RYAN'S FAMILY STEAK HOUSES, INC.
2002 STOCK OPTION PLAN
Effective as of May 1, 2002
RYAN'S FAMILY STEAK HOUSES, INC.
2002 STOCK OPTION PLAN
1. PURPOSE
The purpose of the Ryan's Family Steak Houses, Inc. Stock
Option Plan (the "Plan") is to promote the growth and
profitability of Ryan's Family Steak Houses, Inc. (the "Company")
and its subsidiaries from time to time (the "Subsidiaries") by
increasing the personal participation of key personnel in the
continued growth and financial success of the Company and the
Subsidiaries by enabling the Company and the Subsidiaries to
attract and retain key personnel of outstanding competence and by
providing such key personnel with an equity opportunity in the
Company. This purpose will be achieved through the grant of stock
options ("Options") to purchase shares of the common stock of the
Company.
2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee
of the Company's Board of Directors (the "Compensation
Committee"); provided, however, that, if the Compensation
Committee includes members who are not "outside directors" (within
the meaning of Section 162(m) of the Internal Revenue Code of
1986, as amended (the "Code"), or any successor provision
("Section 162(m)")) or "non-employee directors" (within the
meaning of Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 ("Rule 16b-3")) the Plan shall be administered by a
special committee of the Board of Directors that includes those
members of the Company's Compensation Committee (not less than
two) who are "outside directors" and "non-employee directors." The
administering committee shall be referred to herein as the
"Committee." The Committee shall have complete authority to: (i)
interpret all terms and provisions of the Plan consistent with
law; (ii) select from the group of those individuals eligible to
participate in the Plan the key personnel to whom Options shall be
granted; (iii) within the limits established herein, determine the
number of shares to be subject to and the term of each Option
granted to each of such personnel; (iv) prescribe the form of
instrument(s) evidencing Options granted under this Plan; (v)
determine the time or times at which Options shall be granted;
(vi) make special grants of Options when determined to be
appropriate; (vii) provide, if appropriate, for the exercise of
Options in installments and/or subject to specified conditions;
(viii) determine the method of exercise of Options granted under
the Plan; (ix) determine any other terms and conditions to which
Options shall be subject, so long as such terms and conditions are
not inconsistent with this Plan; (x) adopt, amend and rescind
general and special rules and regulations for the Plan's
administration; and (xi) make all other determinations necessary
or advisable for the administration of this Plan.
Any action which the Committee is authorized to take may be
taken without a meeting if all the members of the Committee sign a
written document authorizing such action to be taken, unless
different provision is made by the Bylaws of the Company or by
resolution of the Committee.
The Committee may designate selected Board members or certain
employees of the Company to assist the Committee in the
administration of the Plan and may grant authority to such persons
to execute documents including Options on behalf of the Committee;
subject in each such case to the requirements of Rule 16b-3 and
Section 162(m).
No member of the Board or Committee or employee of the
Company assisting the Board or Committee pursuant to the preceding
paragraph shall be liable for any action taken or determination
made in good faith.
3. ELIGIBILITY AND FACTORS TO BE CONSIDERED IN GRANTING
OPTIONS
Participation in this Plan shall be determined by the
Committee and (other than grants pursuant to Section 5 hereof)
shall be limited to those key personnel, who may or may not be
officers or members of the Board of Directors, of the Company and
the Subsidiaries who have the greatest impact on the Company's
long-term performance. In making any determination as to the key
personnel to whom Options shall be granted and as to the number of
shares to be subject thereto, the Committee shall take into
account, in each case, the level and responsibility of the
position, performance, compensation, assessed potential and such
other factors as the Committee shall deem relevant to the
accomplishment of the purposes of the Plan.
Directors of the Company or any Subsidiary who are not also
employees of the Company or any Subsidiary are not eligible to
participate in this Plan, except pursuant to Section 5 of the
Plan. Options may be granted under this Plan only for a reason
connected with employment or directorship.
