As filed with the Securities and Exchange Commission on May 10, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
MAIN STREET AND MAIN INCORPORATED
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 11-2948370
- --------------------------------- ----------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
5050 North 40th Street, Suite 200
Phoenix, Arizona 85018
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(Address of Principal Executive Officer) (Zip Code)
MAIN STREET AND MAIN INCORPORATED
1995 Stock Option Plan
Various Stock Option Agreements
-------------------------------
(Full Title of the Plans)
Bart A. Brown, Jr.
President and Chief Executive Officer
MAIN STREET AND MAIN INCORPORATED
5050 North 40th Street, Suite 200
Phoenix, Arizona 85018
(602) 852-9000
- --------------------------------------------------------------------------------
(Name, Address, and Telephone Number, Including Area Code, of Agent for Service)
This Registration Statement shall become effective immediately upon filing with
the Securities and Exchange Commission, and sales of the registered securities
will begin as soon as reasonably practicable after such effective date.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================
<S> <C> <C> <C> <C>
PROPOSED PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE OFFERING PRICE REGISTRATION FEE
- --------------------------------------------------------------------------------------------
Common Stock 5,000 shares $1.72 $ 8,600 $ 2.39
Common Stock 15,000 shares 1.88 28,200 7.84
Common Stock 500,000 shares 2.00 1,000,000 278.00
Common Stock 347,500 shares 2.50 868,750 241.51
Common Stock 15,000 shares 2.75 41,250 11.47
Common Stock 162,500 shares 3.00 487,500 135.53
Common Stock 15,000 shares 3.19 47,850 13.30
Common Stock 215,500 shares 3.25 700,375 194.70
Common Stock 10,000 shares 3.375 33,750 9.38
Common Stock 20,000 shares 3.38 67,600 18.79
Common Stock 150,000 shares 3.438 515,700 143.37
Common Stock 25,000 shares 3.63 90,750 25.23
Common Stock 90,000 shares 4.00 360,000 100.08
Common Stock 162,500 shares 5.00 812,500 225.88
Common Stock 750 shares 3.375(2) 2,531 0.70
--------- ---------- ---------
Total 1,733,750 shares $5,065,356 $1,408.17
============================================================================================
</TABLE>
<PAGE>
(1) Represents 323,750 shares issuable under the 1995 Stock Option Plan and
1,410,000 shares issuable under various stock option agreements. This
Registration Statement shall also cover any additional shares of Common
Stock which become issuable under the 1995 Stock Option Plan and various
stock option agreements by reason of any stock dividend, stock split,
recapitalization or any other similar transaction without receipt of
consideration which results in an increase in the number of outstanding
shares of Common Stock of Main Street and Main Incorporated.
(2) Calculated for purposes of this offering under Rule 457(h) and Rule 457(c)
of the Securities Act of 1933, as amended, using the average of the high
and low sales prices for the Common Stock of Main Street and Main
Incorporated as reported on the Nasdaq National Market on May 3, 1999.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Main Street and Main Incorporated (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's latest annual report filed pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act") or the latest prospectus filed pursuant to the Securities Act of
1933, as amended (the "Securities Act") that contains audited
financial statements for the Registrant's latest fiscal year for which
such statements have been filed; and
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the 1934
Act since the end of the fiscal year covered by the documents referred
to in (a) above; and
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A (File No. 0-18668)
filed with the Commission on June 29, 1990.
All reports and definitive proxy or information statements filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Certificate of Incorporation and Bylaws of the Registrant
provide that the Registrant will indemnify and advance expenses, to the fullest
extent permitted by the Delaware General Corporation Law, to each person who is
or was a director or officer of the Registrant, or who serves or served any
other enterprise or organization at the request of the Registrant (an
"Indemnitee").
Under Delaware law, to the extent that an Indemnitee is successful on
the merits in defense of a suit or proceeding brought against him or her by
reason of the fact that he or she is or was a director, officer, or agent of the
Registrant, or serves or served any other enterprise or organization at the
request of the Registrant, the Registrant shall indemnify him or her against
expenses (including attorneys' fees) actually and reasonably incurred in
connection with such action.
If unsuccessful in defense of a third-party civil suit or criminal
suit, or if such a suit is settled, an Indemnitee may be indemnified under
Delaware law against both (i) expenses, including attorneys' fees, and (ii)
judgments, fines, and amounts paid in settlement if he or she acted in good
faith and in a manner he or she
<PAGE>
reasonably believed to be in, or not opposed to, the best interests of the
Registrant, and, with respect to any criminal action, had no reasonable cause to
believe his or her conduct was unlawful.
If unsuccessful in defense of a suit brought by or in the right of the
Registrant, where the suit is settled, an Indemnitee may be indemnified under
Delaware law only against expenses (including attorneys' fees) actually and
reasonably incurred in the defense or settlement of the suit if he or she acted
in good faith and in a manner he or she reasonably believed to be in, or not
opposed to, the best interests of the Registrant except that if the Indemnitee
is adjudged to be liable for negligence or misconduct in the performance of his
or her duty to the Registrant, he or she cannot be made whole even for expenses
unless a court determines that he or she is fully and reasonably entitled to
indemnification for such expenses.
Also under Delaware law, expenses incurred by an officer or director in
defending a civil or criminal action, suit, or proceeding may be paid by the
Registrant in advance of the final disposition of the suit, action, or
proceeding upon receipt of an undertaking by or on behalf of the officer or
director to repay such amount if it is ultimately determined that he or she is
not entitled to be indemnified by the Registrant. The Registrant may also
advance expenses incurred by other employees and agents of the Registrant upon
such terms and conditions, if any, that the Board of Directors of the Registrant
deems appropriate.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
Exhibit
Number Exhibit
- ------ -------
5 Opinion and consent of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, a professional association
10.16 1995 Stock Option Plan
10.22 Stock Option Agreement dated August 5, 1996, between the Registrant
and John F. Antioco for 800,000 shares of Common Stock.
10.22A Stock Option Agreement dated June 15, 1998, between the Registrant and
John F. Antioco amending the Stock Option Agreement dated August 5,
1996.
10.23 Stock Option Agreement dated December 16, 1996, between the Registrant
and Bart A. Brown, Jr. for 250,000 shares of Common Stock. (The
Registrant issued three additional Stock Option Agreements which are
substantially identical in all material respects, except as to number
of shares. The four Stock Option Agreements give rights to purchase a
total of 625,000 shares of Common Stock.)
10.23A Schedule of Stock Option Agreements substantially identical to Exhibit
10.23.
10.24 Stock Option Agreement dated July 14, 1997, between the Registrant and
Bart A. Brown, Jr. for 75,000 shares of Common Stock. (The Registrant
issued one additional Stock Option Agreement which is substantially
identical in all material respects, except as to number of shares. The
two Stock Option Agreements give rights to purchase a total of 175,000
shares of Common Stock.)
10.24A Schedule of Stock Option Agreements substantially identical to Exhibit
10.24.
10.25 Stock Option Agreement dated June 15, 1998, between the Registrant and
James Yeager for 15,000 shares of Common Stock. (The Registrant issued
two additional Stock Option Agreements which are substantially
identical in all material respects, except as to option holder and
number of shares. The three Stock Option Agreements give rights to
purchase a total of 50,000 shares of Common Stock.)
