EXHIBIT 10.4
RED ROBIN GOURMET BURGERS, INC.
2002 STOCK INCENTIVE PLAN
TABLE OF CONTENTS
Page
----
1. THE PLAN............................................................................. 1
1.1 Purpose..................................................................... 1
1.2 Administration and Authorization; Power and Procedure....................... 1
1.3 Participation............................................................... 2
1.4 Shares Available for Awards; Share Limits................................... 3
1.5 Grant of Awards............................................................. 3
1.6 Award Period................................................................ 4
1.7 Limitations on Exercise and Vesting of Awards............................... 4
1.8 Acceptance of Notes to Finance Exercise..................................... 4
1.9 No Transferability; Limited Exception to Transfer Restrictions.............. 5
2. OPTIONS.............................................................................. 6
2.1 Grants...................................................................... 6
2.2 Option Price................................................................ 6
2.3 Limitations on Grant and Terms of Incentive Stock Options................... 7
2.4 Option Repricing/Cancellation and Regrant/Waiver............................ 8
2.5 Effects of Termination of Employment or Service............................. 8
3. STOCK APPRECIATION RIGHTS............................................................ 9
3.1 Grants...................................................................... 9
3.2 Exercise of Stock Appreciation Rights....................................... 10
3.3 Payment..................................................................... 10
3.4 Limited Stock Appreciation Rights........................................... 10
4. RESTRICTED STOCK AND STOCK UNIT AWARDS............................................... 11
4.1 Grants...................................................................... 11
4.2 Restrictions................................................................ 12
4.3 Return to the Corporation................................................... 12
5. PERFORMANCE SHARE AWARDS AND OTHER STOCK AWARDS...................................... 12
5.1 Grants of Performance Share Awards.......................................... 12
5.2 Grants of Stock Bonuses and Other Awards.................................... 13
5.3 Deferred Payments........................................................... 13
5.4 Alternative Payments........................................................ 13
i
6. OTHER PROVISIONS..................................................................... 13
6.1 Rights of Eligible Persons, Participants and Beneficiaries.................. 13
6.2 Adjustments; Acceleration................................................... 14
6.3 Effect of Termination of Service on Awards.................................. 17
6.4 Compliance with Laws........................................................ 18
6.5 Tax Matters................................................................. 18
6.6 Plan and Award Amendments, Termination and Suspension....................... 19
6.7 Privileges of Stock Ownership............................................... 19
6.8 Effective Date of the Plan.................................................. 20
6.9 Term of the Plan............................................................ 20
6.10 Governing Law/Construction/Severability..................................... 20
6.11 Captions.................................................................... 20
6.12 Stock-Based Awards in Substitution for Stock Options or Awards Granted
by Other Corporation........................................................ 20
6.13 Non-Exclusivity of Plan..................................................... 21
6.14 No Corporate Action Restriction............................................. 21
6.15 Other Company Benefit and Compensation Programs............................. 21
7. DEFINITIONS.......................................................................... 22
8. NON-EMPLOYEE DIRECTOR OPTIONS........................................................ 27
8.1 Participation............................................................... 27
8.2 Annual Option Grants........................................................ 27
8.3 Option Price................................................................ 28
8.4 Option Period and Exercisability............................................ 28
8.5 Termination of Directorship................................................. 28
8.6 Adjustments................................................................. 28
8.7 Acceleration Upon a Change in Control Event................................. 28
ii
RED ROBIN GOURMET BURGERS, INC.
2002 STOCK INCENTIVE PLAN
1. THE PLAN
1.1 Purpose. The purpose of this Plan is to promote the success of the
Company by providing an additional means through the grant of
Awards to attract, motivate, retain and reward key employees,
including officers, whether or not directors, of the Company with
awards and incentives for high levels of individual performance
and improved financial performance of the Company and to attract,
motivate and retain experienced and knowledgeable independent
directors. "Corporation" means Red Robin Gourmet Burgers, Inc. and
"Company" means the Corporation and its Subsidiaries,
collectively. These terms and other capitalized terms are defined
in Article 7.
1.2 Administration and Authorization; Power and Procedure.
1.2.1 Committee. This Plan shall be administered by and all
Awards to Eligible Employees shall be authorized by the
Committee. Action of the Committee with respect to the
administration of this Plan shall be taken pursuant to a
majority vote or by written consent of its members.
1.2.2 Plan Awards; Interpretation; Powers of Committee. Subject
to the express provisions of this Plan, the Committee shall
have the authority:
(a) to determine eligibility and, from among those
persons determined to be eligible, the particular
Eligible Persons who will receive an Award;
(b) to grant Awards to Eligible Persons, determine the
price at which securities will be offered or awarded
and the amount of securities to be offered or
awarded to any of such persons, and determine the
other specific terms and conditions of such Awards
consistent with the express limits of this Plan, and
establish the installments (if any) in which such
Awards shall become exercisable or shall vest, or
determine that no delayed exercisability or vesting
is required, and establish the events of termination
or reversion of such Awards;
(c) to approve the forms of Award Agreements (which need
not be identical either as to type of award or among
Participants);
(d) to construe and interpret this Plan and any
agreements defining the rights and obligations of
the Company and Participants under this Plan,
further define the terms used in this Plan, and
prescribe, amend and rescind rules and regulations
relating to the administration of this Plan;
(e) to cancel, modify, or waive the Corporation's rights
with respect to, or modify, discontinue, suspend, or
terminate any or all outstanding Awards held by
Eligible Employees, subject to any required consent
under Section 6.6;
1
(f) to accelerate or extend the exercisability or extend
the term of any or all such outstanding Awards
within the maximum ten-year term of Awards under
Section 1.6; and
(g) to make all other determinations and take such other
action as contemplated by this Plan or as may be
necessary or advisable for the administration of
this Plan and the effectuation of its purposes.
The provisions of Article 8 relating to Non-Employee
Director Awards shall be automatic and, to the maximum
extent possible, self-effectuating. Although the discretion
of the Committee extends to those Awards, Board approval or
ratification shall be required for any material amendments
to any such Award.
1.2.3 Binding Determinations/Liability Limitation. Any action
taken by, or inaction of, the Corporation, any Subsidiary,
the Board or the Committee relating or pursuant to this
Plan and within its authority hereunder or under applicable
law shall be within the absolute discretion of that entity
or body and shall be conclusive and binding upon all
persons. Neither the Board nor any Committee, nor any
member thereof or person acting at the direction thereof.
shall be liable for any act, omission, interpretation,
construction or determination made in good faith in
connection with this Plan (or any Award made under this
Plan), and all such persons shall be entitled to
indemnification and reimbursement by the Company in respect
of any claim, loss, damage or expense (including, without
limitation, attorneys' fees) arising or resulting therefrom
to the fullest extent permitted by law and/or under any
directors and officers liability insurance coverage that
may be in effect from time to time.
1.2.4 Reliance on Experts. In making any determination or in
taking or not taking any action under this Plan, the
Committee or the Board, as the case may be, may obtain and
may rely upon the advice of experts, including professional
advisors to the Corporation. No director, officer or agent
of the Company shall be liable for any such action or
determination taken or made or omitted in good faith.
1.2.5 Delegation. The Committee may delegate ministerial,
non-discretionary functions to individuals who are officers
or employees of the Company. Subject to Section 6.4 and
6.10, the Committee may also delegate, to the extent
permitted by Section 157(c) of the Delaware General
Corporation Law, to one or more officers of the
Corporation, its powers under this Plan (a) to designate
the officers and employees of the Corporation or any of its
Subsidiaries who will receive grants of rights or options
to purchase shares of Common Stock, and (b) to determine
the number of rights or options to be received by them,
pursuant to a resolution that specifies the total number of
rights or options that may be granted under the delegation,
provided that no officer may be delegated the power to
designate himself or herself as a recipient of such options
or rights.
1.3 Participation. Awards may be granted by the Committee only to
those persons that the Committee determines to be Eligible
Persons. An Eligible Person who has been granted an Award may, if
otherwise eligible, be granted additional Awards if the Committee
shall so determine.
2
1.4 Shares Available for Awards; Share Limits.
1.4.1 Shares Available. Subject to the provisions of Section 6.2,
the capital stock that may be delivered under this Plan
shall be shares of the Corporation's authorized but
unissued Common Stock and any shares of its Common Stock
held as treasury shares. The shares may be delivered for
any lawful consideration.
1.4.2 Share Limits. The maximum number of shares of Common Stock
that may be delivered pursuant to Awards granted to
Eligible Persons under this Plan shall not exceed 900,000*
shares (the "Share Limit"). The maximum number of shares of
Common Stock that may be delivered pursuant to options
qualified as Incentive Stock Options granted under this
Plan is 900,000* shares. The maximum number of shares
subject to those options and stock appreciation rights that
are granted during any calendar year to any individual
shall be limited to 170,000* and the maximum individual
limit on the number of shares in the aggregate subject to
all Awards that during any calendar year are granted under
this Plan shall be 170,000.* Each of the foregoing
numerical limits shall be subject to adjustment as
contemplated by this Section 1.4 and Section 6.2.
1.4.3 Share Reservation; Replenishment and Reissue of Unvested
Awards. No Award may be granted under this Plan unless, on
the date of grant, the sum of (a) the maximum number of
shares issuable at any time pursuant to such Award, plus
(b) the number of shares that have previously been issued
pursuant to Awards granted under this Plan, other than
reacquired shares available for reissue consistent with any
applicable legal limitations, plus (c) the maximum number
of shares that may be issued at any time after such date of
grant pursuant to Awards that are outstanding on such date,
does not exceed the Share Limit. Shares that are subject to
or underlie Awards which expire or for any reason are
cancelled or terminated, are forfeited, fail to vest, or
for any other reason are not paid or delivered under this
Plan, as well as reacquired shares, shall again, except to
the extent prohibited by law, be available for subsequent
Awards under this Plan. Except as limited by law, if an
Award is or may be settled only in cash, such Award need
not be counted against any of the limits under this Section
1.4.
