EXHIBIT 4.2
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EL CHICO RESTAURANTS, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into this ______ day of __________,
19_______, between El Chico Restaurants, Inc., a Texas corporation (the
"Company") and ________________ (the "Holder") in connection with the grant of
an Incentive Option (hereinafter defined) under the El Chico Restaurants, Inc.
1995 Stock Plan (the "Plan").
W I T N E S S E T H:
WHEREAS, the Holder is employed by the Company or one of its Affiliates
(hereinafter defined) in a key position and the Company desires to encourage him
to own Stock (hereinafter defined) and to give him added incentive to advance
the interests of the Company through the Plan and desires to grant the Holder an
Incentive Option to purchase shares of Stock of the Company under terms and
conditions established by the Committee (hereinafter defined) and/or the Plan.
NOW, THEREFORE, in consideration of these premises, the parties agree
that the following shall constitute the Agreement between the Company and the
Holder:
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings specified below:
1.1 "AFFILIATES" shall mean (a) any corporation, other than
the Company, in an unbroken chain of corporations ending with the
Company if each of the corporations, other than the Company, owns 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; and (b) any corporation, other than the Company, in an unbroken
chain of corporations beginning with the Company if each of the
corporations, other than the last corporation in the unbroken chain,
owns 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.
1.2 "BOARD OF DIRECTORS" shall mean the board of directors of
the Company.
1.3 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.4 "COMMITTEE" shall mean the committee appointed pursuant to
appointed pursuant to Section 3 of the Plan by the Board of Directors
to administer the Plan.
1.5 "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
1.6 "FAIR MARKET VALUE" shall mean:
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(a) If shares of Stock of the same class are listed
or admitted to unlisted trading privileges on any national or
regional securities exchange at the date of determining the
Fair Market Value, the last reported sale price on such
exchange on the last business day prior to the date in
question; or
(b) If shares of Stock of the same class shall not be
listed or admitted to unlisted trading privileges as provided
in subparagraph 1.6(a) and sales prices therefor in the
over-the-counter market shall be reported by the National
Association of Securities Dealers, Inc. Automated Quotations,
Inc. ("NASDAQ") National Market System at the date of
determining the Fair Market Value, the last reported sale
price so reported on the last business day prior to the date
in question; or
(c) If shares of Stock of the same class shall not be
listed or admitted to unlisted trading privileges as provided
in subparagraph 1.6(a) and sales prices therefor shall not be
reported by the NASDAQ National Market System as provided in
subparagraph 1.6(b), and bid and asked prices therefor in the
over-the-counter market shall be reported by NASDAQ (or, if
not so reported, by the National Quotation Bureau
Incorporated) at the date of determining the Fair Market
Value, the average of the closing bid and asked prices on the
last business day prior to the date in question; and
(d) If shares of Stock of the same class shall not be
listed or admitted to unlisted trading privileges as provided
in subparagraph 1.6(a) and sales prices or bid and asked
prices therefor shall not be reported by NASDAQ (or the
National Quotation Bureau Incorporated) as provided in
subparagraph 1.6(b) or subparagraph 1.6(c) at the date of
determining the Fair Market Value, the value determined in
good faith by the Board of Directors.
For purposes of valuing Incentive Options, the Fair Market Value of
Stock shall be determined without regard to any restriction other than
one which, by its terms, will never lapse.
1.7 "INCENTIVE OPTION" shall mean a stock option that is
intended to satisfy the requirements of Section 422 of the Code.
1.8 "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
1.9 "STOCK" shall mean the Company' s authorized $.10 par
value common stock together with any other securities with respect to
which Options granted hereunder may become exercisable.
