EXHIBIT 10.36
▇▇▇▇▇'▇ RESTAURANTS, INC.
RESTRICTED STOCK ISSUANCE AGREEMENT
AGREEMENT made as of this ____ day of _____________, 199__, by
and among ▇▇▇▇▇'▇ Restaurants, Inc., a California corporation (the
"Corporation"), ____________________________, a participant ("Participant") in
the Corporation's 1995 Stock Option/Stock Issuance Plan (the "Plan") and
____________________________, the Participant's spouse.
I. PURCHASE OF SHARES
1.1 PURCHASE. The Participant hereby purchases, and the
Corporation hereby sells to Participant, __________ shares (the "Shares") of the
Corporation's common stock ("Common Stock") at a purchase price of $_________
per share (the "Purchase Price") pursuant to the provisions of the Plan.
1.2 PAYMENT. Concurrently with the execution of this
Agreement, the Participant shall deliver to the Corporate Secretary of the
Corporation (i) the aggregate Purchase Price payable for the Shares in cash or
cash equivalent and (ii) a duly-executed blank Assignment Separate from
Certificate (in the form attached hereto as Exhibit A).
1.3 DELIVERY OF CERTIFICATES. The certificates representing
the Shares hereunder shall be held in escrow by the Secretary of the Corporation
as provided in Article VII hereof.
1.4 SHAREHOLDER RIGHTS. Until such time as the Corporation
actually exercises its repurchase right, rights of first refusal or special
purchase right under this Agreement, Participant (or any successor in interest)
shall have all the rights of a shareholder (including voting and dividend
rights) with respect to the Shares, including the Shares held in escrow under
Article VII, subject, however, to the transfer restrictions of Article IV.
II. SECURITIES LAW COMPLIANCE
2.1 EXEMPTION FROM REGISTRATION. The Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
are accordingly being issued to Participant in reliance upon the exemption from
such registration provided by Rule 701 of the Securities and Exchange Commission
for stock issuances under compensatory benefit plans such as the Plan.
Participant hereby acknowledges receipt of a copy of the documentation for such
Plan in the form of Exhibit B attached hereto.
2.2 RESTRICTED SECURITIES.
A. Participant hereby confirms that Participant has
been informed that the Shares are restricted securities under the 1933 Act and
may not be resold or transferred unless the Shares are first registered under
the Federal securities laws or unless an exemption from such registration is
available. Accordingly, Participant hereby acknowledges that Participant is
prepared to hold the Shares for an indefinite period and that Participant is
aware that Rule 144 of the Securities and Exchange Commission issued under the
1933 Act is not presently available to exempt the sale of the Shares from the
registration requirements of the 1933 Act.
B. Upon the expiration of the ninety (90)-day period
immediately following the date on which the Corporation first becomes subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the Shares, to the extent vested under Article V, may be
sold (without registration) pursuant to the applicable requirements of Rule 144.
If Participant is at the time of such sale an affiliate of the Corporation for
purposes of Rule 144 or was such an affiliate during the preceding three (3)
months, then the sale must comply with all the requirements of Rule 144
(including the volume limitation on the number of shares sold, the
broker/market-maker sale requirement and the requisite notice to the Securities
and Exchange Commission); however, the two-year holding period requirement of
the Rule will not be applicable. If Participant is not at the time of the sale
an affiliate of the Corporation nor was such an affiliate during the preceding
three (3) months, then none of the requirements of Rule 144 (other than the
broker/market-maker sale requirement for Shares held for less than three (3)
years following payment in cash of the Purchase Price therefor) will be
applicable to the sale.
C. Should the Corporation not become subject to the
reporting requirements of the Exchange Act, then Participant may, provided
he/she is not at the time an affiliate of the Corporation (nor was such an
affiliate during the preceding three (3) months), sell the Shares (without
registration) pursuant to paragraph (k) of Rule 144 after the Shares have been
held for a period of three (3) years following the payment in cash of the
Purchase Price for such shares.
2.3 DISPOSITION OF SHARES. Participant hereby agrees that
Participant shall make no disposition of the Shares (other than a permitted
transfer under paragraph 4.1) unless and until there is compliance with all of
the following requirements:
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(a) Participant shall have notified the Corporation of the
proposed disposition and provided a written summary of the terms and
conditions of the proposed disposition.
(b) Participant shall have complied with all requirements of
this Agreement applicable to the disposition of the Shares.
(c) Participant shall have provided the Corporation with
written assurances, in form and substance satisfactory to the
Corporation, that (i) the proposed disposition does not require
registration of the Shares under the 1933 Act or (ii) all appropriate
action necessary for compliance with the registration requirements of the
1933 Act or of any exemption from registration available under the 1933
Act (including Rule 144) has been taken.
(d) Participant shall have provided the Corporation with
written assurances, in form and substance satisfactory to the
Corporation, that the proposed disposition will not result in the
contravention of any transfer restrictions applicable to the Shares
pursuant to the provisions of the Commissioner Rules identified in
paragraph 2.5.
The Corporation shall NOT be required (i) to transfer on its books
any Shares which have been sold or transferred in violation of the provisions of
this Article II NOR (ii) to treat as the owner of the Shares, or otherwise to
accord voting or dividend rights to, any transferee to whom the Shares have been
transferred in contravention of this Agreement.