1.5 Grant of Awards. Subject to the express provisions of this Plan,
the Committee shall determine the number of shares of Common Stock
subject to each Award, the price (if any) to be paid for the
shares or the Award and, in the case of performance share awards,
in addition to matters addressed in Section 1.2.2, the specific
objectives, goals and performance criteria (such as an increase in
sales, market value, earnings or book value over a base period,
the years of service before vesting, the relevant job
classification or level of responsibility or other factors) that
further define the terms of the performance share award. Each
Award shall be evidenced by an Award Agreement signed by the
Corporation and, if required by the Committee, by the Participant.
The Award Agreement shall set forth the material terms and
conditions of the Award established by the Committee consistent
with the specific provisions of this Plan.
_____________________
* After giving effect to the Corporation's 2002 reverse split to the Common
Stock.
3
1.6 Award Period. Each Award and all executory rights or obligations
under the related Award Agreement shall expire on such date (if
any) as shall be determined by the Committee, but in the case of
Options or other rights to acquire Common Stock (other than Stock
Units credited pursuant to Section 4.1.2 in respect of deferred
compensation or the deferred payment of an Award) not later than
ten (10) years after the Award Date.
1.7 Limitations on Exercise and Vesting of Awards.
1.7.1 Provisions for Exercise. Unless the Committee otherwise
expressly provides, no Award shall be exercisable or shall
vest until at least one year after the initial Award Date,
and once exercisable an Award shall remain exercisable
until the expiration or earlier termination of the Award.
1.7.2 Procedure. Any exercisable Award shall be deemed to be
exercised when the Secretary of the Corporation receives
written notice of such exercise from the Participant,
together with any required payment made in accordance with
Section 2.2 or 8.4, as the case may be.
1.7.3 Fractional Shares/Minimum Issue. Fractional share interests
shall be disregarded, but may be accumulated. The
Committee, however, may determine in the case of Eligible
Persons that cash, other securities, or other property will
be paid or transferred in lieu of any fractional share
interests. No fewer than 100 shares may be purchased on
exercise of any Award at one time unless the number
purchased is the total number at the time available for
purchase under the Award.
1.8 Acceptance of Notes to Finance Exercise. The Corporation may, with
the Committee's approval, accept one or more notes from any
Eligible Person in connection with the exercise or receipt of any
outstanding Award; provided that any such note shall be subject to
the following terms and conditions:
(a) The principal of the note shall not exceed the amount
required to be paid to the Corporation upon the exercise or
receipt of one or more Awards under this Plan and the note
shall be delivered directly to the Corporation in
consideration of such exercise or receipt.
(b) The initial term of the note shall be determined by the
Committee; provided that the term of the note, including
extensions, shall not exceed a period of five years.
(c) The note shall provide for full recourse to the Participant
and shall bear interest at a rate determined by the
Committee but not less than the interest rate necessary to
avoid the imputation of interest under the Code.
(d) If the employment of the Participant terminates, the unpaid
principal balance of the note shall become due and payable
on the date of such termination; provided, however, that if
a sale of such shares would cause such Participant to incur
liability under Section 16(b) of the Exchange Act, the
unpaid balance shall become due and payable on the 10th
business day after the first day on which a sale of such
shares could have been made without incurring such
liability
4
assuming for these purposes that there are no other
transactions (or deemed transactions in securities of this
Corporation) by the Participant subsequent to such
termination.
(e) If required by the Committee or by applicable law, the note
shall be secured by a pledge of any shares or rights
financed thereby in compliance with applicable law.
(f) If required by the Committee and consistent with applicable
law, the note shall include a right of offset in favor of
the Corporation.
(g) The terms, repayment provisions, and collateral release
provisions of the note and the pledge securing the note
shall conform with applicable rules and regulations of the
Federal Reserve Board as then in effect.
1.9 No Transferability; Limited Exception to Transfer Restrictions.
1.9.1 Limit On Exercise and Transfer. Unless otherwise expressly
provided in (or pursuant to) this Section 1.9, by
applicable law and by the Award Agreement, as the same may
be amended, (a) Awards are non-transferable and shall not
be subject in any manner to sale, transfer, anticipation,
alienation, assignment, pledge, encumbrance or charge; (b)
Awards shall be exercised only by the Participant; and (c)
amounts payable or shares issuable pursuant to any Award
shall be delivered only to (or for the account of) the
Participant.
1.9.2 Exceptions. The Committee may permit Awards to be exercised
by and paid to certain persons or entities related to the
Participant, including but not limited to members of the
Participant's immediate family, trusts or other entities
controlled by or whose beneficiaries or beneficial owners
are the Participant and/or members of the Participant's
immediate family, pursuant to such conditions and
procedures, including limitations on subsequent transfers,
as the Committee may establish. Consistent with Section
6.4, any permitted transfer shall be subject to the
condition that the Committee receive evidence satisfactory
to it that the transfer (a) is being made for essentially
donative, estate and/or tax planning purposes on a
gratuitous or donative basis and without consideration
(other than nominal consideration or in exchange for an
interest in a qualified transferee), and (b) will not
compromise the Corporation's ability to register shares
issuable under this Plan on SEC Form S-8 under the
Securities Act. Notwithstanding the foregoing or anything
in Section 1.9.3, Incentive Stock Options and Restricted
Stock Awards shall be subject to any and all additional
transfer restrictions under the Code to the extent
necessary to maintain the intended favorable tax
consequences of such Awards.
1.9.3 Further Exceptions to Limits On Transfer. The exercise and
transfer restrictions in Section 1.9.1 shall not apply to:
(a) transfers to the Corporation,
(b) the designation of a beneficiary to receive benefits
in the event of the Participant's death or, if the
Participant has died, transfers to or exercise
5
by the Participant's beneficiary, or, in the absence
of a validly designated beneficiary, transfers by
will or the laws of descent and distribution,
(c) subject to any applicable Incentive Stock Option
limitations, transfers to a family member (or former
family member) pursuant to a domestic relations
order if approved or ratified by the Committee,
(d) if the Participant has suffered a disability,
permitted transfers or exercises on behalf of the
Participant by his or her legal representative, or
(e) the authorization by the Committee of "cashless
exercise" procedures with third parties who provide
financing for the purpose of (or who otherwise
facilitate) the exercise of Awards consistent with
applicable laws and the express authorization of the
Committee.
2. OPTIONS
2.1 Grants. One or more Options may be granted under this Article 2 to
any Eligible Person. Each Option granted shall be designated in
the applicable Award Agreement, by the Committee as either an
Incentive Stock Option, subject to Section 2.3, or a Non-Qualified
Stock Option.
2.2 Option Price.
2.2.1 Pricing Limits. The purchase price per share of the Common
Stock covered by each Option shall be determined by the
Committee at the time of the Award, but in the case of
Incentive Stock Options shall not be less than 100% (110%
in the case of a Participant described in Section 2.3.4) of
the Fair Market Value of the Common Stock on the date of
grant and in all cases shall not be less than the par value
thereof.
2.2.2 Payment Provisions. The purchase price of any shares
purchased on exercise of an Option granted under this
Article 2 shall be paid in full at the time of each
purchase in one or a combination of the following methods:
. in cash or by electronic funds transfer;
. by check payable to the order of the Corporation;
. if authorized by the Committee or specified in the
applicable Award Agreement, by a promissory note of
the Participant consistent with the requirements of
Section 1.8;
. by notice and third party payment in such manner as
may be authorized by the Committee; or
. by the delivery of shares of Common Stock of the
Corporation already owned by the Participant;
6
provided, however, that the Committee may in its
absolute discretion limit the Participant's ability
to exercise an Award by delivering such shares, and
provided further that any shares delivered which
were initially acquired upon exercise of a stock
option must have been owned by the Participant at
least six months as of the date of delivery. Shares
of Common Stock used to satisfy the exercise price
of an Option shall be valued at their Fair Market
Value on the date of exercise. Without limiting the
generality of the foregoing, the Committee may
provide that an Option can be exercised and payment
made by delivering a properly executed exercise
notice together with irrevocable instructions to a
broker to promptly deliver to the Corporation the
amount of sale proceeds necessary to pay the
exercise price and, unless otherwise prohibited by
the Committee or applicable law, any applicable tax
withholding under Section 6.5. The Corporation will
not be obligated to deliver certificates for any
shares unless and until it receives full payment of
the exercise price therefor and any related
withholding obligations under Section 6.5 and any
other conditions to exercise have been satisfied
2.3 Limitations on Grant and Terms of Incentive Stock Options.
2.3.1 $100,000 Limit. To the extent that the aggregate "Fair
Market Value" of stock with respect to which incentive
stock options first become exercisable by a Participant in
any calendar year exceeds $100,000, taking into account
both Common Stock subject to Incentive Stock Options under
this Plan and stock subject to incentive stock options
under all other plans of the Company or any parent
corporation of the Corporation, such options shall be
treated as Nonqualified Stock Options. For this purpose,
the "Fair Market Value" of the stock subject to options
shall be determined as of the date the options were
awarded. In reducing the number of options treated as
incentive stock options to meet the $100,000 limit, the
most recently granted options shall be reduced first. To
the extent a reduction of simultaneously granted options is
necessary to meet the $100,000 limit, the Committee may, in
the manner and to the extent permitted by law, designate
which shares of Common Stock are to be treated as shares
acquired pursuant to the exercise of an Incentive Stock
Option.
2.3.2 Option Period. Each Option and all rights thereunder shall
expire no later than 10 years after the Award Date.
2.3.3 Other Code Limits. Incentive Stock Options may only be
granted to Eligible Employees of the Corporation or a
Subsidiary that satisfies the other eligibility
requirements of the Code. There shall be imposed in any
Award Agreement relating to Incentive Stock Options such
other terms and conditions as from time to time are
required in order that the Option be an "incentive stock
option" as that term is defined in Section 422 of the Code.
7
2.3.4 Limits on 10% Holders. No Incentive Stock Option may be
granted to any person who, at the time the Option is
granted, owns (or is deemed to own under Section 424(d) of
the Code) shares of outstanding Common Stock possessing
more than 10% of the total combined voting power of all
classes of stock of the Corporation, unless the exercise
price of such Option is at least 110% of the Fair Market
Value of the stock subject to the Option and such Option by
its terms is not exercisable after the expiration of five
years from the date such Option is granted.
