Exhibit 4.3
U.S. FRANCHISE SYSTEMS, INC.
AMENDED AND RESTATED 1996 STOCK OPTION PLAN
SECTION 1. Purpose. The purposes of this U.S. Franchise Systems, Inc.
1996 Stock Option Plan are to promote the interests of U.S. Franchise Systems,
Inc. ("USFS" or the "Company") and its stockholders by (i) attracting and
retaining exceptional officers and other key employees of the Company and its
Subsidiaries, and consultants, advisors and others whom the Committee determines
possess skills that would be an asset to the Company or any of its Subsidiaries;
(ii) motivating such individuals by means of performance-related incentives to
achieve longer-range performance goals; and (iii) enabling such individuals to
participate in the long-term growth and financial success of the Company.
SECTION 2. Definitions. As used in the Plan, the following terms shall
have the meanings set forth below:
"Affiliate" shall mean (i) any entity that, directly or indirectly, is
controlled by or controls the Company and (ii) any entity in which the Company
has a significant equity interest, in either case as determined by the
Committee.
"Board" shall mean the Board of Directors of the Company.
"Change of Control" shall mean the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition, in one or a
series of related transactions, of all or substantially all of the assets of the
Company to any "person" or "group" (as such terms are used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) other than the Permitted Holders, (ii) any
person or group, other than the Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that
a person shall be deemed to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total voting power of the voting stock of the Company, including
by way of merger, consolidation or otherwise or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board (together with any new directors whose election by such Board or whose
nomination for election by the stockholders of the Company was approved by a
vote of a majority of the directors of the Company then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Committee" shall mean (i) a committee of the Board designated by the
Board to administer the Plan and composed of not less two directors, each of
whom is intended to be a "Non-Employee Director" (within the meaning of Rule
16b-3) and an "outside director" (within the meaning of Code section 162(m)) to
the extent Rule 16b-3 and Code section 162(m), respectively, are applicable to
the Company or (ii) if at any time such a committee has not been so designated
by the Board, the Board or any authorized committee thereof.
"Company" shall mean U.S. Franchise Systems, Inc., together with any
successor thereto.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" shall mean, (A) with respect to any property other
than Shares, the fair market value of such property determined by such methods
or procedures as shall be established from time to time by the Committee and (B)
with respect to the Shares, as of any date, (i) the mean between the high and
low sales prices of the Shares as reported on the composite tape for securities
traded on the New York Stock Exchange for such date (or if not then trading on
the New York Stock Exchange, the mean between the high and low sales price of
the Shares on the stock exchange or over-the-counter market on which the Shares
are principally trading on such date), or if, there were no sales on such date,
on the closest preceding date on which there were sales of Shares or (ii) in the
event there shall be no public market for the Shares on such date, the fair
market value of the Shares as determined in good faith by the Committee.
"Incentive Stock Option" shall mean a right to purchase Shares from the
Company that is granted under Section 6 of the Plan and that is intended to meet
the requirements of Section 422 of the Code or any successor provision thereto.
"Non-Qualified Stock Option" shall mean a right to purchase Shares from
the Company that is granted under Section 6 of the Plan and that is not intended
to be an Incentive Stock Option.
"Option" shall mean an Incentive Stock Option or a Non-Qualified Stock
Option.
"Option Agreement" shall mean any written agreement, contract, or other
instrument or document evidencing any Option, which may, but need not, be
executed or acknowledged by a Participant.
"Participant" shall mean any officer or other key employee (including
any prospective officer or key employee) of the Company or its Subsidiaries, and
any consultant, advisor or other person whom the Committee determines possesses
skills that would be an asset to the Company or any of its Subsidiaries, in each
case who is eligible for an Option under Section 5 and selected by the Committee
to receive an Option under the Plan.
"Permitted Holders" shall mean, as of the date of determination, any
and all of Neal K. Aronson and Michael A. Leven, their spouses, their siblings
and their siblings' spouses, their parents and descendants of any of them
(whether natural or adopted) (collectively, the "Family Group") and (iii) any
trust established and maintained primarily for the benefit of any member of the
Family Group and any entity controlled by any member of the Family Group.
"Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, unincorporated organization, government
or political subdivision thereof or other entity.
"Plan" shall mean this U.S. Franchise Systems, Inc. 1996 Stock Option
Plan.
"Rule 16b-3" shall mean Rule 16b-3 as promulgated and interpreted by
the SEC under the Exchange Act, or any successor rule or regulation thereto as
in effect from time to time.
