EXHIBIT 99.2
NON-STATUTORY STOCK OPTION AGREEMENT BETWEEN REGISTRANT AND XX. XXXXXXX
XXXXX'X RESTAURANTS, INC.
NON-STATUTORY STOCK OPTION AGREEMENT
RECITALS
A. The Corporation has entered into a Consulting Agreement with
Xxxx Xxxxxxx ("Optionee") effective as of October 25, 2001 (the "Consulting
Agreement"), pursuant to which Optionee is to render valuable services to the
Corporation.
B. This Agreement is executed pursuant to the Consulting
Agreement in connection with the Corporation's grant of an option to Optionee.
C. All capitalized terms not otherwise defined in this Agreement
shall have the meaning assigned to them in the attached Appendix.
NOW THEREFORE, it is hereby agreed as follows:
1. PRINCIPAL TERMS.
(a) Optionee: Xxxx Xxxxxxx
(b) Number of Option Shares: 50,000 shares
(c) Exercise Price: $3.05 per share
(d) Grant Date: 25,000 shares on October 25, 2001 (pursuant to
the 1999 Stock Incentive Plan) 25,000 shares on October
25, 2001 (outside of the 1999 Stock Incentive Plan)
(e) Expiration Date: October 24, 2011
2. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
of the Grant Date, an option to purchase up to the number of Option Shares
specified in Paragraph 1(b) above, subject to the grant dates specified in 1(d)
above. The Option Shares shall be purchasable from time to time during the
option term specified in Paragraph 3 below at the Exercise Price.
3. OPTION TERM. This option shall have a maximum term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 6 or 7.
4. LIMITED TRANSFERABILITY.
(a) This option shall be neither transferable nor assignable
by Optionee other than by will or by the laws of descent and distribution
following Optionee's death and may be exercised, during Optionee's lifetime,
only by Optionee. However, Optionee may designate one or more persons as the
beneficiary or beneficiaries of this option, and this option shall, in
accordance with such designation, automatically be transferred to such
beneficiary or beneficiaries upon the Optionee's death while holding such
option. Such beneficiary or beneficiaries shall take the transferred option
subject to all the terms and conditions of this Agreement, including (without
limitation) the limited time period during which this option may, pursuant to
Paragraph 6, be exercised following Optionee's death.
(b) This option may, in connection with the Optionee's estate
plan, be assigned in whole or in part during Optionee's lifetime to one or more
members of Optionee's immediate family or to a trust established for the
exclusive benefit of one or more such family members. The assigned portion shall
be exercisable only by the person or persons who acquire a proprietary interest
in the option pursuant to such assignment. The terms applicable to the assigned
portion shall be the same as those in effect for this option immediately prior
to such assignment.
5. DATES OF EXERCISE. This option shall become exercisable for
the Option Shares in one or more installments as specified below:
(a) This option shall be immediately exercisable for 25,000
option shares granted on October 25, 2001 that were granted pursuant to the 1999
Stock Incentive Plan.
(b) This option shall become exercisable for the remaining
25,000 Option Shares granted outside of the 1999 Stock Incentive Plan on the six
(6)-month anniversary of the Grant Date; provided that if the Consulting
Agreement has been terminated, by either the Corporation or Optionee, for any
reason or no reason, this option shall not be exercisable for such remaining
shares.
As the option becomes exercisable for such installments, those installments
shall accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 6 or 7.
7. CESSATION OF SERVICE. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(a) Should Optionee cease to remain in Service for any reason
(other than death, Permanent Disability or Misconduct) while holding this
option, then Optionee shall have a period of three (3) months (commencing with
the date of such cessation of Service) during which to exercise this option, but
in no event shall this option be exercisable at any time after the Expiration
Date.
(b) Should Optionee die while holding this option, then the
personal representative of Optionee's estate or the person or persons to whom
the option is transferred pursuant to Optionee's will or in accordance with the
laws of inheritance shall have the right to exercise this option. However, if
Optionee has designated one or more beneficiaries of this option, then those
persons shall have the exclusive right to exercise this option following
Optionee's death. Such right shall lapse, and this option shall cease to be
outstanding, upon the earlier of (i) the expiration of the twelve (12)-month
period measured from the date of Optionee's death or (ii) the Expiration Date.
