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EXHIBIT 10.9
SHONEY'S, INC. 1981 STOCK OPTION PLAN
AS AMENDED AND RESTATED THROUGH MAY 1, 1996
PURPOSE OF THE PLAN
This Stock Option Plan (the "Plan") is intended to promote the interests of
Shoney's, Inc. (the "Company") and its shareholders by encouraging those key
employees who will be responsible for the future growth and continued
development of the Company and its Subsidiaries, as hereinafter defined, to own,
and to increase their ownership of, the Company's stock, thereby giving them, as
shareholders, an increased personal interest in, and a greater concern for, the
Company's continued success and progress.
STATEMENT OF THE PLAN
1. Name. The Plan shall be known as the Shoney's, Inc. 1981 Stock Option
Plan.
2. Definition of Terms. In addition to words and terms that may be defined
elsewhere in the Plan, the following words and terms as used in the Plan shall
have the following meanings unless the context or use fairly indicates another
or different meaning or intent, which definitions shall be equally applicable to
both the singular and plural forms of such words and terms:
2.1 "Board" means the Company's Board of Directors.
2.2 "Change in Control" means a change in control of a nature that
would be required to be reported in response to Item 6(e) of Schedule 14A
of Regulation 14A promulgated under the Exchange Act; provided, however,
that, without limitation, such a Change in Control shall be deemed to have
occurred if during the option exercise period: (a) any "person" (as such
term is used in the Sections 13(d) and 14(d) of the Exchange Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing
more than fifty percent (50%) of the combined voting power of Company's
then outstanding voting securities; or (b) all or substantially all of the
fixed assets of the Company, based on the appraised value of such assets on
a consolidated basis, are sold, exchanged or otherwise transferred (other
than to secure debt owed by the Company); or (c) the Company's shareholders
approve a plan of liquidation or dissolution; or (d) individuals who at the
time an option is granted constitute members of the Board cease for any
reason to constitute a majority thereof unless the election, or the
nomination for election by Company's shareholders, of each new director was
approved by a vote of at least a majority of the directors then still in
office who were directors at the time the option was granted.
2.3 "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.4 "Committee" means the Human Resources and Compensation Committee
of the Board, consisting solely of three or more outside directors (as
defined by Code Section 162(m) and the regulations issued thereunder), as
from time to time designated by the Board, that administers the Plan in
accordance with Section 3, and who are not and have not at any time for one
year before appointment to the Committee been eligible to receive stock or
options under any plan (other than the Directors Stock Option Plan) of the
Company or any of its affiliates.
2.5 "Common Stock" means the common stock of the Company having a par
value of $1.00 per share.
2.6 "Disability" means, as defined by and to be construed in
accordance with Code Section 22(e)(3), any medically determinable physical
or mental impairment which can be expected to result in death or which has
lasted or can be expected to last for a continuous period of not less than
twelve (12) months, and which renders Participant unable to engage in the
duties being engaged in before the impairment. A Participant shall not be
considered to have a Disability unless the Participant
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furnishes proof of the existence thereof in a such form and manner, and at
such time, as the Committee may require.
2.7 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.8 "Incentive Option" means an option which qualifies as an
incentive stock option within the meaning of Code Section 422.
2.9 "Nonqualified Option" means an option which does not qualify as
an incentive stock option under Code Section 422.
2.10 "Parent" means any corporation, which at the time an option is
granted, qualifies as a parent of the Company under the definition of
"parent corporation" contained in Code Section 424(e), i.e., any
corporation, other than the Company, in an unbroken chain of corporations
ending with the Company, if at the time of the granting of an option under
the Plan, each of the corporations other than the Company own stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
2.11 "Participant" means an employee of the Company or any of its
Subsidiaries to whom an option is granted under the Plan.
2.12 "Performance-Based Option" means an Incentive Option or
Nonqualified Option that vests as determined by the Committee in accordance
with Section 7.7[i].
