<PAGE>
As filed with the Securities and Exchange Commission on _______________, 1996
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
BUFFETS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1462294
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10260 VIKING DRIVE 55344
EDEN PRAIRIE, MINNESOTA (Zip Code)
(Address of Principal Executive Offices)
HOMETOWN BUFFET, INC.
1991 STOCK INCENTIVE PLAN
AND
NONSTATUTORY STOCK OPTION AGREEMENTS WITH
C. DENNIS SCOTT, NEAL L. WICHARD, CHRISTIAN F. HORN AND JEROME POLLOCK
----------------------------------------------------------------------
(Full title of the plan)
ROE H. HATLEN, CHAIRMAN COPY TO:
BUFFETS, INC. DOUGLAS P. LONG
10260 VIKING DRIVE FAEGRE & BENSON LLP
EDEN PRAIRIE, MN 55344 2200 NORWEST CENTER
(Name and address of 90 SOUTH SEVENTH STREET
agent for service) MINNEAPOLIS, MN 55402
(612) 942-9760
(Telephone number, including area code, of agent for service)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
Proposed Proposed
Title of Securities Amount to be Maximum Offering Maximum Amount of
to be Registered Registered Price Per Share Aggregate Offering Registration Fee
Price
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 1,793,679 (1)
$0.01 par value Shares $(2) $13,435,273.62
Common Stock, 35,099
$0.01 par value Shares $1.71 $60,019.29
Common Stock, 4,387
$0.01 par value Shares $5.13 $22,505.31
Common Stock, 11,700
$0.01 par value Shares $9.19 $107,523.00
Common Stock, 46,800
$0.01 par value Shares $9.62 $450,216.00
Common Stock, 2,808
$0.01 par value Shares $11.32 $31,786.56
- -----------------------------------------------------------------------------------------------
TOTAL 1,894,473 Shares $14,107,323.78 $4,274.95
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Maximum number of shares available upon exercise of options issued
under the HomeTown Buffet, Inc. 1991 Stock Incentive Plan. No further options
will be issued under the Plan.
(2) Prices range from $1.23 to $13.52 per share, with an average of $7.49
per share.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents previously filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), are, as of their respective dates, incorporated
by reference in this Registration Statement:
(a) The Annual Report on Form 10-K of Buffets, Inc. (the "Company") for
the fiscal year ended January 3, 1996 (which incorporates by reference certain
portions of the Company's 1995 Annual Report to Shareholders, including
financial statements and accompanying information, and certain portions of the
Company's definitive proxy statement for the Company's 1996 Annual Meeting of
Shareholders);
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual Report on
Form 10-K referred to in (a) above; and
(c) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A dated March 27, 1986 and Amendment
No. 1 thereto dated May 11, 1992, and the Company's Registration Statement on
Form 8-A dated October 30, 1995, which contains a description of the related
Rights to Purchase Preferred Shares, together with any amendments or reports
filed for the purpose of updating such descriptions.
In addition, all documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all shares of Common Stock offered have been sold or which
deregisters all shares of Common Stock then remaining unsold, shall be deemed to
be incorporated by reference in, and to be a part of, this Registration
Statement from the date of filing of such documents.
Any statement contained in a document incorporated, or deemed to be
incorporated, by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or incorporated herein by reference or in any other
subsequently filed document that is or is deemed to be incorporated by reference
herein modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
II-1
<PAGE>
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 4.01 of the Company's Restated By-Laws provides that the Company
shall indemnify its directors and officers to the full extent required or
permitted by Minnesota Statutes or by other provisions of law. Section 302A.521
of the Minnesota Statutes provides in substance that, unless prohibited or
limited by its articles of incorporation or by-laws, a corporation must
indemnify an officer or director who is made or threatened to be made a party to
a proceeding by reason of his or her capacity as an officer or director against
judgments, penalties, fines, settlements and reasonable expenses, including
attorneys' fees and disbursements, incurred by such person in connection with
the proceeding, if certain criteria are met. These criteria, all of which must
be met by the person seeking indemnification, are: (a) that such person has not
been indemnified by another organization for the same judgments, penalties,
fines, settlements and expenses; (b) that such person must have acted in good
faith; (c) that no improper personal benefit was obtained by such person and
that, if applicable, certain statutory conflict of interest provisions have been
satisfied; (d) that, in the case of a criminal proceeding, such person had no
reasonable cause to believe that the conduct was unlawful; and (e) that such
person acted in a manner he or she reasonably believed was in the best interests
of the corporation or, in certain limited circumstances, not opposed to the best
interests of the corporation. The determination as to eligibility for
indemnification is made by the members of the corporation's board of directors,
or a committee thereof, who are at the time not parties to the proceedings under
consideration, by special legal counsel, by the shareholders who are not parties
to the proceedings or by a court.
Article VIII of the Company's Amended and Restated Articles of
Incorporation provides that a director shall not be liable to the Company or its
shareholders for monetary damages for breach of fiduciary duty as director,
except: (i) for any breach of the director's duty of loyalty to the Company or
its shareholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for dividends, stock
repurchases and other distributions made in violation of Minnesota law or for
violations of the Minnesota securities laws; (iv) for any transaction from which
the director derived an improper personal benefit; or (v) for any act or
omission occurring prior to the effective date of the provision in the Company's
Amended and Restated Articles of Incorporation limiting such liability. Article
VIII does not affect the availability of equitable remedies, such as an action
to enjoin or rescind a transaction involving a breach of fiduciary duty,
although, as a practical matter, equitable relief may not be available. Article
VIII also does not limit the liability of directors for violations of, or
relieve them from the necessity of complying with, the federal securities laws.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
II-2
<PAGE>
ITEM 8. EXHIBITS.
Exhibit
-------
4.1 Composite Amended and Restated Articles of Incorporation of the
Company (incorporated by reference to Exhibit 4.1 to the
Company's Registration Statement on Form S-3, File No. 33-63694).
4.2 By-Laws of the Company (incorporated by reference to Exhibit
3(b) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 29, 1993).
4.3 Form of Rights Agreement, dated as of October 24, 1995, by
and between the Company and American Stock Transfer and
Trust Company (incorporated by reference to Exhibit 1 to the
Company's Current Report on Form 8-K dated October 24,
1995).
4.4 Second Amended and Restated Credit Agreement by and between
the Company and First Bank National Association dated as of
April 30, 1996 (incorporated by reference to Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q for the quarter
ended April 24, 1996).
4.5 Amendment No. 1 dated as of September 20, 1996 to Second Amended
and Restated Credit Agreement by and between the Company and
First Bank National Association (incorporated by reference to
Exhibit 4.5 to the Company's Registration Statement on Form 8-A,
dated November 8, 1996).