2.4 Option Repricing/Cancellation and Regrant/Waiver of Restrictions.
Subject to Section 1.4 and Section 6.6 and the specific
limitations on Awards contained in this Plan, the Committee from
time to time may authorize, generally or in specific cases only,
for the benefit of any Eligible Person any adjustment in the
exercise or purchase price, the vesting schedule, the number of
shares subject to, the restrictions upon or the term of, an Award
granted under this Article 2 by cancellation of an outstanding
Award and a subsequent regranting of an Award, by amendment, by
substitution of an outstanding Award, by waiver or by other
legally valid means. Such amendment or other action may result
among other changes in an exercise or purchase price which is
higher or lower than the exercise or purchase price of the
original or prior Award, provide for a greater or lesser number of
shares subject to the Award, or provide for a longer or shorter
vesting or exercise period.
2.5 Effects of Termination of Employment or Service.
2.5.1 Dismissal for Cause. Unless otherwise provided in the Award
Agreement and subject to earlier termination pursuant to or
as contemplated by Section 1.6 or 6.2, if a Participant's
employment by or service to the Company is terminated by
the Company for Cause, the Participant's outstanding
Options will terminate immediately, whether or not the
Options are then vested and/or exercisable.
2.5.2 Voluntary Terminations. Unless otherwise provided in the
Award Agreement and subject to earlier termination pursuant
to or as contemplated by Section 1.6 or 6.2, if a
Participant voluntarily terminates his or her employment by
or service to the Company (other than because of his or her
death or Total Disability), the Participant's outstanding
Options will terminate immediately, whether or not the
Options are then vested and/or exercisable.
2.5.3 Layoff or Dismissal. Unless otherwise provided in the Award
Agreement and subject to earlier termination pursuant to or
as contemplated by Section 1.6 or 6.2, if a Participant is
laid off by the Company or his or her employment or service
is otherwise terminated by the Company (in each case, other
than a termination by the Company for Cause or due to the
Participant's death or Total Disability):
. the Participant will have until the date that is 90
days after the Participant's Severance Date to
exercise his or her Option (or portion thereof) to
the extent that it was vested and exercisable on the
Severance Date;
8
. the Option, to the extent not vested and exercisable
on the Participant's Severance Date, shall terminate
on the Severance Date; and
. the Option, to the extent exercisable for the 90-day
period following the Participant's Severance Date
and not exercised during such period, shall
terminate at the close of business on the last day
of the 90-day period.
2.5.4 Death or Total Disability. Unless otherwise provided in the
Award Agreement and subject to earlier termination pursuant
to or as contemplated by Section 1.6 or 6.2, if a
Participant's employment by or service to the Company
terminates as a result of the Participant's Total
Disability or death:
. the Participant (or his or her Personal
Representative or Beneficiary, in the case of the
Participant's Total Disability or death,
respectively), will have until the date that is 12
months after the Participant's Severance Date to
exercise the Participant's Option (or portion
thereof) to the extent that it was vested and
exercisable on the Severance Date;
. the Option, to the extent not vested and exercisable
on the Participant's Severance Date, shall terminate
on the Severance Date; and
. the Option, to the extent exercisable for the
12-month period following the Participant's
Severance Date and not exercised during such period,
shall terminate at the close of business on the last
day of the 12-month period.
2.5.5 Certain SARs. Any SAR granted concurrently or in tandem
with an Option shall have the same post-termination
provisions and exercisability periods as the Option to
which it relates, unless the Committee otherwise provides.
2.5.6 Committee Discretion; Determination of Continued Employment
or Service. Notwithstanding the foregoing provisions of
this Section 2.5, in the event of, or in anticipation of, a
termination of employment or service with the Company for
any reason, other than discharge for Cause, the Committee
may, in its discretion, increase the portion of the
Participant's Award available to the Participant, or
Participant's Beneficiary or Personal Representative, as
the case may be, or, subject to the provisions of Section
1.6, extend the exercisability period, upon such terms as
the Committee shall determine and expressly set forth in or
by amendment to the Award Agreement. The provisions of this
Section 2.5 are subject to Section 6.3.
3. STOCK APPRECIATION RIGHTS
3.1 Grants. In its discretion, the Committee may grant to any Eligible
Person Stock Appreciation Rights either concurrently with the
grant of another Award or in respect of an outstanding Award, in
whole or in part, or independently of any other Award. Any Stock
Appreciation Right granted in connection with an Incentive Stock
Option shall contain such terms as may be required to comply with
the provisions of Section 422 of
9
the Code and the regulations promulgated thereunder, unless the
holder otherwise agrees.
3.2 Exercise of Stock Appreciation Rights.
3.2.1 Exercisability. Unless the Award Agreement or the Committee
otherwise provides, a Stock Appreciation Right related to
another Award shall be exercisable at such time or times,
and to the extent, that the related Award shall be
exercisable.
3.2.2 Effect on Available Shares. To the extent that a Stock
Appreciation Right is exercised, only the actual number of
delivered shares of Common Stock shall be charged against
the maximum amount of Common Stock that may be delivered
pursuant to Awards under this Plan. The number of shares
subject to the Stock Appreciation Right and the related
Option of the Participant shall, however, be reduced by the
number of underlying shares as to which the exercise
related, unless the Award Agreement otherwise provides.
3.2.3 Stand-Alone SARs. A Stock Appreciation Right granted
independently of any other Award shall be exercisable
pursuant to the terms of the Award Agreement.
3.3 Payment.
3.3.1 Amount. Unless the Committee otherwise provides, upon
exercise of a Stock Appreciation Right and the attendant
surrender of an exercisable portion of any related Award,
the Participant shall be entitled to receive payment of an
amount determined by multiplying:
(a) the difference obtained by subtracting the exercise
price per share of Common Stock under the related
Award (if applicable) or the initial share value
specified in the Award from the Fair Market Value of
a share of Common Stock on the date of exercise of
the Stock Appreciation Right, by
(b) the number of shares with respect to which the Stock
Appreciation Right shall have been exercised.
3.3.2 Form of Payment. The Committee, in its sole discretion,
shall determine the form in which payment shall be made of
the amount determined under Section 3.3.1 above, either
solely in cash, solely in shares of Common Stock (valued at
Fair Market Value on the date of exercise of the Stock
Appreciation Right), or partly in such shares and partly in
cash, provided that the Committee shall have determined
that such exercise and payment are consistent with
applicable law. If the Committee permits the Participant to
elect to receive cash or shares (or a combination thereof)
on such exercise, any such election shall be subject to
such conditions as the Committee may impose.
3.4 Limited Stock Appreciation Rights. The Committee may grant to any
Eligible Person Stock Appreciation Rights exercisable only upon or
in respect of a change in control or any other specified event
("Limited SARs") and such Limited SARs may relate to or
10
operate in tandem or combination with or substitution for Options,
other SARs or other Awards (or any combination thereof), and may
be payable in cash or shares based on the spread between the base
price of the SAR and a price based upon the Fair Market Value of
the Shares during a specified period or at a specified time within
a specified period before, after or including the date of such
event.
4. RESTRICTED STOCK AND STOCK UNIT AWARDS
Subject to any applicable limitations under applicable law and to such
rules and procedures as the Committee may establish from time to time:
4.1 Grants.
4.1.1 Restricted Stock. The Committee may, in its discretion,
grant one or more Restricted Stock Awards to any Eligible
Person. Each Restricted Stock Award Agreement shall specify
the number of shares of Common Stock to be issued to the
Participant, the date of such issuance, the consideration
for such shares (but not less than the minimum lawful
consideration under applicable state law) by the
Participant, the extent (if any) to which and the time (if
ever) at which the Participant shall be entitled to
dividends, voting and other rights in respect of the shares
prior to vesting, and the restrictions (which may be based
on performance criteria, passage of time or other factors
or any combination thereof) imposed on such shares and the
conditions of release or lapse of such restrictions. Such
restrictions shall not lapse earlier than one year after
the Award Date, except to the extent the Committee may
otherwise provide, such as in the case of Awards
principally for services already rendered. Stock
certificates or book entries evidencing shares of
Restricted Stock pending the lapse of the restrictions
("Restricted Shares") shall bear a legend or notation
making appropriate reference to the restrictions imposed
hereunder and (if in certificate form) shall be held by the
Corporation or by a third party designated by the Committee
until the restrictions on such shares shall have lapsed and
the shares shall have vested in accordance with the
provisions of the Award and Section 1.7. Upon issuance of
the Restricted Stock Award, the Participant may be required
to provide such further assurance and documents as the
Committee may require to enforce the restrictions.
4.1.2 Stock Units. The Committee may, in its discretion,
authorize and grant to any Eligible Person a Stock Unit
Award or the crediting of Stock Units for services rendered
or to be rendered or in lieu of other compensation,
consistent with other applicable terms of this Plan, may
permit an Eligible Person to irrevocably elect to defer by
means of Stock Units or receive in Stock Units all or a
portion of any Award hereunder, or may grant Stock Units in
lieu of, in exchange for, in respect of, or in addition to
any other Compensation or Award under this Plan. The
specific terms, conditions, and provisions relating to each
Stock Unit grant or election, including the applicable
vesting and payout provisions of the Stock Units and the
form of payment to be made at or following the vesting
thereof, shall be set forth in or pursuant to the
applicable agreement or Award and any relevant Company
deferred compensation plan, in form substantially as
approved by the Committee.
11
4.1.3 Payouts. The Committee in the applicable Award Agreement or
the relevant Company deferred compensation plan may permit
the Participant to elect the form and time of payout of
vested Stock Units on such conditions or subject to such
procedures as the Committee may impose, and may permit
Restricted Stock or Stock Unit offsets or other provision
for payment of any applicable taxes that may be due on the
crediting, vesting or payment in respect of the Stock
Units.
4.2 Restrictions.
4.2.1 Pre-Vesting Restraints. Except as provided in Section 4.1
and 1.9, Restricted Shares comprising any Restricted Stock
Award and rights in respect of Stock Unit Awards may not be
sold, assigned, transferred, pledged or otherwise disposed
of or encumbered, either voluntarily or involuntarily,
until the restrictions on Restricted Shares have lapsed and
the shares issuable pursuant to the Stock Unit Award have
been issued.