2.4 RESTRICTIVE LEGENDS. In order to reflect the restrictions
on disposition of the Shares, the stock certificates for the Shares will be
endorsed with restrictive legends, including one or more of the following
legends:
(i) "The shares represented by this certificate have not
been registered under the Securities Act of 1933. The shares may not be
sold or offered for sale in the absence of (a) an effective registration
statement for the shares under such Act, (b) a 'no action' letter of the
Securities and Exchange Commission with respect to such sale or offer, or
(c) satisfactory assurances to the Corporation that registration under
such Act is not required with respect to such sale or offer."
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(ii) "It is unlawful to consummate a sale or transfer of
this security, or any interest therein, or to receive any consideration
therefor, without the prior written consent of the Commissioner of
Corporations of the State of California, except as permitted in the
Commissioner's Rules."
(iii) "The shares represented by this certificate are
unvested and accordingly may not be sold, assigned, transferred,
encumbered, or in any manner disposed of except in conformity with the
terms of a written agreement dated ____________, 19__, between the
Corporation and the registered holder of the shares (or the predecessor
in interest to the shares). Such agreement grants certain repurchase
rights and rights of first refusal to the Corporation (or its assignees)
upon the sale, assignment, transfer, encumbrance or other disposition of
the Corporation's shares or upon termination of service with the
Corporation. The Corporation will upon written request furnish a copy of
such agreement to the holder hereof without charge."
2.5 RECEIPT OF COMMISSIONER RULES. Participant hereby
acknowledges receipt of a copy of Section 260.141.11 of the Rules of the
California Corporations Commissioner, a copy of which is attached as Exhibit C
to this Agreement.
III. SPECIAL TAX PROVISIONS
3.1 SECTION 83(B) ELECTION. The Participant understands that
under Section 83 of the Code, the excess of the fair market value of the Shares
on the date any forfeiture restrictions applicable to such shares lapse over the
Purchase Price for such Shares will be reportable as ordinary income on such
lapse date. For this purpose, the term "forfeiture restrictions" includes the
right of the Corporation to repurchase the Shares pursuant to the Repurchase
Right provided under Article V of this Agreement. Participant understands that
he/she may elect under Section 83(b) of the Internal Revenue Code of 1986, as
amended (the "Code") to be taxed at the time the Shares are acquired hereunder,
rather than when and as such Shares cease to be subject to such forfeiture
restrictions. Such election must be filed with the Internal Revenue Service
within thirty (30) days after the date of this Agreement. Even if the fair
market value of the Shares on the date of this Agreement equals the Purchase
Price paid (and thus no tax is payable), the election must be made to avoid
adverse tax consequences in the future. The form for making this election is
attached as Exhibit D hereto. Participant understands that failure to make this
filing within the thirty (30)-day period will result in the
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recognition of ordinary income by the Participant as the forfeiture
restrictions lapse.
3.2 PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT'S SOLE
RESPONSIBILITY, AND NOT THE CORPORATION'S, TO FILE A TIMELY ELECTION UNDER
SECTION 83(b), EVEN IF PARTICIPANT REQUESTS THE CORPORATION OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON HIS/HER BEHALF. This filing should be
made by registered or certified mail, return receipt requested, and Participant
must retain two (2) copies of the completed form for filing with his/her State
and Federal tax returns for the current tax year and an additional copy for
his/her personal records.
IV. TRANSFER RESTRICTIONS
4.1 RESTRICTION ON TRANSFER. Participant shall not
transfer, assign, encumber or otherwise dispose of any of the Shares which
are subject to the Corporation's Repurchase Right under Article V. In
addition, Shares which are released from the Repurchase Right shall not be
transferred, assigned, encumbered or otherwise made the subject of
disposition in contravention of the Corporation's First Refusal Right under
Article VI. Such restrictions on transfer, however, shall NOT be applicable
to (i) a gratuitous transfer of the Shares made to the Participant's spouse
or issue, including adopted children, or to a trust for the exclusive benefit
of the Participant or the Participant's spouse or issue, PROVIDED AND ONLY IF
the Participant obtains the Corporation's prior written consent to such
transfer, (ii) a transfer of title to the Shares effected pursuant to the
Participant's will or the laws of intestate succession or (iii) a transfer to
the Corporation in pledge as security for any purchase-money indebtedness
incurred by the Participant in connection with the acquisition of the Shares.
4.2 TRANSFEREE OBLIGATIONS. Each person (other than the
Corporation) to whom the Shares are transferred by means of one of the
permitted transfers specified in paragraph 4.1 must, as a condition precedent
to the validity of such transfer, acknowledge in writing to the Corporation
that such person is bound by the provisions of this Agreement and that the
transferred shares are subject to (i) both the Corporation's Repurchase Right
and the Corporation's First Refusal Right granted hereunder and (ii) the
market stand-off provisions of paragraph 4.4, to the same extent such Shares
would be so subject if retained by the Participant.
4.3 DEFINITION OF OWNER. For purposes of Articles IV, V, VI
and VII of this Agreement, the term "Owner" shall include the Participant and
all subsequent holders of the Shares who derive their chain of ownership through
a permitted transfer from the Participant in accordance with paragraph 4.1.