10.25A Schedule of Stock Option Agreements substantially identical to Exhibit
10.25.
II-2
<PAGE>
10.26 Stock Option Agreement dated December 31, 1998, between the Registrant
and Tim Rose for 10,000 shares of Common Stock. (The Registrant issued
one additional Stock Option Agreement which is substantially identical
in all material respects, except as to option holder and number of
shares. The two Stock Option Agreements give rights to purchase a
total of 160,000 shares of Common Stock.)
10.26A Schedule of Stock Option Agreements substantially identical to Exhibit
10.26.
23.1 Consent of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears,
P.A. is contained in Exhibit 5
23.2 Consent of Independent Certified Public Accountants - Arthur Andersen
LLP
24 Power of Attorney (included on page II.4 of this Registration
Statement)
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective Registration Statement.
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement, provided,
however, that clauses (1)(i) and (1)(ii) do 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 Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference into the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, 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 undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference into the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the
II-3
<PAGE>
event that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant 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 registrant 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 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-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
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 Phoenix, State of Arizona, on this 5th day of May,
1999.
MAIN STREET AND MAIN INCORPORATED
By: /s/ Bart A. Brown, Jr.
--------------------------------------
Bart A. Brown, Jr.
President, and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints jointly and severally, Bart A. Brown, Jr.
and James C. Yeager and each of them, as his true and lawful attorney-in-fact
and agents, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be done
in connection therewith, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
SIGNATURE POSITION DATE
--------- -------- ----
/s/ John F. Antioco Chairman of the Board May 5, 1999
- --------------------------
John F. Antioco
/s/ Bart A. Brown, Jr. President, Chief Executive May 5, 1999
- -------------------------- Officer, and Director
Bart A. Brown, Jr. (Principal Executive Officer)
/s/ William G. Shrader Executive Vice President, May 5, 1999
- -------------------------- Chief Operating Officer,
William G. Shrader and Director
/s/ James Yeager Vice President-Finance (Principal May 5, 1999
- -------------------------- Financial and Accounting Officer),
James Yeager Secretary and Treasurer
/s/ Jane Evans Director May 5, 1999
- --------------------------
Jane Evans
/s/ John C. Metz Director May 5, 1999
- --------------------------
John C. Metz
/s/ Steven A. Sherman Director May 5, 1999
- --------------------------
Steven A. Sherman
II-5
EXHIBIT 5
The Law Offices of
O'CONNOR, CAVANAGH, ANDERSON, KILLINGSWORTH & BESHEARS
One East Camelback Road, Suite 1100
Phoenix, Arizona 85012
Telephone: (602) 263-2400
Fax: (602) 263-2900
May 7, 1999
Main Street and Main Incorporated
5050 North 40th Street, Suite 200
Phoenix, Arizona 85018
Re: Registration Statement on Form S-8
Main Street and Main Incorporated
Gentlemen:
As legal counsel to Main Street and Main Incorporated, a Delaware
corporation (the "Company"), we have assisted in the preparation of the
Company's Registration Statement on Form S-8 (the "Registration Statement") to
be filed with the Securities and Exchange Commission on or about May 10, 1999 in
connection with the registration under the Securities Act of 1933, as amended,
of 323,750 shares of the Company's common stock, par value $0.001 per share,
(the "Common Stock") issuable pursuant to the Company's 1995 Amended and
Restated Stock Option Plan (the "Option Plan") and an aggregate of 1,410,000
shares of Common Stock issuable pursuant to various stock option agreements (the
"Agreements"). The shares of Common Stock issuable pursuant to the Option Plan
and the Agreements are collectively referred to as the "Shares." The facts, as
we understand them, are set forth in the Registration Statement.
With respect to the opinion set forth below, we have examined originals,
certified copies, or copies otherwise identified to our satisfaction as being
true copies, only of the following:
A. The Amended Certificate of Incorporation of the Company, as filed with
the Secretary of State of the State of Delaware, as amended through the date
hereof;
B. The Bylaws of the Company, as amended through the date hereof;
<PAGE>
Main Street and Main Incorporated
May 7, 1999
Page 2
C. Various resolutions of the Board of Directors of the Company authorizing
the issuance of the Shares; and
D. The Registration Statement.
Subject to the assumptions that (i) the documents and signatures examined
by us are genuine and authentic and (ii) the persons executing the documents
examined by us have the legal capacity to execute such documents, and subject to
the further limitations and qualifications set forth below, it is our opinion
that the Shares, when issued and sold in accordance with the terms of the Option
Plan and the Agreements, will be validly issued, fully paid and nonassessable.
Please be advised that we are members of the State Bar of Arizona, and our
opinion is limited to the legality of matters under federal securities laws and
the General Corporation Laws of the State of Delaware. Further, our opinion is
based solely upon existing laws, rules and regulations, and we undertake no
obligation to advise you of any changes that may be brought to our attention
after the date hereof.
We hereby expressly consent to any reference to our firm in the
Registration Statement, inclusion of this opinion as an exhibit to the
Registration Statement, and to the filing of this opinion with any other
appropriate governmental agency.
Very truly yours,
/s/ O'Connor, Cavanagh, Anderson,
Killingsworth & Beshears, P.A.
MAIN STREET AND MAIN INCORPORATED
1995 STOCK OPTION PLAN
ARTICLE 1.
GENERAL
1.1 PURPOSE OF PLAN; TERM
(a) ADOPTION. On January 8, 1996 (the "Adoption Date"), the Board of
Directors (the "Board") of Main Street and Main Incorporated, a Delaware
corporation (the "Company"), adopted this stock option plan to be known as the
1995 Stock Option Plan (the "Plan").
(b) DEFINED TERMS. All initially capitalized terms used hereby shall have
the meaning set forth in ARTICLE V hereto.
(c) GENERAL PURPOSE. The Plan shall be divided into two programs: the
Discretionary Grant Program and the Automatic Grant Program.
(i) DISCRETIONARY GRANT PROGRAM. The purpose of the Discretionary
Grant Program is to further the interests of the Company and its stockholders by
encouraging key persons associated with the Company (or Parent or Subsidiary
Corporations) to acquire shares of the Company's Stock, thereby acquiring a
proprietary interest in its business and an increased personal interest in its
continued success and progress. Such purpose shall be accomplished by providing
for the discretionary granting of options to acquire the Company's Stock
("Discretionary Options"), the direct granting of the Company's Stock ("Stock
Awards"), the granting of stock appreciation rights ("SARs"), or the granting of
other cash awards ("Cash Awards") (Stock Awards, SARs and Cash Awards shall be
collectively referred to herein as "Discretionary Awards").
(ii) AUTOMATIC GRANT PROGRAM. The purpose of the Automatic Grant
Program is to promote the interests of the Company by providing non-employee
members of the Company's Board of Directors (the "Board") the opportunity to
acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Company and to thereby have an increased personal interest in
its continued success and progress. Such purpose shall be accomplished by
providing for the automatic grant of options to acquire the Company's Stock
("Automatic Options").
(d) CHARACTER OF OPTIONS. Discretionary Options granted under this Plan to
employees of the Company (or Parent or Subsidiary Corporations) that are
intended to qualify as an "incentive stock option" as defined in Code section
422 ("Incentive Stock Option") will be specified in the applicable stock option
agreement. All other Options granted under this Plan will be nonqualified
options.