(c) Should Optionee cease Service by reason of Permanent
Disability while holding this option, then Optionee shall have a period of
twelve (12) months (commencing with the date of such cessation of Service)
during which to exercise this option. In no event shall this option be
exercisable at any time after the Expiration Date.
(d) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the number of
Option Shares for which the option is exercisable at the time of Optionee's
cessation of Service. Upon the expiration of such limited exercise period or (if
earlier) upon the Expiration Date, this option shall terminate and cease to be
outstanding for any exercisable Option Shares for which the option has not been
exercised. However, this option shall, immediately upon Optionee's cessation of
Service for any reason, terminate and cease to be outstanding with respect to
any Option Shares for which this option is not otherwise at that time
exercisab1e.
(e) Should Optionee's Service be terminated for Misconduct,
then this option shall terminate immediately and cease to remain outstanding.
7. SPECIAL ACCELERATION OF OPTION.
(a) This option, to the extent outstanding at the time of a
Corporate Transaction but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the effective date of
such Corporate Transaction, become exercisable for all of the Option Shares at
the time subject to this option and may be exercised for any or all of those
Option Shares as fully vested shares of Common Stock. No such acceleration of
this option shall occur, however, if and to the extent: (i) this option is, in
connection with the Corporate Transaction, to be assumed by the successor
corporation (or parent thereof) or (ii) this option is to be replaced with a
cash incentive program of the successor corporation which preserves the spread
existing at the time of the Corporate Transaction on the Option Shares for which
this option is not otherwise at that time exercisable (the excess of the Fair
Market Value of those Option Shares over the aggregate Exercise Price payable
for such shares) and provides for subsequent payout in accordance with the same
option exercise/vesting schedule set forth in Section 4 above.
(b) Immediately following the Corporate Transaction, this
option shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation (or parent thereof) in connection with the
Corporate Transaction.
(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
(d) This Agreement shall not in way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
8. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
9. STOCKHOLDER RIGHTS. The holder of this option shall not have
any stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
10. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect to all or
any part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased
shares in one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) promissory note payable to the Corporation, but
only to the extent authorized by the Board or a committee thereof
in accordance with Paragraph 14;
(C) shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the requisite
period necessary to avoid a charge to the Corporation's earnings
for financial reporting purposes and valued at Fair Market Value
on the Exercise Date; or
(D) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
instructions (i) to a Corporation-designated brokerage firm to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate Exercise Price
payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be
withheld by the Corporation by reason of such exercise and (ii) to
the Corporation to deliver the certificates for the purchased
shares directly to such brokerage firm in order to complete the
sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise Price
must accompany the Notice of Exercise delivered to the Corporation in connection
with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option (if other than
Optionee) have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation
(or Parent or Subsidiary employing or retaining Optionee) for the satisfaction
of all Federal, state and local income and employment tax withholding
requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any
fractional shares.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of the
Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the Nasdaq
National Market, if applicable) on which the Common Stock may be listed for
trading at the time of such exercise and issuance.
(b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of any Common Stock pursuant to this option
shall relieve the Corporation of any liability with respect to the non-issuance
or sale of the Common Stock as to which such approval shall not have been
obtained. The Corporation, however, shall use its best efforts to obtain all
such approvals.
12. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraphs 4 and 7, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the Corporation and its successors and
assigns and Optionee, Optionee's assigns, the legal representatives, heirs and
legatees of Optionee' s estate and any beneficiaries of this option designated
by Optionee.
13. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the grant Notice. All
notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
14. FINANCING. The Board or a committee thereof may, in its
absolute discretion and without any obligation to do so, permit Optionee to pay
the Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Board or a committee thereof in its
sole discretion.
15. INVESTMENT REPRESENTATIONS. Optionee, by acceptance of this
option, represents and warrants to the Corporation as follows:
(a) Optionee is an "accredited investor" as that term is
defined in Rule 501(a) under the Securities Act of 1933, as amended (the
"Securities Act").
(b) Optionee is acquiring this option and the Option Shares
for investment for his own account and not with a view to, or for resale in
connection with, any distribution thereof. Optionee understands that the option
and the Option Shares have not been registered under the Securities Act by
reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent as expressed herein.