2.13 "Prior Plan" means the Stock Option Plan originally approved by
the Company's shareholders on January 16, 1969, as amended.
2.14 "Representative" means the personal representative of the
Participant's estate, and after final settlement of the Participant's
estate, the successor or successors entitled thereto by law.
2.15 "Subsidiary" means any corporation which at the time an option
is granted qualifies as a subsidiary of the Company under the definition of
"subsidiary corporation" contained in Code Section 424(f), i.e., any
corporation, other than the Company, in an unbroken chain of corporations
beginning with the Company if, at the time of the granting of an option
under the Plan, each of the corporations other than the last corporation in
the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock of one of the other corporations in
such chain.
2.16 "Trading Price of the Common Stock" means (i) the closing price
of the Common Stock on the principal national securities exchange on which
the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) if the Common Stock is not then
traded on a national securities exchange, the average of the closing bid
and asked quotations or the closing high bid quotation, whichever is
available, in the over-the-counter market as reported by the NASDAQ
National Market List; or (iii) if the Common Stock is not then reported on
the NASDAQ National Market List, the average of the closing bid and asked
prices last quoted by an established quotation service for over-
the-counter-securities.
3. Administration. The Plan shall be administered by the Committee.
Members of the Committee shall not be eligible to participate in the Plan. The
Committee may interpret the Plan, prescribe, amend, and rescind any rules and
regulations necessary or appropriate for the administration of the Plan, and
make such other determinations and take such other action as it deems necessary
or desirable for the administration of the Plan and the protection of the
Company except as otherwise reserved to the Board or the shareholders of the
Company. Without limiting the generality of the foregoing sentence, the
Committee may, in its discretion, treat all or any portion of any period during
which an optionee is on military or other approved leave of absence from the
Company or a Subsidiary, as a period of employment of such optionee by the
Company or such Subsidiary, as the case may be, for purposes of accrual of the
Participant's rights under the Plan; provided, however, that in the case of an
Incentive Option such leave shall not be longer than 90 days or the optionee's
reemployment following such leave must be guaranteed by contract or statute. In
the event the leave described in the preceding sentence exceeds 90 days and
reemployment is not guaranteed by contract or statute, the
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optionee's employment by the Company or a Subsidiary shall be deemed to have
terminated on the 91st day of such leave. Any interpretation, determination, or
other action made or taken by the Committee shall be final, binding, and
conclusive. No member of the Committee shall be liable for any action taken or
omitted or determination made in good faith with respect to the Plan or any
option granted under the Plan.
4. Shares Subject to Plan. Options may be granted by the Company from time
to time to purchase an aggregate of 13,685,180 shares of Common Stock, subject
to adjustment as provided in Section 9. The shares issued upon exercise of
options granted under the Plan may be authorized and unissued shares or shares
held by the Company in its treasury. If any option granted under the Plan shall
terminate, expire, or, with the consent of the Participant, be cancelled as to
any shares, new options may thereafter be granted covering any such shares.
5. Eligibility. Options may be granted to those employees of the Company
(including officers, whether or not they are directors) who have and exercise
key management functions and responsibilities for the Company or any Subsidiary.
The granting of an option to any employee shall neither entitle such employee
to, nor disqualify such employee from, participation in any other grant of
options.
6. Grant of Options. The Committee shall have the authority, subject to
the terms of the Plan, to: (a) determine and designate from time to time those
employees of the Company or any Subsidiary to whom options are to be granted and
the number of shares to be optioned to each such employee, provided that no
director of the Company who is not also an employee of the Company or of a
Subsidiary and no director who is a member of the Committee administering the
Plan shall be entitled to receive any option under the Plan and further provided
that the maximum number of shares of Common Stock that may be granted to any
Participant during any fiscal year of the Company shall not exceed two million
(2,000,000) shares; (b) authorize the granting of Incentive Options,
Nonqualified Options, Performance-Based Options, or combinations of Incentive
Options, Nonqualified Options and Performance-Based Options; and to require, if
it so determines, that if an Incentive Option and a Nonqualified Option are
granted to the same Participant, then to the extent one option is exercised the
other option shall not be exercised and shall terminate; (c) determine the
number of shares subject to each option; and (d) subject to the restrictions of
Section 7.7, determine the schedule and duration of the exercise period for any
option. The date of grant of an option under the Plan will be the date on which
the option is awarded by the Committee.