(e) RULE 16B-3 PLAN. The Plan is intended to comply with all applicable
conditions of Rule 16b-3 (and all subsequent revisions thereof) promulgated
under the Securities Exchange Act of 1934 (the "Act"). In such instance, to the
extent any provision of the Plan or action by a Plan Administrator or the Board
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Board or such Plan Administrator. In addition,
the Board may amend the Plan from time to time as it deems necessary in order to
meet the requirements of any amendments to Rule 16b-3 without the consent of the
shareholders of the Company.
(f) DURATION OF PLAN. The term of the Plan is 10 years commencing on the
date of adoption of the original Plan by the Board as specified in SECTION
1.1(a) hereof. No Option or Award shall be granted under the Plan unless granted
<PAGE>
within 10 years of the adoption of the Plan by the Board, but Options or Awards
outstanding on that date shall not be terminated or otherwise affected by virtue
of the Plan's expiration.
1.2 STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN.
(a) DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. The shares of stock
subject to the provisions of the Plan and issuable upon the grant of Stock
Awards or upon the exercise of SARs or Options granted under the Plan are shares
of the Company's common stock, $.001 par value per share (the "Stock"), which
may be either unissued or treasury shares. The Company may not issue more than
325,000 shares of Stock pursuant to the Plan, unless the Plan is amended as
provided in Section 1.3 or the maximum number of shares subject to the Plan is
adjusted as provided in Section 4.1.
(b) CALCULATION OF AVAILABLE SHARES. The number of shares of Stock
available under the Plan shall be reduced: (i) by any shares of Stock issued
(including any shares of Stock withheld for tax withholding requirements) upon
exercise of an Option and (ii) by any shares of Stock issued (including any
shares of Stock withheld for tax withholding requirements) upon the grant of a
Stock Award or the exercise of an SAR.
(c) RESTORATION OF UNPURCHASED SHARES. If an Option or SAR expires or
terminates for any reason prior to its exercise in full and before the term of
the Plan expires, the shares of Stock subject to, but not issued under, such
Option or SAR shall, without further action or by or on behalf of the Company,
again be available under the Plan.
1.3 APPROVAL; AMENDMENTS.
(a) APPROVAL BY STOCKHOLDERS. The Plan shall be submitted to the
stockholders of the Company for their approval at a regular or special meeting
to be held within 12 months after the adoption of the Plan by the Board.
Stockholder approval shall be evidenced by the affirmative vote of the holders
of a majority of the shares of the Company's Common Stock present in person or
by proxy and voting at the meeting. The date such stockholder approval has been
obtained shall be referred to herein as the "Effective Date."
(b) COMMENCEMENT OF PROGRAMS. The Automatic Grant Program and the
Discretionary Grant Program are both effective immediately, but if the Plan is
not approved by the stockholders within 12 months after its adoption by the
Board, the Plan and all Options and Awards made under either the Discretionary
Grant Program or the Automatic Grant Program will automatically terminate and be
forfeited to the same extent and with the same effect as though the Plan had
never been adopted.
(c) AMENDMENTS TO PLAN. The Board may, without action on the part of the
Company's stockholders, make such amendments to, changes in and additions to the
Plan as it may, from time to time, deem necessary or appropriate and in the best
interests of the Company; provided, the Board may not, without the consent of
the applicable Optionholder, take any action which disqualifies any
Discretionary Option previously granted under the Plan for treatment as an
Incentive Stock Option or which adversely affects or impairs the rights of the
Optionholder of any Discretionary Option outstanding under the Plan, and further
provided that, except as provided in ARTICLE IV hereof, the Board may not,
without the approval of the Company's stockholders, (i) increase the aggregate
number of shares of Stock subject to the Plan, (ii) reduce the exercise price at
which Discretionary Options may be granted or the exercise price at which any
outstanding Discretionary Option may be exercised, (iii) extend the term of the
Plan, (iv) change the class of persons eligible to receive Discretionary Options
or Discretionary Awards under the Plan, or (v) materially increase the benefits
2
<PAGE>
accruing to participants under the Plan. In addition, the provisions set forth
in Article III hereof shall not be amended more than once every six months other
than to comport with changes in the Code, the Employee Retirement Income
Security Act, or the rules thereunder. Notwithstanding the foregoing,
Discretionary Options or Discretionary Awards may be granted under this Plan to
purchase shares of Stock in excess of the number of shares then available for
issuance under the Plan if (A) an amendment to increase the maximum number of
shares issuable under the Plan is adopted by the Board prior to the initial
grant of any such Option or Award and within one year thereafter such amendment
is approved by the Company's stockholders and (B) each such Discretionary Option
or Discretionary Award granted does not become exercisable or vested, in whole
or in part, at any time prior to the obtaining of such stockholder approval.
ARTICLE 2.
DISCRETIONARY GRANT PROGRAM
2.1 PARTICIPANTS; ADMINISTRATION.
(a) ELIGIBILITY AND PARTICIPATION. Discretionary Options and Discretionary
Awards may be granted only to persons ("Eligible Persons") who at the time of
grant are (i) key personnel (including officers and directors) of the Company or
Parent or Subsidiary Corporations, or (ii) consultants or independent
contractors who provide valuable services to the Company or Parent or Subsidiary
Corporations; provided that (1) if a Senior Committee exists, the members of
that Senior Committee shall be ineligible, during their tenure on the Senior
Committee, to be granted Discretionary Options or Discretionary Awards under the
Plan or to be granted or awarded equity securities of the Company pursuant to
any other plan of the Company or its affiliates except pursuant to the Automatic
Grant Program or as otherwise allowed by Rule 16b-3(c)(2)(i) promulgated under
the Act, and (2) Incentive Stock Options may only be granted to key personnel of
the Company (and its Parent or Subsidiary Corporation) who are also employees of
the Company (or its Parent or Subsidiary Corporation), and (3) the maximum
number of shares of stock with respect to which Options or SARs may be granted
to any employee during the term of the Plan shall not exceed 50 percent of the
shares of stock covered by the Plan. A Plan Administrator shall have full
authority to determine which Eligible Persons in its administered group are to
receive Discretionary Option grants under the Plan, the number of shares to be
covered by each such grant, whether or not the granted Discretionary Option is
to be an Incentive Stock Option, the time or times at which each such
Discretionary Option is to become exercisable, and the maximum term for which
the Discretionary Option is to be outstanding. A Plan Administrator shall also
have full authority to determine which Eligible Persons in such group are to
receive Discretionary Awards under the Discretionary Grant Program and the
conditions relating to such Discretionary Award.