4. STOCK SUBJECT TO PLAN
The stock to be offered under this Plan, upon exercise of
Options, may be authorized but unissued common shares, shares
previously issued and thereafter acquired by the Company (if
permitted by applicable law), or any combination thereof. An
aggregate of 2,500,000 shares are reserved for the grant of
Options under this Plan, any or all of which, at the Committee's
discretion, may be intended to qualify as incentive stock options
under Section 422 of the Code. The maximum number of shares of
the Company's common stock that may be covered by Options granted
under the Plan in any fiscal year of the Company to any single
participant is 100,000. Provided that the adjustment does not
cause compensation payable under this Plan to lose its
deductibility under Section 162(m), the maximum number of shares
subject to the Plan shall be appropriately adjusted to reflect any
change in the capitalization of the Company resulting from a stock
dividend, stock split, or other adjustment contemplated by Section
15 of this Plan and occurring after the adoption of this Plan.
If an Option granted hereunder shall expire or terminate for
any reason without having been fully exercised, the unpurchased
shares subject thereto shall again be available for the purposes
of this Plan.
The Committee will maintain records showing the cumulative
total of all shares subject to Options outstanding under this
Plan.
5. OPTIONS FOR DIRECTORS WHO ARE NEITHER OFFICERS NOR
EMPLOYEES
The grant of Options under this Section 5 shall be limited to
those directors of the Company who, on the date of grant, are
neither officers nor employees of the Company or any Subsidiary
(each an "Eligible Director").
On October 31 of each calendar year (or, if October 31 is not
a business day, the immediately preceding business day) (the
"Grant Date"), each Eligible Director shall automatically receive
from the Company an option to acquire 5,000 shares of common stock
at an exercise price equal to the closing price of the Common
stock on the Grant Date. Each such Option shall be exercisable
immediately and at any time and from time to time thereafter
(subject to Section 11 hereof) until and including the date which
is the business day immediately preceding the tenth anniversary of
the Grant Date. Notice of each such Option granted on a Grant
Date shall be given to each Eligible Director within a reasonable
time after the Grant Date. The number of shares subject to Options
granted under this Section 5 shall not be subject to adjustment
pursuant to Section 15., provided, however, that the Committee, in
its sole discretion, may increase or decrease such number of
shares from time to time.
This Section 5 may not be amended more frequently than once
every six months, other than to comport with changes in the
Internal Revenue Code or the rules and regulations thereunder.
6. ALLOTMENT OF SHARES
The Committee may, in its sole discretion and subject to the
provisions of the Plan, grant to eligible participants, on or
after the effective date hereof, Options to purchase shares of the
Company's common stock. Options granted under this Plan may, at
the discretion of the Committee, be: (i) Options which are
intended to qualify as incentive stock options under Section 422
of the Code (or any successor provision); (ii) Options which are
not intended to so qualify under Section 422 of the Code (or any
successor provision); or (iii) both of the foregoing if granted
separately and not in tandem. Each Option granted under this Plan
must be clearly identified as to its status as an incentive stock
option or not.
Options may be allotted to participants in such amounts,
subject to the limitations specified in this Plan, as the
Committee, in its sole discretion, may from time to time
determine.
In the case of Options intended to be incentive stock
options, the aggregate fair market value (determined at the time
of the Options' respective grants) of the shares with respect to
which such Options are exercisable for the first time by a
participant hereunder during any calendar year (under all plans
taken into account pursuant to Section 422(d) of the Code (or any
successor provision)) shall not exceed $100,000.
Options not intended to qualify as incentive stock options
under Section 422 of the Code (or any successor provision) may be
granted to any Plan participant without regard to the Section 422
limitations.
7. OPTION PRICE
The price per share at which each Option granted under the
Plan may be exercised shall be such price as shall be determined
by the Committee at the time of grant based on such criteria as
may be adopted by the Committee in good faith; provided, however,
in no case shall the exercise price per share be less than one
hundred percent (100%) of the fair market value of the common
stock at the time such Option is granted (or 110% for owners of
more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary). Other than adjustments
pursuant to Section 15 of this Plan, the price per share at which
an Option granted under this Plan may be exercised shall not be
changed after the date of grant.
