Exhibit 1
NON-QUALIFIED STOCK OPTION AGREEMENT
This Option Agreement (the "Agreement") made and effective as of the 4th
day of October, 1999, between BFX Hospitality Group, Inc., a Delaware
corporation (the"Corporation"), and Xxxxxx X. XxXxxx, an Employee of the
Corporation or one or more of its Subsidiaries (the "Employee").
WHEREAS, the Corporation desires to afford Employee the opportunity to
purchase shares of Corporation's $.05 par value common stock, as a reward for
past performance as a key employee of the Corporation, and as an incentive for
future performance.
NOW, WHEREFORE, in consideration of the mutual covenants hereinafter set
forth and
for other good and valuable consideration, the parties hereto agree as follows:
1. Grant of Option. The Corporation hereby grants to the Employee the
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right and option (the "Option") to purchase an aggregate of 300,000 shares of
Corporation's $.05 par value common stock (the "Shares"), such Shares being
subject to adjustment as provided in paragraph 6 hereof, and on the terms and
conditions herein set forth.
2. Purchase Price. The purchase price of the Shares covered by the
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Option shall be $1.00 per Share.
3. Term of Option. The term of the Option shall be for a period of five
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(5) years from the date hereof, beginning on October 4, 1999 and ending on
October 3, 2004.
4. Exercise of Option. From and after October 4, 1999, the Option shall
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be fully exercisable, in whole or in part, for the remaining term of the Option.
The Option granted herein shall be exercisable only by the Employee, the
Administrator or Executor of the Estate of the Employee, the heirs of the
Employee taking title to the Option pursuant to the Employee's Will or the laws
of descent and distribution, a court appointed guardian of the Employee, or by
power of attorney duly appointed by the Employee.
5. Transferability of Option. This Option may be transferred by Employee
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by Will or by the laws of descent and distribution, but not otherwise. Upon such
presentation for transfer, the Company shall promptly execute and deliver a new
Option Agreement or Option in the form hereof in the name of assignee or
assignees and in the denominations specified in such instructions. The Company
shall pay all expenses incurred by it in connection with the preparation,
issuance and delivery of Options under this Paragraph.
6. Anti-Dilution Provisions.
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(a) In case at any time or from time to time after the date of this
Option, the holders of common stock of the Company shall have received
or shall have become legally entitled to receive,
(i) other or additional stock or other securities or property (other
than cash) by way of a dividend or other distribution, or
(ii) other or additional (or less) stock or other securities or
property (including cash) by way of stock-split, spin-off, split-
up, reclassification, combination or shares or similar corporate
rearrangements,
then and in each such case the holder of this Option, upon the exercise hereof s
provided herein, shall be entitled to receive, in lieu of (or in addition to, as
the case may be) the Shares theretofore receivable upon the exercise of this
Option, the amount of stock and other securities and property (including cash in
the case referred to in clause (ii) above) which such holder would have held on
the date of such exercise of on the date such dividend, distribution, corporate
rearrangement or such other event as described in clause (ii) above such holder
had been the holder of record of the number of Shares receivable upon the
exercise of this Option and had thereafter, during the period from the date
thereof to and including the date of such exercise, obtained such Shares and all
other or additional (or less) stock and other securities and property (including
cash in the case referred to in clause (ii) above) receivable by him as
aforesaid during such period, giving effect to all adjustments called for during
such period by the following subparagraph.
(b) In case of any reorganization of the Company (or any other corporation
the stock or other securities of which are at the time receivable on
the exercise of this Option) after the date hereof, or in case, after
such date, the Company (or any such other corporation) shall
consolidate, amalgamate or merge with or into or enter into a
mandatory share exchange with another entity, then and in each such
case the holder of this Option, upon the exercise hereof as provided
herein at any time after the consummation of such reorganization,
consolidation, amalgamation, merger, mandatory share exchange, or
conveyance, shall be entitled to receive, and any third parties
participating in such transaction shall acknowledge in writing that
the holder is entitled to receive, in lieu of the Shares, stock or
other securities and property receivable upon the exercise of this
Option prior to such consummation, the stock or other securities or
property to which such holder would have been entitled upon such
consummation if such holder had exercised this Option immediately
prior thereto, all subject to further adjustment as provided in the
preceding subparagraph (a).
(c) So long as this Option shall be outstanding and unexercised, if the
Company shall enter into any transactions referred to in this Section
6, which effects a change in the securities or other property to which
the holder is entitled upon exercise of this Option, then, in any such
case, the
Company shall cause to be sent to the holder a brief statement of the
event giving rise to such effect, and a description thereof, together
with advance notice of the record date relevant to any such
transaction.