(b) GENERAL ADMINISTRATION. The Eligible Persons under the Discretionary
Grant Program shall be divided into two groups and there shall be a separate
administrator for each group. One group will be comprised of Eligible Persons
that are Affiliates. For purposes of this Plan, the term "Affiliates" shall mean
all "officers" (as that term is defined in Rule 16a-1(f) promulgated under the
Act) and directors of the Company and all persons who own ten percent or more of
the Company's issued and outstanding equity securities. Initially, the power to
administer the Discretionary Grant Program with respect to Eligible Persons that
are Affiliates shall be vested with the Board. At any time, however, the Board
may vest the power to administer the Discretionary Grant Program with respect to
Persons that are Affiliates exclusively with a committee (the "Senior
Committee") comprised of two or more Disinterested Directors which are appointed
by the Board. The administration of all Eligible Persons that are not Affiliates
("Non-Affiliates") shall be vested exclusively with the Board. The Board,
however, may at any time appoint a committee (the "Employee Committee") of two
or more persons who are members of the Board and delegate to such Employee
Committee the power to administer the Discretionary Grant Program with respect
to the Non-Affiliates. In addition, the Board may establish an additional
3
<PAGE>
committee or committees of persons who are members of the Board and delegate to
such other committee or committees the power to administer all or a portion of
the Discretionary Grant program with respect to all or a portion of the Eligible
Persons. Members of the Senior Committee, Employee Committee or any other
committee allowed hereunder shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any time. The Board
may at any time terminate all or a portion of the functions of the Senior
Committee, the Employee Committee, or any other committee allowed hereunder and
reassume all or a portion of powers and authority previously delegated to such
committee. The Board in its discretion may also require the members of the
Senior Committee, the Employee Committee or any other committee allowed
hereunder to be "outside directors" as that term is defined in any applicable
regulations promulgated under Code section 162(m).
(c) PLAN ADMINISTRATORS. The Board, the Employee Committee, Senior
Committee, and/or any other committee allowed hereunder, whichever is
applicable, shall be each referred to herein as a "Plan Administrator." Each
Plan Administrator shall have the authority and discretion, with respect to its
administered group, to select which Eligible Persons shall participate in the
Discretionary Grant Program, to grant Discretionary Options or Discretionary
Awards under the Discretionary Grant Program, to establish such rules and
regulations as they may deem appropriate with respect to the proper
administration of the Discretionary Grant Program and to make such
determinations under, and issue such interpretations of, the Discretionary Grant
Program and any outstanding Discretionary Option or Discretionary Award as they
may deem necessary or advisable. Unless otherwise required by law or specified
by the Board with respect to any committee, decisions among the members of a
Plan Administrator shall be by majority vote. Decisions of a Plan Administrator
shall be final and binding on all parties who have an interest in the
Discretionary Grant Program or any outstanding Discretionary Option or
Discretionary Award.
(d) GUIDELINES FOR PARTICIPATION. In designating and selecting Eligible
Persons for participation in the Discretionary Grant Program, a Plan
Administrator shall consult with and give consideration to the recommendations
and criticisms submitted by appropriate managerial and executive officers of the
Company. A Plan Administrator also shall take into account the duties and
responsibilities of the Eligible Persons, their past, present and potential
contributions to the success of the Company and such other factors as a Plan
Administrator shall deem relevant in connection with accomplishing the purpose
of the Plan.
2.2 TERMS AND CONDITIONS OF DISCRETIONARY OPTIONS.
(a) ALLOTMENT OF SHARES. A Plan Administrator shall determine the number of
shares of Stock to be optioned from time to time and the number of shares to be
optioned to any Eligible Person (the "Optioned Shares"). The grant of a
Discretionary Option to a person shall neither entitle such person to, nor
disqualify such person from, participation in any other grant of Options or
Stock Awards under this Plan or any other stock option plan of the Company.
(b) EXERCISE PRICE. Upon the grant of any Discretionary Option, a Plan
Administrator shall specify the option price per share. If the Discretionary
Option is intended to qualify as an Incentive Stock Option under the Code, the
option price per share may not be less than 100 percent of the fair market value
per share of the stock on the date the Discretionary Option is granted (110
percent if the Discretionary Option is granted to a stockholder who at the time
the Discretionary Option is granted owns or is deemed to own stock 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 Corporation). The determination of
the fair market value of the Stock shall be made in accordance with the
valuation provisions of SECTION 4.5 hereof.
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(c) INDIVIDUAL STOCK OPTION AGREEMENTS. Discretionary Options granted under
the Plan shall be evidenced by option agreements in such form and content as a
Plan Administrator from time to time approves, which agreements shall
substantially comply with and be subject to the terms of the Plan, including the
terms and conditions of this SECTION 2.2. As determined by a Plan Administrator,
each option agreement shall state (i) the total number of shares to which it
pertains, (ii) the exercise price for the shares covered by the Option, (iii)
the time at which the Options vest and become exercisable and (iv) the Option's
scheduled expiration date. The option agreements may contain such other
provisions or conditions as a Plan Administrator deems necessary or appropriate
to effectuate the sense and purpose of the Plan, including covenants by the
Optionholder not to compete and remedies for the Company in the event of the
breach of any such covenant.
(d) OPTION PERIOD. No Discretionary Option granted under the Plan that is
intended to be an Incentive Stock Option shall be exercisable for a period in
excess of 10 years from the date of its grant (five years if the Discretionary
Option is granted to a shareholder who at the time the Discretionary Option is
granted owns or is deemed to own stock possessing more than 10 percent of the
total combined voting power of all classes of stock of the Company or of any
Parent or any Subsidiary Corporation), subject to earlier termination in the
event of termination of employment, retirement or death of the Optionholder. A
Discretionary Option may be exercised in full or in part at any time or from
time to time during the term of the Discretionary Option or provide for its
exercise in stated installments at stated times during the Option's term.
(e) VESTING; LIMITATIONS. The time at which Discretionary Options vest with
respect to an Optionholder shall be in the discretion of that Optionholder's
Plan Administrator; provided that no Discretionary Options shall vest prior to
the Effective Date. Notwithstanding the foregoing, to the extent a Discretionary
Option is intended to qualify as an Incentive Stock Option, the aggregate fair
market value (determined as of the respective date or dates of grant) of the
Stock for which one or more Options granted to any person under this Plan (or
any other option plan of the Company or its Parent or Subsidiary Corporations)
may for the first time become exercisable as Incentive Stock Options during any
one calendar year shall not exceed the sum of $100,000 (referred to herein as
the "$100,000 Limitation"). To the extent that any person holds two or more
Options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability as an Incentive Stock Option
shall be applied on the basis of the order in which such Options are granted.
(f) NO FRACTIONAL SHARES. Options shall be exercisable only for whole
shares; no fractional shares will be issuable upon exercise of any Discretionary
Option granted under the Plan.
(g) METHOD OF EXERCISE. To exercise a Discretionary Option, an Optionholder
(or in the case of an exercise after an Optionholder's death, such
Optionholder's executor, administrator, heir or legatee, as the case may be)
must take the following action:
(i) execute and deliver to the Company a written notice of exercise
signed in writing by the person exercising the Discretionary Option specifying
the number of shares of Stock with respect to which the Discretionary Option is
being exercised;
(ii) pay the aggregate Option Price in one of the alternate forms as
set forth in SECTION 2.2(h) below; and
(iii) furnish appropriate documentation that the person or persons
exercising the Discretionary Option (if other than the Optionholder) has the
right to exercise such Option.
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As soon as practical after the Exercise Date, the Company will mail or deliver
to or on behalf of the Optionholder (or any other person or persons exercising
this Discretionary Option under the Plan) a certificate or certificates
representing the Stock acquired upon exercise of the Discretionary Option.
