Exhibit 5
QUANTUM RESTAURANT GROUP, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT, made as of the 30th day of
January, 1996, by and between Quantum Restaurant Group, Inc. (the
"Corporation"), a Delaware corporation, and Xxxxx X. Xxxxxxxxx (the
"Participant").
WHEREAS, the Participant owns, at the time the Option is granted
hereunder, no more than ten percent (10%) of total combined voting power of all
classes of stock of the Corporation, or its parent or subsidiary corporation.
WHEREAS, the Corporation desires to give the Participant an opportunity
to participate in the long-term growth of the Corporation by granting to the
Participant options to purchase the Corporation's Common Stock pursuant to the
terms and conditions of the Quantum Restaurant Group, Inc. Stock Option Plan
and this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties agree as
follows:
1. DEFINITIONS.
"Administrator" means a committee of the Board comprised of two or
more disinterested directors, within the meaning of Securities and Exchange
Commission Rule 16b-3, duly appointed to administer the Plan.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling (including, but not limited to, all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person. A Person shall be deemed to control a corporation if
such person possesses, directly or indirectly, the power to (i) vote 15% or more
of the securities having ordinary voting power for the election of directors of
such corporation, or (ii) direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Board" means the Board of Directors of the Corporation.
"Cause" means a finding by the Administrator based upon reasonable
evidence presented in writing to the Participant that the Participant engaged in
a criminal act or willful misconduct inconsistent with his employment
responsibilities or contractual relationship with the Corporation or any
subsidiary corporation.
"Change in Control" means any of the following events: (a) the
acquisition by any Person who was not an Affiliate of the Corporation as of
December 15, 1994 of beneficial ownership, directly or indirectly, of 50% or
more of the combined voting power of
the then outstanding voting securities of the Corporation, except pursuant to a
public offering of securities of the Corporation; (b) the sale or other transfer
of all or substantially all of the assets of the Corporation to a Person who was
not an Affiliate of the Corporation as of December 15, 1994; (c) a merger,
consolidation or other reorganization of the Corporation with a Person who was
not an Affiliate of the Corporation as of December 15, 1994 and in which the
Corporation is not the surviving entity; or (d) individuals who, as of December
15, 1994, made up the Board (the "Incumbent Directors") cease for any reason to
constitute at least a majority of the Board; provided that any individual who
becomes a director after December 15, 1994 whose election, or nomination for
election by the Corporation's stockholders was approved by a vote or written
consent of at least two-thirds of the directors then comprising the Incumbent
Directors shall be considered as though such individual were an Incumbent
Director, but excluding, for this purpose, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Corporation (as such
terms are used in Rule 14a-11 under the Securities Exchange Act of 1934, as
amended).
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means Common Stock ($.01 par value) of the
Corporation.
"Corporation" means Quantum Restaurant Group, Inc.
"Disability" means the inability, in the opinion of a physician
chosen by the Administrator, of the Participant by reason of any physical or
mental ailment to perform the duties of the position in which he was employed by
the Corporation or any subsidiary corporation when such disability commenced.
"Effective Date" means the date specified in Section 15 of the
Plan as being the effective date thereof.
"Employment" means the Participant's employment with the
Corporation, a parent or subsidiary corporation of the Corporation, or such
other corporation as provided in section 422 of the Code.
"Fair Market Value" means, on any day, with respect to Common
Stock which is (i) listed on a United States securities exchange, the last sales
price of such stock on such day on the largest United States securities exchange
on which such stock shall have traded on such day, or if such day is not a day
on which a United States securities exchange is open for trading, on the
immediately preceding day on which such securities exchange was so open, (ii)
not listed on a United States securities exchange but is included in the NASDAQ
National Market System, the last sales price of such stock on such day, or if
such day is not a trading day, on the immediately preceding trading day, or
(iii) neither listed on a United States securities exchange nor included in the
NASDAQ National Market System, the fair market value of such stock as determined
from time to time by the Board in its sole discretion.
"Option" means the incentive stock option granted to the
Participant under this Agreement and pursuant to the Plan.