4.2.2 Dividend and Voting Rights. Unless otherwise provided in
the applicable Award Agreement, a Participant receiving a
Restricted Stock Award shall be entitled to vote such
shares but shall not be entitled to dividends on any of the
shares until the shares have vested. Such dividends shall
be retained in a restricted account until the shares have
vested and shall revert to the Corporation if they fail to
vest. Stock Unit Awards may include dividend equivalent
rights to the extent authorized by the Committee.
4.2.3 Cash Payments. If the Participant shall have paid or
received cash (including any payments in respect of
dividends) in connection with the Restricted Stock Award or
Stock Unit Award, the Award Agreement shall specify the
extent (if any) to which such amounts shall be returned
(with or without an earnings factor) as to any Restricted
Shares or Stock Unit Awards which cease to be eligible for
vesting.
4.3 Return to the Corporation. Unless the Committee otherwise
expressly provides, Restricted Shares or Stock Units that remain
subject to conditions to vesting upon restrictions at the time of
termination of employment or service or are subject to other
conditions to vesting that have not been satisfied by the time
specified in the applicable Award Agreement shall not vest and
shall be returned to the Corporation or cancelled, as the case may
be, unless the Committee otherwise provides in the applicable
terms of the Award.
5. PERFORMANCE SHARE AWARDS AND OTHER STOCK AWARDS
5.1 Grants of Performance Share Awards. Subject to Section 6.4, the
Committee may, in its discretion, grant Performance Share Awards
to Eligible Persons based upon such factors as the Committee shall
deem relevant in light of the specific type and terms of the
award. An Award Agreement shall specify the maximum number of
shares of Common Stock (if any) subject to the Performance Share
Award, the consideration (but not less than the minimum lawful
consideration) to be paid for any such shares as may be issuable
to the Participant, the duration of the Award and the conditions
upon which
12
delivery of any shares, cash or other property to the Participant
shall be based. The amount of cash or shares or other property
that may be deliverable pursuant to such Award shall be based upon
the degree of attainment over a specified period of not more than
10 years (a "performance cycle") as may be established by the
Committee of such measure(s) of the performance of the Company (or
any part thereof) or the Participant as may be established by the
Committee. The Committee may provide for full or partial credit,
prior to completion of such performance cycle or the attainment of
the performance achievement specified in the Award, in the event
of the Participant's death, Retirement, or Total Disability, a
Change in Control Event or in such other circumstances as the
Committee may determine.
5.2 Grants of Stock Bonuses and Other Awards. Subject to Section 6.4,
the Committee may grant a Stock Bonus to any Eligible Person to
reward exceptional or special services, contributions or
achievements, or issue Common Stock for past services in the
ordinary course, the value of which shall be determined by the
Committee, in the manner and on such terms and conditions
(including any restrictions on such shares) as determined from
time to time by the Committee. The number of shares so awarded
shall be determined by the Committee. The Award may be granted
independently or in lieu of a cash bonus.
5.3 Deferred Payments. The Committee may authorize for the benefit of
any Eligible Person the deferral of any payment of cash or shares
or other property that may become due or of cash otherwise payable
under this Plan, and provide for accredited benefits thereon based
upon such deferment, at the election or at the request of such
Participant, subject to the other terms of this Plan. Such
deferral shall be subject to such further conditions, restrictions
or requirements as the Committee may impose, subject to any then
vested rights of Participants.
5.4 Alternative Payments. The Committee may require or allow all or a
portion of the Award to be paid or credited in the form of shares
of Common Stock, Restricted Shares, Stock Units, an Option or
other Award.
6. OTHER PROVISIONS
6.1 Rights of Eligible Persons, Participants and Beneficiaries.
6.1.1 Employment Status. Status as an Eligible Person shall not
be construed as a commitment that any Award will be made
under this Plan to an Eligible Person or to Eligible
Persons generally.
6.1.2 No Employment/Service Contract. Nothing contained in this
Plan (or in any other documents under this Plan or in any
Award) shall confer upon any Eligible Employee or other
Participant any right to continue in the employ or other
service of the Company, constitute any contract or
agreement of employment or other service or affect an
employee's status as an employee at will, nor shall
interfere in any way with the right of the Company to
change a person's compensation or other benefits, or to
terminate his or her employment or other service, with or
without cause. Nothing in this Section 6.1, however, is
intended
13
to adversely affect any express independent right of such
person under a separate employment or service contract
other than an Award Agreement.
6.1.3 Plan Not Funded. Awards payable under this Plan shall be
payable in shares or from the general assets of the
Corporation, and (except as provided in Section 1.4.3) no
special or separate reserve, fund or deposit shall be made
to assure payment of such Awards. No Participant,
Beneficiary or other person shall have any right, title or
interest in any fund or in any specific asset (including
shares of Common Stock, except as expressly otherwise
provided) of the Company by reason of any Award hereunder.
Neither the provisions of this Plan (or of any related
documents), nor the creation or adoption of this Plan, nor
any action taken pursuant to the provisions of this Plan
shall create, or be construed to create, a trust of any
kind or a fiduciary relationship between the Company and
any Participant, Beneficiary or other person. To the extent
that a Participant, Beneficiary or other person acquires a
right to receive payment pursuant to any Award hereunder,
such right shall be no greater than the right of any
unsecured general creditor of the Company.
6.2 Adjustments; Acceleration.
6.2.1 Adjustments. Upon or in contemplation of any
reclassification, recapitalization, stock split (including
a stock split in the form of a stock dividend) or reverse
stock split ("stock split"); any merger, combination,
consolidation, or other reorganization; any spin-off,
split-up, or similar extraordinary dividend distribution
("spin-off") in respect of the Common Stock (whether in the
form of securities or property); any exchange of Common
Stock or other securities of the Corporation, or any
similar, unusual or extraordinary corporate transaction in
respect of the Common Stock; or a sale of all or
substantially all the assets of the Corporation as an
entirety ("asset sale"); then the Committee shall, in such
manner, to such extent (if any) and at such time as it
deems appropriate and equitable in the circumstances:
(a) proportionately adjust any or all of (1) the number
and type of shares of Common Stock (or other
securities) that thereafter may be made the subject
of Awards (including the specific maxima and numbers
of shares set forth elsewhere in this Plan), (2) the
number, amount and type of shares of Common Stock
(or other securities or property) subject to any or
all outstanding Awards, (3) the grant, purchase, or
exercise price of any or all outstanding Awards, (4)
the securities, cash or other property deliverable
upon exercise of any outstanding Awards, or (5) the
performance standards appropriate to any outstanding
Awards, or
(b) make provision for a cash payment or for the
assumption, substitution or exchange of any or all
outstanding share-based Awards or the cash,
securities or property deliverable to the holder of
any or all outstanding share-based Awards, based
upon the distribution or consideration payable to
holders of the Common Stock upon or in respect of
such event.
14
The Committee may adopt such valuation methodologies for
outstanding Awards as it deems reasonable in the event of a
cash or property settlement and, in the case of Options,
SARs or similar rights, but without limitation on other
methodologies, may base such settlement solely upon the
excess if any of the per share amount payable upon or in
respect of such event over the exercise or strike price of
the Award.
In any of such events, the Committee may take such action
prior to such event to the extent that the Committee deems
the action necessary to permit the Participant to realize
the benefits intended to be conveyed with respect to the
underlying shares in the same manner as is or will be
available to stockholders generally. In the case of any
stock split or reverse stock split, if no action is taken
by the Committee, the proportionate adjustments
contemplated by clause (a) above shall nevertheless be
made.
6.2.2 Automatic Acceleration of Awards. Upon a dissolution of the
Corporation or other event described in Section 6.2.1 that
the Corporation does not survive (or does not survive as a
public company in respect of its Common Stock), each then
outstanding Option and Stock Appreciation Right shall
become fully vested, all shares of Restricted Stock then
outstanding shall fully vest free of restrictions, and each
Performance Share Award or other Award granted under this
Plan that is then outstanding shall become payable to the
Award holder.
6.2.3 Possible Acceleration of Awards. Without limiting Section
6.2.2, in the event of a Change in Control Event, the Board
or the Committee may, in their discretion, provide that
each then outstanding Option and Stock Appreciation Right
shall become fully vested, all shares of Restricted Stock
then outstanding shall fully vest free of restrictions, and
each Performance Share Award or other Award granted under
this Plan that is then outstanding shall be payable to the
Award holder.
6.2.4 Early Termination of Awards. Any Award that has been
accelerated as required or contemplated by Section 6.2.2 or
6.2.3 (or would have been so accelerated but for Section
6.2.8) shall terminate upon the related event referred to
in Section 6.2.2 or 6.2.3, as applicable, subject to any
provision that has been expressly made by the Board or the
Committee, through a plan of reorganization or otherwise,
for the survival, substitution, assumption, exchange or
other continuation or settlement of such Award and provided
that, in the case of Options and Stock Appreciation Rights,
the Award holder shall be given reasonable advance notice
of the impending termination and a reasonable opportunity
to exercise his or her outstanding Options and Stock
Appreciation Rights in accordance with their terms before
the termination of such Awards (except that in no case
shall more than ten day's notice of accelerated vesting and
the impending termination be required and any acceleration
may be made contingent upon the actual occurrence of the
event).
6.2.5 Other Acceleration Rules. Any acceleration of Awards
pursuant to this Section 6.2 shall comply with applicable
legal requirements and, if necessary to accomplish the
purposes of the acceleration or if the circumstances
require, may
15
be deemed by the Board or the Committee to occur a limited
period of time not greater than 30 days before the event.
Without limiting the generality of the foregoing, the Board
or the Committee may deem an acceleration to occur
immediately prior to the applicable event and/or reinstate
the original terms of an Award if an event giving rise to
an acceleration does not occur. The Committee may override
the provisions of Section 6.2.2, 6.2.3, 6.2.4 and/or 6.2.6
by express provision in the Award Agreement and may accord
any Eligible Person a right to refuse any acceleration,
whether pursuant to the Award Agreement or otherwise, in
such circumstances as the Committee may approve.