(h) PAYMENT PRICE. The aggregate Option Price shall be payable in one of
the alternative forms specified below:
(i) Full payment in cash or check made payable to the Company's order;
or
(ii) Full payment in shares of Stock held for the requisite period
necessary to avoid a charge to the Company's reported earnings and valued at
fair market value on the Exercise Date (as determined in accordance with Section
4.5 hereof); or
(iii) If a cashless exercise program has been implemented by the
Board, full payment through a sale and remittance procedure pursuant to which
the Optionholder (A) shall provide irrevocable written instructions to a
designated brokerage firm to effect the immediate sale of the Optioned Shares to
be purchased and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable
for the Optioned Shares to be purchased and (B) shall concurrently provide
written directives to the Company to deliver the certificates for the Optioned
Shares to be purchased directly to such brokerage firm in order to complete the
sale transaction.
(i) RIGHTS OF A STOCKHOLDER. An Optionholder shall not have any of the
rights of a stockholder with respect to Optioned Shares until such individual
shall have exercised the Option and paid the Option Price for the Optioned
Shares. No adjustment will be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
(j) REPURCHASE RIGHT. The Plan Administrator may, in its sole discretion,
set forth other terms and conditions upon which the Company (or its assigns)
shall have the right to repurchase shares of Stock acquired by an Optionholder
pursuant to a Discretionary Option. Any repurchase right of the Company shall be
exercisable by the Company (or its assignees) upon such terms and conditions as
the Plan Administrator may specify in the Stock Repurchase Agreement evidencing
such right. The Plan Administrator may also in its discretion establish as a
term and condition of one or more Discretionary Options granted under the Plan
that the Company shall have a right of first refusal with respect to any
proposed sale or other disposition by the Optionholder of any shares of Stock
issued upon the exercise of such Discretionary Options. Any such right of first
refusal shall be exercisable by the Company (or its assigns) in accordance with
the terms and conditions set forth in the Stock Repurchase Agreement.
(k) TERMINATION OF SERVICE. If any Optionholder ceases to be in Service to
the Company for a reason other than permanent disability or death, such
Optionholder must, within 90 days after the date of termination of such Service,
but in no event after the Option's stated expiration date, exercise some or all
of the Discretionary Options that the Optionholder was entitled to exercise on
the date the Optionholder's Service terminated; provided, that if the
Optionholder is discharged for Cause or commits acts detrimental to the
Company's interests after the Service of the Optionholder has been terminated,
then the Option will thereafter be void for all purposes. "Cause" shall mean a
termination of Service based upon a finding by the applicable Plan Administrator
that the Optionholder: (i) has committed a felony involving dishonesty, fraud,
theft or embezzlement; (ii) after written notice from the Company has repeatedly
failed or refused, in a material respect, to follow reasonable policies or
directives established by the Company; (iii) after written notice from the
Company, has willfully and persistently failed to attend to material duties or
obligations; (iv) has performed an act or failed to act, which, if he were
prosecuted and convicted, would constitute a theft of money or property of the
Company; or (v) has misrepresented or concealed a material fact for purposes of
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securing employment with the Company. If any Optionholder ceases to be in
Service to the Company by reason of permanent disability within the meaning of
section 22(e)(3) of the Code (as determined by the applicable Plan
Administrator), the Optionholder will have 12 months after the date of
termination of Service, but in no event after the stated expiration date of the
Optionholder's Discretionary Options, to exercise Discretionary Options that the
Optionholder was entitled to exercise on the date the Optionholder's Service
terminated as a result of the disability.
(l) DEATH OF OPTIONHOLDER. If an Optionholder dies while in the Company's
Service, any Discretionary Options that the Optionholder was entitled to
exercise on the date of death will be exercisable within three months after such
date or until the stated expiration date of the Optionholder's Option, whichever
occurs first, by the person or persons ("successors") to whom the Optionholder's
rights pass under a will or by the laws of descent and distribution. As soon as
practicable after receipt by the Company of such notice and of payment in full
of the Option Price, a certificate or certificates representing the Optioned
Shares shall be registered in the name or names specified by the successors in
the written notice of exercise and shall be delivered to the successors.
(m) OTHER PLAN PROVISIONS STILL APPLICABLE. If a Discretionary Option is
exercised upon the termination of Service or death of an Optionholder under this
Section 2.2, the other provisions of the Plan will continue to apply to such
exercise, including the requirement that the Optionholder or its successor may
be required to enter into a Stock Repurchase Agreement.
(n) DEFINITION OF "SERVICE". For purposes of this Plan, unless it is
evidenced otherwise in the option agreement with the Optionholder, the
Optionholder is deemed to be in "Service" to the Company so long as such
individual renders continuous services on a periodic basis to the Company (or to
any Parent or Subsidiary Corporation) in the capacity of an employee, director,
or an independent consultant or advisor. In the discretion of the applicable
Plan Administrator, an Optionholder will be considered to be rendering
continuous services to the Company even if the type of services change, e.g.,
from employee to independent consultant. The Optionholder will be considered to
be an employee for so long as such individual remains in the employ of the
Company or one or more of its Parent or Subsidiary Corporations.
2.3 TERMS AND CONDITIONS OF STOCK AWARDS.
(a) ELIGIBILITY. All Eligible Persons shall be eligible to receive Stock
Awards. The Plan Administrator of each administered group shall determine the
number of shares of Stock to be awarded from time to time to any Eligible Person
in such group. Except as provided otherwise in this Plan, the grant of a Stock
Award to a person (a "Grantee") shall neither entitle such person to, nor
disqualify such person from participation in, any other grant of options or
awards by the Company, whether under this Plan or under any other stock option
or award plan of the Company.
(b) AWARD FOR SERVICES RENDERED. Stock Awards shall be granted in
recognition of an Eligible Person's services to the Company. The grantee of any
such Stock Award shall not be required to pay any consideration to the Company
upon receipt of such Stock Award, except as may be required to satisfy any
applicable Arizona corporate law, employment tax and/or income tax withholding
requirements.
(c) CONDITIONS TO AWARD. All Stock Awards shall be subject to such terms,
conditions, restrictions, or limitations as the applicable Plan Administrator
deems appropriate, including, by way of illustration but not by way of
limitation, restrictions on transferability, requirements of continued
employment, individual performance or the financial performance of the Company,
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or payment by the recipient of any applicable employment or withholding taxes.
Such Plan Administrator may modify or accelerate the termination of the
restrictions applicable to any Stock Award under the circumstances as it deems
appropriate.
(d) AWARD AGREEMENTS. A Plan Administrator may require as a condition to a
Stock Award that the recipient of such Stock Award enter into an award agreement
in such form and content as that Plan Administrator from time to time approves.
2.4 TERMS AND CONDITIONS OF SARS.
(a) ELIGIBILITY. All Eligible Persons shall be eligible to receive SARs.
The Plan Administrator of each administered group shall determine the SARs to be
awarded from time to time to any Eligible Person in such group. The grant of an
SAR to a person shall neither entitle such person to, nor disqualify such person
from participation in, any other grant of options or awards by the Company,
whether under this Plan or under any other stock option or award plan of the
Company.
(b) AWARD OF SARS. Concurrently with or subsequent to the grant of any
Discretionary Option to purchase one or more shares of Stock, the Plan
Administrator may award to the Optionholder with respect to each share of Stock,
underlying the Discretionary Option, a related SAR permitting the Optionholder
to be paid any appreciation on that Stock in lieu of exercising the Option. In
addition, a Plan Administrator may award to any Eligible Person an SAR
permitting the Eligible Person to be paid the appreciation on a designated
number of shares of the Stock, whether or not such Shares are actually issued.