7. Terms and Conditions of Options. Each option granted under the Plan
shall be evidenced by an agreement, in a form approved by the Committee, and
shall be subject to the terms and conditions contained in Sections 7.1 through
7.8 and to such other terms and conditions as the Committee may deem
appropriate; provided, however, that no Incentive Option shall be subject to any
condition that is inconsistent with the provisions of Code Section 422(b). In
the event that any condition imposed hereunder on an Incentive Option is at any
time determined by the Internal Revenue Service or a court of competent
jurisdiction to be inconsistent with Code Section 422, then each Incentive
Option shall be deemed to have been granted without such condition but shall
continue in effect under such remaining terms and conditions as may be
applicable as if the invalid condition had not been included.
7.1 Option Period. Each option agreement shall specify the period
during which the option thereunder is exercisable (which shall not exceed
ten (10) years from the date of grant, except as otherwise provided by
Section 8.3) and shall provide that the option shall expire at the end of
such period.
7.2 Option Price. The option price per share shall be 100% of the
fair market value of the Common Stock on the date of grant. The fair market
value of the Common Stock shall be the Trading Price of the Common Stock on
the date of grant. Such price shall be subject to adjustment as provided in
Section 9.
7.3 Nontransferability. The options granted hereunder shall not be
transferable by the Participant otherwise than by will or the laws of
descent and distribution.
7.4 Ten Percent Shareholders. Incentive Options shall not be granted
to any employee who, immediately before the option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or of its Parent or Subsidiaries;
provided,
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however, that this prohibition shall not apply if at the time such option
is granted the option price is at least one hundred ten percent (110%) of
the fair market value of the Common Stock and such option is not
exercisable after the expiration of five (5) years from the date such
option is granted.
7.5 $100,000 Incentive Option Limitation. To the extent the aggregate
fair market value (determined as of the date the option is granted) of the
Common Stock for which an Incentive Option will first become exercisable by
a Participant in any calendar year under all plans of the Participant's
employer corporation and its Parent and Subsidiaries exceeds $100,000, such
option shall be treated as a Nonqualified Option.
7.6 Termination of Employment. If any Participant shall cease to be
an employee of either the Company, or a Parent or Subsidiary, or a Parent
or Subsidiary corporation of each corporation issuing or assuming a stock
option in a transaction to which Code Section 424(a) applies, except when
such cessation of employment is caused by the death or Disability of the
Participant, the Participant may, subject to the provisions hereof and
before the earlier of the option's expiration date or the expiration of
three (3) months from such cessation of employment, exercise the option
granted to such Participant to the same extent that the Participant might
have exercised such option on the date of cessation of employment. To the
extent that any option is not exercised in accordance herewith, it shall
terminate at the earlier of the option's expiration date or the expiration
of the three (3) month period following cessation of employment.
Participant's Representative, in the event of the Participant's death, or
the Participant, in the event of the Participant's Disability, may, subject
to the provisions hereof and before the earlier of the option's expiration
date or the expiration of twelve (12) months after the date of such death
or Disability, exercise the option granted to such Participant up to the
total number of shares covered by the option less any previous exercises.
To the extent that any option is not exercised in accordance herewith, it
shall terminate at the earlier of the option's expiration date or the
expiration of the twelve (12) month period following death or Disability.
Nothing in the Plan shall be construed as imposing any obligation on the
Company to continue the employment of any Participant.
