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EXHIBIT 10.5
FAMOUS DAVE'S OF AMERICA, INC.
1998 DIRECTOR STOCK OPTION PLAN
(as adopted June 11, 1998)
1. PURPOSE. The purpose of the Famous Dave's of America, Inc. 1998
Director Stock Option Plan (the "Plan") is to advance the interests of Famous
Dave's of America, Inc. (the "Company") and its shareholders by encouraging
share ownership by members of the Board of Directors of the Company (the
"Board") who are not employees of the Company or any of its subsidiaries, in
order to promote long-term shareholder value through continuing ownership of the
Company's Common Stock.
2. ADMINISTRATION. The Plan shall be administered by the Board. The
Board shall have all the powers vested in it by the terms of the Plan, such
powers to include authority (within the limitations described herein) to
prescribe the form of the agreement embodying awards of nonqualified stock
options made under the Plan ("Options"). The Board shall, subject to the
provisions of the Plan, grant Options under the Plan and shall have the power to
construe the Plan, to determine all questions arising thereunder and to adopt
and amend such rules and regulations for the administration of the Plan as it
may deem desirable. Any decisions of the Board in the administration of the
Plan, as described herein, shall be final and conclusive. The Board may act only
by a majority of its members in office, except that the members thereof may
authorize any one or more of their number or any other officer of the Company to
execute and deliver documents on behalf of the Board. No member of the Board
shall be liable for anything done or omitted to be done by him or by any other
member of the Board in connection with the Plan, except for his own willful
misconduct or as expressly provided by statute.
3. PARTICIPATION. Each member of the Board who is not an employee of
the Company or any of its subsidiaries (a "Non-Employee Director") shall be
eligible to receive an Option in accordance with Paragraph 5 below.
4. AWARDS UNDER THE PLAN.
(a) Awards under the Plan shall include only Options, which are rights
to purchase Common Stock of the Company, having $.01 par value (the "Common
Stock"). Such Options are subject to the terms, conditions and restrictions
specified in Paragraph 5 below.
(b) There may be issued under the Plan pursuant to the exercise of Options
an aggregate of not more than 250,000 shares of Common Stock, subject to
adjustment as provided in Paragraph 6 below. If any Option is canceled,
terminates or expires unexercised, in whole or in part, any shares of
Common Stock that would otherwise have been issuable pursuant thereto will
be available for issuance under new Options.
(c) A Non-Employee Director to whom an Option is granted (and any person
succeeding to such a Non-Employee Director's rights pursuant to the Plan)
shall have no rights as a shareholder with respect to any Common Stock
issuable pursuant to any such Option until the date of the issuance of a
stock certificate to him for such shares. Except as provided in Paragraph 6
below, no
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adjustment shall be made for dividends, distributions or other rights
(whether ordinary or extraordinary, and whether in cash, securities or
other property) for which the record date is prior to the date such stock
certificate is issued.
5. NONQUALIFIED STOCK OPTIONS. Each Option granted under the Plan
shall be evidenced by an agreement in such form as the Board shall prescribe
from time to time in accordance with the Plan and shall comply with the
following terms and conditions:
(a) The Option exercise price shall be the "Fair Market Value" (as
herein defined) of the Common Stock subject to such Option on the date the
Option is granted. Fair Market Value shall be the closing sales price of a share
of Common Stock on the date of grant as reported on the Nasdaq Market or, if the
Nasdaq Market is closed on that date, on the last preceding date on which the
Nasdaq Market was open for trading, but in no event will such Option exercise
price be less than the par value of the Common Stock.
(b) The Board shall determine the number of shares of Common Stock
subject to each Option granted to Non-Employee Directors and, subject to Section
5(d) hereof, the vesting schedule of each such Option. Notwithstanding the
foregoing, once such Options become outstanding, a Non-Employee Director will
still be entitled to the anti-dilution adjustments provided for in Section 6
hereof.
(c) The Option shall not be transferable by the optionee otherwise than
by will or the laws of descent and distribution, and shall be exercisable during
his lifetime only by him.
(d) Options shall not be exercisable:
(i) except pursuant to the vesting schedule established
by the Board of Directors and after the expiration of ten years
from the date it is granted. Notwithstanding anything to the
contrary herein, an Option shall automatically become immediately
exercisable in full: (i) upon the removal of the Non-Employee
Director from the Board without cause; or (ii) in the event of a
"change in control" of the Company, as defined in any existing
agreements between the Company and its senior officers.