(c) CONDITIONS TO SAR. All SARs shall be subject to such terms, conditions,
restrictions or limitations as the applicable Plan Administrator deems
appropriate, including, by way of illustration but not by way of limitation,
restrictions on transferability, requirements of continued employment,
individual performance, financial performance of the Company, or payment by the
recipient of any applicable employment or withholding taxes. Such Plan
Administrator may modify or accelerate the termination of the restrictions
applicable to any SAR under the circumstances as it deems appropriate.
(d) SAR AGREEMENTS. A Plan Administrator may require as a condition to the
grant of an SAR that the recipient of such SAR enter into an SAR agreement in
such form and content as that Plan Administrator from time to time approves.
(e) EXERCISE. An Eligible Person who has been granted a SAR may exercise
such SAR subject to the conditions specified in the SAR agreement by the Plan
Administrator.
(f) AMOUNT OF PAYMENT. The amount of payment to which the grantee of an SAR
shall be entitled upon the exercise of each SAR shall be equal to the amount, if
any, by which the fair market value of the specified shares of Stock on the
exercise date exceeds the fair market value of the specified shares of Stock on
the date the Discretionary Option related to the SAR was granted or became
effective, or, if the SAR is not related to any Option, on the date the SAR was
granted or became effective.
(g) FORM OF PAYMENT. The SAR may be paid in either cash or Stock, as
determined in the discretion of the applicable Plan Administrator and set forth
in the SAR agreement. If the payment is in Stock, the number of shares to be
paid to the participant shall be determined by dividing the amount of the
payment determined pursuant to SECTION 2.4(f) by the fair market value of a
share of Stock on the exercise date of such SAR. As soon as practical after
exercise, the Company shall deliver to the SAR grantee a certificate or
certificates for such shares of Stock.
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(h) TERMINATION OF EMPLOYMENT; DEATH. Sections 2.2(k) and (l), applicable
to Options, shall apply equally to SARs.
2.5 OTHER CASH AWARDS.
(a) IN GENERAL. The Plan Administrator of each administered group shall
have the discretion to make other awards of cash to Eligible Persons in such
group ("Cash Awards"). Such Cash Awards may relate to existing Options or to the
appreciation in the value of the Stock or other Company securities.
(b) CONDITIONS TO AWARD. All Cash Awards shall be subject to such terms,
conditions, restrictions or limitations as the applicable Plan Administrator
deems appropriate, and such Plan Administrator may require as a condition to
such Cash Award that the recipient of such Cash Award enter into an award
agreement in such form and content as the Plan Administrator from time to time
approves.
ARTICLE 3.
AUTOMATIC GRANT PROGRAM
3.1 ELIGIBLE DIRECTORS UNDER THE AUTOMATIC GRANT PROGRAM. The Automatic
Grant Program shall commence as of the date set forth in SECTION 1.3(b) hereof.
The persons eligible to participate in the Automatic Grant Program shall be
limited to non-employee Board members ("Eligible Directors"). Persons who are
eligible under the Automatic Grant Program may also be eligible to receive
Discretionary Options or Discretionary Awards under the Discretionary Grant
Program or option grants or direct stock issuances under other plans of the
Company.
3.2 TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS.
(a) AMOUNT AND DATE OF GRANT. During the term of this Plan, grants of
Automatic Options shall be made to each Eligible Director ("Optionholder") as
follows:
(i) ANNUAL GRANTS. Each year on the Annual Grant Date an Automatic
Option to acquire 2,500 shares of stock shall be granted to each Eligible
Director for so long as there are shares of Stock available under SECTION 1.2
hereof. The "Annual Grant Date" shall be the date of the Company's annual
stockholders meeting commencing as of the next annual meeting occurring after
the Effective Date. Any Person that was granted an Automatic Option under
SECTION 3.2(a)(ii) hereof within 90 days of an Annual Grant Date shall be
ineligible to receive an Automatic Option Grant pursuant to this SECTION
3.2(a)(i) on such Annual Grant Date.
(ii) INITIAL NEW DIRECTOR GRANTS. On the Initial Grant Date, every new
member of the Board who is an Eligible Director and has not previously received
an Automatic Option grant under this SECTION 3.2(a)(ii) or SECTION 3.2(a)(iii)
shall be granted an Automatic Option to acquire 15,000 shares of Stock as long
as there are shares of Stock available under SECTION 1.2 hereof. The "Initial
Grant Date" shall be the date that an Eligible Director is first appointed or
elected to the Board.
(iii) INITIAL EXISTING DIRECTOR GRANTS. On the Adoption Date, every
Eligible Director shall be granted an Automatic Option to acquire 7,500 shares
of Stock.
(b) EXERCISE PRICE. The exercise price per share of Stock (the "Optioned
Shares") subject to each Automatic Option grant shall be equal to 100 percent of
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the fair market value per share of the Stock on the date the Automatic Option
was granted as determined in accordance with the valuation provisions of SECTION
4.5 hereof (the "Option Price").
(c) VESTING. Each Automatic Option grant shall become exercisable and vest
on the date of such grant; provided that no Automatic Option shall vest prior to
the Effective Date.
(d) METHOD OF EXERCISE. In order to exercise an Automatic Option with
respect to any vested Optioned Shares, an Optionholder (or in the case of an
exercise after an Optionholder's death, such Optionholder's executor,
administrator, heir or legatee, as the case may be) must take the following
action:
(i) execute and deliver to the Company a written notice of exercise
signed in writing by the person exercising the Automatic Option specifying the
number of shares of Stock with respect to which the Automatic Option is being
exercised;
(ii) pay the aggregate Option Price in one of the alternate forms as
set forth in Section 3.2(e) below; and
(iii) furnish appropriate documentation that the person or persons
exercising the Automatic Option (if other than the Optionholder) has the right
to exercise such Option.
As soon after the Exercise Date, as practical, the Company shall mail or deliver
to or on behalf of the Optionholder (or any other person or persons exercising
the Automatic Option in accordance herewith) a certificate or certificates
representing the Stock for which the Automatic Option has been exercised in
accordance with the provisions of this Plan. In no event may any Automatic
Option be exercised for any fractional shares.
(e) PAYMENT PRICE. The aggregate Option Price shall be payable in one of
the alternative forms specified below:
(i) full payment in cash or check made payable to the Company's order;
or
(ii) full payment in shares of Stock held for the requisite period
necessary to avoid a charge to the Company's reported earnings and valued at
fair market value on the Exercise Date (as determined in accordance with Section
4.5 hereof); or
(iii) if a cashless exercise program has been implemented by the Board, full
payment through a sale and remittance procedure pursuant to which the
Optionholder (A) shall provide irrevocable written instructions to a designated
brokerage firm to effect the immediate sale of the Optioned Shares to be
purchased and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable
for the Optioned Shares to be purchased and (B) shall concurrently provide
written directives to the Company to deliver the certificates for the Optioned
Shares to be purchased directly to such brokerage firm in order to complete the
sale transaction.
