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Nathan's Famous, Inc.
1998 Stock Option Plan
SECTION 1. GENERAL PROVISIONS
1.1. Name and General Purpose
The name of this plan is the Nathan's Famous 1998 Stock Option Plan
(hereinafter called the "Plan"). The purpose of the Plan is to enable Nathan's
Famous, Inc. (the "Company") and its subsidiaries and affiliates to foster and
promote the interests of the Company by attracting and retaining directors,
officers and employees of the Company, and consultants to the Company, who
contribute to the Company's success by their ability, ingenuity and industry, to
enable such directors, officers, employees and consultants to participate in the
long-term success and growth of the Company by giving them a proprietary
interest in the Company and to provide incentive compensation opportunities
competitive with those of competing corporations.
1.2 Definitions
a. "Affiliate" means any person or entity controlled by or under
common control with the Company, by virtue of the ownership of
voting securities, by contract or otherwise.
b. "Board" means the Board of Directors of the Company.
c. "Change in Control" means a change of control of the Company,
or in any person directly or indirectly controlling the
Company, which shall mean:
(a) a change in control as such term is presently defined in
Regulation 240.12b-(f) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"); or
(b) if any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act) other than the Company or any
"person" who on the date of this Agreement is a director or
officer of the Company, becomes the "beneficial owner" (as
defined in Rule 13(d)-3 under the Exchange Act) directly or
indirectly, of securities of the Company representing twenty
percent (20%) or more of the voting power of the Company's
then outstanding securities; or
(c) if during any period of two (2) consecutive years during
the term of this Plan, individuals who at the beginning of such
period constitute the Board of Directors, cease for any reason
to constitute at least a majority thereof.
d. "Committee" means the Committee referred to in Section 1.3 of
the Plan.
e. "Common Stock" means shares of the Common Stock, par value
$.01 per share, of the Company.
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f. "Company" means Nathan's Famous, Inc., a corporation organized
under the laws of the State of Delaware (or any successor
corporation).
g. "Fair Market Value" means the market price of the Common Stock
on the Nasdaq National Market System on the date of the grant
or on any other date on which the Common Stock is to be valued
hereunder. If no sale shall have been reported on the Nasdaq
National Market System on such date, Fair Market Value shall
be determined by the Committee.
h. "Non-Employee Director" shall have the meaning set forth in
Rule 16(b) promulgated by the Securities and Exchange
Commission ("Commission").
i. "Option" means any option to purchase Common Stock under
Section 2 of the Plan.
j. "Option Agreement" means the option agreement described in
Section 2.4 of the Plan.
k. "Participant" means any director, officer, employee or
consultant of the Company, a Subsidiary or an Affiliate who is
selected by the Committee to participate in the Plan.
l. "Subsidiary" means any corporation in which the Company
possesses directly or indirectly 50% or more of the combined
voting power of all classes of stock of such corporation.
m. "Total Disability" means accidental bodily injury or sickness
which wholly and continuously disabled an optionee. The
Committee, whose decisions shall be final, shall make a
determination of Total Disability.
1.3 Administration of the Plan
The Plan shall be administered by the Committee appointed by the
Board consisting of two or more members of the Board all of whom shall be
Non-Employee Directors. The Committee shall serve at the pleasure of the Board
and shall have such powers as the Board may, from time to time, confer upon it.
Subject to this Section 1.3, the Committee shall have sole and
complete authority to adopt, alter, amend or revoke such administrative rules,
guidelines and practices governing the operation of the Plan as it shall, from
time to time, deem advisable, and to interpret the terms and provisions of the
Plan.
The Committee shall keep minutes of its meetings and of action taken
by it without a meeting. A majority of the Committee shall constitute a quorum,
and the acts of a majority of the members present at any meeting at which a
quorum is present, or acts approved in writing by all of the members of the
Committee without a meeting, shall constitute the acts of the Committee.
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1.4 Eligibility
Stock Options may be granted only to directors, officers, employees
or consultants of the Company or a Subsidiary or Affiliate. Subject to Section
2.3, any person who has been granted any Option may, if he is otherwise
eligible, be granted an additional Option or Options.
1.5 Shares
The aggregate number of shares reserved for issuance pursuant to the
Plan shall be 500,000 shares of Common Stock, or the number and kind of shares
of stock or other securities which shall be substituted for such shares or to
which such shares shall be adjusted as provided in Section 1.6.