7.7 Period of Exercise of Options. Any option granted hereunder, may,
before its expiration or termination, be exercised from time to time, in
whole or in part, up to the total number of shares with respect to which it
shall have then become exercisable. An option granted hereunder shall
become exercisable in such installments as are specified in the option
agreement, the rate of which shall not be at a rate exceeding the following
schedule, except as otherwise provided by this Section 7.7: (a) After one
(1) year from the date the option is granted, it may be exercised as to not
more than 33 1/3% of the shares covered thereunder; (b) after two years
from the date the option is granted, it may be exercised as to not more
than an additional 33 1/3%, or a total of 66 2/3%, of the shares covered
thereunder; (c) after three years from the date the option is granted, it
may be exercised as to all of the shares covered thereunder.
Notwithstanding the foregoing, the Committee may provide in the option
agreement that an option shall vest, in whole or in part:
[i] with respect to Performance-Based Options, at such time, or
within such time period as the Committee shall designate, as the fair
market value of the Company's Common Stock subject to the option
increases seventy-five percent (75%), or such greater percentage as
determined by the Committee, over the fair market value of the Common
Stock at date of grant of the option, with said option to vest no later
than ten (10) years from the date the option is granted provided that
the Committee may provide for expiration of the option upon termination
of employment.
[ii] in the event of the Participant's termination of employment
with the Company or Subsidiary because of the Participant's death or
Disability; and
[iii] in the event of a Change in Control.
7.8 Determination of Fair Market Value for Vesting of
Performance-Based Options. A Performance-Based Option shall vest on such
dates as the average of the Trading Price of the Common Stock for the
immediately preceding twenty (20) consecutive trading days (the "Average
Trading Price of the
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Common Stock") is at least seventy-five percent (75%), or such greater
percentage as determined by the Committee, over the Trading Price of the
Common Stock on the date of grant.
8. Exercise of Option. The exercise of any option under the Plan shall be
subject to the provisions of Sections 8.1 through 8.3.
8.1 Manner of Exercise. To exercise an option, the Participant shall
deliver to the Company at its main office (attention of the corporate
Secretary): [i] written notice specifying the number of shares as to which
the option is being exercised and, if determined by counsel for the Company
to be necessary, representing that such shares are being acquired for
investment purposes only and not for purpose of resale or distribution; and
[ii] payment by the Participant, or a broker-dealer (as provided in Section
8.2), for such shares of the option price for the number of shares with
respect to which the option is exercised. Provided that all conditions
precedent contained in the Plan and option agreement are satisfied, the
Company shall deliver to the Participant, at the offices of the Company, a
certificate or certificates for the Common Stock. If Participant fails to
accept delivery of the Common Stock, the Participant's rights to exercise
the applicable portion of the option shall terminate.
8.2 Payment for Shares. Except as otherwise provided in this Section
8, the option price for the Common Stock shall be paid in full when the
option is exercised. Subject to such rules as the Committee may impose, the
option price may be paid in whole or in part in [i] cash, [ii] whole shares
of Common Stock owned by the Participant evidenced by negotiable
certificates, [iii] by a combination of such methods of payment, or [iv]
such other consideration as shall constitute lawful consideration for the
issuance of Common Stock and be approved by the Committee. If payment of
the option price is made in Common Stock, the value of the Common Stock
used for payment of the option price shall be the closing price of the
Common Stock on the national securities exchange on the business day
preceding the day written notice of exercise is delivered to the Company.
The Committee, in its discretion, may suspend or terminate the right of
Participant to pay with stock of the Company should the Committee deem such
action to be in the Company's best interests.
8.3 Exercises Causing Loss of Tax Deduction. No part of an option may
be exercised to the extent the exercise would cause the Participant to have
compensation from the Company and its affiliated companies for any year in
excess of $1 million and which is nondeductible by the Company and its
affiliated companies pursuant to Code Section 162(m) and the regulations
issued thereunder. Any option not exercisable because of this limitation
shall continue to be exercisable in any subsequent year in which the
exercise would not cause the loss of the Company's or its affiliated
companies' tax deduction, provided that an Incentive Option may not be
exercised later than ten (10) years from date of grant. This section shall
not limit the exercisability of an option in the event of Change in
Control.