"Person" means any individual, partnership, firm, trust,
corporation or similar entity. When two or more Persons act as a partnership,
limited partnership, syndicate or other group for the purpose of acquiring,
holding or disposing of securities of the Corporation, such partnership, limited
partnership, syndicate or group shall be deemed a "Person."
"Plan" means the Quantum Restaurant Group, Inc. Stock Option Plan,
as amended from time to time.
2. GRANT OF OPTION. The Corporation hereby grants to the Participant
an Option to purchase 33,333 shares of Common Stock at an option price of $12.00
per share, which is not less than the Fair Market Value of the Common Stock at
the time the Option is granted hereunder, subject to the terms hereof (the
"Option Price"). The Option granted hereby is intended to be an "incentive stock
option" within the meaning of section 422 of the Code and the Agreement shall be
construed and interpreted in accordance with such intention.
3. OPTION TERMS. (a) The Option shall become exercisable in
accordance with the following Schedule:
Years From Date of Grant Amount Exercisable
------------------------ ------------------
One 0%
Two 25%
Three 50%
Four 75%
Five 100%
(b) Notwithstanding the provisions of paragraph (a) of this
Section 3, the Option shall not be exercisable after the expiration of ten (10)
years from the date the Option is granted hereunder. Further, in the event the
Participant's Employment terminates for any reason whatsoever, whether because
of his death, Disability, termination with or without Cause, voluntary
termination or otherwise, the Option, (i) to the extent it has not theretofore
become exercisable, shall terminate as of the date such Employment terminates,
and (ii) to the extent it has become exercisable but has not been exercised,
shall terminate three (3) months after the date such Employment terminates.
4. NON-ASSIGNABILITY. The Option granted hereby and any right arising
thereunder shall not be transferable other than by will or by the laws of
descent and distribution. During the lifetime of the Participant, the Option
shall be exercisable only by him. Any Option or portion thereof exercisable at
the Participant's death that is transferred by will or by the laws of descent
and distribution, shall be exercisable in accordance with the terms of this
Agreement by the executor or administrator, as the case may be, of the
Participant's estate for a period of three (3) months after the date of the
Participant's death and shall then terminate. If the Option is not exercisable
at the date of the Participant's death it shall terminate as of such date.
5. EFFECT OF A CHANGE OF CONTROL. Notwithstanding the provisions of
Section 3 hereof, if there should be a Change of Control of the Corporation, the
Corporation shall give the Participant written notice of such Change of Control
as promptly as practicable (and, if possible, prior to the effective date
thereof) and the Option, to the extent not currently exercisable, shall become
immediately exercisable as of the effective date of such Change of Control.
6. TRANSFER RESTRICTIONS. The Participant understands that the Common
Stock issuable upon the exercise of this Option will not be registered under the
Securities Act of 1933, as amended (the "Act"). The Participant acknowledges
that the Common Stock will be purchased for investment only, and that it may not
be sold or transferred in the absence of either an effective registration
statement under the Act or an opinion of experienced securities counsel,
acceptable in form and content to the Corporation in its sole discretion, which
states that registration is not required under the Act.
By executing this Agreement, the Participant agrees to refrain from
re-offering, reselling, or otherwise disposing of any of the Common Stock
acquired upon the exercise of the Option in any manner which would violate the
Act or any other federal or state securities law.
The Participant further understands that in the event the Common Stock
issuable upon the exercise of the Option is not covered by an effective
registration statement under the Act, the Corporation may imprint on the
certificate representing said Common Stock the following legend or any other
legend which counsel for the Corporation considers necessary or advisable to
comply with the Act or the securities laws of any State:
"The shares of Quantum Restaurant Group, Inc. Common Stock
represented by this certificate have been acquired for investment and
have not been registered under the Securities Act of 1933, as amended.
Such shares may not be sold, transferred, pledged or hypothecated
unless the registration provisions of said act have been complied with
or unless Quantum Restaurant Group, Inc. has received an opinion of
counsel satisfactory to Quantum Restaurant Group, Inc. that such
registration is not required."