6.2.6 Termination of Employment in Connection With a Change in
Control Event. If, prior to a Change in Control Event, any
Participant's employment is terminated by the Company for
any reason other than Cause or due to the Participant's
death or Total Disability after the announcement of but not
more than 90 days before the consummation of such Change in
Control Event, then upon (or immediately prior to and
subject to) the consummation of the event, any Awards held
by the Participant prior to the termination of his or her
employment that were unvested and terminated in connection
with such termination of employment shall be deemed
reinstated and fully vested at such time, but without
extension of any other early termination or expiration
provisions of the Participant's Award Agreement or of the
other provisions of this Plan. Any such reinstated Awards
shall remain subject to the other adjustment, termination
and settlement provisions of the Award and this Section 6.2
in connection with the subject Change in Control Event or
any applicable, subsequent event. If any Participant's
employment is terminated by the Company upon or within one
year after a Change in Control Event and the termination is
not for Cause or due to the Participant's death or Total
Disability, then, subject to the other provisions of this
Section 6.2 (including without limitation Sections 6.2.2,
6.2.3, 6.2.4 and 6.2.8), all outstanding Options and other
Awards held by the Participant shall be deemed to be fully
vested immediately prior to the termination of the
Participant's employment, irrespective of the vesting
provisions of the Participant's Award Agreement, unless the
Award Agreement specifies a different result in the
specific case of a Change in Control Event. Notwithstanding
the foregoing, in no event shall an Award be reinstated or
extended beyond its final expiration date.
6.2.7 Possible Rescission of Acceleration. If the vesting of an
Award has been accelerated expressly in anticipation of an
event or upon stockholder approval of an event and the
Committee or the Board later determines that the event will
not occur, the Committee may rescind the effect of the
acceleration as to any then outstanding and unexercised or
otherwise unvested Awards.
6.2.8 Golden Parachute Limitation. Notwithstanding anything else
contained in this Section 6.2 to the contrary, in no event
shall an Award be accelerated under this Plan to an extent
or in a manner which would not be fully deductible by the
Company for federal income tax purposes because of Section
280G of the Code, nor shall any payment hereunder be
accelerated if any portion of such accelerated payment
would not be deductible by the Company because of Section
280G of the Code. If a holder would be entitled to benefits
or payments
16
hereunder and under any other plan or program that would
constitute "parachute payments" as defined in Section 280G
of the Code, then the holder may by written notice to the
Company designate the order in which such parachute
payments will be reduced or modified so that the Company is
not denied federal income tax deductions for any "parachute
payments" because of Section 280G of the Code.
Notwithstanding the foregoing, an employment or other
agreement with the Participant may expressly provide for
benefits in excess of amounts determined by applying the
foregoing Section 280G limitations.
6.3 Effect of Termination of Service on Awards.
6.3.1 General. The Committee shall establish the effect of a
termination of employment or service on the rights and
benefits under each Award under this Plan and in so doing
may make distinctions based upon, inter alia, the cause of
termination and type of Award.
6.3.2 Termination of Consulting or Affiliate Services. If the
Participant is not an Eligible Employee or director and
provides services as an Other Eligible Person, the
Committee shall be the sole judge of whether the
Participant continues to render services to the Company,
unless a contract or the Award otherwise provides. If in
these circumstances the Company notifies the Participant in
writing that a termination of services of the Participant
for purposes of this Plan has occurred, then (unless the
contract or Award otherwise expressly provides), the
Participant's termination of services for purposes of
Section 2.5, 3, 4.3 or 5 shall be the date which is 10 days
after the Company's mailing of the notice or, in the case
of a termination for Cause, the date of the mailing of the
notice.
6.3.3 Effect on Unvested Awards. Unless otherwise provided in the
applicable Award Agreement and subject to the other
provisions of this Plan, a Restricted Stock Award, Stock
Appreciation Right, Performance Share Award, or Stock Unit
Award, to the extent such Award has not vested as of the
applicable Severance Date shall terminate on the Severance
Date without further payment or benefit of any kind; and
any Option theretofore outstanding and not vested shall
terminate. Vested Options are subject to the provisions of
Section 2.5.
6.3.4 Events Not Deemed Terminations of Service. Unless Company
policy or the Committee otherwise provides, the employment
relationship shall not be considered terminated in the case
of (a) sick leave, (b) military leave, or (c) any other
leave of absence authorized by the Company or the
Committee; provided that unless reemployment upon the
expiration of such leave is guaranteed by contract or law,
such leave is for a period of not more than 90 days. In the
case of any Eligible Employee on an approved leave of
absence, continued vesting of the Award while on leave from
the employ of the Company may be suspended until the
employee returns to service, unless the Committee otherwise
provides or applicable law otherwise requires. In no event
shall an Award be exercised after the expiration of the
term set forth in the Award Agreement.
6.3.5 Effect of Change of Subsidiary Status. For purposes of this
Plan and any Award, if an entity ceases to be a Subsidiary
a termination of employment or
17
service shall be deemed to have occurred with respect to
each Eligible Person in respect of the Subsidiary who does
not continue as an Eligible Person in respect of another
entity within the Company.
6.4 Compliance with Laws. This Plan, the granting and vesting of
Awards under this Plan, the offer, issuance and delivery of shares
of Common Stock, the acceptance of promissory notes and/or the
payment of money under this Plan or under Awards are subject to
compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal
securities law, federal margin requirements) and to such approvals
by any listing, regulatory or governmental authority as may, in
the opinion of counsel for the Company, be necessary or advisable
in connection therewith. The person acquiring any securities under
this Plan will, if requested by the Company, provide such
assurances and representations to the Company as the Committee may
deem necessary or desirable to assure compliance with all
applicable legal and accounting requirements.
6.5 Tax Matters.
6.5.1 Provision for Tax Withholding or Offset. Upon any exercise,
vesting, or payment of any Award or upon the disposition of
shares of Common Stock acquired pursuant to the exercise of
an Incentive Stock Option prior to satisfaction of the
holding period requirements of Section 422 of the Code, the
Company shall have the right at its option to:
(a) require the Participant (or Personal Representative
or Beneficiary, as the case may be) to pay or
provide for payment of at least the minimum amount
of any taxes which the Company may be required to
withhold with respect to such Award event or
payment; or
(b) deduct from any amount payable in cash the minimum
amount of any taxes which the Company may be
required to withhold with respect to such cash
payment.
In any case where a tax is required to be withheld in
connection with the delivery of shares of Common Stock
under this Plan, the Committee may in its sole discretion
(subject to Section 6.4) grant (either at the time of the
Award or thereafter) to the Participant the right to elect,
pursuant to such rules and subject to such conditions as
the Committee may establish, to have the Corporation reduce
the number of shares to be delivered by (or otherwise
reacquire) the appropriate number of shares, valued in a
consistent manner at their Fair Market Value or at the
sales price in accordance with authorized procedures for
cashless exercises, necessary to satisfy the minimum
applicable withholding obligation on exercise, vesting or
payment. In no event shall the shares withheld exceed the
minimum whole number of shares required for tax withholding
under applicable law.
6.5.2 Tax Loans. If so provided in the Award Agreement, the
Company may, to the extent permitted by law, authorize a
short-term loan of not more than nine (9) months to an
Eligible Person in the amount of any taxes that the Company
may
18
be required to withhold with respect to shares of Common
Stock received (or disposed of, as the case may be)
pursuant to a transaction described in Section 6.5.1. Such
a loan shall be for a term, at a rate of interest and
pursuant to such other terms and conditions as the
Committee, under applicable law, may establish and such
loan need not comply with the other provisions of Section
1.8.
6.6 Plan and Award Amendments, Termination and Suspension.
6.6.1 Board Authorization. The Board may, at any time, terminate
or, from time to time, amend, modify or suspend this Plan,
in whole or in part. No Awards may be granted during any
suspension of this Plan or after termination of this Plan,
but the Committee shall retain jurisdiction as to Awards
then outstanding in accordance with the terms of this Plan.
6.6.2 Stockholder Approval. To the extent then required by
applicable law or required under Sections 162, 422 or 424
of the Code to preserve the intended tax consequences of
this Plan, or deemed necessary or advisable by the Board,
any amendment to this Plan shall be subject to stockholder
approval.
6.6.3 Amendments to Awards. Without limiting any other express
authority of the Committee under (but subject to) the
express limits of this Plan, the Committee by agreement or
resolution may waive conditions of or limitations on Awards
to Participants that the Committee in the prior exercise of
its discretion has imposed, without the consent of a
Participant, and (subject to the requirements of Sections
1.2.2 and 6.6.4) may make other changes to the terms and
conditions of Awards.
6.6.4 Limitations on Amendments to Plan and Awards. No amendment,
suspension or termination of this Plan or change of or
affecting any outstanding Award shall, without written
consent of the Participant, affect in any manner materially
adverse to the Participant any rights or benefits of the
Participant or obligations of the Company under any Award
granted under this Plan prior to the effective date of such
change. Changes contemplated by Section 6.2 shall not be
deemed to constitute changes or amendments for purposes of
this Section 6.6.
6.6.5 Incentive Stock Option Acceleration. The portion of any
Incentive Stock Option accelerated in connection with a
Change in Control Event or any other action permitted
hereunder shall remain exercisable as an Incentive Stock
Option only to the extent the applicable $100,000
limitation on Incentive Stock Options is not exceeded. To
the extent exceeded, the accelerated portion of the Option
shall be exercisable as a Nonqualified Stock Option under
the Code.
6.7 Privileges of Stock Ownership. Except as otherwise expressly
authorized by the Committee or this Plan, a Participant shall not
be entitled to any privilege of stock ownership as to any shares
of Common Stock not actually delivered to and held of record by
the Participant. No adjustment will be made for dividends or other
rights as a stockholder for which a record date is prior to such
date of delivery.
19
6.8 Effective Date of the Plan. This Plan is effective as of
July 13, 2002, the date of approval by the Board (the
"Effective Date"). This Plan shall be submitted for and subject to
stockholder approval.
6.9 Term of the Plan. No Award will be granted under this Plan after
the close of business on the day before the 10th anniversary of
the Effective Date (the "Termination Date"). Unless otherwise
expressly provided in this Plan or in an applicable Award
Agreement, any Award granted prior to the Termination Date may
extend beyond such date, and all authority of the Committee with
respect to Awards hereunder, including the authority to amend an
Award, shall continue during any suspension of this Plan and in
respect of Awards outstanding on the Termination Date.
6.10 Governing Law/Construction/Severability.
6.10.1 Choice of Law. This Plan, the Awards, all documents
evidencing Awards and all other related documents shall be
governed by, and construed in accordance with the laws of
the State of Delaware.