If the Company's shares of common stock are:
(1) actively traded on any national securities
exchange or NASDAQ system that reports their sales prices,
fair market value shall be the closing price per share on
the date the Committee grants the Option;
(2) otherwise traded over the counter, fair market
value shall be the average of the final bid and asked prices
for the shares of the Company's common stock as reported for
the date the Committee grants the Option; or
(3) not traded, the Committee shall consider any
factor or factors which it believes affects fair market
value, and shall determine fair market value without regard
to any restriction other than a restriction which by its
terms will never lapse.
8. TERM OF OPTION
The term of each Option granted under the Plan shall be
established by the Committee, but shall not exceed ten (10) years
(or five (5) years for owners of more than 10% of the total
combined voting power of all classes of stock of the Company or of
a Subsidiary) from the date of the grant.
9. TIME OF GRANTING OPTIONS
The date of grant of an Option under the Plan shall, for all
purposes, be the date on which the Committee makes the
determination of granting such Option. Notice of the
determination shall be given to each individual to whom an Option
is so granted, within a reasonable time after the date of such
grant.
10. NON-TRANSFERABILITY
An Option granted to a participant under this Plan shall not
be transferable by him or her except by will or the laws of
descent and distribution or, to the extent not inconsistent with
the applicable provisions of the Code, pursuant to a domestic
relations order. In the case of an Option intended to be an
incentive stock option, such Option shall not be transferable by a
participant other than by will or the laws of descent and
distribution and during the optionee's lifetime shall be
exercisable only by him or her.
11. EXERCISE OF OPTIONS
Subject to the provisions of this Plan, an Option may be
exercisable at such time or times after the date of grant thereof,
on such schedule, and upon such conditions as may be determined by
the Committee at the time of grant, and an Option granted under
Section 5 hereof shall be exercisable in accordance with the
provisions of Section 5 hereof. The Committee may, in its
discretion, temporarily suspend the exercise of Options from time
to time for a period not to exceed thirty (30) days.
Exercisability of Incentive Stock Options. Any Option
granted under this Plan which is intended to qualify as an
incentive stock option under Section 422 of the Code (or any
successor provision) (other than an Option granted to a person who
was an executive officer of the Company (as designated by the
Board of Directors) at the time of the grant of the Option (a
"Grant-Date Officer")) shall terminate in full (whether or not
previously exercisable) prior to the expiration of its term on the
date the optionee ceases to be a director of the Company or an
employee of the Company or any Subsidiary of the Company, unless
the optionee shall (a) die while a director of the Company or an
employee of the Company or such Subsidiary, in which case the
participant's personal representative or representatives may
exercise all or part of the previously unexercised portion of the
Option at any time within one year after the participant's death
(but no later than the fixed term of the Option) for the number of
shares for which the Option could have been exercised at the time
the participant died, (b) become permanently or totally disabled
within the meaning of Section 22(e)(3) of the Code (or any
successor provision) while a director of the Company or an
employee of the Company or a Subsidiary, in which case the
participant or his or her personal representative may exercise the
previously unexercised portion of the Option at any time within
one year after termination of his or her employment or
directorship (but no later than the fixed term of the Option) for
the number of shares for which the Option could have been
exercised at the time the participant terminated his or her
employment because of becoming permanently or totally disabled,
(c) resign with the consent of the Company or have his or her
directorship with the Company or employment with the Company or
any Subsidiary terminated by the Company or any Subsidiary for any
reason other than because of an "Immediate Termination Event" (as
defined below), in which case the participant may exercise the
previously unexercised portion of the Option at any time within
three months after the participant's resignation or termination
(but no later than the fixed term of the Option) for the number of
shares for which the Option could have been exercised immediately
prior to such resignation or termination, (d) retire with the
consent of the Company after the optionee has reached his or her
55th birthday and has at least 10 years of service with the
Company or any Subsidiary, in which case the participant may
exercise the previously unexercised portion of such Option at any
time prior to the expiration of its fixed term for the number of
shares for which the Option could have been exercised immediately
prior to such retirement, or (e) retire with the consent of the
Company in any circumstance not covered by the preceding clause
(d), in which case the participant may exercise the previously
unexercised portion of such Option at any time within two years
after the participant's retirement (but no later than the fixed
term of the Option) for the number of shares for which the Option
could have been exercised immediately prior to such retirement.