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4.4 MARKET STAND-OFF PROVISIONS.
A. In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to, any Shares without the prior written consent of the Corporation or
its underwriters. Such limitations shall be in effect for such period of time
from and after the effective date of such registration statement as may be
requested by the Corporation or such underwriters; PROVIDED, however, that in no
event shall such period exceed one hundred-eighty (180) days. The limitations
of this paragraph 4.4 shall remain in effect for the two-year period immediately
following the effective date of the Corporation's initial public offering and
shall thereafter terminate and cease to have any force or effect.
B. Owner shall be subject to the market stand-off provisions
of this paragraph 4.4 PROVIDED AND ONLY IF the officers and directors of the
Corporation are also subject to similar arrangements.
C. In the event of any stock dividend, stock split,
recapitalization or other change affecting the Corporation's outstanding Common
Stock effected without receipt of consideration, then any new, substituted or
additional securities distributed with respect to the Shares shall be
immediately subject to the provisions of this paragraph 4.4, to the same extent
the Shares are at such time covered by such provisions.
D. In order to enforce the limitations of this paragraph 4.4,
the Corporation may impose stop-transfer instructions with respect to the Shares
until the end of the applicable stand-off period.
V. REPURCHASE RIGHT
5.1 GRANT. The Corporation is hereby granted the right (the
"Repurchase Right"), exercisable at any time during the sixty (60)-day period
following the date the Participant ceases for any reason to remain in Service or
(if later) during the sixty (60)-day period following the execution date of this
Agreement, to repurchase at the Purchase Price all or (at the discretion of the
Corporation and with the consent of the Participant) any portion of the Shares
in which the Participant has not acquired a vested interest in accordance with
the vesting provisions of paragraph 5.3 below (such shares to be hereinafter
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called the "Unvested Shares"). For purposes of this Agreement, the Participant
shall be deemed to remain in Service for so long as the Participant continues to
render periodic services to the Corporation or any parent or subsidiary
corporation, whether as an employee, a non-employee member of the board of
directors, or an independent contractor or consultant.
5.2 EXERCISE OF THE REPURCHASE RIGHT. The Repurchase Right
shall be exercisable by written notice delivered to the Owner of the Unvested
Shares prior to the expiration of the applicable sixty (60)-day period specified
in paragraph 5.1. The notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be effected, such date to
be not more than thirty (30) days after the date of notice. To the extent one
or more certificates representing Unvested Shares may have been previously
delivered out of escrow to the Owner, then Owner shall, prior to the close of
business on the date specified for the repurchase, deliver to the Secretary of
the Corporation the certificates representing the Unvested Shares to be
repurchased, each certificate to be properly endorsed for transfer. The
Corporation shall, concurrently with the receipt of such stock certificates
(either from escrow in accordance with paragraph 7.3 or from Owner as herein
provided), pay to Owner in cash or cash equivalents (including the cancellation
of any purchase-money indebtedness), an amount equal to the Purchase Price
previously paid for the Unvested Shares which are to be repurchased.
5.3 TERMINATION OF THE REPURCHASE RIGHT. The Repurchase Right
shall terminate with respect to any Unvested Shares for which it is not timely
exercised under paragraph 5.2. In addition, the Repurchase Right shall
terminate, and cease to be exercisable, with respect to any and all Shares in
which the Participant vests in accordance with the schedule below. Accordingly,
as the Participant continues in Service, the Participant shall acquire a vested
interest in, and the Repurchase Right shall lapse with respect to, the Shares in
installments in accordance with the following provisions:
(i) The Participant shall not acquire any vested
interest in, nor shall the Repurchase Right lapse with respect to, any
Shares unless and until the Participant has completed twelve (12)
months of Service measured from _________________, 199__.
(ii) Upon the completion of the twelve (12) month
Service period specified in subparagraph (i) above, the Participant
shall acquire a vested interest in, and the Repurchase Right shall
lapse with respect to, 25% of the Shares.
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(iii) The Participant shall acquire a vested interest
in, and the Repurchase Right shall lapse with respect to, the
remaining Shares in a series of successive equal monthly installments
over each of the next thirty-six (36) months of Service completed by
the Participant after the initial vesting date under subparagraph
(ii) above.
All Shares as to which the Repurchase Right lapses shall,
however, continue to be subject to (i) the First Refusal Right and (ii) the
market stand-off provisions of paragraph 4.4.
5.4 FRACTIONAL SHARES. No fractional shares shall be
repurchased by the Corporation. Accordingly should the Repurchase Right extend
to a fractional share (in accordance with the vesting computation provisions of
paragraph 5.3) at the time the Participant ceases Service, then such fractional
share shall be added to any fractional share in which the Participant is at such
time vested in order to make one whole vested share no longer subject to the
Repurchase Right.
5.5 ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event
of any stock dividend, stock split, recapitalization or other change affecting
the Corporation's outstanding Common Stock as a class effected without receipt
of consideration, then any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which is
by reason of any such transaction distributed with respect to the Shares shall
be immediately subject to the Repurchase Right, but only to the extent the
Shares are at the time covered by such right. Appropriate adjustments to
reflect the distribution of such securities or property shall be made to the
number of Shares at the time subject to the Repurchase Right hereunder and to
the price per share to be paid upon the exercise of the Repurchase Right in
order to reflect the effect of any such transaction upon the Corporation's
capital structure; PROVIDED, however, that the aggregate Purchase Price shall
remain the same.