(f) TERM OF OPTION. Each Automatic Option shall expire on the tenth
anniversary of the date on which an Automatic Option grant was made ("Expiration
Date"). Except as provided in Article IV hereof, should an Optionholder's
service as a Board member cease prior to the Expiration Date for any reason
while an Automatic Option remains outstanding and unexercised, then the
Automatic Option term shall immediately terminate and the Automatic Option shall
cease to be outstanding in accordance with the following provisions:
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(i) The Automatic Option shall immediately terminate and cease to be
outstanding for any shares of Stock which were not vested at the time of the
Optionholder's cessation of Board service.
(ii) Should an Optionholder cease, for any reason other than death, to
serve as a member of the Board, then the Optionholder shall have 90 days
measured from the date of such cessation of Board service in which to exercise
the Options which vested prior to the time of such cessation of Board service.
In no event, however, may any Automatic Option be exercised after the Expiration
Date of such Option.
(iii) Should an Optionholder die while serving as a Board member or
within 90 days after cessation of Board service, then the personal
representative of the Optionholder's estate (or the person or persons to whom
the Automatic Option is transferred pursuant to the Optionholder's will or in
accordance with the laws of descent and distribution) shall have a 90 day period
measured from the date of the Optionholder's cessation of Board service in which
to exercise the Options which vested prior to the time of such cessation of
Board service. In no event, however, may any Automatic Option be exercised after
the Expiration Date of such Option.
(g) RIGHTS OF A STOCKHOLDER. An Optionholder shall not have any of the
rights of a stockholder with respect to Optioned Shares until such individual
shall have exercised the Option and paid the Option Price for the Optioned
Shares. No adjustment will be made for dividends or other rights for which the
record date is prior to the date such stock certificate is issued.
ARTICLE 4.
MISCELLANEOUS
4.1 CAPITAL ADJUSTMENTS. The aggregate number of shares of Stock subject to
the Plan, the number of shares of Stock covered by outstanding Options and
Awards, the number of shares of Stock covered by unissued Automatic Options, and
the price per share stated in all outstanding Options and Awards shall be
proportionately adjusted for any increase or decrease in the number of
outstanding shares of Stock of the Company resulting from a subdivision or
consolidation of shares or any other capital adjustment or the payment of a
stock dividend or any other increase or decrease in the number of such shares
effected without the Company's receipt of consideration therefor in money,
services or property.
4.2 MERGERS, ETC. If the Company is the surviving corporation in any merger
or consolidation (not including a Corporate Transaction), any Option or Award
granted under the Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Stock subject to the Option or Award would
have been entitled prior to the merger or consolidation. Except as provided in
Section 4.3 hereof, a dissolution or liquidation of the Company shall cause
every Option or Award outstanding hereunder to terminate.
4.3 CORPORATE TRANSACTION. In the event of stockholder approval of a
Corporate Transaction, (a) all unvested Automatic Options shall automatically
accelerate and immediately vest so that each outstanding Option shall, one week
prior to the specified effective date for the Corporate Transaction, become
fully exercisable for all of the Optioned Shares and (b) the Plan Administrator
shall have the discretion and authority, exercisable at any time, to provide for
the automatic acceleration of one or more of the outstanding Discretionary
Options or Discretionary Awards granted by it under the Plan. Upon the
consummation of the Corporate Transaction, all Options shall, to the extent not
previously exercised, terminate and cease to be outstanding.
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4.4 CHANGE IN CONTROL.
(a) AUTOMATIC GRANT PROGRAM. In the event of a Change in Control, all
unvested Automatic Options shall automatically accelerate and immediately vest
so that each outstanding Automatic Option shall, immediately prior to the
effective date of such Change in Control, become fully exercisable for all of
the Optioned Shares. Thereafter, each Automatic Option shall remain exercisable
until the Expiration Date of such Option.
(b) DISCRETIONARY GRANT PROGRAM. In the event of a Change in Control,
a Plan Administrator shall have the discretion and authority, exercisable at any
time, whether before or after the Change in Control, to provide for the
automatic acceleration of one or more outstanding Discretionary Options or
Discretionary Awards granted by it under the Plan upon the occurrence of such
Change in Control. A Plan Administrator may also impose limitations upon the
automatic acceleration of such Options or Awards to the extent it deems
appropriate. Any Options or Awards accelerated upon a Change in Control will
remain fully exercisable until the expiration or sooner termination of the
Option term.
(c) INCENTIVE STOCK OPTION LIMITS. The exercisability of any
Discretionary Options which are intended to qualify as Incentive Stock Options
and which are accelerated by the Plan Administrator in connection with a pending
Corporation Transaction or Change in Control shall, except as otherwise provided
in the discretion of the Plan Administrator and the Optionholder, remain subject
to the $100,000 Limitation and vest as quickly as possible without violating the
$100,000 Limitation.
4.5 CALCULATION OF FAIR MARKET VALUE OF STOCK. The fair market value of a
share of Stock on any relevant date shall be determined in accordance with the
following provisions:
(a) If the Stock is not at the time listed or admitted to trading on
any stock exchange but is traded in the over-the-counter market, the fair market
value shall be the mean between the highest bid and lowest asked prices (or, if
such information is available, the closing selling price) per share of Stock on
the date in question in the over-the-counter market, as such prices are reported
by the National Association of Securities Dealers through its Nasdaq system or
any successor system. If there are no reported bid and asked prices (or closing
selling price) for the Stock on the date in question, then the mean between the
highest bid price and lowest asked price (or the closing selling price) on the
last preceding date for which such quotations exist shall be determinative of
fair market value.
(b) If the Stock is at the time listed or admitted to trading on any
stock exchange, then the fair market value shall be the closing selling price
per share of Stock on the date in question on the stock exchange determined by
the Board to be the primary market for the Stock, as such price is officially
quoted in the composite tape of transactions on such exchange. If there is no
reported sale of Stock on such exchange on the date in question, then the fair
market value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(c) If the Stock at the time is neither listed nor admitted to trading
on any stock exchange nor traded in the over-the-counter market, then the fair
market value shall be determined by the Board after taking into account such
factors as the Board shall deem appropriate, including one or more independent
professional appraisals.
4.6 USE OF PROCEEDS. The proceeds received by the Company from the sale of
Stock pursuant to the exercise of Options or Awards hereunder, if any, shall be
used for general corporate purposes.
4.7 CANCELLATION OF OPTIONS. Each Plan Administrator shall have the
authority to effect, at any time and from time to time, with the consent of the
affected Optionholders, the cancellation of any or all outstanding Discretionary
Options granted under the Plan by that Plan Administrator and to grant in
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substitution therefore new Discretionary Options under the Plan covering the
same or different numbers of shares of Stock as long as such new Discretionary
Options have an exercise price per share of Stock no less than the minimum
exercise price as set forth in Section 2.2(b) hereof on the new grant date.
4.8 REGULATORY APPROVALS. The implementation of the Plan, the granting of
any Option or Award hereunder, and the issuance of Stock upon the exercise of
any such Option or Award shall be subject to the procurement by the Company of
all approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the Options or Awards granted under it and the Stock issued
pursuant to it.
4.9 INDEMNIFICATION. In addition to such other rights of indemnification as
they may have, the members of a Plan Administrator shall be indemnified and held
harmless by the Company, to the extent permitted under applicable law, for, from
and against all costs and expenses reasonably incurred by them in connection
with any action, legal proceeding to which any member thereof may be a party by
reason of any action taken, failure to act under or in connection with the Plan
or any rights granted thereunder and against all amounts paid by them in
settlement thereof or paid by them in satisfaction of a judgment of any such
action, suit or proceeding, except a judgment based upon a finding of bad faith.