Exercisability of Stock Options other than Incentive Stock
Options. Any Option granted under this Plan which is not intended
to qualify as an incentive stock option under Section 422 of the
Code (or any successor provision) (other than an Option granted to
a Grant-Date Officer) shall terminate in full (whether or not
previously exercisable) prior to the expiration of its term on the
date the optionee ceases to be a director of the Company or an
employee of the Company or any Subsidiary of the Company, unless
the optionee shall (a) die while a director of the Company or an
employee of the Company or such Subsidiary, in which case the
participant's personal representative or representatives may
exercise all or part of the previously unexercised portion of the
Option at any time within two years after the participant's death
(but no later than the fixed term of the Option) for the number of
shares for which the Option could have been exercised at the time
the participant died, (b) become permanently or totally disabled
within the meaning of Section 22(e)(3) of the Code (or any
successor provision) while a director of the Company or an
employee of the Company or a Subsidiary, in which case the
participant or his or her personal representative may exercise the
previously unexercised portion of the Option at any time within
two years after termination of his or her employment or
directorship (but no later than the fixed term of the Option) for
the number of shares for which the Option could have been
exercised at the time the participant terminated his or her
employment because of becoming permanently or totally disabled,
(c) resign with the consent of the Company or have his or her
directorship with the Company or employment with the Company or
any Subsidiary terminated by the Company or any Subsidiary for any
reason other than because of an "Immediate Termination Event" (as
defined below), in which case the participant may exercise the
previously unexercised portion of the Option at any time within
three months after the participant's resignation or termination
(but no later than the fixed term of the Option) for the number of
shares for which the Option could have been exercised immediately
prior to such resignation or termination, (d) retire with the
consent of the Company after the optionee has reached his or her
55th birthday and has at least 10 years of service with the
Company or any Subsidiary, in which case the participant may
exercise the previously unexercised portion of such Option at any
time prior to the expiration of its fixed term for the number of
shares for which the Option could have been exercised immediately
prior to such retirement, or (e) retire with the consent of the
Company in any circumstance not covered by the preceding clause
(d), in which case the participant may exercise the previously
unexercised portion of such Option at any time within two years
after the participant's retirement (but no later than the fixed
term of the Option) for the number of shares for which the Option
could have been exercised immediately prior to such retirement.
Options to Grant-Date Officers. In the case of an Option
granted to a Grant-Date Officer, the termination of such
participant's employment for a reason other than an Immediate
Termination Event (as defined below) shall not affect the term of
the Option and the Option shall be exercisable by the option
holder or his or her personal representative for its remaining
term notwithstanding such termination of employment.
Immediate Termination Event. An "Immediate Termination Event"
means termination of employment or directorship by reason of: (i)
failure to pass a drug test administered by the Company or any
Subsidiary; (ii) obvious intoxication on the job or possession of
any alcoholic substance on the premises of the Company or any
Subsidiary; (iii) misuse of Company or Subsidiary assets (which
shall include but not be limited to cash, inventory and/or
equipment); (iv) gross misconduct in connection with the
performance of job duties for the Company or any Subsidiary; or
(v) conviction of a felony or entry of a guilty or nolo contendere
plea to a felony offense by the individual. Notwithstanding
anything to the contrary herein, if a participant to whom an
Option shall have been granted shall have his or her directorship
with the Company or employment with the Company or a Subsidiary
terminated because of an Immediate Termination Event, all options
held by such participant shall terminate in full (whether or not
previously exercisable) prior to their term on the date that the
participant ceased to be an employee of the Company or a
Subsidiary or a director of the Company.
No Exercise After Fixed Term of Option. In no event may an
Option be exercised after the expiration of its fixed term.