5.6 CORPORATE TRANSACTION.
A. Immediately prior to the consummation of any of the
following shareholder-approved transactions (a "Corporate Transaction"):
(i) a merger or consolidation in which more than fifty
percent (50%) of the Corporation's outstanding voting stock is
transferred to a person or persons different from those who held the
stock immediately prior to such transaction, or
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(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,
the Repurchase Right shall automatically lapse in its
entirety, except to the extent the Repurchase Right is to be assigned to the
successor corporation (or its parent company) in connection with such Corporate
Transaction.
B. To the extent the Repurchase Right remains in effect
following such Corporate Transaction, it shall apply to the new capital stock or
other property (including cash) received in exchange for the Shares in
consummation of the Corporate Transaction, but only to the extent the Shares are
at the time covered by such right. Appropriate adjustments shall be made to the
price per share payable upon exercise of the Repurchase Right to reflect the
effect of the Corporate Transaction upon the Corporation's capital structure;
PROVIDED, however, that the aggregate Purchase Price shall remain the same.
VI. RIGHT OF FIRST REFUSAL
6.1 GRANT. The Corporation is hereby granted the right of
first refusal (the "First Refusal Right"), exercisable in connection with any
proposed transfer of the Shares in which the Participant has vested in
accordance with the vesting provisions of Article V. For purposes of this
Article VI, the term "transfer" shall include any sale, assignment, pledge,
encumbrance or other disposition for value of the Shares intended to be made by
the Owner, but shall not include any of the permitted transfers under paragraph
4.1.
6.2 NOTICE OF INTENDED DISPOSITION. In the event the Owner
desires to accept a bona fide third-party offer for any or all of the Shares
(the shares subject to such offer to be hereinafter called the "Target Shares"),
Owner shall promptly (i) deliver to the Corporate Secretary of the Corporation
written notice (the "Disposition Notice") of the terms and conditions of the
offer, including the purchase price and the identity of the third-party offeror
and (ii) provide satisfactory proof that the disposition of the Target Shares to
such third-party offeror would not be in contravention of the provisions set
forth in Articles II and IV of this Agreement.
6.3 EXERCISE OF RIGHT. The Corporation (or its assignees)
shall, for a period of twenty-five (25) days following receipt of the
Disposition Notice, have the right to repurchase any or all of the Target Shares
specified in the Disposition Notice upon substantially the same terms and
conditions specified therein or upon terms and conditions which do not
materially vary
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from those specified therein. Such right shall be exercisable by delivery of
written notice (the "Exercise Notice") to Owner prior to the expiration of
the twenty-five (25)-day exercise period. If such right is exercised with
respect to all the Target Shares specified in the Disposition Notice, then
the Corporation (or its assignees) shall effect the repurchase of the Target
Shares, including payment of the purchase price, not more than five (5)
business days after delivery of the Exercise Notice; and at such time Owner
shall deliver to the Corporation the certificates representing the Target
Shares to be repurchased, each certificate to be properly endorsed for
transfer. To the extent any of the Target Shares are at the time held in
escrow under Article VII, the certificates for such shares shall
automatically be released from escrow and delivered to the Corporation for
purchase.
6.4 NON-EXERCISE OF RIGHT. In the event the Exercise Notice is
not given to Owner within twenty-five (25) days following the date of the
Corporation's receipt of the Disposition Notice, Owner shall have a period of
thirty (30) days thereafter in which to sell or otherwise dispose of the Target
Shares to the third-party offeror identified in the Disposition Notice upon
terms and conditions (including the purchase price) no more favorable to such
third-party offeror than those specified in the Disposition Notice; PROVIDED,
however, that any such sale or disposition must not be effected in contravention
of the provisions of Article II of this Agreement. To the extent any of the
Target Shares are at the time held in escrow under Article VII, the certificates
for such shares shall automatically be released from escrow and surrendered to
the Owner. The third-party offeror shall acquire the Target Shares free and
clear of the Corporation's Repurchase Right under Article V and the
Corporation's First Refusal Right hereunder, but the acquired shares shall
remain subject to (i) the securities law restrictions of paragraph 2.2(a) and
(ii) the market stand-off provisions of paragraph 4.4. In the event Owner does
not effect such sale or disposition of the Target Shares within the specified
thirty (30) day period, the Corporation's First Refusal Right shall continue to
be applicable to any subsequent disposition of the Target Shares by Owner until
such right lapses in accordance with paragraph 6.7.
6.5 PARTIAL EXERCISE OF RIGHT. In the event the Corporation
(or its assignees) makes a timely exercise of the First Refusal Right with
respect to a portion, but not all, of the Target Shares specified in the
Disposition Notice, Owner shall have the option, exercisable by written notice
to the Corporation delivered within thirty (30) days after the date of the
Disposition Notice, to effect the sale of the Target Shares pursuant to one of
the following alternatives:
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(i) sale or other disposition of all the Target Shares
to the third-party offeror identified in the Disposition Notice, but
in full compliance with the requirements of paragraph 6.4, as if the
Corporation did not exercise the First Refusal Right hereunder; or
(ii) sale to the Corporation (or its assignees) of the
portion of the Target Shares which the Corporation (or its assignees)
has elected to purchase, such sale to be effected in substantial
conformity with the provisions of paragraph 6.3.