4.6 Indenture dated as of November 27, 1995 related to 7% Convertible
Subordinated Notes of HomeTown Buffet, Inc. due December 1, 2002
(incorporated by reference to Exhibit 4.6 to the Company's
Registration Statement on Form 8-A, dated November 8, 1996).
4.7 First Supplemental Indenture dated as of September 20, 1996 among
the Company, HomeTown and Wells Fargo Bank, N.A. (incorporated by
reference to Exhibit 4.7 to the Company's Registration Statement
on Form 8-A, dated November 8, 1996).
5 Opinion of Faegre & Benson LLP.
23.1 Consent of Faegre & Benson LLP (included in Exhibit 5).
23.2 Consent of Independent Auditors.
II-3
<PAGE>
24 Powers of Attorney (included with signatures to this Registration
Statement).
99.1 HomeTown Buffet, Inc. 1991 Stock Incentive Plan.
99.2 Form of Nonstatutory Stock Option Agreement.
II-4
<PAGE>
ITEM 9. UNDERTAKINGS.
A. The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities Act");
(b) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement; and
(c) To include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement or any
material change to such information in this Registration Statement;
PROVIDED, however, that paragraphs (A)(1)(a) and (A)(1)(b) shall not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Sections 13 or 15(d) of the Exchange Act that are incorporated by reference in
this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Sections 13(a) or 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to the initial BONA
FIDE offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or
II-5
<PAGE>
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act, and will be governed by the final adjudication of such issue.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Company certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minneapolis, State of Minnesota, on November 7, 1996.
BUFFETS, INC.
By: /s/ Roe H. Hatlen
-------------------------------------
Roe H. Hatlen
Chairman and Chief Executive Officer
Each of the undersigned officers and directors of Buffets, Inc. hereby
appoints Roe H. Hatlen and Clark C. Grant, and each of them (with full power to
act alone), as attorneys and agents for the undersigned, with full power of
substitution, for and in the name, place, and stead of the undersigned, to sign
and file with the Securities and Exchange Commission under the Securities Act of
1933, as amended, any and all amendments (including post-effective amendments)
and exhibits to this Registration Statement and any and all applications,
instruments, or documents to be filed with the Securities and Exchange
Commission pertaining to the registration of the securities covered hereby, with
full power and authority to do and perform any and all acts and things
whatsoever requisite and necessary or desirable.
II-7
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
- --------- -------- ----
/s/ Roe H. Hatlen Chairman, Chief Executive November 7, 1996
- ------------------- Officer and Director (Principal ----------------
Roe H. Hatlen Executive Officer)
/s/ Clark C. Grant Executive Vice President of November 7, 1996
- --------------------- Finance and Admnistration and ----------------
Clark C. Grant Treasurer (Principal Financial
Officer)
/s/ Marguerite C. Nesset Vice President of Accounting and November 7, 1996
- ------------------------ Controller (Principal ----------------
Marguerite C. Nesset Accounting Officer)
Director , 1996
- ----------------------- ----------------
Walter R. Barry, Jr.
/s/ Dr. Christian F. Horn Director November 7, 1996
- ------------------------- ----------------
Dr. Christian F. Horn
/s/ Raymond A. Lipkin Director November 7, 1996
- --------------------- ----------------
Raymond A. Lipkin
/s/ Alan S. McDowell Director November 7, 1996
- --------------------- ----------------
Alan S. McDowell
/s/ C. Dennis Scott Director November 7, 1996
- --------------------- ----------------
C. Dennis Scott
/s/ David Michael Winton Director November 7, 1996
- ------------------------ ----------------
David Michael Winton
II-8
<PAGE>
INDEX TO EXHIBITS
Exhibit
4.1 Composite Amended and Restated Articles of
Incorporation of the Company (incorporated
by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-3, File No. 33-
63694). . . . . . . . . . . . . . . . . . . . . . Incorporated by reference
4.2 By-Laws of the Company (incorporated by reference
to Exhibit 3(b) to the Company's Annual Report on
Form 10-K for the fiscal year ended December 29,
1993) . . . . . . . . . . . . . . . . . . . . . . Incorporated by reference
4.3 Form of Rights Agreement, dated as of October 24,
1995, by and between the Company and American
Stock Transfer and Trust Company (incorporated
by reference to Exhibit 1 to the Company's
Current Report on Form 8-K dated October 24,
1995) . . . . . . . . . . . . . . . . . . . . . . Incorporated by reference
4.4 Second Amended and Restated Credit Agreement by
and between the Company and First Bank National
Association dated as of April 30, 1996
(incorporated by reference to Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q for
the quarter ended April 24, 1996) . . . . . . . . Incorporated by reference
4.5 Amendment No. 1 dated as of September 20, 1996
to Second Amended and Restated Credit Agreement
by and between the Company and First Bank
National Association (incorporated by reference
to Exhibit 4.5 to the Company's Registration
Statement on Form 8-A, dated November 8,
1996) . . . . . . . . . . . . . . . . . . . . . . Incorporated by reference
4.6 Indenture dated as of November 27, 1995 related
to 7% Convertible Subordinated Notes of HomeTown
Buffet, Inc. due December 1, 2002 (incorporated
by reference to Exhibit 4.6 to the Company's
Registration Statement on Form 8-A, dated
November 8, 1996) . . . . . . . . . . . . . . . . Incorporated by reference
4.7 First Supplemental Indenture dated as of
September 20, 1996 among the Company, HomeTown
and Wells Fargo Bank, N.A (incorporated by
reference to Exhibit 4.7 to the Company's
Registration Statement on Form 8-A, dated
November 8, 1996) . . . . . . . . . . . . . . . . Incorporated by reference
5 Opinion of Faegre & Benson Professional Limited
Liability Partnership . . . . . . . . . . . . . . . . .Filed Electronically
II-9
<PAGE>
23.1 Consent of Faegre & Benson Professional Limited
Liability Partnership (included in Exhibit 5)
23.2 Consent of Independent Auditors . . . . . . . . . . . .Filed Electronically
24 Powers of Attorney (included with signatures to this
Registration Statement)
99.1 HomeTown Buffet, Inc. 1991 Stock Incentive Plan . . . .Filed Electronically
99.2 Form of Nonstatutory Stock Option Agreement . . . . . .Filed Electronically
II-10
<PAGE>
EXHIBIT 5
November 6, 1996
Buffets, Inc.
