EXHIBIT 99.3
BARBEQUES GALORE LIMITED
STOCK OPTION AGREEMENT
----------------------
RECITALS
- --------
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
---------------
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a maximum term of ten (10)
-----------
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall be neither
-----------------------
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, if this option is designated a
Non-Statutory Option in the Grant Notice, then this option may, in connection
with the Optionee's estate plan, be assigned in whole or in part during
Optionee's lifetime to one or more members of the Optionee's immediate family or
to a trust established for the exclusive benefit of one or more such family
members. The assigned portion shall be exercisable only by the person or
persons who acquire a proprietary interest in the option pursuant to such
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for this option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
4. DATES OF EXERCISE. This option shall become exercisable for the
-----------------
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. CESSATION OF SERVICE. The option term specified in Paragraph 2
--------------------
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(i) Should Optionee cease to remain in Service for any reason
(other than death, Permanent Disability or Misconduct) while this option is
outstanding, then Optionee shall have a period of three (3) months
(commencing with the date of such cessation of Service) during which to
exercise this option, but in no event shall this option be exercisable at
any time after the Expiration Date.
(ii) Should Optionee dies while holding this option, then the
personal representative of Optionee's estate or the person or persons to
whom the option is transferred pursuant to Optionee's will or in accordance
with the laws of descent and distribution shall have the right to exercise
this option. Such right shall lapse, and this option shall cease to be
outstanding, upon the earlier of (A) the expiration of the twelve (12)-
-------
month period measured from the date of Optionee's death or (B) the
Expiration Date.
(iii) Should Optionee cease Service by reason of Permanent
Disability while this option is outstanding, then Optionee shall have a
period of twelve (12) months (commencing with the date of such cessation of
Service) during which to exercise this option. In no event shall this
option be exercisable at any time after the Expiration Date.
(iv) During the limited period of post-Service exercisability,
this option may not be exercised in the aggregate for more than the number
of vested Option Shares for which the option is exercisable at the time of
Optionee's cessation of Service. Upon the expiration of such limited
exercise period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding for any vested Option Shares for
which the option has not been exercised. However, this option shall,
immediately upon Optionee's cessation of Service for any reason, terminate
and cease to be outstanding with respect to any Option Shares in which
Optionee is not otherwise at that time vested or for which this option is
not otherwise at that time exercisable.
2.
(v) Should Optionee's Service be terminated for Misconduct, then
this option shall terminate immediately and cease to remain outstanding.
6. SPECIAL ACCELERATION OF OPTION.
------------------------------
(a) In the event of a Corporate Transaction, this option, to the
extent outstanding at that time, but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of the Corporate Transaction, become exercisable for all of the
Option Shares at the time subject to this option and may be exercised for any or
all of those Option Shares as fully-vested Ordinary Shares. No such
acceleration of this option, however, shall occur if and to the extent: (i) this
option is, in connection with the Corporate Transaction, to be assumed by the
successor corporation (or parent thereof) or to be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation (or
parent thereof) or (ii) this option is to be replaced with a cash incentive
program of the successor corporation which preserves the spread existing at the
time of the Corporate Transaction on the Option Shares for which this option is
not otherwise at that time exercisable (the excess of the Fair Market Value of
those Option Shares over the aggregate Exercise Price payable for such shares)
and provides for subsequent pay-out in accordance with the same option
exercise/vesting schedule set forth in the Grant Notice.
(b) Immediately following the Corporate Transaction, this option shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof) in connection with the Corporate
Transaction.
(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
--------
(d) This Agreement shall not in any way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
---------------------------
Ordinary Shares by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Ordinary Shares as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
3.
8. SHAREHOLDER RIGHTS. The holder of this option shall not have any
------------------
shareholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. MANNER OF EXERCISING OPTION.