Failure of Owner to deliver timely notification to the Corporation
under this paragraph 6.5 shall be deemed to be an election by Owner to sell the
Target Shares pursuant to alternative (i) above.
6.6 RECAPITALIZATION/MERGER.
(a) In the event of any stock dividend, stock split,
recapitalization or other transaction affecting the Corporation's outstanding
Common Stock as a class effected without receipt of consideration, then any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the Purchased Shares shall be
immediately subject to the Corporation's First Refusal Right hereunder, but only
to the extent the Purchased Shares are at the time covered by such right.
(b) In the event of any of the following transactions:
(i) a merger or consolidation in which the
Corporation is not the surviving entity,
(ii) a sale, transfer or other disposition of all
or substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is
the surviving entity but in which the Corporation's outstanding voting
securities are transferred in whole or in part to person or persons other
than those who held such securities immediately prior to the merger, or
(iv) any transaction effected primarily to change
the State in which the Corporation is incorporated, or to create a
holding company structure,
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the Corporation's First Refusal Right shall remain in full
force and effect and shall apply to the new capital stock or other property
received in exchange for the Purchased Shares in consummation of the transaction
but only to the extent the Purchased Shares are at the time covered by such
right.
6.7 LAPSE. The First Refusal Right under this Article VI shall
lapse and cease to have effect upon the EARLIEST to occur of (i) the first date
on which shares of the Corporation's Common Stock are held of record by more
than five hundred (500) persons, (ii) a determination is made by the
Corporation's Board of Directors that a public market exists for the outstanding
shares of the Corporation's Common Stock, or (iii) a firm commitment
underwritten public offering pursuant to an effective registration statement
under the 1933 Act, covering the offer and sale of the Corporation's Common
Stock in the aggregate amount of at least $5,000,000. However, the market
stand-off provisions of paragraph 4.4 shall continue to remain in full force and
effect following the lapse of the First Refusal Right hereunder.
VII. ESCROW
7.1 DEPOSIT. Upon issuance, the certificates for any Unvested
Shares purchased hereunder shall be deposited in escrow with the Corporation to
be held in accordance with the provisions of this Article VII. Each deposited
certificate shall be accompanied by a duly executed Assignment Separate from
Certificate in the form of Exhibit A. The deposited certificates, together with
any other assets or securities from time to time deposited with the Corporation
pursuant to the requirements of this Agreement, shall remain in escrow until
such time or times as the certificates (or other assets and securities) are to
be released or otherwise surrendered for cancellation in accordance with
paragraph 7.3. Upon delivery of the certificates (or other assets and
securities) to the Corporation, the Owner shall be issued an instrument of
deposit acknowledging the number of Unvested Shares (or other assets and
securities) delivered in escrow to the Corporation.
7.2 RECAPITALIZATION. All regular cash dividends on the
Unvested Shares (or other securities at the time held in escrow) shall be paid
directly to the Owner and shall not be held in escrow. However, in the event of
any stock dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration or in the event of a Corporate Transaction, any new, substituted
or additional securities or other property which is by reason of such
transaction distributed with respect to the Unvested Shares shall be immediately
delivered to the Corporation to be held in escrow under this
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Article VII, but only to the extent the Unvested Shares are at the time subject
to the escrow requirements of paragraph 7.1.
7.3 RELEASE/SURRENDER. The Unvested Shares, together with any
other assets or securities held in escrow hereunder, shall be subject to the
following terms and conditions relating to their release from escrow or their
surrender to the Corporation for repurchase and cancellation:
(i) Should the Corporation (or its assignees) elect to
exercise the Repurchase Right under Article V with respect to any
Unvested Shares, then the escrowed certificates for such Unvested Shares
(together with any other assets or securities issued with respect
thereto) shall be delivered to the Corporation, concurrently with the
payment to the Owner, in cash or cash equivalent (including the
cancellation of any purchase-money indebtedness), of an amount equal to
the aggregate Purchase Price for such Unvested Shares, and the Owner
shall cease to have any further rights or claims with respect to such
Unvested Shares (or other assets or securities attributable to such
Unvested Shares).
(ii) Should the Corporation (or its assignees) elect to
exercise its First Refusal Right under Article VI with respect to any
vested Target Shares held at the time in escrow hereunder, then the
escrowed certificates for such Target Shares (together with any other
assets or securities attributable thereto) shall, concurrently with the
payment of the paragraph 6.3 purchase price for such Target Shares to the
Owner, be surrendered to the Corporation, and the Owner shall cease to
have any further rights or claims with respect to such Target Shares (or
other assets or securities).
(iii) Should the Corporation (or its assignees) elect NOT
to exercise its First Refusal Right under Article VI with respect to any
Target Shares held at the time in escrow hereunder, then the escrowed
certificates for such Target Shares (together with any other assets or
securities attributable thereto) shall be surrendered to the Owner for
disposition in accordance with the provisions of paragraph 6.4.