12. METHOD OF EXERCISE
Each Option granted under this Plan shall be deemed exercised
when the holder: (a) shall indicate the decision to do so in
writing delivered to the Company; (b) shall tender to the Company
payment in full in cash, or in shares of the Company's common
stock, of the exercise price for the shares for which the Option
is exercised; (c) shall tender to the Company payment in full in
cash, or in shares of the Company's common stock, of the amount of
all federal and state withholding or other employment taxes
applicable to the taxable income, if any, of the holder resulting
from such exercise; and (d) shall comply with such other
reasonable requirements as the Committee may establish.
No person, estate or other entity shall have any of the
rights of a shareholder with reference to shares subject to an
Option until a certificate or certificates for the shares has been
delivered.
An Option granted under this Plan may be exercised for any
lesser number of shares than the full amount for which it could be
exercised. Such a partial exercise of an Option shall not affect
the right to exercise the Option from time to time in accordance
with this Plan for the remaining shares subject to the Option. An
optionee must exercise Options in 100 share increments, unless the
optionee is exercising Options upon or after termination of the
optionee's employment with the Company or a Subsidiary.
13. CANCELLATION AND REPLACEMENT OF OPTIONS
The Committee may, at any time or from time to time, permit
the voluntary surrender by the holder of any outstanding Option
under this Plan where such surrender is conditioned upon the
granting to such holder of new Option(s) for such number of shares
as the Committee shall determine, or may require such a voluntary
surrender as a condition precedent to the grant of new Option(s)
to such holder.
The Committee shall determine the terms and conditions of new
Options, including the prices at and periods during which they may
be exercised, in accordance with the provisions of this Plan, all
or any of which may differ from the terms and conditions of the
Options surrendered. Any such new Option(s) shall be subject to
all the relevant provisions of this Plan. In no event, however,
shall a cancellation and regrant be used to effect a "repricing"
that would result in a decrease in the per-share exercise price of
an Option granted under this Plan.
The shares subject to any Option(s) so surrendered shall no
longer be charged against the limitation provided in Section 4 of
this Plan and may again become shares subject to the Plan.
Except as may be otherwise required under Section 162(m) with
respect to "covered employees" (as defined in Section 162(m)), the
granting of new Option(s) in connection with the surrender of
outstanding Option(s) under this Plan shall be considered for the
purposes of the Plan as the grant of new Option(s) and not an
alteration, amendment or modification of the Plan or of the
Option(s) being surrendered.
14. TERMINATION OF OPTIONS
An Option granted under this Plan shall be considered
terminated in whole or in part to the extent that, in accordance
with the provisions of this Plan, it can no longer be exercised
for any shares originally subject to the Option. The shares
subject to any Option, or portion thereof, which terminates shall
no longer be charged against the limitation provided in Section 4
of this Plan and may again become shares subject to the Plan.
15. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of a stock dividend, recapitalization, merger,
reorganization, consolidation, stock split, stock consolidation or
any other change in the characteristics of the shares of common
stock, the shares available for purposes of this Plan or subject
to Options outstanding hereunder shall be correspondingly
increased, diminished or changed, so that by exercise of any
outstanding Option the participant shall receive, without change
in aggregate purchase price, securities, as so increased,
diminished or changed, (and other property, if applicable)
comparable to the securities (and property, if applicable) he or
she would have received if he or she had exercised his or her
Option prior to such event and had continued to hold the common
stock so purchased until affected by such event; provided with
respect to incentive stock options that, in the case of a
corporate merger, consolidation, acquisition of property or stock,
separation, reorganization or liquidation, the excess of the
aggregate fair market value of the shares subject to any Option
immediately after such event over the aggregate exercise price of
such shares is not more than the excess of the aggregate fair
market value of all shares subject to the Option immediately
before such event over the aggregate exercise price of such
shares. The Committee, in its discretion, may elect not to make
adjustments pursuant to this Section 15. to the extent necessary
to ensure that compensation payable under this Plan does not lose
its deductibility on account of Section 162(m).