10260 Viking Drive
Eden Prairie, MN 55344
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-8 (the
"Registration Statement") relating to the offering of up to 1,894,473 shares of
Common Stock, par value $.01 per share, of Buffets, Inc. (the "Company"),
pursuant to the HomeTown Buffet, Inc. 1991 Stock Option Plan (the "Plan"),
certain option agreements covering options granted by HomeTown outside of the
Plan (the "Option Agreements") and the Agreement and Plan of Merger dated
June 3, 1996 among the Company, HomeTown Buffet, Inc. ("HomeTown") and Country
Delaware, Inc. (the "Merger Agreement"), we have examined such corporate records
and other documents, including the Plan, the Option Agreements and the Merger
Agreement, and have reviewed such matters of law, as we have deemed relevant
hereto, and, based upon such examination and review, it is our opinion that all
necessary corporate action on the part of the Company has been taken to
authorize the issuance and sale of such shares of Common Stock by the Company,
and that, when issued and sold as contemplated in the Plan, or the Option
Agreements, as applicable, and the Merger Agreement, such shares will be legally
issued, fully paid and non-assessable under the current laws of the State of
Minnesota.
We consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Faegre & Benson LLP
---------------------------
FAEGRE & BENSON LLP
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Buffets, Inc. on Form S-8 of our report dated February 9, 1996, incorporated
by reference in the Annual Report on Form 10-K of Buffets, Inc. for the fiscal
year ended January 3, 1996.
Deloitte & Touche LLP
/s/ Deloitte & Touche LLP
Minneapolis, Minnesota
November 6, 1996
<PAGE>
EXHIBIT 99.1
HOMETOWN BUFFET, INC.
1991 STOCK INCENTIVE PLAN, AS AMENDED
1. PURPOSE.
The purpose of this Stock Incentive Plan (the "Plan") is to enable
HomeTown Buffet, Inc. (the "Company") to attract and retain the services of
selected employees, officers, directors and other key contributors (including
consultants and non-employee agents) of the Company or any subsidiary of the
Company. Notwithstanding the foregoing, grants to Non-Employee Directors (as
defined in subparagraph 12.1) of options or other awards under the Plan shall be
made solely in accordance with the provisions of paragraph 12.
2. SHARES SUBJECT TO THE PLAN.
Subject to adjustment as provided below, the shares to be offered
under the Plan shall consist of Common Stock of the Company, and the total
number of shares of Common Stock that may be issued under the Plan shall not
exceed 2,100,000 shares. The shares issued under the Plan may be authorized and
unissued shares or reacquired shares. If an option or stock appreciation right
granted under the Plan expires, terminates or is cancelled, the unissued shares
subject to such option or stock appreciation right shall again be available
under the Plan. If shares sold or awarded as a bonus under the Plan are
forfeited to the Company or repurchased by the Company, the number of shares
forfeited or repurchased shall again be available under the Plan.
3. EFFECTIVE DATE AND DURATION OF PLAN.
3.1 EFFECTIVE DATE. The Plan shall become effective as of April 10,
1991.
3.2 DURATION. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions on
such shares have lapsed. The Board of Directors may suspend or terminate the
Plan at any time except with respect to options and shares subject to
restrictions then outstanding under the Plan. Termination shall not affect any
outstanding option, any right of the Company to repurchase shares or the
forfeitability of shares issued under the Plan.
4. ADMINISTRATION.
4.1 BOARD OF DIRECTORS. The Plan shall be administered by the Board
of Directors of the Company, which shall determine and designate from time to
time the individuals to whom awards shall be made, the amount of the awards and
the other terms and conditions of the awards. Subject to the provisions of the
Plan, the Board of Directors may from time to time adopt and amend rules and
regulations relating to administration of the Plan, advance the lapse of any
waiting period, accelerate any exercise date, waive or modify any restriction
applicable to
<PAGE>
shares (except those restrictions imposed by law) and make all other
determinations in the judgment of the Board of Directors necessary or desirable
for the administration of the Plan. The interpretation and construction of the
provisions of the Plan and related agreements by the Board of Directors shall be
final and conclusive. The Board of Directors may correct any defect or supply
any omission or reconcile any inconsistency in the Plan or in any related
agreement in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and it shall be the sole and final judge of such expediency.
4.2 COMMITTEE. The Board of Directors may delegate to a committee of
the Board of Directors or specified officers of the Company, or both (the
"Committee") any or all authority for administration of the Plan. If authority
is delegated to a Committee, all references to the Board of Directors in the
Plan shall mean and relate to the Committee except (i) as otherwise provided by
the Board of Directors, (ii) that only the Board of Directors may amend or
terminate the Plan as provided in paragraphs 3 and 16 and (iii) that a Committee
including officers of the Company shall not be permitted to grant options to
persons who are officers of the Company.
5. TYPES OF AWARDS; ELIGIBILITY.
The Board of Directors may, from time to time, take the following
actions, separately or in combination, under the Plan: (i) grant Incentive
Stock Options, as defined in Section 422A of the Internal Revenue Code of 1986,
as amended (the "Code"), as provided in paragraphs 6.1 and 6.2; (ii) grant
options other than Incentive Stock Options ("Non-Statutory Stock Options") as
provided in paragraphs 6.1 and 6.3; (iii) award stock bonuses as provided in
paragraph 7; (iv) sell shares subject to restrictions as provided in
paragraph 8; (v) grant stock appreciation rights as provided in paragraph 9;
(vi) grant cash bonus rights as provided in paragraph 10; and (vi) grant foreign
qualified awards as provided in paragraph 11. Any such awards may be made to
employees, including employees who are officers or directors, directors, and to
non-employees (including consultants) who the Board of Directors believes have
made or will make an important contribution to the Company or its subsidiaries;
provided, however, that only employees of the Company, or its subsidiaries,
shall be eligible to receive Incentive Stock Options under the Plan. The Board
of Directors shall select the individuals to whom awards shall be made and shall
specify the action taken with respect to each individual to whom an award is
made. At the discretion of the Board of Directors, an individual may be given
an election to surrender an award in exchange for the grant of a new award.
6. OPTION GRANTS.
6.1 GENERAL RULES RELATING TO OPTIONS.
(a) TERMS OF GRANT. The Board of Directors may grant options
under the Plan. With respect to each option grant, the Board of Directors
shall determine the number of shares subject to the option, the option
price, the period of the option, the time or times at which the option may
be exercised and whether the option is an Incentive Stock Option or
a Non-Statutory Stock Option.
2
<PAGE>
(b) EXERCISE OF OPTIONS. Except as provided in paragraph 6.1(d)
or as determined by the Board of Directors, no option granted under the
Plan may be exercised unless at the time of such exercise the optionee is
employed by or in the service of the Company or any subsidiary of the
Company and shall have been so employed or provided such service
continuously since the date such option was granted. Absence on leave or
on account of illness or disability under rules established by the Board of
Directors shall not, however, be deemed an interruption of employment or
service for this purpose. Unless otherwise determined by the Board of
Directors, vesting of options shall not continue during an absence on leave
(including an extended illness) or on account of disability. Except as
provided in paragraphs 6.1(d) and 14, options granted under the Plan may be
exercised from time to time over the period stated in each option in such
amounts and at such times as shall be prescribed by the Board of Directors,
provided that options shall not be exercised for fractional shares. Unless
otherwise determined by the Board of Directors, if the optionee does not
exercise an option in any one year with respect to the full number of
shares to which the optionee is entitled in that year, the optionee's
rights shall be cumulative and the optionee may purchase those shares in
any subsequent year during the term of the option.