6.10.2 Severability. If a court of competent jurisdiction holds
any provision invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.
6.10.3 Plan Construction.
(a) Rule 16b-3. It is the intent of the Corporation that
the Awards and transactions permitted by Awards be
interpreted in a manner that, in the case of
Participants who are or may be subject to Section 16
of the Exchange Act, satisfies the applicable
requirements for exemptions under Rule 16b-3.
Notwithstanding the foregoing, the Corporation shall
have no liability to any Participant for Section 16
consequences of Awards or events under Awards.
(b) Section 162(m). It is the further intent of the
Company that (to the extent the Company or Awards
under this Plan may be or become subject to
limitations on deductibility under Section 162(m) of
the Code), Options or SARs granted with an exercise
or base price not less than Fair Market Value on the
date of grant that are granted to or held by a
person subject to Section 162(m) of the Code will
qualify as performance-based compensation or
otherwise be exempt from deductibility limitations
under Section 162(m) of the Code, to the extent that
the authorization of the Award (or the payment
thereof, as the case may be) satisfies any
applicable administrative requirements thereof.
6.11 Captions. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate
reference. Such headings shall not be deemed in any way material
or relevant to the construction or interpretation of this Plan or
any provision thereof.
6.12 Stock-Based Awards in Substitution for Stock Options or Awards
Granted by Other Corporation. Awards may be granted to Eligible
Persons under this Plan in substitution for or in connection with
an assumption of employee stock options, SARs,
20
restricted stock or other stock-based awards granted by other
entities to persons who are or who will become Eligible Persons in
respect of the Company, in connection with a distribution, merger
or other reorganization by or with the granting entity or an
affiliated entity, or the acquisition by the Company, directly or
indirectly, of all or a substantial part of the stock or assets of
the employing entity. The Awards so granted need not comply with
other specific terms of this Plan, provided the Awards reflect
only adjustments giving effect to the assumption or substitution
consistent with the conversion applicable to the Common Stock in
the transaction and any change in the issuer of the security. Any
shares that are issued and any Awards that are granted by, or
become obligations of, the Company, as a result of the assumption
by the Company or an affiliate of, or in substitution for,
outstanding awards previously granted by an acquired company (or
previously granted by a predecessor employer (or direct or
indirect parent thereof) in the case of persons that become
employed by the Company (or a subsidiary or affiliate) in
connection with a business or asset acquisition or similar
transaction) shall not be counted against the maximum number of
shares available for issuance under this Plan.
6.13 Non-Exclusivity of Plan. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board or the Committee to
grant awards or authorize any other compensation, with or without
reference to the Common Stock, under any other plan or authority.
6.14 No Corporate Action Restriction. The existence of this Plan, the
Award Agreements and the Awards granted hereunder shall not limit,
affect or restrict in any way the right or power of the Board or
the stockholders of the Corporation to make or authorize: (a) any
adjustment, recapitalization, reorganization or other change in
the Corporation's or any Subsidiary's capital structure or its
business, (b) any merger, amalgamation, consolidation or change in
the ownership of the Corporation or any subsidiary, (c) any issue
of bonds, debentures, capital, preferred or prior preference stock
ahead of or affecting the Corporation's or any Subsidiary's
capital stock or the rights thereof, (d) any dissolution or
liquidation of the Corporation or any Subsidiary, (e) any sale or
transfer of all or any part of the Corporation or any Subsidiary's
assets or business, or (f) any other corporate act or proceeding
by the Corporation or any Subsidiary. No participant, beneficiary
or any other person shall have any claim under any Award or Award
Agreement against any member of the Board or the Committee, or the
Corporation or any employees, officers or agents of the
Corporation or any Subsidiary, as a result of any such action.
6.15 Other Company Benefit and Compensation Programs. Payments and
other benefits received by a Participant under an Award made
pursuant to this Plan shall not be deemed a part of a
Participant's compensation for purposes of the determination of
benefits under any other employee welfare or benefit plans or
arrangements, if any, provided by the Corporation or any
Subsidiary, except where the Committee or the Board expressly
otherwise provides or authorizes in writing. Awards under this
Plan may be made in addition to, in combination with, as
alternatives to or in payment of grants, awards or commitments
under any other plans or arrangements of the Company or the
Subsidiaries.
21
7. DEFINITIONS.
"Award" means an award of any Option, Stock Appreciation Right,
Restricted Stock, Stock Bonus, Performance Share Award, dividend equivalent or
deferred payment right or other right or security that would constitute a
"derivative security" under Rule 16a-1(c) of the Exchange Act, or any
combination thereof, whether alternative or cumulative, authorized by and
granted under this Plan.
"Award Agreement" means any writing setting forth the terms of an Award
that has been authorized by the Committee.
"Award Date" means the date upon which the Committee took the action
granting an Award or such later date as the Committee designates as the Award
Date at the time of the Award or, in the case of Awards under Article 8, the
applicable dates set forth therein.
"Award Period" means the period beginning on an Award Date and ending on
the expiration date of such Award.
"Beneficiary" means the person, persons, trust or trusts designated by a
Participant or, in the absence of a designation, entitled by will or the laws of
descent and distribution, to receive the benefits specified in the Award
Agreement and under this Plan in the event of a Participant's death, and shall
mean the Participant's executor or administrator if no other Beneficiary is
designated and able to act under the circumstances.
"Board" means the Board of Directors of the Corporation.
"Cause" with respect to a Participant means (unless otherwise expressly
provided in the applicable Award Agreement or another applicable contract with
the Participant) a termination of service based upon a finding by acting in good
faith and based on its reasonable belief at the time, that the Participant:
(a) has been negligent in the discharge of his or her duties to the
Company, has refused to perform stated or assigned duties or is
incompetent in or (other than by reason of a disability or
analogous condition) incapable of performing those duties; or
(b) has been dishonest or committed or engaged in an act of theft,
embezzlement or fraud, a breach of confidentiality, an
unauthorized disclosure or use of inside information, customer
lists, trade secrets or other confidential information; has
breached a fiduciary duty, or willfully and materially violated
any other duty, law, rule, regulation or policy of the Company or
an affiliate; or has been convicted of a felony or misdemeanor
(other than minor traffic violations or similar offenses); or
(c) has materially breached any of the provisions of any agreement
with the Company or an affiliated entity; or
(d) has engaged in unfair competition with, or otherwise acted
intentionally in a manner injurious to the reputation, business or
assets of, the Company or an affiliate; has improperly induced a
vendor or customer to break or terminate any contract with the
Company or an affiliate or induced a principal for whom the
Company or an affiliate acts as agent to terminate such agency
relationship.
22
A termination for Cause shall be deemed to occur (subject to reinstatement upon
a contrary final determination by the Committee) on the date on which the
Company first delivers written notice to the Participant of a finding of
termination for Cause.
"Change in Control Event" means any of the following:
(a) Approval by the stockholders (or, if no stockholder approval is
required, by the Board) of the Corporation of the dissolution or
liquidation of the Corporation, other than in the context of a
transaction that does not constitute a Change in Control Event
under clause (b) below.
(b) Consummation of a merger, consolidation, or other reorganization,
with or into, or the sale of all or substantially all of the
Corporation's business and/or assets as an entirety to, one or
more entities that are not Subsidiaries (a "Business
Combination"), unless (1) as a result of the Business Combination
more than 50% of the outstanding securities voting generally in
the election of directors of the surviving or resulting entity or
a parent thereof (the "Successor Entity") immediately after the
reorganization are, or will be, owned, directly or indirectly, in
substantially the same proportions by stockholders of the
Corporation immediately before the Business Combination; and (2)
no person (as defined in clause (c) below, but excluding the
Successor Entity or an Excluded Person) beneficially owns,
directly or indirectly, more than 30% of the outstanding shares of
the combined voting power of the outstanding voting securities of
the Successor Entity, after giving effect to the Business
Combination, except to the extent that such ownership existed
prior to the Business Combination; and (3) at least 50% of the
members of the board of directors of the entity resulting from the
Business Combination were members of the Board at the time of the
execution of the initial agreement or of the action of the Board
approving the Business Combination.
(c) Any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) other than an Excluded Person becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Corporation
representing more than 30% of the combined voting power of the
Corporation's then outstanding securities entitled to then vote
generally in the election of directors of the Corporation, other
than as a result of (1) an acquisition directly from the Company,
(2) an acquisition by the Company, or (3) an acquisition by any
entity pursuant to a transaction which is expressly excluded under
clause (b) above.
(d) During any period not longer than two consecutive years,
individuals who at the beginning of such period constituted the
Board cease to constitute at least a majority thereof, unless the
election, or the nomination for election by the Corporation's
stockholders, of each new Board member was approved by a vote of
at least two-thirds of the Board members then still in office who
were Board members at the beginning of such period (including for
these purposes, new members whose election or nomination was so
approved), but excluding, for this purpose, any such individual
whose initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a person other than the
Board.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
23
"Commission" means the Securities and Exchange Commission.
"Committee" means the Board or one or more committees appointed by the
Board to administer all or certain aspects of this Plan, each committee to be
comprised solely of one or more directors or such number as may be required
under applicable law. Each member of a Committee in respect of his or her
participation in any decision with respect to an Award intended to satisfy the
requirements of Section 162(m) of the Code must satisfy the requirements of
"outside director" status within the meaning of Section 162(m) of the Code;
provided, however, that the failure to satisfy such requirement shall not affect
the validity of the action of any committee otherwise duly authorized and acting
in the matter. As to Awards, grants or other transactions that are authorized
only by a Committee (and not the Board) and that are intended to be exempt under
Rule 16b-3, the requirements of Rule 16b-3(d)(1) with respect to committee
action must also be satisfied.
"Common Stock" means the Common Stock of the Corporation and such other
securities or property as may become the subject of Awards, or become subject to
Awards, pursuant to an adjustment made under Section 6.2 of this Plan.
"Company" means, collectively, the Corporation and its Subsidiaries.
"Corporation" means Red Robin Gourmet Burgers, Inc., a Delaware
corporation, and its successors.
"Eligible Employee" means an officer (whether or not a director) or
employee of the Company.