---------------------------
(a) In order to exercise this option with respect to all or any part
of the Option Shares for which this option is at the time exercisable, Optionee
(or any other person or persons exercising the option) must take the following
actions:
(i) Execute and deliver to the Corporation a Notice of Exercise
for the Option Shares for which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased shares in
one or more of the following forms:
(A) cash or check made payable to the Corporation;
(B) a promissory note payable to the Corporation, but only
to the extent authorized by the Plan Administrator in accordance with
Paragraph 13;
(C) Ordinary Shares held by Optionee (or any other person or
persons exercising the option) for the requisite period necessary to
avoid a charge to the Corporation's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise Date; or
(D) to the extent the option is exercised for vested Option
Shares, through a special sale and remittance procedure pursuant to
which Optionee (or any other person or persons exercising the option)
shall concurrently provide irrevocable written instructions (I) to a
Corporation-designated brokerage firm to effect the immediate sale of
the purchased shares and remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate Exercise Price payable for the purchased shares plus all
applicable U.S. Federal, state, local and foreign income and
employment taxes required to be withheld by the Corporation by reason
of such exercise and (II) to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale.
4.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the
Exercise Price must accompany the Notice of Exercise delivered to the
Corporation in connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee)
have the right to exercise this option.
(iv) Make appropriate arrangements with the Corporation
(or Parent or Subsidiary employing or retaining Optionee) for the
satisfaction of all U.S. Federal, state, local and foreign income and
employment tax withholding requirements applicable to the option
exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional
shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
------------------------------------
(a) The exercise of this option and the issuance of the Option
Shares upon such exercise shall be subject to compliance by the Corporation
and Optionee with all applicable requirements of law relating thereto and with
all applicable regulations of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Ordinary Shares may be listed for trading
at the time of such exercise and issuance.
(b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of any Ordinary Shares pursuant to this option
shall relieve the Corporation of any liability with respect to the non-
issuance or sale of the Ordinary Shares as to which such approval shall not
have been obtained. The Corporation, however, shall use its best efforts to
obtain all such approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
----------------------
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.
5.
12. NOTICES. Any notice required to be given or delivered to the
-------
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal U.S. corporate offices. Any notice required
to be given or delivered to Optionee shall be in writing and addressed to
Optionee at the address indicated below Optionee's signature line on the Grant
Notice. All notices shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, postage prepaid and properly addressed to the party to
be notified.
13. FINANCING. The Plan Administrator may, in its absolute
---------
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion.
14. CONSTRUCTION. This Agreement and the option evidenced hereby are
------------
made and granted pursuant to the Plan and are in all respects limited by and
subject to the terms of the Plan. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
15. GOVERNING LAW. The interpretation, performance and enforcement
-------------
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
16. EXCESS SHARES. If the Option Shares covered by this Agreement
-------------
exceed, as of the Grant Date, the number of Ordinary Shares which may without
shareholder approval be issued under the Plan, then this option shall be void
with respect to those excess shares, unless shareholder approval of an amendment
sufficiently increasing the number of Ordinary Shares issuable under the Plan is
obtained in accordance with the provisions of the Plan.
17. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event
--------------------------------------------------
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
(i) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option is
exercised for one or more Option Shares: (A) more than three (3) months
after the date Optionee ceases to be an Employee for any reason other than
death or Permanent Disability or (B) more than twelve (12) months after the
date Optionee ceases to be an Employee by reason of Permanent Disability.
6.
(ii) No installment under this option shall qualify for favorable
tax treatment as an Incentive Option if (and to the extent) the aggregate
Fair Market Value (determined at the Grant Date) of the Ordinary Shares for
which such installment first becomes exercisable hereunder would, when
added to the aggregate value (determined as of the respective date or dates
of grant) of the Ordinary Shares or other securities for which this option
or any other Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation or any
Parent or Subsidiary) first become exercisable during the same calendar
year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate.
Should such One Hundred Thousand Dollar ($100,000) limitation be exceeded
in any calendar year, this option shall nevertheless become exercisable for
the excess shares in such calendar year as a Non-Statutory Option.