8.4 Investment Representation. Each option agreement may provide
that, upon demand by the Committee for such a representation, the
Participant or Participant's Representative shall deliver to the Committee
at the time of any exercise of an option or portion thereof a written
representation that the shares to be acquired upon such exercise are to be
acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation
before delivery of Common Stock issued upon exercise of an option and
before expiration of the option period shall be a condition precedent to
the right of the Participant or Participant's Representative to purchase
Common Stock.
8.5 Withholding. The Company's obligation to deliver shares on the
exercise of any option shall be subject to satisfaction of any applicable
federal, state, and local tax withholding requirements, and the Company, in
its sole discretion, may withhold shares otherwise transferable to the
Participant upon exercise of an option in order to satisfy such withholding
requirements.
8.6 Successive Options. Notwithstanding anything herein contained to
the contrary, no Incentive Option granted hereunder to a Participant before
May 1, 1996 shall be exercisable while there is outstanding (within the
meaning of former Code Section 422A(c)(7) which was repealed with respect
to options granted after December 31, 1986) any Incentive Option
theretofore granted to such Participant to
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purchase stock in the Company or in a corporation which (at the time of the
granting of this option) is a Parent or Subsidiary of the Company, or is a
predecessor corporation of any such corporations.
9. Capital Adjustments. The number and price of shares of Common Stock
covered by each option and the total number of shares that may be optioned and
sold under the Plan shall be proportionately adjusted to reflect any stock
dividend, stock split or share combination of the Common Stock or any
recapitalization of the Company. In the event of any merger, consolidation,
reorganization, liquidation or dissolution of the Company, or any exchange of
shares involving the Common Stock, any option granted under the Plan shall
automatically be deemed to pertain to the securities and other property to which
a holder of the number of shares of Common Stock covered by the option would
have been entitled to receive in connection with any such event. The Committee
shall have the sole discretion to make all interpretations and determinations
required under this section to the extent it deems equitable and appropriate.
10. Reservation and Delivery of Shares. The Company, during the term of
any options granted hereunder, will at all times reserve and keep available, and
will seek to obtain from any regulatory body having jurisdiction any requisite
authority in order to issue and sell, such number of shares of Common Stock as
shall be sufficient to satisfy the requirements of the options granted under the
Plan. If in the opinion of its counsel, the issuance or sale of any shares of
its stock hereunder shall not be lawful for any reason, including the inability
of the Company to obtain from any regulatory body having jurisdiction authority
deemed by such counsel to be necessary for such issuance or sale, the Company
shall not be obligated to issue or sell any such shares.
11. Event of Defeasance. Any options granted hereunder are specifically
made subject to defeasance by the failure of the shareholders of the Company to
approve the Plan within a period of twelve months from the date the Plan is
adopted by the Board.
12. Securities Laws. Upon the exercise of an option at a time when there
is not in effect under the Securities Act of 1933, a current registration
statement relating to the shares of Common Stock to be received upon such
exercise, the Participant shall represent and warrant in writing to the Company
that the shares purchased are being acquired for investment and not with a view
to the distribution thereof and shall agree to the imposition of a legend on the
certificate or certificates representing said shares evidencing the restrictions
on transfer under the Securities Act of 1933 and the issuance of stop-transfer
instructions by the Company to its transfer agent with respect thereto. No
shares of Common Stock shall be issued or sold upon the exercise of any option
unless and until the then applicable requirements of the Securities Act of 1933,
as any of the same may be amended, the rules and regulations of the Securities
and Exchange Commission and any other regulatory agencies and laws having
jurisdiction over or applicability to the Company, and the rules and regulations
of any securities exchange on which the Common Stock may be listed, shall have
been fully complied with and satisfied.