(ii) unless payment in full is made for the shares of
Common Stock being acquired thereunder at the time of exercise,
such payment shall be made in United States dollars by cash or
check, or in lieu thereof, by tendering to the Company Common Stock
owned by the person exercising the Option and having a Fair Market
Value equal to the cash exercise price applicable to such Option,
or by a combination of United States dollars and Common Stock as
aforesaid; and
(iii) unless the person exercising the Option has been at all times
during the period beginning with the date of grant of the Option
and ending on the date of such exercise, a Non-Employee Director of
the Company, except that
(A) if such person shall cease to be such a Non-Employee
Director for reasons other than death, while holding an
Option that has not expired and has not been fully
exercised, such person may, at any time within three years
of the date he ceased to be a Non-Employee Director (but in
no event after the
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Option has expired under the provisions of subparagraph
5(d)(i) above), exercise the Option with respect to any
Common Stock as to which he could have exercised on the date
he ceased to be such a Non-Employee Director; or
(B) if any person to whom an Option has been granted shall
die holding an Option that has not expired and has not been
fully exercised, his executors, administrators, heirs or
distributees, as the case may be, may, at any time within
one year after the date of such death (but in no event after
the Option has expired under the provisions of subparagraph
5(d)(i) above), exercise the Option with respect to any
shares subject to the Option.
6. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding Common Stock of the Company by reason of any stock split, stock
dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, reorganization, combination or exchange of
shares, a sale by the Company of substantially all of its assets, any
distribution to shareholders other than a normal cash dividend, or other
extraordinary or unusual event, the number or kind of shares that may be issued
under the Plan pursuant to subparagraph 4(b) above, and the number or kind of
shares subject to, and the Option price per share under, all outstanding Options
shall be automatically adjusted so that the proportionate interest of the
participant shall be maintained as before the occurrence of such event; such
adjustment in outstanding Options shall be made without change in the total
Option exercise price applicable to the unexercised portion of such Options and
with a corresponding adjustment in the Option exercise price per share, and such
adjustment shall be conclusive and binding for all purposes of the Plan.
7. MISCELLANEOUS PROVISIONS.
(a) Except as expressly provided for in the Plan, no Non-Employee
Director or other person shall have any claim or right to be granted an Option
under the Plan. Neither the Plan nor any action taken hereunder shall be
construed as giving any Non-Employee Director any right to be retained in the
service of the Company.
(b) A participant's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part either
directly or by operation of law or otherwise (except in the event of a
participant's death, by will or the laws of descent and distribution),
including, but not by way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy or in any other manner, and no such right or
interest of any participant in the Plan shall be subject to any obligation or
liability of such participant.
(c) Common Stock shall not be issued hereunder unless counsel for the
Company shall be satisfied that such issuance will be in compliance with
applicable federal, state, local and foreign securities, securities exchange and
other applicable laws and requirements.
(d) It shall be a condition to the obligation of the Company to issue
Common Stock upon exercise of an Option, that the participant (or any
beneficiary or person entitled to act under subparagraph 5(d)(iii)(B) above) pay
to the Company, upon its demand, such amount as may be requested by the Company
for the purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes. If the amount requested is not paid, the Company
may refuse to issue such Common Stock.
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(e) The expenses of the Plan shall be borne by the Company.
(f) By accepting any Option or other benefit under the Plan, each
participant and each person claiming under or through him shall be
conclusively deemed to have indicated his acceptance and ratification
of, and consent to, any action taken under the Plan by the Company or
the Board.
(g) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Options hereunder or
any Common Stock issued pursuant hereto as may be required by Section
13 or 15(d) of the Securities Exchange Act of 1934, as amended, or any
other applicable statute, rule or regulation.
8. AMENDMENT OR DISCONTINUANCE. The Plan may be amended at any time and
from time to time by the Board as the Board shall deem advisable; provided,
however, that no amendment shall become effective without shareholder approval
if such shareholder approval is required by law, rule or regulation, and in no
event shall the Plan be amended more than once every six months, other than to
comport with changes in the Internal Revenue Code of 1986, as amended, the
Employee Retirement Income Security Act or the rules thereunder. No amendment of
the Plan shall materially and adversely affect any right of any participant with
respect to any Option theretofore granted without such participant's written
consent.
9. TERMINATION. This Plan shall terminate upon the earlier of the
following dates or events to occur upon the adoption of a resolution of the
Board terminating the Plan or ten years from the date the Plan is initially
approved and adopted by the shareholders of the Company. No termination of the
Plan shall materially and adversely affect any of the rights or obligations of
any person, without his consent, under any Option theretofore granted under the
Plan.
10. EFFECTIVE DATE OF PLAN. The Plan will become effective on the date
that it is approved by the affirmative vote of the holders of the greater of (a)
a majority of the outstanding shares of Common Stock of the Company present and
entitled to vote or (b) a majority of the voting power of the minimum number of
shares entitled to vote that would constitute a quorum for transaction of
business at the Company's Annual Meeting of Shareholders.