(iii) Should the exercisability of this option be accelerated
upon a Corporate Transaction, then this option shall qualify for favorable
tax treatment as an Incentive Option only to the extent the aggregate Fair
Market Value (determined at the Grant Date) of the Ordinary Shares for
which this option first becomes exercisable in the calendar year in which
the Corporate Transaction occurs does not, when added to the aggregate
value (determined as of the respective date or dates of grant) of the
Ordinary Shares or other securities for which this option or one or more
other Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation or any
Parent or Subsidiary) first become exercisable during the same calendar
year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate.
Should the applicable One Hundred Thousand Dollar ($100,000) limitation be
exceeded in the calendar year of such Corporate Transaction, the option may
nevertheless be exercised for the excess shares in such calendar year as a
Non-Statutory Option.
(iv) Should Optionee hold, in addition to this option, one or
more other options to purchase Ordinary Shares which become exercisable for
the first time in the same calendar year as this option, then the foregoing
limitations on the exercisability of such options as Incentive Options
shall be applied on the basis of the order in which such options are
granted.
18. LEAVE OF ABSENCE. The following provisions shall apply upon the
----------------
Optionee's commencement of an authorized leave of absence:
(i) The exercise schedule in effect under the Grant Notice shall
be frozen as of the first day of the authorized leave, and this option
shall not become exercisable for any additional installments of the Option
Shares during the period Optionee remains on such leave.
7.
(ii) Should Optionee resume active Employee status within sixty
(60) days after the start date of the authorized leave, Optionee shall, for
purposes of the exercise schedule set forth in the Grant Notice, receive
Service credit for the entire period of such leave. If Optionee does not
resume active Employee status within such sixty (60)-day period, then no
Service credit shall be given for the period of such leave.
(iii) If the option is designated as an Incentive Option in the
Grant Notice, then the following additional provision shall apply:
(A) If the leave of absence continues for more than ninety
(90) days, then this option shall automatically convert to a Non-
Statutory Option under the Federal tax laws at the end of the three
(3)-month period measured from the ninety-first (91st) day of such
leave, unless the Optionee's reemployment rights are guaranteed by
statute or by written agreement. Following any such conversion of the
option, all subsequent exercises of such option, whether effected
before or after Optionee's return to active Employee status, shall
result in an immediate taxable event, and the Corporation shall be
required to collect from Optionee the Federal, state and local income
and employment withholding taxes applicable to such exercise.
(iv) In no event shall this option become exercisable for any
additional Option Shares or otherwise remain outstanding if Optionee does
not resume Employee status prior to the Expiration Date of the option term.
8.
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Barbeques Galore Limited (the "Corporation") that I
elect to purchase ______ Ordinary Shares of the Corporation (the "Purchased
Shares") at the option exercise price of $_____ per share (the "Exercise
Price") pursuant to that certain option (the "Option") granted to me under the
Corporation's 1997 Share Option Plan on ____________, 199___.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
________________________, 199__
Date
-----------------------------------------------
Optionee
Address:
-------------------------------------
-----------------------------------------------
Print name in exact manner
it is to appear on the
stock certificate:
-----------------------------------------------
Address to which certificate
is to be sent, if different
from address above:
-----------------------------------------------
-----------------------------------------------
Social Security Number:
-----------------------------------------------
Employee Number:
-----------------------------------------------
APPENDIX
--------
The following definitions shall be in effect under the Agreement:
A. AGREEMENT shall mean this Stock Option Agreement.
---------
B. BOARD shall mean the Corporation's Board of Directors.
-----
C. CODE shall mean the U.S. Internal Revenue Code of 1986, as amended.
----
D. CORPORATE TRANSACTION shall mean either of the following shareholder-
---------------------
approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different
from the persons holding those securities immediately prior to such
transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation.