7. MODE OF EXERCISE. The Option shall be exercised by the Participant
giving to the Corporation written notice stating (i) the number of shares with
respect to which the Option is being exercised, (ii) the exercise price for such
shares, and (iii) the method of payment. At the option of the Participant, the
Option Price may be paid (i) in cash, (ii) by delivery of Common Stock already
owned by the Participant for a period of not less than six (6) months and having
a Fair Market Value on the date of such delivery equal to the Option Price, or
(iii) by delivery of a combination of cash and such Common Stock having a total
Fair Market Value on the date of such delivery equal to the Option Price.
8. OPTION SUBJECT TO SECURITIES AND OTHER REGULATIONS. The Option
granted hereunder and the obligation of the Corporation to sell and deliver
shares under such Option shall be subject to all applicable federal and state
laws, rules and regulations
and to such approvals by any government or regulatory agency as may be required.
The Corporation, in its discretion, may postpone the issuance or delivery of
shares upon any exercise of the Option until completion of any stock exchange
listing, or other qualification of such shares under any state or federal law,
rule or regulation as the Corporation may consider appropriate, and may require
the Participant, beneficiary or legal representative to make such
representations and furnish such information as it may consider appropriate in
connection with the issuance or delivery of the shares in compliance with
applicable laws, rules and regulations.
Upon demand by the Administrator, the Participant shall deliver to the
Administrator at the time of any exercise of the Option a written representation
that the shares to be acquired upon the exercise of the Option are being
acquired for investment and not for resale or with a view to the distribution
thereof. Upon such demand, delivery of such representation prior to the delivery
of any shares issued upon exercise of the Option shall be a condition precedent
to the right of the Participant to purchase any shares.
9. ANTIDILUTION ADJUSTMENTS. In the event of any change in the Common
Stock by reason of any stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares, or of any similar
change affecting the Common Stock, the number and kind of shares subject to the
Option and the purchase price per share thereof shall be appropriately adjusted
consistent with such change in such manner as the Board may deem equitable to
prevent substantial dilution or enlargement of the rights granted to the
Participant.
10. PLAN CONTROLLING. This Agreement is irrevocable and is intended to
conform in all respects with the Plan. Inconsistencies between this Agreement
and the Plan shall be resolved according to the terms of the Plan. The
Participant acknowledges receipt of a copy of the Plan.
11. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have
any rights as a stockholder with respect to any shares subject to the Option
prior to the date on which he is recorded as the holder of such shares on the
records of the Corporation.
12. TAXES. The Corporation may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding of all
federal, state, local and other taxes required by law to be withheld with
respect to the Option including, but not limited to (i) reducing the number of
shares of Common Stock otherwise deliverable, based upon their Fair Market Value
on the date of exercise, to permit deduction of the amount of any such
withholding taxes from the amount otherwise payable under this Agreement, (ii)
deducting the amount of any such withholding taxes from any other amount then or
thereafter payable to the Participant, or (iii) requiring the Participant,
beneficiary or legal representative to pay to the Corporation the amount
required to be withheld or to execute such documents as the Corporation deems
necessary or desirable to enable it to satisfy its withholding obligations as a
condition of releasing the Common Stock.
13. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be
personally liable by reason of any contract or other instrument executed by such
member or
on his behalf in his capacity as a member of the Board or the Administrator nor
for any mistake of judgment made in good faith.
14. GOVERNING LAW. This Agreement and all rights hereunder shall be
governed by, and construed and interpreted in accordance with, the laws of the
State of New York applicable to contracts made and to be performed entirely
within such State.
THE PLAN AND THIS AGREEMENT SHALL NOT BE CONSTRUED AS GIVING THE
PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION, NOR SHALL
THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE CORPORATION TO TERMINATE THE
PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE.
Executed as of the day and year first above written.
QUANTUM RESTAURANT GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxx
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PARTICIPANT
/s/ Xxxxx X. Xxxxxxxxx
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Xxxxx X. Xxxxxxxxx