7. Rights as a Shareholder. The Employee or Employee's permitted
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transferee shall
have no rights as a stockholder with respect to any Shares covered by the Option
until the date of issuance of a stock certificate for such Shares. No
adjustments, other than as provided in paragraph 6 above, shall be made for
dividends (ordinary or extraordinary, whether in cash, securities, or other
property) or distributions for which the record date is prior to the date such
stock certificate is issued.
8. Listing; Registration; Governmental Approval.
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(a) Issuance. The Option granted herein is subject to the requirement
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that, if at any time the listing, registration, or qualification of Shares
issuable upon exercise of the Option is required by any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body is necessary as a condition of, or in connection with the
issuance of any Shares, no Shares shall be issued in whole or in part, unless
such listing, registration, qualification, consent or approval has been
obtained. The Corporation agrees, at its own expense, to take all action
necessary to obtain such listing, registration, qualification, consent or
approval so the Corporation can perform its contractual obligation to issue the
Shares covered by this Option.
(b) Registration Rights.
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(1) Employee shall have the right, exercisable by written notice to
the Corporation from time to time for three (3) years following the date of
exercise of the Options, to have the Corporation prepare and file with the
Securities and Exchange Commission (the "Commission"), at the sole expense of
the Corporation, registration statements and such other documents, including
prospectuses, as may be necessary in the opinion of both counsel for the
Corporation and counsel for Employee, in order to comply with the provisions of
the Securities Act of 1933, as amended (the "Act"), so as to permit a public
offering and sale by Employee of his Registrable Securities (as hereinafter
defined).
(2) If, at any time within to three (3) years following the exercise
of the Option, the Corporation proposes to prepare and file a registration
statement covering equity or debt securities of the Corporation, or any such
securities of the Corporation held by its shareholders (in any such case, other
than in connection with a merger, acquisition or pursuant to Form S-8 or
successor form), it will give written notice of its intention to do so by
registered mail ("Notice"), at least thirty (30) business days prior to the
filing of each such registration statement, to Employee. Upon the written
request of Employee, made within twenty (20) business days after receipt of the
Notice, that the Corporation include any of Employee's Registrable Securities in
the proposed registration statement, the Corporation shall, as to Employee, use
its best efforts to effect the registration under the Act of the Registrable
Securities which it has been so requested to register and include them in the
sale by the underwriter ("Piggyback Registration"), at the Corporation's sole
cost and expense and at no cost or expense to Employee; provided, however, that
if, in the written opinion of the Corporation's managing underwriter, if any,
for such offering, the inclusion of a specific percentage (up to 100%) of the
Registrable Securities requested to be registered, when added to the securities
being registered by the Corporation or the selling shareholder(s), will exceed
the maximum amount of the Corporation's securities which can be marketed (i) at
a price reasonably related to their then current market value, or (ii) without
otherwise materially adversely
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affecting the entire offering, then the Corporation may exclude from such
offering the percentage of the Registrable Securities which it has been
requested to register specified by such managing underwriter. To avail himself
of the registration right granted herein, Employee shall (a) firmly commit to
sell his shares and to escrow them pending completion of the registration; and
(b) agree to a pre-offering lock-up for ninety (90) days prior to the effective
date of such registration and a post-offering lock-up for an additional ninety
(90) days. Notwithstanding the provisions of this paragraph 8(b)(1), the
Corporation shall have the right at any time after it shall have given written
notice pursuant to this paragraph 8(b)(2) (irrespective of whether any written
request for inclusion of such securities shall have already been made) to elect
not to file any such proposed registration statement, or to withdraw the same
after the filing but prior to the effective date thereof.
(3) As used herein the term "Registrable Security" means all of the
Shares; provided, however, that with respect to any particular Registrable
Security, such security shall cease to be a Registrable Security when, as of the
date of determination, (i) it has been effectively registered under the Act and
disposed of pursuant thereto, (ii) registration under the Act is no longer
required for the immediate public distribution of such security or (iii) it has
ceased to be outstanding. In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the common stock of Employer, such adjustment shall be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the registration rights granted pursuant to this paragraph 8.
(4) In connection with any registration under this paragraph 8, the
Corporation shall file the registration statement as expeditiously as possible,
but in no event later than thirty (30) business days following receipt of any
demand therefor, shall use its best efforts to have any such Registration
Statements declared effective at the earliest possible time, and shall furnish
Employee such number of prospectuses as shall reasonably be requested.