2. GRANT OF INCENTIVE OPTION. Subject to the terms and conditions
set forth herein, the Company grants to the Holder an Incentive Option (Grant
Number _____) to purchase from the Company, during the period ending ________
(___) years from the date of this Agreement,
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______ shares of Stock at a price of $_____ per share, subject to adjustment as
provided in Paragraph 8 hereof. This Incentive Option is exercisable with
respect to the shares of Stock indicated as follows, except as provided in
Paragraphs 7 and 8:
ON OR AFTER NUMBER OF SHARES
_____shares of Stock
____ additional shares of Stock
____ additional shares of Stock
____ additional shares of Stock
____ additional shares of Stock
3. NOTICE OF EXERCISE. This Incentive Option may be exercised in
whole or in part, from time to time, in accordance with Paragraph 2, by written
notice to the Company at the address provided in Paragraph 13, which notice
shall:
(a) Specify the Grant Number, the number of shares of Stock to
be purchased and the exercise price to be paid therefor;
(b) If the person exercising this Incentive Option is not the
Holder himself, contain or be accompanied by evidence satisfactory to
the Committee of such person's right to exercise this Incentive Option;
and
(c) Be accompanied by (i) payment in full of the exercise
price in the form of cash or a check payable to the order of the
Company; (ii) payment in the form of shares of Stock owned by the
Holder for at least six months and at least equal in value to the
aggregate exercise price payable in connection with such exercise; or
(iii) a combination of (i) and (ii).
4. TRANSFER AND EXERCISE OF INCENTIVE OPTION. This Incentive Option
shall not be transferable except by will or by the laws of descent and
distribution. During the Holder's lifetime, this Incentive Option may be
exercised only by him. The Holder may not make any disposition of this Incentive
Option or any interest therein. As used in this Incentive Option, "disposition"
means any sale, transfer, encumbrance, gift, donation, assignment, pledge,
hypothecation, or other disposition, whether similar or dissimilar to those
previously enumerated, whether voluntary or involuntary, and whether during the
Holder's lifetime or upon or after the Holder's death, including, but not
limited to, any disposition by operation of law, by court order, by judicial
process, or by foreclosure, levy, or attachment, except a transfer by will or by
the laws of descent or distribution. Any attempted disposition in violation of
this Paragraph 4 shall be void and ineffective for all purposes.
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5. STATUS OF HOLDER. The Holder shall not be deemed a shareholder of
the Company with respect to any of the shares of Stock subject to this Incentive
Option, except to the extent that such shares shall have been purchased and
transferred to him. The Company shall not be required to issue or transfer any
certificates for shares of Stock purchased upon exercise of this Incentive
Option until all applicable requirements of law have been complied with and such
shares shall have been duly listed on any securities exchange on which the Stock
may then be listed.
6. NO EFFECT ON CAPITAL STRUCTURE. This Incentive Option shall not
affect the right of the Company or any Affiliate thereof to reclassify,
recapitalize or otherwise change its capital or debt structure or to merge,
consolidate, convey any or all of its assets, dissolve, liquidate, windup, or
otherwise reorganize.
7. PREMATURE EXPIRATION OF INCENTIVE OPTION.
(a) TERMINATION AS AN EMPLOYEE OR DIRECTOR - GENERAL.
(1) If the Holder ceases to be employed by
at least one of the employers in the group of
employers consisting of the Company and its
Affiliates because the Holder voluntarily terminates
employment with such group of employers and the
Holder does not remain or thereupon become a director
of the Company or one or more of its Affiliates, or
if a Holder voluntarily ceases to be a director of at
least one of the corporations in the group of
corporations consisting of the Company and its
Affiliates and the Holder does not remain or
thereupon become an employee of the Company or one or
more of its Affiliates, the Holder shall have the
right for thirty (30) days after such termination of
employment or cessation of directorship, whichever
event occurs latest, to exercise this Incentive
Option with respect to that portion hereof that has
become exercisable pursuant to this Agreement as of
the date of the Holder's termination or cessation,
and thereafter this Incentive Option shall terminate
and cease to be exercisable.
(2) If a Holder ceases to be employed by at
least one of the employers in the group of employers
consisting of the Company and its Affiliates because
any of such entities terminates the Holder's
employment for misconduct, the portion, if any, of
this Incentive Option that remains unexercised,
including that portion, if any, that pursuant to this
Agreement is not yet exercisable, at the time of the
Holder's termination of employment, shall terminate
and cease to be exercisable as of such time.
"Misconduct" shall be as defined in the Company's
Personnel Policy and Procedures Manual.