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"SEC" shall mean the Securities and Exchange Commission or any
successor thereto and shall include the Staff thereof.
"Shares" shall mean shares of the Class A Common Stock of the Company,
$.01 par value, or such other securities of the Company (i) into which such
common shares shall be changed by reason of a recapitalization, merger,
consolidation, split-up, combination, exchange of shares or other similar
transaction or (ii) as may be determined by the Committee pursuant to Section
4(b).
"Subsidiary" shall mean (i) any entity that, directly or indirectly, is
controlled by the Company and (ii) any entity in which the Company has a
significant equity interest, in either case as determined by the Committee
"Substitute Awards" shall have the meaning specified in Section 4(c).
SECTION 3. Administration. (a) The Plan shall be administered by the
Committee. Subject to the terms of the Plan and applicable law, and in addition
to other express powers and authorizations conferred on the Committee by the
Plan, the Committee shall have full power and authority to: (i) designate
Participants; (ii) determine the type or types of Options to be granted to a
Participant; (iii) determine the number of Shares to be covered by, or with
respect to which payments, rights, or other matters are to be calculated in
connection with, Options; (iv) determine the terms and conditions of any Option;
(v) determine whether, to what extent, and under what circumstances Options may
be settled or exercised in cash, Shares, other securities, or other property, or
canceled, forfeited, or suspended and the method or methods by which Options may
be settled, exercised, canceled, forfeited, or suspended; (vi) determine
whether, to what extent, and under what circumstances cash, Shares, other
securities, other property, and other amounts payable with respect to an Option
shall be deferred either automatically or at the election of the holder thereof
or of the Committee; (vii) interpret, administer reconcile any inconsistency,
correct any default and/or supply any omission in the Plan and any instrument or
agreement relating to, or Option made under, the Plan; (viii) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it shall
deem appropriate for the proper administration of the Plan; and (ix) make any
other determination and take any other action that the Committee deems necessary
or desirable for the administration of the Plan.
(b) Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or with respect to
the Plan or any Option shall be within the sole discretion of the Committee, may
be made at any time and shall be final, conclusive, and binding upon all
Persons, including the Company, any Affiliate, any Participant, any holder or
beneficiary of any Option, and any shareholder.
(c) The mere fact that a Committee member shall fail to qualify as a
"Non- Employee Director" or "outside director" within the meaning of Rule 16b-3
and Code section 162(m), respectively, shall not invalidate any Option granted
by the Committee which Option is otherwise validly made under the Plan.
(d) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
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SECTION 4. Shares Available for Options.
(a) Shares Available. Subject to adjustment as provided in Section
4(b), the aggregate number of Shares with respect to which Options may be
granted under the Plan shall be 725,000 and the maximum number of Shares with
respect to which Options may be granted to any Participant in any fiscal year
shall be 250,000. If, after the effective date of the Plan, any Shares covered
by an Option granted under the Plan, or to which such an Option relates, are
forfeited, or if an Option has expired, terminated or been canceled for any
reason whatsoever (other than by reason of exercise or vesting) and in either
such case a Participant has received no benefits of ownership with respect to
the forfeited Shares or the Shares to which such expired, terminated or canceled
Option relates (other than voting rights and dividends that were forfeited in
connection with such forfeiture, expiration, termination or cancellation), then
the Shares covered by such Option shall, to the maximum extent permitted under
Section 162(m) of the Code during any period when Section 162(m) is applicable
to the Company, again be, or shall become, Shares with respect to which Options
may be granted hereunder.
(b) Adjustments. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Shares, other
securities, or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, issuance
of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that an adjustment is determined by the Committee in its discretion to be
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, then the
Committee shall, in such manner as it may deem equitable, adjust any or all of
(i) the number of Shares or other securities of the Company (or number and kind
of other securities or property) with respect to which Options may be granted,
(ii) the number of Shares or other securities of the Company (or number and kind
of other securities or property) subject to outstanding Options, and (iii) the
grant or exercise price with respect to any Option or, if deemed appropriate,
make provision for a cash payment to the holder of an outstanding Option in
consideration for the cancellation of such Option.
(c) Substitute Awards. Options may, in the discretion of the Committee,
be made under the Plan in assumption of, or in substitution for, outstanding
awards previously granted by the Company or its Affiliates or a company acquired
by the Company or with which the Company combines ("Substitute Awards"). The
number of Shares underlying any Substitute Awards shall be counted against the
aggregate number of Shares available for Options under the Plan.