(iv) As the interest of the Participant in the Unvested
Shares (or any other assets or securities attributable thereto) vests in
accordance with the provisions of Article V, the certificates for such
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vested shares (as well as all other vested assets and securities) shall
be released from escrow and delivered to the Owner in accordance with the
following schedule:
a. The initial release of vested shares (or
other vested assets and securities) from escrow shall be
effected within thirty (30) days following the expiration
of the initial twelve (12)-month period measured from the
initial vesting date under paragraph 5.3.
b. Subsequent releases of vested shares (or
other vested assets and securities) from escrow shall be
effected at semi-annual intervals thereafter, with the
first such semi-annual release to occur six (6) months
after the initial paragraph 5.3 vesting date.
c. Upon the Participant's cessation of Service,
any escrowed Shares (or other assets or securities) in
which the Participant is at the time vested shall be
promptly released from escrow.
d. Upon any earlier termination of the
Corporation's Repurchase Right in accordance with the
applicable provisions of Article V, the Shares (or other
assets or securities) at the time held in escrow hereunder
shall promptly be released to the Owner as fully-vested
shares or other property.
(v) All Shares (or other assets or securities) released
from escrow in accordance with the provisions of subparagraph (iv) above
shall nevertheless remain subject to (I) the Corporation's First Refusal
Right under Article VI until such right lapses pursuant to paragraph 6.7,
(II) the market stand-off provisions of paragraph 4.4 until such
provisions terminate in accordance therewith and (III) the Special
Purchase Right under Article VIII.
VIII. MARITAL DISSOLUTION OR LEGAL SEPARATION
8.1 GRANT. In connection with the dissolution of the
Participant's marriage or the legal separation of the Participant and the
Participant's spouse, the Corporation shall have the right (the "Special
Purchase Right"), exercisable at any time
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during the thirty (30)-day period following the Corporation's receipt of the
required Dissolution Notice under paragraph 8.2, to purchase from the
Participant's spouse, in accordance with the provisions of paragraph 8.3, all
or any portion of the Shares which would otherwise be awarded to such spouse
in settlement of any community property or other marital property rights such
spouse may have in such shares.
8.2 NOTICE OF DECREE OR AGREEMENT. The Participant shall
promptly provide the Secretary of the Corporation with written notice (the
"Dissolution Notice") of (i) the entry of any judicial decree or order resolving
the property rights of the Participant and the Participant's spouse in
connection with their marital dissolution or legal separation or (ii) the
execution of any contract or agreement relating to the distribution or division
of such property rights. The Dissolution Notice shall be accompanied by a copy
of the actual decree of dissolution or settlement agreement between the
Participant and the Participant's spouse which provides for the award to the
spouse of one or more Shares in settlement of any community property or other
marital property rights such spouse may have in such shares.
8.3 EXERCISE OF SPECIAL PURCHASE RIGHT. The Special Purchase
Right shall be exercisable by delivery of the Purchase Notice to the Participant
and the Participant's spouse within thirty (30) days after the Corporation's
receipt of the Dissolution Notice. The Purchase Notice shall indicate the
number of shares to be purchased by the Corporation, the date such purchase is
to be effected (such date to be not less than five (5) business days, nor more
than ten (10) business days, after the date of the Purchase Notice), and the
fair market value to be paid for such Shares. The Participant (or the
Participant's spouse, to the extent such spouse has physical possession of the
Shares) shall, prior to the close of business on the date specified for the
purchase, deliver to the Corporate Secretary of the Corporation the certificates
representing the shares to be purchased, each certificate to be properly
endorsed for transfer. To the extent any of the shares to be purchased by the
Corporation are at the time held in escrow under Article VII, the certificates
for such shares shall be promptly delivered out of escrow to the Corporation.
The Corporation shall, concurrently with the receipt of the stock certificates,
pay to the Participant's spouse (in cash or cash equivalents) an amount equal to
the fair market value specified for such shares in the Purchase Notice.
If the Participant's spouse does not agree with the fair market
value specified for the shares in the Purchase Notice, then the spouse shall
promptly notify the Corporation in writing of such disagreement and the fair
market value of such
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shares shall thereupon be determined by an appraiser of recognized standing
selected by the Corporation and the spouse. If they cannot agree on an
appraiser within twenty (20) days after the date of the Purchase Notice, each
shall select an appraiser of recognized standing, and the two appraisers
shall designate a third appraiser of recognized standing whose appraisal
shall be determinative of such value. The cost of the appraisal shall be
shared equally by the Corporation and the Participant's spouse. The closing
shall then be held on the fifth business day following the completion of such
appraisal; PROVIDED, however, that if the appraised value is more than
fifteen percent (15%) greater than the fair market value specified for the
shares in the Purchase Notice, the Corporation shall have the right,
exercisable prior to the expiration of such five (5) business-day period, to
rescind the exercise of the Special Purchase Right and thereby revoke its
election to purchase the shares awarded to the spouse.
8.4 LAPSE. The Special Purchase Right under this Article VIII
shall lapse and cease to have effect upon the EARLIER to occur of (i) the first
date on which the First Refusal Right under Article VI lapses or (ii) the
expiration of the thirty (30)-day exercise period specified in paragraph 8.3, to
the extent the Special Purchase Right is not timely exercised in accordance with
such paragraph.