E. CORPORATION shall mean Barbeques Galore Limited, a corporation
-----------
organized under the laws of New South Wales, Australia, and any corporate
successor to all or substantially all of the assets or voting stock of Barbeques
Galore Limited which shall by appropriate action adopt the Plan.
F. EMPLOYEE shall mean an individual who is in the employ of the
--------
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
G. EXERCISE DATE shall mean the date on which the option shall have been
-------------
exercised in accordance with Paragraph 9 of the Agreement.
H. EXERCISE PRICE shall mean the exercise price per share as specified in
--------------
the Grant Notice.
I. EXPIRATION DATE shall mean the date on which the option expires as
---------------
specified in the Grant Notice.
J. FAIR MARKET VALUE per Ordinary Share on any relevant date shall be
-----------------
determined in accordance with the following provisions:
A-1.
(i) If the Ordinary Shares (or any American Depositary Shares
representing the Ordinary Shares) are at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per Ordinary Share (or American Depositary Share) on the date in
question, as the price is reported by the National Association of
Securities Dealers on the Nasdaq National Market or any successor system.
If there is no closing selling price for the Ordinary Shares (or American
Depositary Shares) on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which
such quotation exists.
(ii) If the Ordinary Shares (or any American Depositary Shares
representing the Ordinary Shares) are at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
Ordinary Share (or American Depositary Share) on the date in question on
the Stock Exchange determined by the Plan Administrator to be the primary
market for the Ordinary Shares, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Ordinary Shares (or American Depositary Shares) on
the date in question, then the Fair Market Value shall be the closing
selling price on the last preceding date for which such quotation exists.
K. GRANT DATE shall mean the date of grant of the option as specified in
----------
the Grant Notice.
L. GRANT NOTICE shall mean the Notice of Grant of Stock Option
------------
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
M. INCENTIVE OPTION shall mean an option which satisfies the requirements
----------------
of Code Section 422.
N. MISCONDUCT shall mean the commission of any act of fraud, embezzlement
----------
or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of
confidential information or trade secrets of the Corporation (or any Parent or
Subsidiary), or any other intentional misconduct by Optionee adversely affecting
the business or affairs of the Corporation (or any Parent or Subsidiary) in a
material manner. The foregoing definition shall not be deemed to be inclusive
of all the acts or omissions which the Corporation (or any Parent or Subsidiary)
may consider as grounds for the dismissal or discharge of Optionee or any other
individual in the Service of the Corporation (or any Parent or Subsidiary).
O. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
--------------------
requirements of Code Section 422.
A-2.
P. NOTICE OF EXERCISE shall mean the notice of exercise in the form
------------------
attached hereto as Exhibit I.
Q. OPTION SHARES shall mean the number of Ordinary Shares subject to the
-------------
option as specified in the Grant Notice.
R. OPTIONEE shall mean the person to whom the option is granted as
--------
specified in the Grant Notice.
S. ORDINARY SHARE shall mean the Corporation's ordinary share, par value
--------------
of A$0.20 per share.
T. PARENT shall mean any corporation (other than the Corporation) in an
------
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
U. PERMANENT DISABILITY shall mean the inability of Optionee to engage in
--------------------
any substantial gainful activity by reason of any medically determinable
physical or mental impairment which is expected to result in death or has lasted
or can be expected to last for a continuous period of twelve (12) months or
more.
V. PLAN shall mean the Corporation's 1997 Share Option Plan.
----
W. PLAN ADMINISTRATOR shall mean either the Board or a committee of the
------------------
Board acting in its administrative capacity under the Plan.
X. SERVICE shall mean the Optionee's performance of services for the
-------
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a non-
employee member of the board of directors or a consultant or independent
advisor.
Y. STOCK EXCHANGE shall mean the American Stock Exchange or the New York
--------------
Stock Exchange.
Z. SUBSIDIARY shall mean any corporation (other than the Corporation) in
----------
an unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
A-3.