(d) Sources of Shares Deliverable Under Options. Any Shares delivered
pursuant to an Option may consist, in whole or in part, of authorized and
unissued Shares or of treasury Shares.
SECTION 5. Eligibility. Any officer or other key employee of the
Company or any of its Subsidiaries (including any prospective officer or key
employee), and any consultant, advisor or other person whom the Committee
determines possesses skills that would be an asset to the Company or any of its
Subsidiaries, who is not a member of the Committee, shall be eligible to be
designated a Participant.
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SECTION 6. Stock Options.
(a) Grant. Subject to the provisions of the Plan, the Committee shall
have sole and complete authority to determine the Participants to whom Options
shall be granted, the number of Shares to be covered by each Option, the
exercise price therefor and the conditions and limitations applicable to the
exercise of the Option. The Committee shall have the authority to grant
Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant
both types of Options. In the case of Incentive Stock Options, the terms and
conditions of such grants shall be subject to and comply with such rules as may
be prescribed by Section 422 of the Code, as from time to time amended, and any
regulations implementing such statute. All Options when granted under the Plan
are intended to be Non-Qualified Stock Options, unless the applicable Option
Agreement expressly states that the Option is intended to be an Incentive Stock
Option. If an Option is intended to be an Incentive Stock Option, and if for any
reason such Option (or any portion thereof) shall not qualify as an Incentive
Stock Option, then, to the extent of such nonqualification, such Option (or
portion thereof) shall be regarded as a Non-Qualified Stock Option appropriately
granted under the Plan; provided that such Option (or portion thereof) otherwise
complies with the Plan's requirements relating to Non-Qualified Stock Options.
(b) Exercise Price. The Committee shall establish the exercise price at
the time each Option is granted, which exercise price shall be set forth in the
applicable Option Agreement.
(c) Exercise. Each Option shall be exercisable at such times and
subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Option Agreement or thereafter. The
Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of federal or
state securities laws, as it may deem necessary or advisable;
(d) Payment. No Shares shall be delivered pursuant to any exercise of
an Option until payment in full of the aggregate exercise price therefor is
received by the Company. Such payment may be made in cash, or its equivalent,
or, if and to the extent permitted by the Committee, (i) by exchanging Shares
owned by the optionee (which are not the subject of any pledge or other security
interest and which have been owned by such optionee for at least six months) or
(ii) if permitted by and subject to such rules as may be established by the
Committee, through delivery of irrevocable instructions to a broker to sell such
Shares and deliver promptly to the Company an amount equal to the aggregate
exercise price, or by a combination of the foregoing, provided that the combined
value of all cash and cash equivalents and the Fair Market Value of any such
Shares so tendered to the Company as of the date of such tender is at least
equal to such aggregate exercise price.
SECTION 7. Amendment and Termination.
(a) Amendments to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan or any portion thereof at any time; provided
that no such amendment, alteration, suspension, discontinuation or termination
shall be made without shareholder approval if such approval is necessary to
comply with any tax or regulatory requirement, including for these purposes any
approval requirement which is a prerequisite for exemptive relief from Section
16(b) of the Exchange Act or necessary to qualify the options granted hereunder
as performance based compensation for purposes of Code Section 162(m) (provided
that the
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Company is subject to the requirements of Section 16 of the Exchange Act or Code
Section 162(m), as the case may be, as of the date of such action).
(b) Amendments to Options. The Committee may waive any conditions or
rights under, amend any terms of, or alter, suspend, discontinue, cancel or
terminate, any Option theretofore granted, prospectively or retroactively;
provided that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the rights of any
Participant or any holder or beneficiary of any Option theretofore granted shall
not to that extent be effective without the consent of the affected Participant,
holder or beneficiary.
(c) Adjustment of Options Upon the Occurrence of Certain Unusual or
Nonrecurring Events. The Committee is hereby authorized to make adjustments in
the terms and conditions of, and the criteria included in, Options in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) hereof) affecting the Company, any
Affiliate, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan.
SECTION 8. Change of Control. In the event of a Change of Control after
the date of the adoption of this Plan, any outstanding Options then held by
Participants which are unexercisable or otherwise unvested shall automatically
be deemed exercisable or otherwise vested, as the case may be, as of immediately
prior to such Change of Control.
SECTION 9. General Provisions.