IX. GENERAL PROVISIONS
9.1 ASSIGNMENT. The Corporation may assign its Repurchase
Right under Article V, its First Refusal Right under Article VI and/or its
Special Purchase Right under Article VIII to any person or entity selected by
the Corporation's Board of Directors, including (without limitation) one or more
shareholders of the Corporation.
If the assignee of the Repurchase Right is other than a one
hundred percent (100%) owned subsidiary corporation of the Corporation or the
parent corporation owning one hundred percent (100%) of the Corporation, then
such assignee must make a cash payment to the Corporation, upon the assignment
of the Repurchase Right, in an amount equal to the excess (if any) of (i) the
fair market value of the Unvested Shares at the time subject to the assigned
Repurchase Right over (ii) the aggregate repurchase price payable for Unvested
Shares thereunder.
9.2 DEFINITIONS. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations
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ending with the Corporation shall be considered to be a PARENT
corporation of the Corporation, provided each such 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.
(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a SUBSIDIARY of the Corporation, provided each such
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.
9.3 NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this
Agreement or in the Plan shall confer upon the Participant any right to continue
in the Service of the Corporation (or any parent or subsidiary corporation
employing or retaining Participant) for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Corporation
(or any parent or subsidiary corporation employing or retaining Participant) or
the Participant, which rights are hereby expressly reserved by each, to
terminate the Participant's Service at any time for any reason whatsoever, with
or without cause.
9.4 NOTICES. Any notice required in connection with (i) the
Repurchase Right, the Special Purchase Right or the First Refusal Right or (ii)
the disposition of any Shares covered thereby shall be given in writing and
shall be deemed effective upon personal delivery or upon deposit in the United
States mail, registered or certified, postage prepaid and addressed to the party
entitled to such notice at the address indicated below such party's signature
line on this Agreement or at such other address as such party may designate by
ten (10) days advance written notice under this paragraph 9.4 to all other
parties to this Agreement.
9.5 NO WAIVER. The failure of the Corporation (or its
assignees) in any instance to exercise the Repurchase Right granted under
Article V, or the failure of the Corporation (or its assignees) in any instance
to exercise the First Refusal Right granted under Article VI, or the failure of
the Corporation (or its assignees) in any instance to exercise the Special
Purchase Right granted under Article VIII shall not constitute a waiver of any
other repurchase rights and/or rights of first refusal that may subsequently
arise under the provisions of this
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Agreement or any other agreement between the Corporation and the Participant
or the Participant's spouse. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
9.6 CANCELLATION OF SHARES. If the Corporation (or its
assignees) shall make available, at the time and place and in the amount and
form provided in this Agreement, the consideration for the Shares to be
repurchased in accordance with the provisions of this Agreement, then from and
after such time, the person from whom such shares are to be repurchased shall no
longer have any rights as a holder of such shares (other than the right to
receive payment of such consideration in accordance with this Agreement), and
such shares shall be deemed purchased in accordance with the applicable
provisions hereof and the Corporation (or its assignees) shall be deemed the
owner and holder of such shares, whether or not the certificates therefor have
been delivered as required by this Agreement.
X. MISCELLANEOUS PROVISIONS
10.1 PARTICIPANT UNDERTAKING. Participant hereby agrees to take
whatever additional action and execute whatever additional documents the
Corporation may in its judgment deem necessary or advisable in order to carry
out or effect one or more of the obligations or restrictions imposed on either
the Participant or the Shares pursuant to the express provisions of this
Agreement.
10.2 AGREEMENT IS ENTIRE CONTRACT. This Agreement constitutes
the entire contract between the parties hereto with regard to the subject matter
hereof. This Agreement is made pursuant to the provisions of the Plan and shall
in all respects be construed in conformity with the express terms and provisions
of the Plan.
10.3 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California, as such laws
are applied to contracts entered into and performed in such State without resort
to that State's conflict-of-laws rules.
10.4 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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10.5 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and the Participant and the Participant's legal
representatives, heirs, legatees, distributees, assigns and transferees by
operation of law, whether or not any such person shall have become a party to
this Agreement and have agreed in writing to join herein and be bound by the
terms and conditions hereof.
10.6 POWER OF ATTORNEY. Participant's spouse hereby appoints
Participant his or her true and lawful attorney in fact, for him or her and in
his or her name, place and ▇▇▇▇▇, and for his or her use and benefit, to agree
to any amendment or modification of this Agreement and to execute such further
instruments and take such further actions as may reasonably be necessary to
carry out the intent of this Agreement. Participant's spouse further gives and
grants unto Participant as his or her attorney in fact full power and authority
to do and perform every act necessary and proper to be done in the exercise of
any of the foregoing powers as fully as he or she might or could do if
personally present, with full power of substitution and revocation, hereby
ratifying and confirming all that Participant shall lawfully do and cause to be
done by virtue of this power of attorney.
[Remainder of this page is left intentionally blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement on
the day and year first indicated above.
▇▇▇▇▇'▇ RESTAURANTS, INC.
By ________________________________
Title _____________________________
Address: ___________________________________
___________________________________
___________________________________
Participant 1
Address: ___________________________________
___________________________________
The undersigned spouse of Participant has read and hereby approves
the foregoing Restricted Stock Purchase Agreement. In consideration of the
Corporation's granting the Participant the right to acquire the Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms and provisions of such Agreement, including,
(specifically) the right of the Corporation (or its assignees) to purchase any
and all interest or right the undersigned may otherwise have in such shares
pursuant to community property laws or other marital property rights.