(c) NONTRANSFERABILITY. Each Incentive Stock Option and, unless
otherwise determined by the Board of Directors, each other option granted
under the Plan by its terms shall be nonassignable and nontransferable by
the optionee, either voluntarily or by operation of law, except by will or
by the laws of descent and distribution of the state or country of the
optionee's domicile at the time of death, and each option by its terms
shall be exercisable during the optionee's lifetime only by the optionee.
(d) TERMINATION OF EMPLOYMENT OR SERVICE.
(i) GENERAL RULE. Unless otherwise determined by the
Board of Directors, in the event the employment or service of the
optionee with the Company or subsidiary terminates for any reason
other than because of physical disability or death as provided in
subparagraphs 6.1(d)(ii) and (iii), the option may be exercised at any
time prior to the expiration date of the option or the expiration of
30 days after the date of such termination, whichever is the shorter
period, but only if and to the extent the optionee was entitled to
exercise the option at the date of such termination.
(ii) TERMINATION BECAUSE OF PHYSICAL DISABILITY. Unless
otherwise determined by the Board of Directors, in the event of the
termination of employment or service because of physical disability
(as that term is defined in Section 22(e)(3) of the Code), the option
may be exercised at any time prior to the expiration date of the
option or the expiration of 12 months after the date of such
termination, whichever is the shorter period, but only if and to the
extent the optionee was entitled to exercise the option at the date of
such termination.
3
<PAGE>
(iii) TERMINATION BECAUSE OF DEATH. Unless otherwise
determined by the Board of Directors, in the event of the death of an
optionee while employed by or providing service to the Company or a
parent or subsidiary, the option may be exercised at any time prior to
the expiration date of the option or the expiration of 12 months after
the date of such death, whichever is the shorter period, but only if
and to the extent the optionee was entitled to exercise the option at
the date of such termination and only by the person or persons to whom
such optionee's rights under the option shall pass by the optionee's
will or by the laws of descent and distribution of the state or
country of domicile at the time of death.
(iv) AMENDMENT OF EXERCISE PERIOD APPLICABLE TO
TERMINATION. The Board of Directors, at the time of grant or at any
time thereafter, may extend the 30-day and 12-month exercise periods
any length of time not later than the original expiration date of the
option, and may increase the portion of an option that is exercisable,
subject to such terms and conditions as the Board of Directors may
determine.
(v) FAILURE TO EXERCISE OPTION. To the extent that the
option of any deceased optionee or of any optionee whose employment or
service terminates is not exercised within the applicable period, all
further rights to purchase shares pursuant to such option shall cease
and terminate.
(e) PURCHASE OF SHARES. Unless the Board of Directors
determines otherwise, shares may be acquired pursuant to an option granted
under the Plan only upon receipt by the Company of notice in writing from
the optionee of the optionee's intention to exercise, specifying the number
of shares as to which the optionee desires to exercise the option and the
date on which the optionee desires to complete the transaction, and if
required in order to comply with the Securities Act of 1933, as amended,
containing a representation that it is the optionee's present intention to
acquire the shares for investment and not with a view to distribution, and
any other information the Board of Directors may request. Unless the Board
of Directors determines otherwise, on or before the date specified for
completion of the purchase of shares pursuant to an option, the optionee
must have paid the Company the full purchase price of such shares in cash
(including, with the consent of the Board of Directors, cash that may be
the proceeds of a loan from the Company) or, with the consent of the Board
of Directors, in whole or in part, in Common Stock of the Company valued at
fair market value, restricted stock, or other contingent awards denominated
in either stock or cash, deferred compensation credits, promissory notes
and other forms of consideration. The fair market value of Common Stock
provided in payment of the purchase price shall be determined by the Board
of Directors. No shares shall be issued until full payment therefor has
been made. Each optionee who has exercised an option shall immediately
upon notification of the amount due, if any, pay to the Company in cash
amounts necessary to satisfy any applicable federal, state and local tax
withholding requirements. If additional withholding is or becomes required
beyond any amount deposited before delivery of the certificates, the
optionee shall pay such amount to the Company on demand. If the optionee
fails to pay the amount demanded,
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the Company may withhold that amount from other amounts payable by the
Company to the optionee, including salary, subject to applicable law. Upon
the exercise of an option, the number of shares reserved for issuance under
the Plan shall be reduced by the number of shares issued upon exercise of
the option, less the number of shares surrendered in payment of the option
exercise.
6.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be
subject to the following additional terms and conditions:
(a) LIMITATION ON AMOUNT OF GRANTS. No employee may be granted
Incentive Stock Options under the Plan if the aggregate fair market value,
on the date of grant, of the Common Stock with respect to which Incentive
Stock Options are exercisable for the first time by that employee during
any calendar year under the Plan and under any other incentive stock option
plan (within the meaning of Section 422A of the Code) of the Company or any
parent or subsidiary of the Company exceeds $100,000.
(b) LIMITATIONS ON GRANTS TO 10 PERCENT SHAREHOLDERS. An
Incentive Stock Option may be granted under the Plan to an employee
possessing more than 10 percent of the total combined voting power of all
classes of stock of the Company or of any parent or subsidiary of the
Company only if the option price is at least 110 percent of the fair market
value of the Common Stock subject to the option on the date it is granted,
as described in paragraph 6.2(d), and the option by its terms is not
exercisable after the expiration of five years from the date it is granted.
(c) DURATION OF OPTIONS. Subject to paragraphs 6.1(b) and
6.2(b), Incentive Stock Options granted under the Plan shall continue in
effect for the period fixed by the Board of Directors, except that no
Incentive Stock Option shall be exercisable after the expiration of 10
years from the date it is granted.
(d) OPTION PRICE. The option price per share shall be
determined by the Board of Directors at the time of grant. Except as
provided in paragraph 6.2(b), the option price shall not be less than 100
percent of the fair market value of the Common Stock covered by the
Incentive Stock Option at the date the option is granted. The fair market
value shall be determined by the Board of Directors.
(e) LIMITATION ON TIME OF GRANT. No Incentive Stock Option
shall be granted on or after the tenth anniversary of the effective date of
the Plan.
(f) CONVERSION OF INCENTIVE STOCK OPTIONS. The Board of
Directors may at any time without the consent of the optionee convert an
Incentive Stock Option to a Non-Statutory Stock Option.