Adjustments under this Section shall be made by the
Committee, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and
conclusive.
16. COMPLIANCE WITH SECURITIES AND EXCHANGE COMMISSION AND
OTHER REQUIREMENTS
No certificate(s) for shares shall be executed and delivered
upon exercise of an Option until the Company shall have taken such
action, if any, as is then required to comply with the provisions
of the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, the South Carolina Uniform Securities
Act, as amended, any other applicable state blue sky law(s) and
the requirements of any exchange or NASDAQ system on which the
common stock of the Company may, at the time, be listed.
In the case of the exercise of an Option by a person or
estate acquiring the right to exercise the Option by bequest or
inheritance, the Committee may require reasonable evidence as to
the ownership of the Option and may require such consent and
releases of taxing authorities as it may deem advisable.
17. NO RIGHT TO EMPLOYMENT
Neither the adoption of the Plan nor its operation, nor any
document describing or referring to the Plan, or any part thereof,
shall confer upon any participant under this Plan any right to
continue in the employ or as a director of the Company or any
Subsidiary, or shall in any way affect the right and power of the
Company or any Subsidiary to terminate the employment or
directorship of any participant in this Plan at any time with or
without assigning a reason therefore, to the same extent as the
Company or Subsidiary might have done if this Plan had not been
adopted.
18. AMENDMENT AND TERMINATION
The Committee may at any time suspend, amend or terminate
this Plan. The Committee may make such modifications of the terms
and conditions of a holder's Option as it shall deem advisable.
No Option may be granted during any suspension of the Plan or
after such termination. Notwithstanding the foregoing provisions
of this Section, no amendment, suspension or termination shall,
without the consent of the holder of an Option, alter or impair
any rights or obligations under any Option theretofore granted
under the Plan.
In addition to Committee approval of an amendment, if the
amendment would: (i) materially increase the benefits accruing to
participants; (ii) increase the number of securities issuable
under this Plan (other than an increase merely reflecting a change
in capitalization such as a stock dividend or stock split); (iii)
change the class of employees eligible to receive Options; or (iv)
otherwise materially modify the requirements for eligibility, then
such amendment shall be approved by a majority of the shares of
the Company's capital stock present and voting either in person or
by proxy, and entitled to vote, at a meeting duly held of the
stockholders of the Company.
19. USE OF PROCEEDS
The proceeds received by the Company from the sale of shares
pursuant to Options granted under the Plan shall be used for
general corporate purposes as determined by the Board.
20. INDEMNIFICATION OF COMMITTEE
In addition to such other rights of indemnification as they
may have as members of the Board, the members of the Committee
shall, to the fullest extent permitted by law, be indemnified by
the Company against the reasonable expenses, including attorney's
fees, actually and necessarily incurred in connection with the
defense of any action, suit, investigation or other proceeding, or
in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to
act under or in connection with the Plan or any Option granted
thereunder, and against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction
of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such
action, suit or proceeding that such Board member (or Committee
member, as applicable) is liable for gross negligence or
misconduct in the performance of his or her duties; provided that
within 60 days after institution of any such action, suit or
proceeding the Board member (or Committee member, as applicable)
shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
21. EFFECTIVE DATE OF THE PLAN
This Plan shall be effective as of May 1, 2002, subject,
however, to approval by the requisite shareholder vote at the
annual meeting of shareholders of the Company held or to be held
on or about May 1, 2002.
22. SECTION 162(m)
This Plan and its operation are intended to satisfy the
requirements of Section 162(m) with respect to permitting the
deductibility of compensation for those participants who are
"covered employees" for purposes of Section 162(m). In the event
that any provision of this Plan or an Option granted under this
Plan does not so satisfy Section 162(m), that provision shall be
deemed amended to the extent necessary to satisfy Section 162(m).
23. DURATION OF THE PLAN
Unless previously terminated by the Committee, this Plan
shall terminate at the close of business on April 30, 2012, and no
Option shall be granted under it thereafter, but such termination
shall not affect any option theretofore granted under the Plan.