v) an investment in the
Company involves a high degree of risk; and (vi) Optionee must, therefore,
continue to bear the economic risks of the investment in such shares for an
indefinite period of time after the exercise of the Option.
(c) Optionee acknowledges that Optionee has received and
reviewed the brief description of the Common Stock of the Company provided in
Exhibit A attached hereto and certain financial and other information with
respect to the Company. Optionee further acknowledges that Optionee has had the
opportunity to ask questions of, and receive answers from, Xxxxxx concerning all
material information concerning the Company.
(d) Optionee acknowledges that Optionee has the capacity to
protect Optionee's own interests in connection with the exercise of the Option,
and to evaluate the merits and risks of the prospective investment, by reason of
Optionee's business or financial experience or the business or financial
experience of Optionee's professional advisors who are unaffiliated with and who
are not compensated by the Company or any affiliate or selling agent of the
Company, directly or indirectly.
(e) Immediately prior to the exercise of all or any portion of
the Option, Optionee shall deliver to Xxxxxx a signed statement, in a form
satisfactory to Xxxxxx, confirming that each of the representations, warranties,
acknowledgments and agreements contained in this Paragraph 8 is true as to
Optionee as of the date of such exercise. Such statement will be satisfactory to
Xxxxxx if made in the form of Exhibit B attached hereto.
(f) Optionee understands that all certificates representing
shares transferred pursuant to this Agreement, unless made pursuant to an
appropriate Registration Statement under the Act, will bear the following
restrictive legend:
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The transfer of the common stock represented by this certificate is
restricted under, and subject to the terms of, an Investor and Employee
Stockholders Agreement dated November 21, 1990, to which the
Corporation is a party and a copy of which is on file at the
Corporation's office.
The securities represented by this certificate have been issued
pursuant to a claim of exemption from the registration or qualification
provision of federal and state securities laws and may not be sold or
transferred without compliance with the registration or qualification
provisions of applicable federal and state securities laws or
applicable exemptions therefrom.
9. Effect of Certain Changes.
(a) If during the Option Term there is any change in the
number of issued shares of Common Stock through the declaration of stock
dividends, recapitalization resulting in stock splits, or combinations or
exchanges of such shares, then the number of Optioned Shares and the Option
Price shall be proportionately adjusted to reflect any increase or decrease in
the number of issued shares of Common Stock; provided, however, that any
fractional shares resulting from such adjustment shall be eliminated.
(b) In the event of (i) the proposed dissolution or
liquidation of the Company, (ii) any corporate separation or division, including
but not limited to, a split-up, a split-off or spin-off, (iii) the Company
executes a definitive agreement to merge or consolidate with or into another
corporation or to sell or otherwise dispose of substantially all of its assets,
(iv) more than 50% of the Company's then outstanding voting stock is acquired by
any person or group or (v) Xxxxxx ceases to be president of the Company, then
Xxxxxx shall provide Optionee with no less than thirty (30) days' written notice
of such event and Optionee shall have the right, during such period to exercise
the Option as to all or any part of the shares of Common Stock covered thereby.
(c) Paragraphs (a) and (b) of this Section 9 shall not apply
to a merger or consolidation in which the Company is the surviving corporation
and shares of Common Stock are not converted into or exchanged for stock,
securities or any other corporation, cash or any other thing of value.
10. Restrictions on Optioned Shares. Optionee understands and agrees
that any Optioned Shares acquired by Optionee or his or her successor pursuant
to this Agreement shall be held subject to the terms of the Investor and
Employee Stockholders' Agreement, dated November 21, 1990, by and among the
Company, Xxxxxx X. Xxxxxx, Ype Xxxxxx, Optionee and certain other investor
shareholders or any successor agreement thereto to which Optionee is a party.
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IN WITNESS WHEREOF, Xxxxxx and Optionee have each executed this
Agreement in duplicate as of the day and year first above written.