___________________________________
Participant's Spouse
-----------------
(1) I have executed the Section 83(b) election that was attached hereto
as Exhibit D. As set forth in Article III, I understand that I, and NOT the
Corporation, will be responsible for completing the form and filing the election
with the appropriate offices of the federal and state tax authorities and that
if such filing is not completed within thirty (30) days after the date of this
Agreement, I will not be entitled to the tax benefits provided by Section 83(b).
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EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, ________________ hereby sell(s), assign(s) and
transfer(s) unto ▇▇▇▇▇'▇ Restaurants, Inc. (the "Corporation") _________________
__________________ (____________) shares of the Common Stock of the Corporation
standing in his\her name on the books of the Corporation represented by
Certificate No. __________ herewith and do hereby irrevocably constitute and
appoint ____________________ Attorney to transfer the said stock on the books of
the Corporation with full power of substitution in the premises.
Dated: ___________________
Signature ________________________________
INSTRUCTION: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Corporation to exercise the
Repurchase Right set forth in the Agreement without requiring additional
signatures on the part of the Participant.
A-1
EXHIBIT B
1995 STOCK OPTION\STOCK ISSUANCE PLAN
(See Exhibit 10.32 to Registration Statement on Form S-1)
B-1
EXHIBIT C
SECTION 260.141.11
TITLE 10, CALIFORNIA ADMINISTRATIVE CODE
260.141.11 Restriction on Transfer. (a) The issuer of any
security upon which a restriction on transfer has been imposed pursuant to
Sections 260.102.6, 260.141.10 or 260.534 shall cause a copy of this section to
be delivered to each issuee or transferee of such security at the time the
certificate evidencing the security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to
consummate a sale or transfer of such security, or any interest therein,
without the prior written consent of the Commissioner (until this condition is
removed pursuant to Section 260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102
of the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse, or
any custodian or trustee for the account of the transferor or the transferor's
ancestors, descendants, or spouse; or to a transferee by a trustee or custodian
for the account of the transferee or the transferee's ancestors, descendants or
spouse;
(5) to holders of securities of the same class of the same
issuer;
(6) by way of gift or donation inter vivos or on
death;
(7) by or through a broker-dealer licensed under the Code
(either acting as such or as a finder) to a resident of a foreign state,
territory or country who is neither domiciled in this state to the knowledge of
the broker-dealer, nor actually present in this state if the sale of such
securities is not in violation of any securities law of the foreign state,
territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or member of an underwriting syndicate or
selling group;
C-1
(9) if the interest sold or transferred is a pledge or other
lien given by the purchaser to the seller upon a sale of the security for which
the Commissioner's written consent is obtained or under this rule not required;
(10) by way of a sale qualified under Sections 25111, 25112,
25113 or 25121 of the Code, of the securities to be transferred, provided that
no order under Section 25140 or Subdivision (a) of Section 25143 is in effect
with respect to such qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a corporation to such
corporation;
(12) by way of an exchange qualified under Section 25111, 25112
or 25113 of the Code, provided that no order under Section 25140 or Subdivision
(a) of Section 25143 is in effect with respect to such qualification;
(13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in this state;
(14) to the State Controller pursuant to the Unclaimed Property
Law or to the administrator of the unclaimed property law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property
Law or by the administrator of the unclaimed property law of another state if,
in either such case, such person (i) discloses to potential purchasers at the
sale that transfer of the securities is restricted under this rule, (ii)
delivers to each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does
not involve a change in the beneficial ownership of the securities;
(17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification requirement of Section
25110 of the Code but exempt from that qualification requirement by subdivision
(f) of Section 25102;
provided that any such transfer is on the condition that any certificate
evidencing the security issued to such transferee shall contain the legend
required by this section.
C-2
(c) The certificates representing all such securities subject
to such a restriction on transfer, whether upon initial issuance or upon any
transfer thereof, shall bear on their face a legend, prominently stamped or
printed thereon in capital letters of not less than 10-point size, reading as
follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES."
C-3
REPURCHASE RIGHTS
EXHIBIT D
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue Code,
pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name: ________________
Address:
Taxpayer Ident. No.:
(2) The property with respect to which the election is being made is
________________ shares of the common stock of ▇▇▇▇▇'▇ Restaurants, Inc.
(3) The property was issued on ______________________, 19__.
(4) The taxable year in which the election is being made is the calendar year
19__.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses in a series of annual
and monthly installments over a four (4) year period ending on
____________________________.
(6) The fair market value at the time of transfer (determined without regard
to any restriction other than a restriction which by its terms will never
lapse) is $________ per share.
(7) The amount paid for such property is $________ per share.
(8) A copy of this statement was furnished to ▇▇▇▇▇'▇ Restaurants, Inc. for
whom taxpayer rendered the service underlying the transfer of property.
(9) This statement is executed as of: ______________________, 19__.
-------------------------------- ----------------------------------------
Spouse (if any) Taxpayer
This form must be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within 30 days after the execution date of the Restricted Stock Issuance
Agreement.
D-1