13. No Rights as Shareholder. A Participant shall not have any rights as a
shareholder with respect to any shares covered by any option granted hereunder
until the issuance of a stock certificate for such shares. No adjustment shall
be made on the issuance of a stock certificate to a Participant as to any
dividends or other rights for which the record date occurred before the issuance
of such certificate.
14. Indemnification and Exculpation. Each person who is or shall have been
a member of the Board or of the Committee shall be indemnified and held harmless
by the Company against and from any and all loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him/her in connection with or
resulting from any claim, action, suit, or proceeding to which he/she may be or
become involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid by him/her in settlement thereof
(with the Company's written approval) or paid by him/her in satisfaction of a
judgment in any such action, suit, or proceeding, except a judgment in favor of
the Company based upon a finding of his/her lack of good faith; subject,
however, to the condition that upon the institution of any claim, action, suit,
or proceeding against him/her, he/she shall in writing give the Company an
opportunity, at its expense, to handle and defend the same before he/she
undertakes to handle and defend it on his/her own behalf. The foregoing right of
indemnification shall not be exclusive of any other right to which such person
may be entitled as a matter of law or otherwise, or any power that the Company
may have to indemnify him/her or
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hold him/her harmless. Each member of the Board or of the Committee, and each
officer and employee of the Company shall be fully justified in relying or
acting in good faith upon any information furnished in connection with the
administration of the Plan by any appropriate person or persons other than
himself/herself. In no event shall any person who is or shall have been a member
of the Board or of the Committee, or an officer or employee of the Company, be
held liable for any determination made, or other action taken, or any omission
to act in reliance upon any such information as referred to in the preceding
sentence, or for any action (including the furnishing of information) taken or
any omission to act, when any such determination, action, or omission is made in
good faith.
15. Amendment and Discontinuance. The Board or the shareholders of the
Company may terminate or amend the Plan in any respect at any time, except that
(a) no action of the Board or the shareholders may alter or impair a
participant's rights under any outstanding option without the Participant's
consent, and (b) without the approval of the shareholders, the total number of
shares that may be optioned and sold under the Plan may not be increased (except
by adjustment pursuant to Section 9), the provisions of Section 5 regarding
eligibility may not be modified, the price at which shares may be purchased
pursuant to options granted hereunder may not be reduced (except by adjustment
pursuant to Section 9), the expiration date of the Plan may not be extended, and
the provisions of this Section 15 may not be changed.
16. Term of Plan. Subject to the provisions of Section 11, the Plan shall
be effective as of the date of the adoption of the Plan by the Board and shall
expire on September 2, 2001 (except as to options outstanding on that date), and
no option shall be granted under the Plan on or after such expiration date.
17. Construction. As herein used, the singular number shall include the
plural, the plural the singular, and the use of any gender shall be applicable
to all genders, unless the context or use shall fairly require a different
construction. Section or paragraph headings are employed herein solely for
convenience of reference, and such headings shall not affect the validity,
meaning, or enforceability of any provision of the Plan. All references herein
to "section" or "paragraph" shall mean the appropriately numbered section or
paragraph of the Plan except where reference is made to the Code or any other
specified law or instrument.
18. Severability. The invalidity or unenforceability of any provision of
the Plan or any option granted pursuant to the Plan shall not affect the
validity and enforceability of the remaining provisions of the Plan and the
options granted hereunder, and such invalid or unenforceable provision shall be
stricken to the extent necessary to preserve the validity and enforceability of
the Plan and the options granted hereunder.
19. Governing Law. Except as the same may be governed by the Code and any
applicable federal securities laws, the Plan and any options granted hereunder
shall be governed by and construed in accordance with the laws of the State of
Tennessee.
This Shoney's, Inc. 1981 Stock Option Plan, as amended and restated through
May 1, 1996, is executed this 21st day of August, 1996, but effective as of
May 1, 1996.
SHONEY'S, INC.
By: /s/ C. Stephen Lynn
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Title: Chairman, CEO and President
WITNESS:
By: /s/ Robert M. Langford
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Title: Executive Vice President,
General Counsel and Secretary
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