(a) Nontransferability. Each Option and each right under any Option
shall be exercisable only by the Participant during the Participant's lifetime,
or, if permissible under applicable law, by the Participant's legal guardian or
representative. No Option may be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant otherwise than by will or
by the laws of descent and distribution and any such purported assignment,
alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company or any Affiliate; provided that the
designation of a beneficiary shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.
(b) No Rights to Options. No Participant or other Person shall have any
claim to be granted any Option, and there is no obligation for uniformity of
treatment of Participants, or holders or beneficiaries of Options. The terms and
conditions of Options and the Committee's determinations and interpretations
with respect thereto need not be the same with respect to each Participant
(whether or not such Participants are similarly situated).
(c) Share Certificates. All certificates for Shares or other securities
of the Company or any Affiliate delivered under the Plan pursuant to any Option
or the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the rules,
regulations, and other requirements of the Securities and Exchange Commission,
any stock exchange upon which such Shares or other securities are then listed,
and any applicable Federal or state laws, and the Committee may cause a legend
or legends to be put on any such certificates to make appropriate reference to
such restrictions.
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(d) Withholding. A Participant may be required to pay to the Company or
any Affiliate and the Company or any Affiliate shall have the right and is
hereby authorized to withhold from any Option, from any payment due or transfer
made under any Option or under the Plan or from any compensation or other amount
owing to a Participant the amount (in cash, Shares, other securities, or other
property) of any applicable withholding taxes in respect of an Option, its
exercise, or any payment or transfer under an Option or under the Plan and to
take such other action as may be necessary in the opinion of the Company to
satisfy all obligations for the payment of such taxes.
(e) Option Agreements. Each Option hereunder shall be evidenced by an
Option Agreement which shall be delivered to the Participant and shall specify
the terms and conditions of the Option and any rules applicable thereto,
including but not limited to the effect on such Option of the death, disability
or termination of employment or service of a Participant and the effect, if any,
of such other events as may be determined by the Committee.
(f) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other compensation arrangements, which may, but need not, provide for
the grant of options (subject to shareholder approval if such approval is
required), and such arrangements may be either generally applicable or
applicable only in specific cases.
(g) No Right to Employment. The grant of an Option shall not be
construed as giving a Participant the right to be retained in the employ of, or
in any consulting relationship to, the Company or any Affiliate. Further, the
Company or an Affiliate may at any time dismiss a Participant from employment or
discontinue any consulting relationship, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Option
Agreement.
(h) No Rights as Stockholder. Subject to the provisions of the
applicable Option, no Participant or holder or beneficiary of any Option shall
have any rights as a stockholder with respect to any Shares to be distributed
under the Plan until he or she has become the holder of such Shares.
(i) Governing Law. The validity, construction, and effect of the Plan
and any rules and regulations relating to the Plan and any Option Agreement
shall be determined in accordance with the laws of the State of Delaware.
(j) Severability. If any provision of the Plan or any Option is or
becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Option, or would disqualify the Plan or any
Option under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform the applicable laws, or if it cannot be
construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Option, such provision shall
be stricken as to such jurisdiction, Person or Option and the remainder of the
Plan and any such Option shall remain in full force and effect.
(k) Other Laws. The Committee may refuse to issue or transfer any
Shares or other consideration under an Option if, acting in its sole discretion,
it determines that the issuance or transfer of such Shares or such other
consideration might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the Exchange
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Act, and any payment tendered to the Company by a Participant, other holder or
beneficiary in connection with the exercise of such Option shall be promptly
refunded to the relevant Participant, holder or beneficiary. Without limiting
the generality of the foregoing, no Option granted hereunder shall be construed
as an offer to sell securities of the Company, and no such offer shall be
outstanding, unless and until the Committee in its sole discretion has
determined that any such offer, if made, would be in compliance with all
applicable requirements of the U.S. federal and any other applicable securities
laws.
(l) No Trust or Fund Created. Neither the Plan nor any Option shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Option, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(m) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Option, and the Committee shall determine
whether cash, other securities, or other property shall be paid or transferred
in lieu of any fractional Shares or whether such fractional Shares or any rights
thereto shall be canceled, terminated, or otherwise eliminated.
(n) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.
SECTION 16. Term of the Plan.
(a) Effective Date. The Plan shall be effective as of the date of its
approval by the shareholders of the Company.
(b) Expiration Date. No Option shall be granted under the Plan after
October 24, 2003. Unless otherwise expressly provided in the Plan or in an
applicable Option Agreement, any Option granted hereunder may, and the authority
of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or
terminate any such Option or to waive any conditions or rights under any such
Option shall, continue after October 24, 2003.