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Exhibit 10.6
DAIRY MART CONVENIENCE STORES, INC.
1990 STOCK OPTION PLAN
This Stock Option Plan (the "Plan) of DAIRY MART CONVENIENCE STORES,
INC. (the "Corporation") enables the Corporation to design a flexible
compensation package in order to attract and retain those employees who will
most effectively advance the interests of the Corporation and its shareholders.
It is intended that both qualified and non-qualified options will be granted
under the Plan.
1. STOCK SUBJECT TO PLAN.
The stock subject to the Plan shall be shares of the Corporation's
authorized but unissued or reacquired Class A Common Stock, par value $.01 per
share. The aggregate number of shares for which options may be granted pursuant
to the Plan shall not exceed 200,000 shares of Class A Common Stock. If an
option shall expire or terminate for any reason without having been exercised in
full, including shares for which an option was surrendered pursuant to Section 5
or 6, the shares subject to the unexercised or terminated option shall not be
considered to have been subject to an option for purposes of the limitation on
the aggregate number of shares subject to the Plan.
2. ADMINISTRATION.
The Plan shall be administered by the Board of Directors of the
Corporation or any committee thereof appointed by the Board of Directors.
Subject to the provisions of the Plan set forth herein, the Board or such
committee is authorized to determine the employees of the Corporation to whom
options shall be granted; the number of shares to be covered by each option; the
terms and conditions of each option (including restrictions on the sale or other
transfer of shares issued pursuant to the exercise of an option); and to
establish rules and regulations pertaining to participation and administration
of the Plan.
3. ELIGIBILITY AND PARTICIPATION.
Employees of the Corporation or any of its subsidiaries, as such term
is defined in Section 425(f) of the Internal Revenue Code of 1986
("Subsidiaries"), including employees who are officers or directors of the
Corporation or its Subsidiaries and, with respect to non-qualified options,
directors of the Corporation or its Subsidiaries who are not employees, shall be
eligible to be granted an option under this Plan. An individual who has been
granted an option may be granted additional options. Notwithstanding the
foregoing, no member of any committee administering the Plan may be granted an
option under this Plan.
4. GRANTING OF OPTIONS
Options granted under the Plan may be of two types, a non-qualified
stock option ("Non-Qualified Option"), and an incentive stock option ("Incentive
Stock Option"). The Board of
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Directors or the committee shall have the authority to grant Non-Qualified
Options, or to grant Incentive Stock Options, or to grant both types of Options
to any eligible person, PROVIDED, HOWEVER, that only officers and employees
employed by the Corporation or a Subsidiary may receive Incentive Stock Options,
but directors who are not employees of the Corporation or its Subsidiaries may
receive Non-Qualified Options. To the extent that any option is not designated
as an Incentive Stock Option, it shall constitute a separate Non-Qualified
Option.
It is intended that the Incentive Stock Options granted hereunder shall
constitute incentive stock options within the meaning of Section 422A of the the
Internal Revenue Code of 1986, as amended (the "Code") and shall be subject to
the tax treatment described in Section 421 of the Code. Anything in the Plan to
the contrary notwithstanding, no provision of the Plan relating to Incentive
Stock Options shall be interpreted, amended or altered, nor shall any discretion
or authority granted under the Plan be so exercised, so as to disqualify either
the Plan or any Incentive Stock Option under Section 422A of the Code.
5. GRANTING OF INCENTIVE STOCK OPTIONS
Each Incentive Stock Option granted under the Plan shall be evidenced
by a written agreement containing provisions not inconsistent with the Plan,
including the following:
(a) Each option shall state the number of shares to which it
pertains, the fair market value of said shares as of the date granted, and the
purchase price of each share subject thereto.
(b) The purchase price of each share subject to an Incentive
Stock Option under this Plan shall be stated therein and, except as otherwise
provided in the second sentence of this subparagraph, shall be not less than the
fair market value of such share on the date the option is granted. With respect
to employees who, at the time of the granting of the Incentive Stock Option,
own, or are deemed to own by virtue of the attribution rules of Code Section
425(d), more than 10% of the total combined voting power of all classes of stock
of (i) the Corporation, or (ii) of a corporation which is a Subsidiary of the
Corporation, the purchase price of each share subject to an option under this
Plan shall be at least 110% of the fair market value of such share on the date
the option is granted.
