EXHIBIT 10.2
FORM OF
CKE RESTAURANTS, INC.
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): [ ] INCENTIVE [ ] NONQUALIFIED
This Stock Option Agreement (the "Agreement") is entered into as of
____________, by and between CKE Restaurants, Inc., a Delaware corporation (the
"Company"), and ____________________________________ (the "Optionee") pursuant
to the Company's 2005 Omnibus Incentive Compensation Plan (the "Plan"). Any
capitalized term not defined herein shall have the same meaning ascribed to it
in the Plan.
1. GRANT OF OPTION. The Company hereby grants to Optionee an option (the
"Option") to purchase all or any portion of a total of ________________________
(_______) shares (the "Shares") of the Common Stock of the Company at a purchase
price of ________________________ ($_____) per share (the "Exercise Price"),
subject to the terms and conditions set forth herein and the provisions of the
Plan. If the box marked "Incentive" above is checked, then this Option is
intended to qualify as an "incentive stock option" as defined in Section 422 of
the Internal Revenue Code of l986, as amended (the "Code"). If this Option fails
in whole or in part to qualify as an incentive stock option, or if the box
marked "Nonqualified" is checked, then this Option shall to that extent
constitute a nonqualified stock option.
2. VESTING OF OPTION. The right to exercise this Option shall vest in
installments, and this Option shall be exercisable from time to time in whole or
in part as to any vested installment ("Vested Shares"). [INSERT VESTING
SCHEDULE, EITHER TIME-BASED OR PERFORMANCE-BASED] such that 100% of the Shares
shall become Vested Shares on the third anniversary of the "Vesting Commencement
Date." For these purposes, the Vesting Commencement Date shall be
_______________.
No additional Shares shall vest after the date of termination of
Optionee's "Continuous Service" (as defined below), but this Option shall
continue to be exercisable in accordance with Section 3 hereof with respect to
that number of shares that have vested as of the date of termination of
Optionee's Continuous Service.
For purposes of this Agreement, the term "Continuous Service" means (i)
employment by either the Company or any parent or subsidiary corporation of the
Company, or by a corporation or a parent or subsidiary of a corporation issuing
or assuming a stock option in a transaction to which Section 424(a) of the Code
applies, which is uninterrupted except for vacations, illness (except for
permanent disability, as defined in Section 22(e)(3) of the Code), or leaves of
absence which are approved in writing by the Company or any of such other
employer corporations, if applicable, (ii) service as a member of the Board of
Directors of the Company until Optionee resigns, is removed from office, or
Optionee's term of office expires and he or she is not reelected, or (iii) so
long as Optionee is engaged as a Consultant or other Service Provider.
3. TERM OF OPTION. The right of the Optionee to exercise this Option shall
terminate upon the first to occur of the following:
(a) the expiration of ten (10) years from the date of this
Agreement;
(b) the expiration of twelve (12) months from the date of
termination of Optionee's Continuous Service if such termination is due to
Disability of the Optionee (as defined in Section 409A(a)(2)(C) of the Code);
(c) the expiration of eighteen (18) months from the date of
termination of Optionee's Continuous Service if such termination is due to
Optionee's death;
(d) the expiration of eighteen (18) months from the date of
termination of Optionee's Continuous Service if such termination occurred at a
time when Optionee is eligible to elect immediate commencement of retirement
benefits at a specified retirement age under a pension plan to which the Company
or any of its Affiliates had made contributions;
(e) the expiration of three (3) months from the date of termination
of Optionee's Continuous Service if such termination occurs for any reason other
than those listed above; or
(f) upon the consummation of a "Change in Control" (as defined in
Section 11.2(b) of the Plan), unless otherwise provided pursuant to Section 8
below.