Such number of shares may be set aside out of the authorized but
unissued shares of Common Stock or out of issued shares of Common Stock acquired
for and held in the Treasury of the Company, not reserved for any other purpose.
Shares subject to, but not sold or issued under, any Option terminating or
expiring for any reason prior to its exercise in full will again be available
for Options thereafter granted during the balance of the term of the Plan.
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1.6 Adjustments Due to Stock Splits,
Mergers, Consolidation, Etc.
If, at any time, the Company shall take any action, whether by stock
dividend, stock split, combination of shares or otherwise, which results in a
proportionate increase or decrease in the number of shares of Common Stock
theretofore issued and outstanding, the number of shares which are reserved for
issuance under the Plan and the number of shares which, at such time, are
subject to Options shall, to the extent deemed appropriate by the Committee, be
increased or decreased in the same proportion, provided, however, that the
Company shall not be obligated to issue fractional shares.
Likewise, in the event of any change in the outstanding shares of
Common Stock by reason of any recapitalization, merger, consolidation,
reorganization, combination or exchange of shares or other corporate change, the
Committee shall make such substitution or adjustments, if any, as it deems to be
appropriate, as to the number or kind of shares of Common Stock or other
securities which are reserved for issuance under the Plan and the number of
shares or other securities which, at such time are subject to Options.
In the event of a Change in Control, at the option of the Board or
Committee, (a) all Options outstanding on the date of such Change in Control
shall, for a period of sixty (60) days following such Change in Control, become
immediately and fully exercisable, and (b) an optionee will be permitted to
surrender for cancellation within sixty (60) days after such Change in Control
any Option or portion of an Option which was granted more than six (6) months
prior to the date of such surrender, to the extent not yet exercised, and to
receive a cash payment in an amount equal to the excess, if any, of the Fair
Market Value (on the date of surrender) of the shares of Common Stock subject to
the Option or portion thereof surrendered, over the aggregate purchase price for
such shares under the Option.
1.7 Non-Alienation of Benefits
Except as herein specifically provided, no right or unpaid benefit
under the Plan shall be subject to alienation, assignment, pledge or charge and
any attempt to alienate, assign, pledge or charge the same shall be void. If any
Participant or other person entitled to benefits hereunder should attempt to
alienate, assign, pledge or charge any benefit hereunder, then such benefit
shall, in the discretion of the Committee, cease.
1.8 Withholding or Deduction for Taxes
If, at any time, the Company or any Subsidiary or Affiliate is
required, under applicable laws and regulations, to withhold, or to make any
deduction for any taxes, or take any other action in connection with any Option
exercise, the Participant shall be required to pay to the Company or such
Subsidiary or Affiliate, the amount of any taxes required to be withheld, or, in
lieu thereof, at the option of the Company, the Company or such Subsidiary or
Affiliate may accept a sufficient number of shares of Common Stock to cover the
amount required to be withheld.
1.9 Administrative Expenses
The entire expense of administering the Plan shall be borne by the
Company.
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1.10 General Conditions
a. The Board or the Committee may, from time to time, amend,
suspend or terminate any or all of the provisions of the Plan,
provided that, without the Participant's approval, no change
may be made which would alter or impair any right theretofore
granted to any Participant.
b. With the consent of the Participant affected thereby, the
Committee may amend or modify any outstanding Option in any
manner not inconsistent with the terms of the Plan, including,
without limitation, and irrespective of the provisions of
Section 2.3(c) below, to accelerate the date or dates as of
which an installment of an Option becomes exercisable.
c. Nothing contained in the Plan shall prohibit the Company or
any Subsidiary or Affiliate from establishing other additional
incentive compensation arrangements for employees of the
Company or such Subsidiary or Affiliate.
d. Nothing in the Plan shall be deemed to limit, in any way, the
right of the Company or any Subsidiary or Affiliate to
terminate a Participant's employment with the Company (or such
Subsidiary or Affiliate) at any time.
e. Any decision or action taken by the Board or the Committee
arising out of or in connection with the construction,
administration, interpretation and effect of the Plan shall be
conclusive and binding upon all Participants and any person
claiming under or through any Participant.
f. No member of the Board or of the Committee shall be liable for
any act or action, whether of commission or omission, (i) by
such member except in circumstances involving actual bad
faith, nor (ii) by any other member or by any officer, agent
or employee.