(c) The purchase price shall be paid in cash, certified or
bank cashier's or teller's check, or in shares of Class A Common Stock, par
value $.01 per share, or Class B Common Stock, par value $.01 per share, of the
Corporation, which shares shall have the value per share reported by the
National Association of Securities Dealers Automated Quotation System as of the
close of business on the date such shares are tendered to the Corporation for
payment for the exercise of an option.
(d) No option shall be exercisable prior to one (1) year from
the date it is granted or more than ten (10) years from the date it is granted,
except that if an employee owns or is deemed to own (by reason of the
attribution rules of Section 425(d) of the Code) more than 10% of the combined
voting power of all classes of stock of the Corporation or any Subsidiary
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and an Incentive Stock Option is granted to such employee, the term of such
option shall be no more than five years from the date of grant.
(e) No option shall be assignable or transferable by an
optionee except by will or the laws of descent and distribution. An option may
be exercised only by the optionee during the optionee's life, unless the
optionee is legally incapacitated, in which case the optionee's appointed
guardian or legal representative may exercise the option.
(f) (i) Subject to Section 13, each Incentive Stock Option by
its terms shall require the optionee to remain in the continuous employ of the
Corporation or a Subsidiary for at least one year form the date of grant of the
Incentive Stock Option before the Incentive Stock Option shall be exercisable,
except if the optionee's employment with the Corporation or Subsidiary
terminates as a result of death.
(ii) An Incentive Stock Option shall not be exercisable
by the optionee unless, at the time of exercise, such optionee is an employee of
the Corporation or a Subsidiary, except that, upon termination of employment
with the Corporation or a Subsidiary, the optionee may exercise any option (1)
to the extent of any unexercised shares, whether or not the optionee was
entitled to do so at the termination of his employment, at any time within one
year thereafter if the termination of employment results from death and if such
death occurs while the Employee is employed by the Corporation or its
Subsidiaries or (2) to the extent that the optionee was entitled to do so at the
termination of his employment, at any time within three months thereafter if the
termination of employment results from a cause other than death.
(iii) If an optionee dies while an employee of the
Corporation or Subsidiary, such optionee's estate or any person who acquired the
right to exercise such option by bequest or inheritance or by reason of the
death of the optionee may exercise such optionee's option to the extent of all
unexercised shares, whether or not the optionee was entitled to do so at the
time of his death, at any time within one year following his date of death.
(iv) If the optionee dies within three months after
termination of employment with the Corporation or Subsidiary other than
termination resulting from death, such optionee's estate or any person who
acquired the right to exercise such option by bequest or inheritance or by
reason of the death of the optionee may exercise (to the extent that the
optionee was entitled to do so at the termination of his employment) such
optionee's option at any time within the period ending on the first anniversary
of the optionee's death.
(v) Notwithstanding any of the foregoing, in no event
shall an option be exercisable in whole or in part after the termination date
provided in the optionee's stock option agreement.
6. GRANTING OF NON-QUALIFIED OPTIONS.
Each Non-Qualified Option granted under the Plan shall be evidenced by
a written stock option agreement containing provisions not inconsistent with the
Plan, including the following:
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(a) Each Non-Qualified Option shall be for a term of not more
than ten years and one day from the date of grant. In addition, each
Non-Qualified Option shall state the number of shares to which it pertains, the
fair market value of such shares as of the date granted, and the purchase price
of each share subject thereto, which purchase price may be no less than 85% of
the fair market value of the shares on the date of grant.
(b) EXERCISE.
(i) Subject to Section 13, and except for directors who
are not employees of the Corporation, each Non-Qualified Option by its terms
shall require the optionee to remain in the continuous employ of the Corporation
any Subsidiary for at least one year from the date of grant of the Option before
the Option shall be exercisable, except if the optionee's employment with the
Corporation or Subsidiary terminates as a result of death.