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6.3 NON-STATUTORY STOCK OPTIONS. Non-Statutory Stock Options shall
be subject to the following additional terms and conditions:
(a) OPTION PRICE. The option price for Non-Statutory Stock
Options shall be determined by the Board of Directors at the time of grant.
The option price may be less than the fair market value of the shares on
the date of grant. The fair market value of shares covered by a
Non-Statutory Stock Option shall be determined by the Board of Directors.
(b) DURATION OF OPTIONS. Non-Statutory Stock Options granted
under the Plan shall continue in effect for the period fixed by the Board
of Directors.
7. STOCK BONUSES.
The Board of Directors may award shares under the Plan as stock
bonuses. Shares awarded as a bonus shall be subject to the terms, conditions,
and restrictions determined by the Board of Directors. The restrictions may
include restrictions concerning transferability and forfeiture of the shares
awarded, together with such other restrictions as may be determined by the Board
of Directors. The Board of Directors may require the recipient to sign an
agreement as a condition of the award. The agreement may contain any terms,
conditions, restrictions, representations and warranties required by the Board
of Directors. The certificates representing the shares awarded shall bear any
legends required by the Board of Directors. The Company may require any
recipient of a stock bonus to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
requirements. If the recipient fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
recipient, including salary or fees for services, subject to applicable law.
Upon the issuance of a stock bonus, the number of shares reserved for issuance
under the Plan shall be reduced by the number of shares issued.
8. RESTRICTED STOCK.
The Board of Directors may issue shares under the Plan for such
consideration (including promissory notes and services) as determined by the
Board of Directors, which consideration may be less than fair market value of
the Common Stock at the time of issuance. Shares issued under the Plan shall be
subject to the terms, conditions and restrictions determined by the Board of
Directors. The restrictions may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the shares issued,
together with such other restrictions as may be determined by the Board of
Directors. All Common Stock issued pursuant to this paragraph 8 shall be
subject to a purchase agreement, which shall be executed by the Company and the
prospective recipient of the shares prior to the delivery of certificates
representing such shares to the recipient. The purchase agreement may contain
any terms, conditions, restrictions, representations and warranties required by
the Board of Directors. The certificates representing the shares shall bear any
legends required by the Board of Directors. The Company may require any
purchaser of restricted stock to pay to the Company in cash upon demand amounts
necessary to satisfy any applicable federal, state or local tax withholding
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requirements. If the purchaser fails to pay the amount demanded, the Company
may withhold that amount from other amounts payable by the Company to the
purchaser, including salary, subject to applicable law. Upon the issuance of
restricted stock, the number of shares reserved for issuance under the Plan
shall be reduced by the number of shares issued.
9. STOCK APPRECIATION RIGHTS.
9.1 GRANT. Stock appreciation rights may be granted under the Plan
by the Board of Directors, subject to such rules, terms, and conditions as
the Board of Directors prescribes.
9.2 EXERCISE.
(a) Each stock appreciation right shall entitle the holder, upon
exercise, to receive from the Company in exchange therefor an amount
equal in value to the excess of the fair market value on the date of
exercise of one share of Common Stock of the Company over its fair
market value on the date of grant (or, in the case of a stock
appreciation right granted in connection with an option, the excess of
the fair market value of one share of Common Stock of the Company over
the option price per share under the option to which the stock
appreciation right relates), multiplied by the number of shares
covered by the stock appreciation right or the option, or portion
thereof, that is surrendered. No stock appreciation right shall be
exercisable at a time that the amount determined under this
subparagraph is negative. Payment by the Company upon exercise of a
stock appreciation right may be made in Common Stock valued at fair
market value, in cash, or partly in Common Stock and partly in cash,
all as determined by the Board of Directors.
(b) A stock appreciation right shall be exercisable only at the
time or times established by the Board of Directors. If a stock
appreciation right is granted in connection with an option, the
following rules shall apply: (1) the stock appreciation right shall
be exercisable only to the extent and on the same conditions that the
related option could be exercised; (2) upon exercise of the stock
appreciation right, the option or portion thereof to which the stock
appreciation right relates terminates; and (3) upon exercise of the
option, the related stock appreciation right or portion thereof
terminates.
(c) The Board of Directors may withdraw any stock appreciation
right granted under the Plan at any time and may impose any conditions
upon the exercise of a stock appreciation right or adopt rules and
regulations from time to time affecting the rights of holders of stock
appreciation rights. Such rules and regulations may govern the right
to exercise stock appreciation rights granted prior to adoption or
amendment of such rules and regulations as well as stock appreciation
rights granted thereafter.
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(d) For purposes of this paragraph 9, the fair market value of
the Common Stock shall be as specified by the Board of Directors.
(e) No fractional shares shall be issued upon exercise of a
stock appreciation right. In lieu thereof, cash may be paid in an
amount equal to the value of the fraction or, if the Board of
Directors shall determine, the number of shares may be rounded
downward to the next whole share.
(f) Each participant who has exercised a stock appreciation
right shall, upon notification of the amount due, pay to the Company
in cash amounts necessary to satisfy any applicable federal, state and
local tax withholding requirements. If the participant fails to pay
the amount demanded, the Company may withhold that amount from other
amounts payable by the Company to the participant including salary,
subject to applicable law. With the consent of the Board of Directors
a participant may satisfy this obligation, in whole or in part, by
having the Company withhold from any shares to be issued upon the
exercise that number of shares that would satisfy the withholding
amount due or by delivering Common Stock to the Company to satisfy the
withholding amount.
(g) Upon the exercise of a stock appreciation right for shares,
the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued, less the number of shares
surrendered or withheld to satisfy withholding obligations. Cash
payments of stock appreciation rights shall not reduce the number of
shares of Common Stock reserved for issuance under the Plan.
10. CASH BONUS RIGHTS.
10.1 GRANT. The Board of Directors may grant cash bonus rights under
the Plan in connection with (i) options granted or previously granted, (ii)
stock appreciation rights granted or previously granted, (iii) stock bonuses
awarded or previously awarded and (iv) shares sold or previously sold under the
Plan. Cash bonus rights will be subject to rules, terms and conditions as the
Board of Directors may prescribe. The payment of a cash bonus shall not reduce
the number of shares of Common Stock reserved for issuance under the Plan.
10.2 CASH BONUS RIGHTS IN CONNECTION WITH OPTIONS. A cash bonus
right granted in connection with an option will entitle an optionee to a cash
bonus when the related option is exercised (or terminates in connection with the
exercise of a stock appreciation right related to the option) in whole or in
part. If an optionee purchases shares upon exercise of an option, and does not
exercise a related stock appreciation right, the amount of the bonus shall be
determined by multiplying the excess of the total fair market value of the
shares to be acquired upon the exercise over the total option price for the
shares by the applicable bonus percentage. If the optionee exercises a related
stock appreciation right in connection with the termination of an option, the
amount of the bonus shall be determined by multiplying the total fair market
value of the shares and cash received pursuant to the exercise of the stock
appreciation right by the applicable bonus
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percentage. The bonus percentage applicable to a bonus right shall be
determined from time to time by the Board of Directors but shall in no event
exceed 75 percent.