---------------------------------
Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxxx X. Xxxxx, Optionee
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EXHIBIT A
DESCRIPTION OF COMMON STOCK OF SILVER DINER DEVELOPMENT, INC.
The authorized Common Stock of Silver Diner Development, Inc. consists of
1,000,000 shares of Common Stock, par value $.10 per share, of which 600 shares
are being offered by this grant, and of which 149,478.422 are outstanding on the
date of this grant. All shares currently outstanding are, and the shares offered
hereby when issued and paid for in accordance with the Agreement to which this
Exhibit A is attached will be, fully paid and non-assessable and are entitled to
participate ratably in any distribution of assets to stockholders in liquidation
and in dividends as may be declared by the Board of Directors out of funds
legally available therefor. Holders of Common Stock do not have redemption
rights, conversion rights or preemptive or other subscription rights. Holders of
Common Stock do not have cumulative voting rights. Each share of Common Stock
has one vote on all matter on which shareholders are entitled to vote, including
the election of directors. The Optioned Shares will be subject to the terms of
the Investor and Employee Stockholders' Agreement, dated November 21, 1990, by
and among the Company, Xxxxxx X. Xxxxxx, Ype Xxxxxx, Optionee and certain other
investor shareholders or any successor agreement thereto to which Optionee is a
party.
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EXHIBIT B
Xxxxxx X. Xxxxxx
c/o Silver Diner Development, Inc.
00000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Xx. Xxxxxx:
I am the holder of an option ("Option") granted by Xxxxxx X. Xxxxxx
("Xxxxxx") on April 6, 1994 to purchase up to an aggregate of 600 shares
(subject to anti-dilution adjustments) of the Common Stock of Silver Diner
Development, Inc., a Virginia corporation (the "Company"), pursuant to the terms
of a Stock Option Agreement dated as of April 6, 1994. I hereby exercise my
Option with respect to _________ shares of Common Stock subject to the Option at
the price of $120 per share as provided for in the Agreement, and I present
herewith funds payable to the order of Xxxxxx in the amount of $__________,
which represents the full purchase price for the number of shares purchased upon
this exercise.
I hereby represent and warrant that I am purchasing the foregoing
shares for my own account for investment and not with a view to the resale or
distribution thereof except for resales or distributions in accordance with
federal and state securities laws, and that I shall neither offer nor sell any
or all of such shares except pursuant to either (i) a Registration Statement on
an appropriate form under the Securities Act of 1933 (the "Act"), which
Registration Statement has been effective and is current with respect to the
shares being offered or sold, or (ii) a specific exemption from the registration
requirements of the Act. I understand and agree that such shares must be held
indefinitely unless they are registered or an exemption from registration
becomes available under the Act and the Securities laws of any state. I further
represent and warrant that I have received and reviewed a brief description of
the Common Stock of the Company and certain financial and other information with
respect to the Company. I further represent and warrant that I have had the
opportunity to ask questions of, and to receive answers from Xxxxxx concerning
all material information concerning the Company and the terms and conditions of
the transaction in which I am acquiring the shares of Common Stock.
I hereby represent and warrant that I have the capacity to protect my
own interests in connection with the exercise of this option, and to evaluate
the merits and risks of this investment, by reason of my business or financial
experience or the business or financial experience of my professional advisors,
who are unaffiliated with and who are not compensated by the Company or any
affiliate or selling agent of the Company, directly or indirectly.
I understand that the foregoing shares shall be held subject to the
terms of the Investor and Employee Stockholders' Agreement, dated November 21,
1990, by and among the Company,
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Xxxxxx X. Xxxxxx, Ype Xxxxxx and certain other investor shareholders or any
successor agreement thereto to which I am a party (the "Investor and Employee
Stockholders' Agreement"). The certificates evidencing the shares purchased upon
this exercise should be registered in my name and delivered to me. I understand
that such certificates will bear the legend required by the Investor and
Employee Stockholders' Agreement.
Very truly yours,
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