(ii) A Non-Qualified Option shall not be exercisable by
the optionee unless, at the time of exercise, such optionee is an employee of
the Corporation or a Subsidiary (except for any director of the Corporation or
Subsidiary who is not an employee), except that, upon termination of employment
with the Corporation or a Subsidiary, the optionee may exercise any
Non-Qualified Option (1) to the extent of any unexercised shares, whether or not
the optionee was entitled to do so at the termination of his employment, at any
time within one year thereafter if the termination of employment results from
death, or (2) to the extent that the optionee was entitled to do so at the
termination of his employment, at any time within three months thereafter if the
termination of employment results from a cause other than death.
(iii) If an optionee dies while an employee of the
Corporation or Subsidiary, such optionee's estate or any person who acquired the
right to exercise such Non-Qualified Option by bequest or inheritance or by
reason of the death of the optionee may exercise such optionee's option to the
extent of all unexercised shares, whether or not the optionee was entitled to do
so at the time of his death, at any time within one year following his date of
death.
(iv) If the optionee dies within three months after
termination of employment with the Corporation or Subsidiary, such optionee's
estate or any person who acquired the right to exercise such option by bequest
or inheritance or by reason of the death of the optionee may exercise (to the
extent that the optionee was entitled to do so at the termination of his
employment) such optionee's Non-Qualified Option at any time within the period
ending on the first anniversary of the optionee's death.
(v) Notwithstanding any of the foregoing, in no event
shall a Non-Qualified Option be exercisable in whole or in part after the
termination date provided in the optionee's stock option agreement.
(c) TRANSFERABILITY. Non-Qualified Options shall not be
transferable otherwise than by will or by the laws of descent and distribution,
and shall be exercisable during the optionee's lifetime only by the optionee or,
if legally incapacitated, by the optionee's duly appointed guardian or legal
representative.
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(d) The purchase price of each share subject to a
Non-Qualified Option under this Plan shall be stated therein and shall be not
less than 85% of the fair market value of such share on the date the
Non-Qualified Option is granted.
7. VESTING.
Except as the Board of Directors or the committee may otherwise provide
in an optionee's stock option agreement, Incentive Stock Options and
Non-Qualified Options shall become exercisable in four equal annual
installments. The Board of Directors or the committee may, in its sole
discretion, permit the acceleration of the time to exercise one or more
installments.
8. OPTIONAL PAYMENT.
The Corporation, with the consent of the optionee, may elect in the case of an
option which is exercisable, upon the surrender of the option, to pay the
optionee on a per share basis either (i) cash equivalent to the excess of the
fair market value of shares to which the exercisable option pertains on the date
of surrender of the option over the purchase price under the option, or (ii)
cash equivalent to the excess of the per share net worth (determined by the
Corporation's public accountants in accordance with generally accepted
accounting principles consistently applied as of the close of the Corporation's
next preceding fiscal year) of the shares to which such exercisable option
pertains on the date the option is surrendered over the per share net worth of
such shares on the date the option was granted. If the Board of Directors of the
Corporation deems it to be necessary or advisable at any time in order to carry
out an acquisition or sale of assets, merger or a securities offering, the
Corporation may purchase any option granted hereunder, without the consent of
the employee holding the option, for a price calculated in accordance with (i)
of this paragraph as if the option were being exercised at such time.
9. CHANGE IN CAPITAL STRUCTURE.
If the Corporation's outstanding shares of Class A Common Stock are
increased or changed into or exchanged for a different number or kind of share
of capital stock or other securities of the Corporation by reason of any stock
dividend or split, recapitalization, reclassification, merger, consolidation,
combination of shares or other corporate change, the Board of Directors or the
committee shall make such substitution or adjustment, if any, as it deems to be
equitable, in the number or kind of shares or other securities as to which
options may be granted and in the number or kind of shares or other securities
allocated to unexercised options granted prior to such change.