10.3 CASH BONUS RIGHTS IN CONNECTION WITH STOCK BONUS. A cash bonus
right granted in connection with a stock bonus will entitle the recipient to a
cash bonus payable when the stock bonus is awarded or restrictions, if any, to
which the stock is subject lapse. If bonus stock awarded is subject to
restrictions and is repurchased by the Company or forfeited by the holder, the
cash bonus right granted in connection with the stock bonus shall terminate and
may not be exercised. The amount and timing of payment of a cash bonus shall be
determined by the Board of Directors.
10.4 CASH BONUS RIGHTS IN CONNECTION WITH STOCK PURCHASES. A cash
bonus right granted in connection with the purchase of stock pursuant to
paragraph 8 will entitle the recipient to a cash bonus when the shares are
purchased or restrictions, if any, to which the stock is subject lapse. Any
cash bonus right granted in connection with shares purchased pursuant to
paragraph 8 shall terminate and may not be exercised in the event the shares are
repurchased by the Company or forfeited by the holder pursuant to applicable
restrictions. The amount of any cash bonus to be awarded and timing of payment
of a cash bonus shall be determined by the Board of Directors.
10.5 TAXES. The Company shall withhold from any cash bonus paid
pursuant to paragraph 10 the amount necessary to satisfy any applicable federal,
state and local withholding requirements.
11. FOREIGN QUALIFIED GRANTS.
Awards under the Plan may be granted to such officers and employees of
the Company and its subsidiaries and such other persons described in paragraph 1
residing in foreign jurisdictions as the Board of Directors may determine from
time to time. The Board of Directors may adopt such supplements to the Plan as
may be necessary to comply with the applicable laws of such foreign
jurisdictions and to afford participants favorable treatment under such laws;
provided, however, that no award shall be granted under any such supplement with
terms which are more beneficial to the participants than the terms permitted by
the Plan.
12. OPTION GRANTS TO NON-EMPLOYEE DIRECTORS.
12.1 NON-DISCRETIONARY GRANTS. Each person who is or becomes a Non-
Employee Director after September 1, 1993 shall be automatically granted an
option to purchase 20,000 shares of Common Stock on the date he or she becomes a
Non-Employee Director. A "Non-Employee Director" is a director who is not an
employee of the Company or any of its subsidiaries and has not been an employee
of the Company or any of its subsidiaries within one year of any date as of
which a determination of eligibility is made. Except as provided in this
subparagraph 12.1, no other non-discretionary grant or discretionary grant of
options or any other type of award may be made to a Non-Employee Director under
this Plan.
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12.2 EXERCISE PRICE. The exercise price of an option granted
pursuant to this paragraph 12 shall be equal to the fair market value of the
Common Stock as determined in accordance with the procedure set forth in
paragraph 6.2(d).
12.3 TERM OF OPTION. The terms of each option granted pursuant to
this paragraph 12 shall be 10 years from the date of grant.
12.4 EXERCISABILITY. Until an option expires or is terminated and
except as provided in paragraphs 12.5 and 14, an option granted under this
paragraph 12 shall be exercisable according to the following schedule: (a) 5
percent of the total number of shares covered by the option shall become
exercisable on the date of the grant and (b) an additional 5 percent of the
total number of shares covered by the option shall become exercisable after the
last day of each calendar quarter thereafter. If an optionee does not exercise
the option in any one quarter for the full number of shares to which the
optionee is entitled, the rights shall be cumulative and the optionee may
exercise the option for such shares at any subsequent time during the term of
the option.
12.5 TERMINATION AS A DIRECTOR. If an optionee ceases to be a
director of the Company for any reason, including death, the option may be
exercised at any time prior to the expiration date of the option or the
expiration of 30 days (or 12 months in the event of death) after the last day
the optionee served as a director, whichever is the shorter period, but only if
and to the extent the optionee was entitled to exercise the option as of the
last day the optionee served as a director.
12.6 NONTRANSFERABILITY. Each option by its terms shall be
nonassignable and nontransferable by the optionee, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution of
the state or country of the optionee's domicile at the time of death or pursuant
to a qualified domestic relations order as defined under the Code or Title I of
the Employee Retirement Income Security Act.
12.7 EXERCISE OF OPTIONS. Options may be exercised upon payment of
cash or shares of Common Stock of the Company in accordance with paragraph
6.1(e). Unless otherwise determined by the Board of Directors, if an option is
exercised within six months of the date of grant, the shares acquired upon such
exercise may not be sold until six months after the date of grant.
13. CHANGES IN CAPITAL STRUCTURE.
If the outstanding Common Stock of the Company is hereafter increased
or decreased or changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason of
any recapitalization, reclassification, stock split, combination of shares or
dividend payable in shares, appropriate adjustment shall be made by the Board of
Directors in the number and kind of shares available for awards under the Plan.
In addition, the Board of Directors shall make appropriate adjustment in the
number and kind of shares as to which outstanding options and stock appreciation
rights, or
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portions thereof then unexercised, shall be exercisable, so that the optionee's
proportionate interest before and after the occurrence of the event is
maintained. The Board of Directors may also require that any securities issued
in respect of or exchanged for shares issued hereunder that are subject to
restrictions be subject to similar restrictions. Notwithstanding the foregoing,
the Board of Directors shall have no obligation to effect any adjustment that
would or might result in the issuance of fractional shares, and any fractional
shares resulting from any adjustment may be disregarded or provided for in any
manner determined by the Board of Directors. Any such adjustments made by the
Board of Directors shall be conclusive.
14. EFFECT OF LIQUIDATION OR REORGANIZATION.
14.1 CASH, STOCK OR OTHER PROPERTY FOR STOCK. Except as provided in
paragraph 14.2, upon a merger, consolidation, acquisition of property or stock,
reorganization or liquidation of the Company, as a result of which the
stockholders of the Company receive cash, stock or other property in exchange
for or in connection with their shares of Common Stock, any option granted
hereunder shall terminate, but the optionee shall have the right during a 30-day
period immediately prior to any such merger, consolidation, acquisition of
property or stock, reorganization or liquidation to exercise his or her option
in whole or in part whether or not the vesting requirements applicable to the
option have been satisfied.