4. EXERCISE OF OPTION. On or after the vesting of any portion of this
Option in accordance with Sections 2 or 8 hereof, and until termination of the
right to exercise this Option in accordance with Section 3 above, the portion of
this Option that has vested may be exercised in whole or in part by the Optionee
(or, after his or her death, by the person designated in Section 5 below) upon
delivery of the following to the Company at its principal executive offices:
(a) a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased (but no fractional Shares may
be purchased), with any partial exercise being deemed to cover first vested
Shares and then the earliest vesting installments of unvested Shares;
(b) a check or cash in the amount of the Exercise Price (or payment
of the Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time under the provisions of Section 6.6
of the Plan);
(c) a check or cash in the amount reasonably requested by the
Company to satisfy the Company's withholding obligations under federal, state or
other applicable tax laws with respect to the taxable income, if any, recognized
by the Optionee in connection with the exercise of this Option (unless the
Company and Optionee shall have made other arrangements for deductions or
withholding from Optionee's wages, bonus or other compensation payable to
Optionee, or by the withholding of Shares issuable upon exercise of this Option
or the delivery of Shares owned by the Optionee in accordance with Section 6.6
of the Plan, provided such arrangements satisfy the requirements of applicable
tax laws); and
(d) a letter, if requested by the Company, in such form and
substance as the Company may require, setting forth the investment intent of the
Optionee, or person designated in Section 5 below, as the case may be.
2
5. LIMITED TRANSFERABILITY; DEATH OF OPTIONEE. Except as provided in
Section 6.7 of the Plan, the rights of the Optionee under this Agreement may not
be assigned or transferred except by will or by the laws of descent and
distribution, and may be exercised during the lifetime of the Optionee only by
such Optionee. Any attempt to sell, pledge, assign, hypothecate, transfer or
dispose of this Option in contravention of this Agreement or the Plan shall be
void and shall have no effect. If the Optionee's Continuous Service terminates
as a result of his or her death, and provided Optionee's rights hereunder shall
have vested pursuant to Section 2 hereof, Optionee's legal representative, his
or her legatee, or the person who acquired the right to exercise this Option by
reason of the death of the Optionee (individually, a "Successor") shall succeed
to the Optionee's rights and obligations under this Agreement. After the death
of the Optionee, only a Successor may exercise this Option.
6. RECEIPT OF PLAN. Optionee acknowledges receipt of a copy of the Plan
and understands that all rights and obligations connected with this Option are
set forth in this Agreement and in the Plan.
7. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE. In the event that the
outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend or other change in the
capital structure of the Company, then appropriate adjustment shall be made by
the Administrator to the number of Shares subject to the unexercised portion of
this Option and to the Exercise Price per share, in order to preserve, as nearly
as practical, but not to increase, the benefits of the Optionee under this
Option, in accordance with the provisions of Section 4.3 of the Plan.
8. CHANGE IN CONTROL. In the event of a Change in Control (as defined in
Section 11.2(b) of the Plan):
(a) The right to exercise this Option shall accelerate automatically
and vest in full (notwithstanding the provisions of Section 2 above) effective
as of immediately prior to the occurrence of a Triggering Event (as defined
below) occurring within the twelve (12) month period beginning with the Change
in Control.
(b) For purposes of this Section 8, the following terms shall have
the meanings set forth below:
(i) "Triggering Event" shall mean (i) the termination of
Continuous Service of Optionee by the Company or an Affiliate (or any successor
thereof) other than on account of death, Disability or Cause, (ii) the
occurrence of a Constructive Termination or (iii) any failure by the Company (or
a successor entity) to assume, replace, convert or otherwise continue this
Option in connection with the Change in Control (or another corporate
transaction or other change effecting the Common Stock) on the same terms and
conditions as applied immediately prior to such transaction, except for
equitable adjustments to reflect changes in the Common Stock pursuant to Section
7 hereof and Section 4.3 of the Plan.
3
(ii) "Cause" shall mean a determination by the Committee that
Optionee (i) has been convicted of, or entered a plea of nolo contendere to, a
crime that constitutes a felony under Federal or state law, (ii) has engaged in
willful gross misconduct in the performance of the Optionee's duties to the
Company or an Affiliate or (iii) has committed a material breach of any written
agreement with the Company or any Affiliate with respect to confidentiality,
noncompetition, nonsolicitation or similar restrictive covenant. In the event
that the Optionee is a party to an employment agreement with the Company or any
Affiliate that defines a termination on account of "Cause" (or a term having
similar meaning), such definition shall apply as the definition of a termination
on account of "Cause" for purposes hereof, but only to the extent that such
definition provides the Optionee with greater rights. A termination on account
of Cause shall be communicated by written notice to the Optionee, and shall be
deemed to occur on the date such notice is delivered to the Optionee.