"Eligible Person" means an Eligible Employee, or any Other Eligible
Person, as designated by the Committee in its discretion.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"Excluded Person" means (a) any person described in and satisfying the
conditions of Rule 13d-1(b)(1) under the Exchange Act, (b) any person who is the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more than
20% of the outstanding Shares of Common Stock at the time of adoption of this
Plan, (or an affiliate, successor, heir, descendant or related party of or to
any such person, (c) the Company, or (d) an employee benefit plan (or related
trust) sponsored or maintained by the Company or the Successor Entity.
"Fair Market Value" on any date means (a) if the stock is listed or
admitted to trade on a national securities exchange, the closing price of the
stock on the Composite Tape, as published in the Western Edition of The Wall
Street Journal, of the principal national securities exchange on which the stock
is so listed or admitted to trade, on such date, or, if there is no trading of
the stock on such date (or if the market has not closed at the applicable time),
then the closing price of the stock as quoted on such Composite Tape on the next
preceding date on which there was trading in such shares; (b) if the stock is
not listed or admitted to trade on a national securities exchange, the last
price for the stock on such date, as furnished by the National Association of
Securities Dealers, Inc. ("NASD") through the NASDAQ National Market Reporting
System or a similar organization if the NASD is no longer reporting such
information; (c) if the stock is not listed or admitted to trade on a national
securities exchange and is not reported on the National Market Reporting System,
the mean between the bid and asked price for the stock on such date, as
furnished by the NASD or a similar organization; or (d) if the stock is not
listed or admitted to trade on a national securities exchange, is not reported
on the National
24
Market Reporting System and if bid and asked prices for the stock are not
furnished by the NASD or a similar organization, the value as established by the
Committee at such time for purposes of this Plan.
"Incentive Stock Option" means an Option which is intended, as evidenced
by its designation, as an incentive stock option within the meaning of Section
422 of the Code, the award of which contains such provisions (including but not
limited to the receipt of stockholder approval of this Plan, if the Award is
made prior to such approval) and is made under such circumstances and to such
persons as may be necessary to comply with that section.
"Nonqualified Stock Option" means an Option that is designated as a
Nonqualified Stock Option and shall include any Option intended as an Incentive
Stock Option that fails to meet the applicable legal requirements thereof. Any
Option granted hereunder that is not designated as an incentive stock option
shall be deemed to be designated a nonqualified stock option under this Plan and
not an incentive stock option under the Code.
"Non-Employee Director" means a member of the Board of Directors of the
Corporation who is not an officer or employee of the Company.
"Non-Employee Director Participant" means a Non-Employee Director who
holds an outstanding Award under the provisions of Article 8.
"Option" means an option to purchase Common Stock granted under this
Plan. The Committee shall designate any Option granted to an Eligible Person as
a Nonqualified Stock Option or an Incentive Stock Option.
"Other Eligible Person" means any Non-Employee Director or any individual
consultant or advisor who renders or has rendered bona fide services (other than
services in connection with the offering or sale of securities of the Company in
a capital raising transaction or as a market maker or promoter of the Company's
securities) to the Company, and who is selected to participate in this Plan by
the Committee. An advisor or consultant may be selected as an Other Eligible
Person only if such person's participation in this Plan would not adversely
affect (a) the Corporation's eligibility to use Form S-8 to register under the
Securities Act of 1933, as amended, the offering of shares issuable under this
Plan by the Company or (b) the Corporation's compliance with any other
applicable laws.
"Participant" means an Eligible Person who has been granted an Award
under this Plan, including any Non-Employee Director who has received an Award
under Article 8 of this Plan.
"Performance Share Award" means an Award of a right to receive shares of
Common Stock under Section 5.1, the issuance of which is contingent upon, among
other conditions, the attainment of performance objectives specified by the
Committee.
"Personal Representative" means the person or persons who, upon the
disability or incompetence of a Participant, shall have acquired on behalf of
the Participant, by legal proceeding or otherwise, the power to exercise the
rights or receive benefits under this Plan and who shall have become the legal
representative of the Participant.
"Plan" means this Red Robin Gourmet Burgers, Inc. 2002 Stock Incentive
Plan, as it may be amended from time to time.
25
"Restricted Shares" or "Restricted Stock" means shares of Common Stock
awarded to a Participant under this Plan, subject to payment of such
consideration, if any, and such conditions on vesting (which may include, among
others, the passage of time, specified performance objectives or other factors)
and such transfer and other restrictions as are established in or pursuant to
this Plan and the related Award Agreement, for so long as such shares remain
unvested under the terms of the applicable Award Agreement.
"Rule 16b-3" means Rule 16b-3 as promulgated by the Commission pursuant
to the Exchange Act, as amended from time to time.
"Section 16 Person" means a person subject to Section 16(a) of the
Exchange Act.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Severance Date" with respect to a particular Participant means, unless
otherwise provided in the applicable Award Agreement:
(a) if the Participant is an Eligible Employee and the Participant's
employment by the Company terminates (regardless of the reason),
the last day that the Participant is actually employed by the
Company (unless, immediately following such termination of
employment, the Participant is a member of the Board or, by
express written agreement with the Company, continues to provide
other services to the Company as an Other Eligible Person, in
which case the Participant's Severance Date shall not be the date
of such termination of employment but shall be determined in
accordance with clause (b) or (c) below, as applicable, in
connection with the termination of the Participant's other
services);
(b) if the Participant is not an Eligible Employee but an Other
Eligible Person by virtue of the fact that he or she is a member
of the Board and the Participant ceases to be a member of the
Board (regardless of the reason), the last day that the
Participant is actually a member of the Board (unless, immediately
following such termination, the Participant is an employee of the
Company or, by express written agreement with the Company,
continues to provide other services to the Company or a Subsidiary
as an Other Eligible Person, in which case the Participant's
Severance Date shall not be the date of such termination but shall
be determined in accordance with clause (a) above or (c) below, as
applicable, in connection with the termination of the
Participant's employment or other services);
(c) if the Participant is not an Eligible Employee but an Other
Eligible Person (other than by virtue of being a Board member) and
the Participant ceases to provide services to the Company (as
determined in accordance with Section 6.3) (regardless of the
reason), the last day that the Participant actually provides
services to the Company as an Other Eligible Person (unless,
immediately following such termination, the Participant is an
employee of the Company or a member of the Board, in which case
the Participant's Severance Date shall not be the date of such
termination of services but shall be determined in accordance with
clause (a) or (c) above, as applicable, in connection with the
termination of the Participant's employment or membership on the
Board).
"Stock Appreciation Right" means a right authorized under this Plan to
receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, the aggregate
26
amount or value of which is determined by reference to a change in the Fair
Market Value of the Common Stock.
"Stock Bonus" means an Award of shares of Common Stock granted under this
Plan for no consideration other than past services and without restriction other
than such transfer or other restrictions as the Committee may deem advisable to
assure compliance with law.
"Stock Unit" means a bookkeeping entry which serves as a unit of
measurement relative to a share of Common Stock for purposes of determining the
payment, in Common Stock or cash, of an Award, including a deferred benefit or
right under this Plan. Stock Units are not outstanding shares and do not entitle
a Participant to any dividend, voting or other rights in respect of any Common
Stock represented thereby or acquirable thereunder. Stock Units, may, however,
by express provision in the applicable Award Agreement, entitle a Participant to
dividend equivalent rights, as defined by the Committee.
"Subsidiary" means any corporation or other entity a majority of whose
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Corporation.
"Total Disability" means a "permanent and total disability" within the
meaning of Section 22(e)(3) of the Code and such other disabilities,
infirmities, afflictions or conditions as the Committee by rule may include.
8. NON-EMPLOYEE DIRECTOR OPTIONS
8.1 Participation. Awards under this Article 8 shall be made only to
Non-Employee Directors and shall be evidenced by Award Agreements
substantially in the form of Exhibit A hereto.
8.2 Annual Option Grants.
8.2.1 Time of Initial Award. After approval of this Plan by the
stockholders of the Corporation, if any person who is not
then an officer or employee of the Company shall become a
director of the Corporation, there shall be granted
automatically to such person (without any action by the
Board or Committee) a Non-qualified Stock Option (the Award
Date of which shall be the date such person takes office)
to purchase 5,000* shares of Common Stock.
8.2.2 Subsequent Annual Awards. Immediately following the annual
meeting of the Corporation's stockholders in each year
during the term of this Plan commencing in 2003, there
shall be granted automatically (without any action by the
Committee or the Board) a Nonqualified Stock Option (the
Award Date of which shall be such date) to each
Non-Employee Director then continuing in office to purchase
1,000* shares of Common Stock.
8.2.3 Maximum Number of Shares. Annual grants that would
otherwise exceed the maximum number of shares under Section
1.4.1 shall be prorated within such limitation. A
Non-Employee Director shall not receive more than one
Nonqualified Stock Option under this Section 8.2 in any
calendar year.
27
8.3 Option Price. The purchase price per share of the Common Stock
covered by each Option granted pursuant to Section 8.2 hereof
shall be 100 percent of the Fair Market Value of the Common Stock
on the Award Date. The exercise price of any Option granted under
this Article 8 shall be paid in full at the time of each purchase
in cash or by check or in shares of Common Stock valued at their
Fair Market Value on the date of exercise of the Option, or partly
in such shares and partly in cash, provided that any such shares
used in payment shall have been owned by the Participant at least
six months prior to the date of exercise.
8.4 Option Period and Exercisability. Each Option granted under this
Article 8 and all rights or obligations thereunder shall expire
ten years after the Award Date and shall be subject to earlier
termination as provided below. Subject to Sections 8.5, 8.6 and
8.7, each Option granted under Section 8.2.1 shall become
exercisable as to 50% of the total number of shares subject
thereto on each of the following dates: (a) the earlier of the
first anniversary of Award Date or the first annual meeting of the
Corporation's stockholders that occurs more than ten months after
the Award Date, and (b) the earlier of the second anniversary of
the Award Date or the first annual meeting of the Corporation's
stockholders that occurs more than twenty-two months after the
Award Date. Subject to Sections 8.5, 8.6 and 8.7, each Option
granted under Section 8.2.2 shall become fully (100%) exercisable
on the earlier of the first anniversary of the Award Date or the
first annual meeting of the Corporation's stockholders that occurs
more than ten months after the Award Date.