14.2 CONVERSION OF OPTIONS ON STOCK FOR STOCK EXCHANGE. If the
stockholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger, consolidation, acquisition of property or stock,
separation or reorganization, all options granted hereunder shall be converted
into options to purchase shares of Exchange Stock unless the Board of Directors,
in its sole discretion, determines that any or all such options granted
hereunder shall not be converted into options to purchase shares of Exchange
Stock but instead shall terminate in accordance with the provisions of
subsection 14.1. The amount and price of converted options shall be determined
by adjusting the amount and price of the options granted hereunder in the same
proportion as used for determining the number of shares of Exchange Stock the
holders of the Common Stock receive in such merger, consolidation, acquisition
of property or stock, separation or reorganization.
15. CORPORATE MERGERS, ACQUISITIONS, ETC.
The Board of Directors may also grant options, stock appreciation
rights, stock bonuses and cash bonuses and issue restricted stock under the Plan
having terms, conditions and provisions that vary from those specified in this
Plan provided that any such awards are granted in substitution for, or in
connection with the assumption of, existing options, stock appreciation rights,
stock bonuses, cash bonuses and restricted stock granted, awarded or issued by
another corporation and assumed or otherwise agreed to be provided for by the
Company pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.
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16. AMENDMENT OF PLAN.
The Board of Directors may at any time, and from time to time, modify
or amend the Plan in such respects as it shall deem advisable because of changes
in the law while the Plan is in effect or for any other reason. Except as
provided in paragraphs 6.1(d), 13 and 14, however, no change in an award already
granted shall be made without the written consent of the holder of such award.
17. APPROVALS.
The obligations of the Company under the Plan are subject to the
approval of state and federal authorities or agencies with jurisdiction in the
matter. The Company shall not be obligated to issue or deliver Common Stock
under the Plan if such issuance or delivery would violate applicable state or
federal securities laws.
18. EMPLOYMENT AND SERVICE RIGHTS.
Nothing in the Plan or any award pursuant to the Plan shall (a) confer
upon any employee any right to be continued in the employment of the Company or
any subsidiary or interfere in any way with the right of the Company or any
subsidiary by whom such employee is employed to terminate such employee's
employment at any time, for any reason, with or without cause, or to decrease
such employee's compensation or benefits, or (b) confer upon any person engaged
by the Company any right to be retained or employed by the Company or to the
continuation, extension, renewal, or modification of any compensation, contract,
or arrangement with or by the Company.
19. RIGHTS AS A SHAREHOLDER.
The recipient of any award under the Plan shall have no rights as a
shareholder with respect to any Common Stock until the date of issue to the
recipient of a stock certificate for such shares. Except as otherwise expressly
provided in the Plan, no adjustment shall be made for dividends or other rights
for which the record date occurs prior to the date such stock certificate is
issued.
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EXHIBIT 99.2
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of , 199 (the "Date of
Grant") between HOMETOWN BUFFET, INC. ("HomeTown"), and the
"Optionee").
HomeTown has agreed to grant the Optionee an option to purchase shares
of HomeTown Buffet, Inc. common stock ("Common Stock") in the amount indicated
below.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained in this Agreement, the parties agree as follows:
1. The Optionee, upon the terms and conditions set forth below, shall
have the right and option (the "Option") to purchase a total of shares of
the Common Stock at a purchase price of $ per share (the "Purchase Price").
Subject to reductions in the Option period as hereinafter provided in the event
the Optionee ceases to be an employee or consultant of HomeTown or any parent,
subsidiary or affiliate of HomeTown or in the event of the death of the
Optionee, the Option shall continue in effect for a period of 10 years from the
Date of Grant.
2. The Option may be exercised from time to time in the following
amounts: (a) 20 percent of the total number of shares covered by the Option
shall become exercisable on the first anniversary of the Date of Grant and (b)
an additional 20 percent of the total number of shares covered by the Option
shall become exercisable after the anniversary Date of Grant each year
thereafter until all shares covered by the Option are fully vested. If the
Optionee does not exercise the Option in any single year for the full number of
shares to which the Optionee is entitled, the rights shall be cumulative and the
Optionee may exercise the Option for such shares at any subsequent time during
the term of the Option. The Option is granted upon the following terms and
conditions:
(a) Subject to reductions in the Option period as provided
below, the Option may be exercised as of the Date of Grant and shall
continue in effect for a period of 10 years from the Date of Grant, at
which time the Option shall end.
(b) The Option shall not be assignable or transferable by the
Optionee except by will or by the laws of descent and distribution of
the state or country of the Optionee's domicile at the time of death.
(c) Except as set forth below, the Option may not be exercised
unless at the time of such exercise the Optionee is employed by, is a
director of or is a consultant to HomeTown or a parent, subsidiary or
affiliate of HomeTown and has maintained such status continuously
since the Date of Grant. In the event the employment or service as a
consultant of the Optionee by HomeTown or a parent, subsidiary or
affiliate of HomeTown terminates by retirement or for any reason
<PAGE>
other than because of death or physical disability as hereinafter
provided, the Option may be exercised at any time before the
expiration date of the Option or the expiration of 60 days after the
date of such termination of employment or service, whichever is the
shorter period, but only if and to the extent the Optionee was
entitled to exercise the Option at the date of such termination. If
employment or service terminates because of death or physical
disability (within the meaning of IRC Section 22(e)(3)), the Option
may be exercised any time before the expiration date of the Option or
the expiration of 12 months after the date of termination, whichever
is the shorter period, but only if and to the extent the Optionee was
entitled to exercise the Option at the date of termination. If the
Optionee's employment or service is terminated by death, the Option
may be exercised only by the person or persons to whom the Optionee's
rights under the Option pass by the Optionee's will or by the laws of
descent and distribution of the state or country of the Optionee's
domicile at the time of death, provided that such person or persons
shall execute a counterpart to HomeTown's or its successors'
shareholders agreement as in effect at the time of exercise (if any).
The parties understand and agree that upon the closing of HomeTown's
anticipated initial public offering no shareholders agreement for
HomeTown will be in effect, but that in the future if HomeTown were to
become a closely held corporation, such an agreement may be put in
place. To the extent that the Option is not exercised within the
periods above provided, all further rights to purchase shares pursuant
to the Option shall terminate at the end of such periods.
(d) Prior to exercise of any rights under this Agreement, the
Optionee shall give HomeTown reasonable notice of intent to exercise.
Shares may be purchased pursuant to the Option only upon receipt by
HomeTown of written notice (the "Notice") from the Optionee of the
Optionee's intention to exercise. The Notice shall specify the number
of shares the Optionee desires to purchase and the date on which the
Optionee desires to complete the purchase and shall contain a
representation that it is the Optionee's present intention to acquire
the shares for investment and not with a view to distribution, unless
in the opinion of counsel for HomeTown or Grantor such a
representation is not required to comply with the Securities Act of
1933, as amended. Upon receipt of Notice and prior to any payment by
the Optionee for the shares purchased, the Optionee shall provide
HomeTown with such additional representations, warranties and
covenants concerning receipt of the shares as HomeTown may require to
ensure compliance with applicable federal and state securities laws.