1.11 Compliance with Applicable Law
Notwithstanding any other provision of the Plan, the Company shall
not be obligated to issue any shares of Common Stock, or grant any Option with
respect thereto, unless it is advised by counsel of its selection that it may do
so without violation of the applicable Federal and State laws pertaining to the
issuance of securities and the Company may require any stock certificate so
issued to bear a legend, may give its transfer agent instructions limiting the
transfer thereof, and may take such other steps as in its judgment are
reasonably required to prevent any such violation.
1.12 Effective Dates
The Plan was adopted by the Board on April 6, 1998. The Plan shall
terminate on April 5, 2008.
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Section 2. OPTION GRANTS
2.1 Authority of Committee
Subject to the provisions of the Plan, the Committee shall have the
sole and complete authority to determine (i) the Participants to whom Options
shall be granted; (ii) the number of shares to be covered by each Option; and
(iii) the conditions and limitations, if any, in addition to those set forth in
Sections 2 and 3 hereof, applicable to the exercise of an Option, including
without limitation, the nature and duration of the restrictions, if any, to be
imposed upon the sale or other disposition of shares acquired upon exercise of
an Option.
Stock Options granted under the Plan shall be non-qualified stock
options.
The Committee shall have the authority to grant Options.
2.2 Option Exercise Price
The price of stock purchased upon the exercise of Options granted
pursuant to the Plan shall be the Fair Market Value thereof at the time that the
Option is granted.
The purchase price is to be paid in full in cash, certified or bank
cashier's check or, at the option of the Company, Common Stock valued at its
Fair Market Value on the date of exercise, or a combination thereof, when the
Option is exercised and stock certificates will be delivered only against such
payment.
2.3 Option Grants
Each Option will be subject to the following provisions:
a. Term of Option
An Option will be for a term of not more than ten years from
the date of grant.
b. Exercise
(i) By an Employee:
Subject to the power of the Committee under Section 1.10(b)
above and except in the manner described below upon the death
of the optionee, an Option may be exercised only in
installments as follows: up to one-half of the subject shares
on and after the first anniversary of the date of grant, up to
all of the subject shares on and after the second such
anniversary of the date of the grant of such Option but in no
event later than the expiration of the term of the Option.
An Option shall be exercisable during the optionee's lifetime
only by the optionee and shall not be exercisable by the
optionee unless, at all times since the date of grant and at
the time of exercise, such optionee is an employee of or
providing services to the
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Company, any parent corporation of the Company or any
Subsidiary or Affiliate, except that, upon termination of all
such employment or provision of services (other than by death,
Total Disability, or by Total Disability followed by death in
the circumstances provided below), the optionee may exercise
an Option at any time within three months thereafter but only
to the extent such Option is exercisable on the date of such
termination.
Upon termination of all such employment by Total Disability,
the optionee may exercise such Options at any time within
three years thereafter, but only to the extent such Option is
exercisable on the date of such termination.
In the event of the death of an optionee (i) while an employee
of or providing services to the Company, any parent
corporation of the Company or any Subsidiary or Affiliate, or
(ii) within three months after termination of all such
employment or provision of services (other than for Total
Disability) or (iii) within three years after termination on
account of Total Disability of all such employment or
provision of services, such optionee's estate or any person
who acquires the right to exercise such option by bequest or
inheritance or by reason of the death of the optionee may
exercise such optionee's Option at any time within the period
of three years from the date of death. In the case of clauses
(i) and (iii) above, such Option shall be exercisable in full
for all the remaining shares covered thereby, but in the case
of clause (ii) such Option shall be exercisable only to the
extent it was exercisable on the date of such termination.
(ii) By Persons other than Employees:
If the optionee is not an employee of the Company or the
parent corporation of the Company or any Subsidiary or
Affiliate, expiration of such optionee's right to exercise his
Options shall be established and determined by the Committee
in the Option Agreement covering the Options granted to such
optionee.
Notwithstanding the foregoing provisions regarding the
exercise of an Option in the event of death, Total Disability,
other termination of employment or provision of services or
otherwise, in no event shall an Option be exercisable in whole
or in part after the termination date provided in the Option
Agreement.
c. Transferability
An Option granted under the Plan shall not be transferable
otherwise than by will or by the laws of descent and
distribution, except as may be permitted by the Board or the
Committee.
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2.4 Agreements
In consideration of any Options granted to a Participant under the
Plan, each such Participant shall enter into an Option Agreement with the
Company providing, consistent with the Plan, such terms as the Committee may
deem advisable.
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