8.5 Termination of Directorship. If a Non-Employee Director's services
as a member of the Board of Directors terminate by reason of death
or Disability, an Option granted pursuant to this Article 8 held
by such Participant shall immediately become and shall remain
exercisable for one year after the date of such termination or
until the expiration of the stated term of such Option, whichever
first occurs. If a Non-Employee Director's services as a member of
the Board of Directors terminate for any other reason, any portion
of an Option granted pursuant to this Article 8 which is not then
exercisable shall terminate and any portion of such Option which
is then exercisable may be exercised for three months after the
date of such termination or until the expiration of the stated
term, whichever first occurs.
8.6 Adjustments. Options granted under this Article 8 shall be subject
to adjustment as provided in Section 6.2, but only to the extent
that such adjustment is consistent with adjustments to Options
held by persons other than executive officers or directors of the
Corporation.
8.7 Acceleration Upon a Change in Control Event. Upon the occurrence
of a Change in Control Event, each Option granted under Section
8.2 hereof shall become immediately exercisable in full. Each such
Option shall be subject to adjustment and termination pursuant to
Section 6.2 in connection with such event.
28
EXHIBIT A
RED ROBIN GOURMET BURGERS, INC.
2002 STOCK INCENTIVE PLAN
DIRECTOR STOCK OPTION AGREEMENT
THIS DIRECTOR STOCK OPTION AGREEMENT (this "Option Agreement") dated
_____________________ by and between RED ROBIN GOURMET BURGERS, INC., a Delaware
corporation (the "Corporation"), and ________________________________ (the
"Director") evidences the nonqualified stock option (the "Option") granted by
the Corporation to the Director pursuant to Article 8 of the Red Robin Gourmet
Burgers, Inc. 2002 Stock Incentive Plan (the "Plan") as to the number of shares
of the Corporation's Common Stock first set forth below.
Number of Shares of Common Stock:/1/ _________________
Exercise Price per Share:/2/ $____________
Award Date:/1/ __________________
Expiration Date:/2/ __________________
The Option is not and shall not be deemed to be an incentive stock option
within the meaning of Section 422 of the Code. Capitalized terms are defined in
the Plan if not defined herein.
1. Vesting; Limits on Exercise.
---------------------------
The Option cannot be exercised until it vests and becomes exercisable. [For
options granted pursuant to Section 8.2.1 of the Plan: Subject to Sections 8.5,
8.6 and 8.7 of the Plan, the Option shall become exercisable as to 50% of the
total number of shares of Common Stock subject to the Option on each of the
following dates: (a) the earlier of the first anniversary of Award Date or the
first annual meeting of the Corporation's stockholders that occurs more than ten
months after the Award Date, and (b) the earlier of the second anniversary of
the Award Date or the first annual meeting of the Corporation's stockholders
that occurs more than twenty-two months after the Award Date.] [For options
granted pursuant to Section 8.2.2 of the Plan: Subject to Sections 8.5, 8.6 and
8.7 of the Plan, the Option shall become exercisable as to 100% of the total
number of shares of Common Stock subject to the Option on the earlier of the
first anniversary of the Award Date or the first annual meeting of the
Corporation's stockholders that occurs more than ten months after the Award
Date.]
. Cumulative Exercisability. To the extent that the Option is vested and
exercisable, the Director has the right to exercise the Option (to the
extent not previously exercised), and such right shall continue, until
the expiration or earlier termination of the Option.
_________________
/1/ Subject to adjustment under Section 8.6 of the Plan.
/2/ Subject to early termination under Section 6.2 or 8.5 of the Plan.
A-1
. No Fractional Shares. Fractional share interests shall be disregarded,
but may be cumulated.
. Minimum Exercise. No fewer than 100/1/ shares of Common Stock may be
purchased at any one time, unless the number purchased is the total
number at the time exercisable under the Option.
2. Service; Continuance of Service Required; No Service Commitment.
The Director agrees to serve as a member of the Board in accordance with
the Corporation's Certificate of Incorporation, bylaws, and applicable law. The
vesting schedule requires continued service through each applicable vesting date
as a condition to the vesting of the applicable installment of the Option and
the rights and benefits under this Option Agreement. Partial service, even if
substantial, during any vesting period will not entitle the Director to any
proportionate vesting or avoid or mitigate a termination of rights and benefits
upon or following a termination of services as provided in Section 4 below or
under the Plan. Nothing contained in this Option Agreement or the Plan
constitutes a continued service commitment by the Company.
3. Method of Exercise of Option.
The Option shall be exercisable by the delivery to the Secretary of the
Corporation of a written notice stating the number of shares of Common Stock to
be purchased pursuant to the Option and accompanied by:
. delivery of an executed Exercise Agreement in substantially the form
attached hereto as Appendix I or such other form as from time to time
may be required by the Committee (the "Exercise Agreement");
. payment in full for the Exercise Price of the shares to be purchased
in the manner specified in Section 8.3 of the Plan; and
. any written statements or agreements required pursuant to Section 6.4
of the Plan.
4. Early Termination of Option.
The Option, to the extent not previously exercised, and all other rights
hereunder, whether vested and exercisable or not, shall terminate and become
null and void prior to the Expiration Date in the event of:
. the Director's termination of services as provided in Section 8.5 of
the Plan, or
. the termination of the Option pursuant to Section 6.2 and/or 8.7 of
the Plan.
5. Non-Transferability.
The Option and any other rights of the Director under this Option Agreement
or the Plan are nontransferable and exercisable only by the Director, except as
set forth in Section 1.9 of the Plan.
A-2
6. Notices.
Any notice to be given under the terms of this Option Agreement or the
Exercise Agreement shall be in writing and addressed to the Corporation at its
principal office to the attention of the Secretary, and to the Director at the
address given beneath the Director's signature hereto, or at such other address
as either party may hereafter designate in writing to the other. Any such notice
shall be given only when received, but if the Director is no longer a member of
the Board, shall be deemed to have been duly given by the Corporation when
enclosed in a properly sealed envelope addressed as aforesaid, registered or
certified, and deposited (postage and registry or certification fee prepaid) in
a post office or branch post office regularly maintained by the United States
Government.
7. Plan.
The Option and all rights of the Director under this Option Agreement are
subject to, and the Director agrees to be bound by, all of the terms and
conditions of the Plan, incorporated herein by this reference. In the event of a
conflict or inconsistency between the terms and conditions of this Option
Agreement and of the Plan, the terms and conditions of the Plan shall govern.
The Director acknowledges receipt of a copy of the Plan and agrees to be bound
by the terms thereof. The Director acknowledges reading and understanding the
Plan. Unless otherwise expressly provided in other sections of this Option
Agreement, provisions of the Plan that confer discretionary authority on the
Board or the Committee do not and shall not be deemed to create any rights in
the Director unless such rights are expressly set forth herein or are otherwise
in the sole discretion of the Board or the Committee so conferred by appropriate
action of the Board or the Committee under the Plan after the date hereof.
8. Entire Agreement.
This Option Agreement (together with the form of Exercise Agreement
attached hereto) and the Plan together constitute the entire agreement and
supersede all prior understandings and agreements, written or oral, of the
parties hereto with respect to the subject matter hereof. The Plan, this Option
Agreement and the Exercise Agreement may be amended pursuant to Section 6.6 of
the Plan. Such amendment must be in writing and signed by the Corporation. The
Corporation may, however, unilaterally waive any provision hereof or of the
Exercise Agreement in writing to the extent such waiver does not adversely
affect the interests of the Director hereunder, but no such waiver shall operate
as or be construed to be a subsequent waiver of the same provision or a waiver
of any other provision hereof.
9. Governing Law.
This Option Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware without regard to conflict of
law principles thereunder.
[The remainder of this page has intentionally been left blank.]
A-3
"DIRECTOR" RED ROBIN GOURMET BURGERS, INC.
a Delaware corporation
_________________________________
Signature
By:__________________________________
_________________________________
Print Name Print Name:__________________________
_________________________________ Title:_______________________________
Address
_________________________________
City, State, Zip Code
CONSENT OF SPOUSE
In consideration of the Corporation's execution of this Option
Agreement, the undersigned spouse of the Director agrees to be bound by all of
the terms and provisions hereof and of the Plan.
_________________________________ __________________________
Signature of Spouse Date
A-4
EXHIBIT A
APPENDIX I
RED ROBIN GOURMET BURGERS, INC.
2002 STOCK INCENTIVE PLAN
OPTION EXERCISE AGREEMENT
The undersigned (the "Purchaser") hereby irrevocably elects to exercise
his/her right, evidenced by that certain Director Stock Option Agreement dated
as of ____________________ (the "Option Agreement") under the Red Robin Gourmet
Burgers, Inc. 2002 Stock Incentive Plan (the "Plan"), as follows:
. the Purchaser hereby irrevocably elects to purchase __________________
shares of Common Stock (the "Shares") of Red Robin Gourmet Burgers,
Inc. (the "Corporation"), and
. such purchase shall be at the price of $__________________ per share,
for an aggregate amount of $__________________.
Capitalized terms are defined in the Plan if not defined herein.
Delivery of Share Certificate. The Purchaser requests that a certificate
representing the Shares be registered to Purchaser and delivered to:____________
________________________________________________________________________________
Plan and Option Agreement. The Purchaser acknowledges that all of his/her
rights are subject to, and the Purchaser agrees to be bound by, all of the terms
and conditions of the Plan and the Option Agreement, both of which are
incorporated herein by this reference. If a conflict or inconsistency between
the terms and conditions of this Exercise Agreement and of the Plan or the
Option Agreement shall arise, the terms and conditions of the Plan and/or the
Option Agreement shall govern. The Purchaser acknowledges receipt of a copy of
all documents referenced herein and the current Plan Prospectus and acknowledges
reading and understanding these documents and having an opportunity to ask any
questions that he/she may have had about them.
"PURCHASER" ACCEPTED BY:
_________________________________ RED ROBIN GOURMET BURGERS, INC.
Signature a Delaware corporation
_________________________________
Print Name By:__________________________________
_________________________________ Print Name:___________________________
Address
Title:________________________________
_________________________________
City, State, Zip Code (To be completed by the corporation after
the price, value (if applicable), and
receipt of funds is verified.)