(3) If a Holder ceases to be employed by at
least one of the employers in the group of employers
consisting of the Company and its Affiliates because
one or more of such entities terminates the
employment of the Holder but not for misconduct, and
the Holder does not remain or
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thereupon become a director of the Company or one or
more of its Affiliates, or if the Holder is only a
director and ceases to be a director of at least one
of the corporations in the group of corporations
consisting of the Company and its Affiliates, the
Holder shall have the right for ninety (90) days
after such termination of employment or cessation of
directorship to exercise this Incentive Option with
respect to that portion hereof that has become
exercisable pursuant to this Agreement as of the date
of the Holder's termination or cessation, and
thereafter this Incentive Option shall terminate and
cease to be exercisable.
(b) TERMINATION AS AN EMPLOYEE OR DIRECTOR - DISABILITY. If
the Holder ceases to be employed by at least one of the employers in
the group of employers consisting of the Company and its Affiliates by
reason of disability (as defined in Section 22(c)(3) of the Code) and
does not remain or thereupon become a director of the Company or one or
more of its Affiliates, or if the Holder is only a director and ceases
by reason of such disability to be a director of at least one of the
corporations in the group of corporations consisting of the Company and
its Affiliates, the Holder shall have the right for twelve (12) months
after the date of termination of employment with or cessation of
directorship of such group of employers by reason of disability,
whichever occurs latest, to exercise this Incentive Option to the
extent this Incentive Option is exercisable on the date of such
termination of employment or cessation of directorship, and thereafter
this Incentive Option shall terminate and cease to be exercisable.
(c) TERMINATION AS AN EMPLOYEE OR DIRECTOR - DEATH. If the
Holder dies while in the employ of the Company or an Affiliate or dies
while a director of the Company or an Affiliate, this Incentive Option
shall be exercisable by the Holder's legal representatives, heirs,
legatees, or distributees for twelve (12) months following the date of
the Holder's death to the extent such Option is exercisable on the
Holder's date of death, and thereafter this Incentive Option shall
terminate and cease to be exercisable.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, MERGER, ETC.
Notwithstanding any other provision hereof, in the event of any change in the
number of outstanding shares of Stock:
(a) Effected without receipt of consideration therefor by the
Company, by reason of a stock dividend, or split, combination, exchange
of shares or other recapitalization, merger, or otherwise, in which the
Company is the surviving corporation;
(b) By reason of a spin-off to the shareholders of a part
of the Company into a separate entity; or
(c) By reason of assumptions and conversions of
outstanding grants due to an acquisition by the Company of a separate
entity;
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then: (1) The number and class of shares subject to this Incentive Option and
(2) the exercise price of this Incentive Option shall be automatically adjusted
to accurately and equitably reflect the effect thereon of such change; provided,
however, that any fractional share resulting from such adjustment may be
eliminated. In the event of a dispute concerning such adjustment, the decision
of the Committee shall be conclusive. The number of shares subject to this
Incentive Option shall be automatically reduced by any fraction included therein
which results from any adjustment made pursuant to this Paragraph 8.
The occurrence of:
(a) A dissolution or liquidation of the Company;
(b) A merger or consolidation (other than a merger effecting a
reincorporation of the Company in another state or any other merger or
a consolidation in which the shareholders of the surviving corporation
and their proportionate interests therein immediately after the merger
or consolidation are substantially identical to the shareholders of the
Company and their proportionate interests therein immediately prior to
the merger or consolidation) in which the Company is not the surviving
corporation (or survives only as a subsidiary of another corporation in
a transaction in which the shareholders of the parent of the Company
and their proportionate interests therein immediately after the
transaction are not substantially identical to the shareholders of the
Company and their proportionate interests therein immediately prior to
the transaction);
(c) A transaction in which any person becomes the owner
of 50% or more of the total combined voting power of all classes of
stock of the Company; or
(d) A sale of all or substantially all of the assets of the
Company where it is contemplated that within a reasonable period of
time thereafter the Company will either be liquidated or converted into
a nonoperating company or an extraordinary dividend will be declared
resulting in a partial liquidation of the Company (but in all cases
only with respect to those employees whom it is anticipated will lose
their employment with the Company and its Affiliates as a result of
such sale of assets)
shall cause this Incentive Option to terminate, but the Holder shall, in any
event, have the right, immediately prior to such dissolution, liquidation,
merger, consolidation, or transaction, to exercise this Incentive Option, to the
extent not theretofore exercised, without regard to the determination as to the
periods and installments of exercisability made pursuant to Paragraph 2 if (and
only if) this Incentive Option has not at that time expired or been terminated.