(5) The Corporation shall pay all costs, fees and expenses in
connection with any such registration statements filed pursuant to this
paragraph 8 including, without limitation, the Corporation's legal and
accounting fees, printing expenses, and blue sky fees and expenses, except for
underwriting commissions and discounts relating to Employee's shares.
(6) The Corporation will take all necessary action which may be
required in qualifying or registering the Registrable Securities included in a
Registration Statement for offering and sale under the securities or blue sky
laws of such states as are requested by Employee; provided that the Corporation
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(7) Employee may, at his option, require the Corporation to satisfy
its obligation with respect to this paragraph 9, by including the Registrable
Securities, to the extent permissible, in a registration statement on Form S-8
(or a successor form thereto)
filed with the Commission which contains a "reoffer prospectus" as required by
General Instruction C of Form S-8; provided, however, that Employee'S rights
under this paragraph 8 shall continue with respect to any Registrable Securities
not included in such registration statement on Form S-8.
9. Method of Exercising Option. Subject to the terms and conditions of
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this Agreement, the Option may be exercised by written notice delivered in
person or by first class mail to the Corporation at its offices presently
located at 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxx 00000. Such notice
shall state the election to exercise the Option and the number of Shares in
respect of which it is being exercised, and shall be signed by the person or
persons so exercising the Option. Such notice shall be accompanied by payment of
the full purchase price of such Shares, in which event the Corporation shall
deliver a certificate representing such Shares as soon as practicable after the
notice shall be received.
Payment of such purchase price shall, in either case, be made in (i) cash,
(ii) cashier's, certified or personal check payable to the order of the
Corporation, (iii) in whole shares of the Corporation's common stock previously
acquired by Employee and evidenced by negotiable certificates, or (iv) by the
Corporation withholding Shares that otherwise would be acquired upon such
exercise. Any Shares transferred to the Corporation (or withheld upon exercise)
as payment of the purchase price under this option shall be valued at the Fair
Market Value on the day preceding the date of exercise of the Option. The
certificate or certificates for the Shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option; or if the Option shall be exercised by the Employee, and
if the Employee shall so request in the notice exercising the Option, such
Option shall be registered in the name of the Employee and another person, as
joint tenants with right of survivorship, and shall be delivered as provided
above to or upon the written order of the person or persons other than the
Employee, such notice shall be accompanied by appropriate proof satisfactory to
the Corporation of the right of such person or persons to exercise the Option.
All shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and non-assessable. Upon the exercise of less than
all of the Options hereunder, the Company shall promptly execute and deliver a
new Option Agreement in the form hereof covering the balance of unexercised
Options. The Company shall pay all expenses incurred by it in connection with
the preparation, issuance and delivery of such new Option Agreements.
Upon request by Employee, the Company hereby agrees to loan Employee such
amount of money as is needed by Employee to pay the purchase price for such
shares. Such loan shall be evidenced by a promissory note, payable in full
twelve (12) months from date of execution, bearing interest at the rate of 8%
per annum, and secured by the shares of stock purchased with the proceeds of the
loan or other collateral acceptable to Company.
10. Withholding of Taxes. At such times as Employee recognizes taxable
income in connection with the receipt of shares hereunder (a "Taxable Event"),
Employee shall pay to the Corporation an amount equal to the federal, state and
local
income taxes and other amounts as may be required by law to be withheld by the
Corporation in connection with the Taxable Event (the "Withholding Taxes") prior
to the issuance, or release from escrow, of such Shares. In satisfaction of the
obligation to pay Withholding Taxes to the Corporation, Employee may take a
written election (the "Tax Election"), which shall be binding upon the
Corporation to have withheld a portion of the Shares then issuable to Employee
having an aggregate Fair Market Value equal to the Withholding Taxes.
11. Non-Qualified Options. The Options granted hereunder are not part of
or authorized pursuant to any plan or arrangement which is qualified or created
incident to any provision of the Internal Revenue Code of 1986, as amended.
12. Subsidiary. As used herein, the term "Subsidiary" shall mean any
present or future corporation in which the Corporation shall own 50% or more of
its accrued voting stock.
13. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the respective heirs, executors, administrators and successors of the
parties hereto.
14. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Delaware.
15. Headings. Headings are for the convenience of the parties are not
deemed to be part of this Agreement.
EXECUTED as of the day and year first written above.
CORPORATION: BFX HOSPITALITY GROUP, INC.
/s/ Xxxxxx X. XxXxxx
By:
Xxxxxx X. XxXxxx,
Chief Executive Officer
EMPLOYEE: /s/ Xxxxxx X. XxXxxx
Xxxxxx X. XxXxxx, Individually