(c) Optionee acknowledges and understands that this option
and the Option Shares must be held indefinitely unless they are subsequently
registered under the Securities Act or an exemption from such registration is
available. Optionee further acknowledges and understands that the Corporation is
under no obligation to register this option or the Option Shares. The Purchaser
understands that the certificate evidencing the Shares nay be imprinted with a
legend which prohibits the transfer of the Option Shares unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Corporation.
16. GOVERNING LAW. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.
17. NOT AN INCENTIVE STOCK OPTION. For the avoidance of doubt,
this option shall not be an option which satisfies the requirements of Code
Section 422.
18. NO RELATIONSHIP TO PLAN. For the avoidance of doubt, this
option shall not be an option granted under the Corporation's 1999 Stock
Incentive Plan.
Consultant: The Company:
XXXXX'X RESTAURANTS, INC.,
a Delaware corporation
Signature:/s/ Xxxx Xxxxxxx By: /s/ Xxxxx Xxxxx
Name: XXXX XXXXXXX Name: XXXXX XXXXX
Title: CEO
Address: X.X. Xxx 0000 Address: 0000 Xxxxxx Xxxxx, Xxxxx 000
XX, XX 00000 Xxxxxxxx, XX 00000
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Xxxxx'x Restaurants, Inc. (the "Corporation")
that I elect to purchase_____ shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $3.05 per share (the
"Exercise Price") pursuant to that certain Non-Statutory Stock Option (the
"Option") granted to me in connection with my Consulting Agreement with the
Corporation, dated October 25, 2001.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
_____________________________, _________
Date
__________________________________________
Optionee
Address: _________________________________
__________________________________________
Print name in exact manner it is to
appear on the stock certificate: __________________________________________
Address to which certificate is to
be sent, if different from address
above: __________________________________________
__________________________________________
Social Security Number: __________________________________________
APPENDIX
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Non-Statutory Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean shares of the Corporation's common stock.
E. CONSULTING AGREEMENT shall mean the consulting agreement between the
Optionee and the Corporation described in Recital A of the Agreement.
F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution
of the Corporation.
G. CORPORATION shall mean Xxxxx'x Restaurants, Inc., a Delaware
corporation, and any successor corporation to all or substantially all of the
assets or voting stock of Xxxxx'x Restaurants, Inc. which shall by appropriate
action adopt the Plan.
H. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
I. EXERCISE DATE shall mean the date on which the option shall have been
exercised in accordance with Paragraph 10 of the Agreement.
J. EXERCISE PRICE shall mean the exercise price per Option Share as
specified in Paragraph 2 of the Agreement.
K. EXPIRATION DATE shall mean the date on which the option expires as
specified in the in Paragraph 2 of the Agreement.
L. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq National
Market, then the Fair Market Value shall be deemed equal to the closing
selling price per share of Common Stock on the date in question, as the
price is reported by the National Association of Securities Dealers on
the Nasdaq National Market. If there is no closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall
be the closing selling price on the last preceding date for which such
quotation exists, or
(ii) If the Common Stock is at the time listed on any Stock Exchange,
then the Fair Market Value shall be deemed equal to the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Board or a committee thereof to be the
primary market for the Common Stock, as such price is officially quoted
in the composite tape of transactions on such exchange. If there is no
closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
X. XXXXX DATE shall mean the date of grant of the option as specified in
Paragraph 2 of the Agreement.
N. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Optionee or any other individual in the Service of the Corporation (or any
Parent or Subsidiary).
O. NOTICE OF EXERCISE shall mean the notice of exercise in the form
attached hereto as Exhibit I.
P. OPTION SHARES shall mean the number of shares of Common Stock subject
to the option as specified in Paragraph 2 of the Agreement.
Q. OPTIONEE shall mean the individual specified in Paragraph 2 of the
Agreement.
R. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
S. PERMANENT DISABILITY shall mean the inability of Optionee to engage
in any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
T. SERVICE shall mean the Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) pursuant to the Consulting Agreement.
U. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
Stock Exchange.
V. SUBSIDIARY shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