9. COMMITTEE AUTHORITY. Any question concerning the interpretation
of this Agreement, any adjustments required to be made under Paragraph 8 of this
Agreement, and any controversy which may arise under this Agreement shall be
determined by the Committee in its sole discretion. Such decision by the
Committee shall be final and binding.
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10. NOTICE OF DISQUALIFYING DISPOSITION. In order to enable the Company
to avail itself of any income tax deduction to which it may be entitled, the
Holder shall notify the Company of his intent to dispose of any of the shares of
Stock purchased pursuant to this Incentive Option within two (2) years from the
date of the grant of the Incentive Option and one (1) year from the date of
exercise of the Incentive Option, and promptly after such disposition the Holder
shall notify the Company of the number of shares of Stock disposed of, the dates
of acquisition and disposition of such shares, and the consideration, if any,
received on such disposition. Nothing in this Paragraph 10, however, shall give
the Holder any right to dispose of shares that is inconsistent with any
provision of the Plan or any Paragraph of this Agreement. If in connection with
any such disposition the Company becomes liable for withholding taxes and has no
amounts owing the Holder with which to discharge its withholding obligation, the
Holder shall provide the Company with the amount needed to discharge the
Company's withholding obligation and shall indemnify the Company against any
penalties it may incur through its inability to apply amounts owing the Holder
in discharge of its withholding obligation. Nothing in this Paragraph shall give
the Holder any right to dispose of shares of Stock in a manner that is
inconsistent with any provision of this Agreement, the Plan, or any stock
transfer restriction agreement entered into by the Holder.
11. INCENTIVE OPTION QUALIFICATION. This Incentive Option is intended
to qualify as an "incentive stock option" with the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, and shall be so construed; provided,
however, that nothing in this Agreement shall be interpreted as a
representation, guarantee or other undertaking on the part of the Company that
this Incentive Option is or will be determined to be an "incentive stock option"
within such section or any other section of the Internal Revenue Code.
12. PLAN CONTROLS. The terms of this Agreement are governed by the
terms of the Plan, a copy of which is attached hereto as Exhibit A and made a
part hereof as if fully set forth herein, and in the case of any inconsistency
between the terms of this Agreement and the terms of the Plan, the terms of the
Plan shall control.
13. NOTICE. Whenever any notice is required or permitted hereunder,
such notice must be in writing and personally delivered or sent by mail. Any
notice required or permitted to be delivered hereunder shall be deemed to be
delivered on the date which it is personally delivered, or, whether actually
received or not, on the third business day after it is deposited in the United
States mail, certified or registered, postage prepaid, addressed to the person
who is to receive it at the address which such person has theretofore specified
by written notice delivered in accordance herewith. The Company or Holder may
change, at any time and from time to time, by written notice to the other, the
address previously specified for receiving notices. Until changed in accordance
herewith, the Company and the Holder specify their respective addresses as set
forth below:
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Company: El Chico Restaurants, Inc.
00000 Xxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attn: Legal Dept.
Holder: _____________________
=====================
14. INFORMATION CONFIDENTIAL. As partial consideration for the granting
of this Incentive Option, the Holder agrees that he will keep confidential all
information and knowledge that he has relating to the manner and amount of his
participation in the Plan; provided, however, that such information may be
disclosed as required by law and may be given in confidence to the Holder's
spouse, tax and financial advisors, or to a financial institution to the extent
that such information is necessary to secure a loan.
15. GOVERNING LAW. Except as is otherwise provided in Paragraph
11.18 of the Plan, where applicable the provisions of this Agreement shall be
governed by the contract law of the State of Texas.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and the Holder has hereunto set his hand on the day and year first
above written.
EL CHICO RESTAURANTS, INC.
By:
Title:
HOLDER:
Print Name:
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