Upon the date specified in the Notice for completion of the purchase
of the shares, which date shall not be more than 10 days after receipt
of the Notice, the Optionee shall pay HomeTown the full purchase price
of the shares in cash; provided, however, that prior to any payment
the Optionee shall have first delivered to HomeTown any additional
representations, warranties and covenants concerning securities law
matters as specified above. Upon receipt of payment, HomeTown shall
deliver certificates representing the shares purchased with stock
powers duly executed. The Optionee shall have none of the rights of a
shareholder until certificates for shares are
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delivered to the Optionee. As a condition to the exercise of the
Option, the Optionee shall execute a counterpart to HomeTown's or its
successors' shareholders agreement as in effect at the time of
exercise (if any), pursuant to which the Optionee shall become bound
by the terms thereof. The parties understand and agree that upon the
closing of HomeTown's anticipated initial public offering no
shareholders agreement for HomeTown will be in effect, but that in the
future if HomeTown were to become a closely held corporation, such an
agreement may be put in place. The certificates for shares acquired
hereunder shall contain a legend noting that the shares are subject to
the terms of the shareholders agreement, if any, in effect at the time
of exercise.
(e) The number and kind of securities or other property
purchasable upon exercise of the Option shall be subject to adjustment
from time to time upon the occurrence, after the date hereof, of any
of the following events:
A. In case HomeTown shall (1) pay a dividend in, or make a
distribution of, shares of Common Stock or of capital stock
convertible into Common Stock on its outstanding Common Stock,
(2) subdivide its outstanding shares of Common Stock into a
greater number of such shares or (3) combine its outstanding
shares of Common Stock into a smaller number of such shares, the
total number of shares of Common Stock purchasable upon the
exercise of the Option shall be adjusted so that the Optionee
shall be entitled to receive at the same aggregate exercise price
the number of shares of Common Stock or securities convertible
into Common Stock which Optionee would have owned or have been
entitled to receive immediately following the happening of any of
the events described above had the Option been exercised
immediately prior to the happening of such event. Any adjustment
made pursuant to this Subsection shall, in the case of a stock
dividend or distribution, become effective as of the record date
therefor and, in the case of a subdivision or combination, be
made as of the effective date thereof. Any adjustment made
pursuant to this Subsection A. shall be made without change in
the exercise price of the Option
B. In the event of a capital reorganization or a
reclassification of the Common Stock (except as provided in
Subsection A. above or Subsection D. below), the Optionee, upon
exercise of the Option or any portion thereof, shall be entitled
to receive, in substitution for the Common Stock to which he
would have been entitled upon exercise immediately prior to such
reorganization or reclassification, the shares (of any class or
classes) or other securities or property of HomeTown (or cash)
that he would have been entitled to receive at the same aggregate
exercise price upon such reorganization or reclassification if
the Option or such portion thereof had been exercised immediately
prior thereto; and in any such case, appropriate provision shall
be made for the application of this Section 1(d) with respect to
the rights and interests thereafter of the Optionee shall
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thereafter be reflected, as nearly as reasonably practicable, in
all subsequent exercises of the Option for any shares or
securities or other property (or cash) thereafter deliverable
upon the exercise of the Option.
C. Whenever the number of shares of Common Stock or other
securities purchasable upon exercise of the Option is adjusted as
provided in this Section 2(e), HomeTown will promptly give
written notice to the Optionee setting forth the number and kind
of securities or other property purchasable upon exercise of the
Option, as so adjusted, stating that such adjustments in the
number or kind of shares or other securities or property (or
cash) conform to the requirements of this Section 2(e), and
setting forth a brief statement of the facts accounting for such
adjustments.
D. In case of any consolidation of HomeTown with, or
merger of HomeTown into, another corporation (other than a
consolidation or merger which does not result in any
reclassification or change of the outstanding Common Stock), or
in case of any sale or conveyance to another corporation of the
property of HomeTown as an entirety or substantially as an
entirety, HomeTown shall execute and deliver to the Optionee a
supplemental option agreement providing that the have the right
thereafter (until the expiration of the Option) to receive, upon
exercise of the Option, solely the kind and amount of shares of
stock and other securities and property (or cash) receivable upon
such consolidation, merger, sale or transfer by a holder of the
number of shares of Common Stock of HomeTown for which the Option
might have been exercised immediately prior to such
consolidation, merger, sale or transfer. Such supplemental
option agreement shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments
provided in this Section 1(d). The above provision of this
Subsection shall similarly apply to successive consolidations,
mergers, sales or transfers.
E. For the purpose of this Section 2(e), the term "Common
Stock" shall mean (i) the class of stock designated as Common
Stock in the Certificate of Incorporation of HomeTown, as
amended, at the date of this Agreement, or (ii) any other class
of stock resulting from successive changes or reclassifications
of such Common Stock consisting solely of changes in par value,
or from par value to no par value, or from no par value to par
value. In the event that at any time as a result of an
adjustment made pursuant to this Section 2(e), the Optionee shall
become entitled to receive any shares of capital stock of
HomeTown other than shares of Common Stock, thereafter the number
of such other shares so receivable upon exercise of the Option
shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions
with respect to the Common
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Stock contained in this Section 1(d), and all other provisions of
this Agreement, with respect to the Common Stock, shall apply on
like terms to any such other shares. For the purpose of this
Section 2(e), the term "HomeTown" means, as the context may
require, HomeTown Buffet, Inc. or any issuer of securities that
the Optionee may become entitled to receive on exercise of the
Option pursuant to the provisions of this Section 2(e).
3. The obligations of HomeTown under this Agreement are subject to state
and federal authorities or agencies with jurisdiction in the matter. HomeTown
shall not be obligated to sell securities under this Agreement if HomeTown is
advised by its legal counsel that the sale would violate state or federal laws.
4. This Agreement shall be binding upon and shall inure to the benefit of
any successors of HomeTown, but except as provided above, the Option granted may
not be assigned or otherwise disposed of by the Optionee.
5. The Optionee hereby represents that he is acquiring the Option, and
will upon any exercise of the Option acquire the securities, for the Optionee's
own account and not with a view to, or for sale in connection with, any
distribution of the Option or the underlying securities.
6. Optionee represents and warrants that he is a resident of the State of
.
7. HomeTown represents and warrants that it took all corporate action
necessary or appropriate to effect this Option grant and authorize this
Agreement, including action by the Board of Directors.
8. Optionee is experienced in evaluating and investing in companies in
the restaurant business and by reason of his business and financial knowledge,
experience and background has the capacity to protect his own interests in
regard to the Option.
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IN WITNESS WHEREOF, the parties have executed this Agreement,
effective as of the day and year first written above.
HOMETOWN BUFFET, INC.
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C. Dennis Scott, President
OPTIONEE
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