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Exhibit 10.11
SHONEY'S, INC.
1981 STOCK OPTION PLAN
(As Amended and Restated Through 10/28/96)
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.
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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 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.
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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
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
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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.
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7.2 Option Price. Each option agreement shall specify the option
price at which the option thereunder is exercisable. The option price per
share shall be at least one hundred percent (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, 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.
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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 date
as the average of the Trading Price of the Common Stock for the immediately
preceding twenty (20) consecutive trading days 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
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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
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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
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.
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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 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.
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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
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options granted hereunder shall be governed by and construed in accordance with
the laws of the State of Tennessee.
This Plan, Shoney's, Inc. 1981 Stock Option Plan, as restated
through October 28, 1996, is executed this ____ day of December, 1996.
SHONEY'S, INC.
By:
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Title
WITNESS:
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Corporate Secretary
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