(iii) "Constructive Termination" shall mean a termination of
employment by Optionee within sixty (60) days following the occurrence of any
one or more of the following events without the Optionee's written consent (i)
any reduction in position, title (for Vice Presidents or above), overall
responsibilities, level of authority, level of reporting (for Vice Presidents or
above), base compensation, annual incentive compensation opportunity, aggregate
employee benefits or (ii) a request that Optionee's location of employment be
relocated by more than fifty (50) miles. In the event that the Optionee is a
party to an employment agreement with the Company or any Affiliate (or a
successor entity) that defines a termination on account of "Constructive
Termination," "Good Reason" or "Breach of Agreement" (or a term having a similar
meaning), such definition shall apply as the definition of "Constructive
Termination" for purposes hereof in lieu of the foregoing, but only to the
extent that such definition provides the Optionee with greater rights. A
Constructive Termination shall be communicated by written notice to the
Committee, and shall be deemed to occur on the date such notice is delivered to
the Committee, unless the circumstances giving rise to the Constructive
Termination are cured within five (5) days of such notice.
9. NO EMPLOYMENT CONTRACT CREATED. Neither the granting of this Option nor
the exercise hereof shall be construed as granting to the Optionee any right
with respect to continuance of employment by the Company or any Affiliate (or a
successor entity). The right of the Company or any Affiliate (or successor
entity) to terminate at will the Optionee's employment at any time (whether by
dismissal, discharge or otherwise), with or without cause, is specifically
reserved, subject to any written employment agreement which the Optionee may
otherwise have with the Company or any Affiliate (or a successor entity).
10. RIGHTS AS STOCKHOLDER. The Optionee (or transferee of this option by
will or by the laws of descent and distribution) shall have no rights as a
stockholder with respect to any Shares covered by this Option until such person
has duly exercised this Option, paid the Exercise Price and become a holder of
record of the Shares purchased.
11. "MARKET STAND-OFF" AGREEMENT. Optionee agrees that, if requested by
the Company or the managing underwriter of any proposed public offering of the
Company's securities (including any acquisition transaction where the Company
securities will be used as all or part of the purchase price), Optionee will not
sell or otherwise transfer or dispose of any Shares held by Optionee without the
prior written consent of the Company or such underwriter, as the case may be,
during such period of time, not to exceed 180 days following the effective date
of the registration statement filed by the Company with respect to such
offering, as the Company or the underwriter may specify.
4
12. NOTICE OF DISQUALIFYING DISPOSITION. To obtain certain tax benefits
afforded to Incentive Options, an Optionee must hold the shares issued upon the
exercise of an Incentive Option for two years after the date of grant of the
Option and one year from the date of exercise. By executing this Agreement,
Optionee hereby agrees to promptly notify the Company's Chief Financial Officer
of any disposition of Shares acquired pursuant to an Incentive Stock Option
within one year from the date this Option is exercised or within two years of
the date of grant of this Option.
13. INTERPRETATION. This Option is granted pursuant to the terms of the
Plan, and shall in all respects be interpreted in accordance therewith. The
Administrator shall interpret and construe this Option and the Plan, and any
action, decision, interpretation or determination made in good faith by the
Administrator shall be final and binding on the Company and the Optionee. As
used in this Agreement, the term "Administrator" shall refer to the committee of
the Board of Directors of the Company appointed to administer the Plan, and if
no such committee has been appointed, the term "Administrator" shall mean the
Board of Directors.
14. NOTICES. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, (or by such
other method as the Administrator may from time to time deem appropriate), and
addressed, if to the Company, at its principal place of business, Attention: the
Chief Financial Officer, and if to the Optionee, at his or her most recent
address as shown in the employment or stock records of the Company.
15. GOVERNING LAW. The validity, construction, interpretation,
and effect of this Option shall be governed by and determined in
accordance with the laws of the State of California.
16. SEVERABILITY. Should any provision or portion of this
Agreement be held to be unenforceable or invalid for any reason, the
remaining provisions and portions of this Agreement shall be unaffected by
such holding.
17. ATTORNEYS' FEES. If any party shall bring an action in law or equity
against another to enforce or interpret any of the terms, covenants and
provisions of this Agreement, the prevailing party in such action shall be
entitled to recover reasonable attorneys' fees and costs.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
[Signature Page Follows]
5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY: OPTIONEE:
CKE Restaurants, Inc.
By:
--------------------------------- --------------------------------------
(Signature)
Its:
--------------------------------- --------------------------------------
(Type or print name)
Address:
--------------------------------------
--------------------------------------
6