In the case of any such substitution or adjustment, the aggregate
option price in each stock option agreement of all the shares covered thereby
prior to such substitution or adjustment shall be the option price for all the
shares or other securities substituted for such shares or to which such shares
are adjusted, and the option price per share after such substitution or
adjustment shall be determined accordingly; PROVIDED, HOWEVER, that no such
determination shall obligate the Corporation to issue or sell fractional shares
or other securities.
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10. USE OF PROCEEDS.
All proceeds received by the Corporation under the Plan shall be used
for its general corporate purposes.
11. EFFECTIVE DATE OF PLAN.
The Plan shall not become effective until approved by the Board of
Directors of the Corporation and the holders of a majority of the voting power
of Class A Common Stock and Class B Common Stock (voting as a single class)
entitled to vote thereon.
12. TERM AND AMENDMENT
The Board of Directors of the Corporation may at any time revise,
amend, suspend or terminate the Plan; provided, however, that such revision,
amendment, suspension or termination shall not affect any option previously
granted under the Plan; and, provided further, that no amendment changing the
provisions of paragraph 3 hereof or increasing the aggregate number of shares
subject to the Plan shall be made without the approval of a majority of the
voting power of shares entitled to vote thereon. Except with respect to options
previously granted, the Plan shall terminate ten (10) years from the date on
which the Plan became effective.
13. ACCELERATION ON CERTAIN CHANGES.
(a) Notwithstanding any other provisions of the Plan, a
dissolution or liquidation of the Corporation, or a merger or consolidation in
which the Corporation is not the surviving corporation, or a Change of Control
of the Corporation (as defined below) shall cause any unexercised portion of the
option to terminate, except for any such portion as to which the Corporation or
another corporation makes appropriate provision for the protection of the value
thereof and either assumes the option or substitutes another option with
substantially similar terms; PROVIDED, HOWEVER, an optionee shall have the right
immediately prior to such dissolution, liquidation, merger, consolidation, or
Change in Control, to exercise the unexercised portion of the Option, in whole
or in part, without regard to any deferred exerciseability provisions contained
herein. The optionee shall have until the close of business on the date
preceding the effective date of any such dissolution, merger, consolidation, or
Change of Control, or preceding the commencement of any such liquidation, to
exercise the option. Such effective date or commencement date shall be the date
designated in a written notice from the Board of Directors or the committee to
the optionee, which notice shall be given not less than fourteen (14) days prior
to such designated effective date or commencement date, provided that for the
purposes of this Section 13 the effective date shall be the date designated,
whether or not the dissolution, merger, consolidation or Change of Control
actually becomes effective on such date. If such dissolution, liquidation,
merger, consolidation, or Change of Control is not consummated within thirty
(30) days after such effective date, and if the optionee has not exercised the
option in full, then the optionee's option (or any part of such option which has
not yet been exercised) shall continue in full force and effect as if no such
notice had been given.
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(b) For purposes hereof, a "CHANGE OF CONTROL" shall mean the
consummation of a transaction in which the beneficial ownership or control of
the Corporation is or may be changed such that one or more persons or entities
(other than persons who owned more than five percent (5%) of any class of the
shares of the Corporation on the date the option was granted) obtain beneficial
ownership or control or more than fifty percent (50%) of the assets or voting
power of the outstanding voting securities or equity interests of the
Corporation. Such transactions include, without limitation, sales of
substantially all of the assets of the Corporation, acquisitions of ownership or
control by tender offer, and acquisitions of such ownership or control through
the issuance of authorized but unissued capital stock of the Corporation.
(c) Except as herein specifically provided, no option or right
or interest under the Plan shall be subject to transfer, assignment, pledge,
charge or other alienation, whether voluntary or involuntary, and any attempt to
transfer, assign, pledge, charge or otherwise alienate the same shall be null
and void and of no effect. If any optionee or other person entitled to benefits
hereunder should attempt to assign, pledge, charge or otherwise alienate any
right or interest hereunder, then such benefits shall, in the discretion of the
Board of Directors or the committee, cease.
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