4.10 PLAN NOT EXCLUSIVE. This Plan is not intended to be the exclusive
means by which the Company may issue options or warrants to acquire its Stock,
stock awards or any other type of award. To the extent permitted by applicable
law, any such other option, warrants or awards may be issued by the Company
other than pursuant to this Plan without shareholder approval.
4.11 COMPANY RIGHTS. The grants of Options shall in no way affect the right
of the Company to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
4.12 ASSIGNMENT. The right to acquire Stock or other assets under the Plan
may not be assigned, encumbered or otherwise transferred by any Optionholder
except as specifically provided herein. No Option or Award granted under the
Plan or any of the rights and privileges conferred thereby shall be assignable
or transferable by an Optionholder or grantee other than by will or the laws of
descent and distribution, and such Option or Award shall be exercisable during
the Optionholder's or grantee's lifetime only by the Optionholder or grantee.
Notwithstanding the foregoing, any Options or Awards granted pursuant to the
Discretionary Grant Program may be assigned, encumbered or otherwise transferred
by the Optionholder or grantee if specifically allowed by the Plan Administrator
upon the grant of such Option or Award. The provisions of the Plan shall inure
to the benefit of, and be binding upon, the Company and its successors or
assigns, and the Optionholders, the legal representatives of their respective
estates, their respective heirs or legatees and their permitted assignees.
4.13 SECURITIES RESTRICTIONS
(a) LEGEND ON CERTIFICATES. All certificates representing shares of Stock
issued under the Plan shall be endorsed with a legend reading as follows:
The shares of Common Stock evidenced by this
certificate have been issued to the registered owner
in reliance upon written representations that these
shares have been purchased solely for investment.
These shares may not be sold, transferred or assigned
unless in the opinion of the Company and its legal
counsel such sale, transfer or assignment will not be
13
<PAGE>
in violation of the Securities Act of 1933, as
amended, and the rules and regulations thereunder.
(b) PRIVATE OFFERING FOR INVESTMENT ONLY. The Options and Awards are
and shall be made available only to a limited number of present and future key
executives, directors and employees who have knowledge of the Company's
financial condition, management and its affairs. The Plan is not intended to
provide additional capital for the Company, but to encourage ownership of Stock
among the Company's key personnel. By the act of accepting an Option or Award,
each grantee agrees (i) that, any shares of Stock acquired will be solely for
investment not with any intention to resell or redistribute those shares and
(ii) such intention will be confirmed by an appropriate certificate at the time
the Stock is acquired if requested by the Company. The neglect or failure to
execute such a certificate, however, shall not limit or negate the foregoing
agreement.
(c) REGISTRATION STATEMENT. If a Registration Statement covering the
shares of Stock issuable under the Plan as filed under the Securities Exchange
Act of 1933, as amended, and as declared effective by the Securities Exchange
Commission, the provisions of SECTIONS 4.14(a) and (b) shall terminate during
the period of time that such Registration Statement, as periodically amended,
remains effective.
4.14 TAX WITHHOLDING.
(a) GENERAL. The Company's obligation to deliver Stock under the Plan
shall be subject to the satisfaction of all applicable federal, state and local
income tax withholding requirements.
(b) SHARES TO PAY FOR WITHHOLDING. The Board may, in its discretion
and in accordance with the provisions of this SECTION 4.15(b) and such
supplemental rules as it may from time to time adopt (including the applicable
safe-harbor provisions of SEC Rule 16b-3), provide any or all Optionholders or
Grantees with the right to use shares of Stock in satisfaction of all or part of
the federal, state and local income tax liabilities incurred by such
Optionholders or Grantees in connection with the receipt of Stock ("Taxes").
Such right may be provided to any such Optionholder or Grantee in either or both
of the following formats:
(i) STOCK WITHHOLDING. An Optionholder or Grantee may be provided
with the election, which may be subject to approval by the Plan Administrator,
to have the Company withhold, from the Stock otherwise issuable, a portion of
those shares of Stock with an aggregate fair market value equal to the
percentage of the applicable Taxes (not to exceed 100 percent) designated by the
Optionholder or Grantee.
(ii) STOCK DELIVERY. The Board may, in its discretion, provide
the Optionholder or Grantee with the election to deliver to the Company, at the
time the Option is exercised or Stock is awarded, one or more shares of Stock
previously acquired by such individual (other than pursuant to the transaction
triggering the Taxes) with an aggregate fair market value equal to the
percentage of the taxes incurred in connection with such Option exercise or
Stock Award (not to exceed 100 percent) designated by the Optionholder or
Grantee.
(c) GOVERNING LAW. The Plan shall be governed by and all questions
hereunder shall be determined in accordance with the laws of the State of
Arizona.
14
<PAGE>
ARTICLE 5.
DEFINITIONS
The following capitalized terms used in this Plan shall have the meaning
described below:
"AFFILIATES" shall mean all "executive officers" (as that term is defined
in Rule 16a-1(f) promulgated under the Act) and directors of the Company and all
persons who own ten percent or more of the Company's issued and outstanding
Stock.
"ANNUAL GRANT DATE" shall mean the date of the Company's annual stockholder
meeting.
"AUTOMATIC GRANT PROGRAM" shall mean that program set forth in Article III
of this Agreement pursuant to which non-employee members of the Board are
automatically granted Options upon certain events.
"AUTOMATIC OPTION GRANT" shall mean those automatic option grants made on
the Annual Grant Date, on the Initial Grant Date, and on the Effective Date.
"AUTOMATIC OPTIONS" shall mean those Options granted pursuant to the
Automatic Grant Program.
"AWARDS" shall mean the Discretionary Awards and the Automatic Awards.
"BOARD" shall mean the Board of Directors of the Company.
"CASH AWARD" shall mean an award to be paid in cash and granted under
Section 2.5 hereunder.
"CHANGE IN CONTROL" shall mean and include the following transactions or
situations:
(a) A sale, transfer, or other disposition by the Company through a
single transaction or a series of transactions of securities of the Company
representing 30 percent or more of the combined voting power of the Company's
then outstanding securities to any "Unrelated Person" or "Unrelated Persons"
acting in concert with one another. For purposes of this Section, the term
"Person" shall mean and include any individual, partnership, joint venture,
association, trust corporation, or other entity (including a "group" as referred
to in Section 13(d)(3) of the Act). For purposes of this Section, the term
"Unrelated Person" shall mean and include any Person other than the Company, a
wholly-owned subsidiary of the Company, or an employee benefit plan of the
Company.
(b) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of the Company to an Unrelated Person or Unrelated Persons acting in
concert with one another.
(c) A change in the ownership of the Company through a single
transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of the Company representing at
least 30 percent of the combined voting power of the Company's then outstanding
securities. For purposes of this Section, the term "Beneficial Owner" shall have
the same meaning as given to that term in Rule 13d-3 promulgated under the Act,
provided that any pledgee of voting securities is not deemed to be the
Beneficial Owner thereof prior to its acquisition of voting rights with respect
to such securities.
15
<PAGE>
(d) Any consolidation or merger of the Company with or into an
Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of the Company immediately prior to the
consolidation or merger are the Beneficial Owners of securities of the surviving
corporation representing at least 50 percent of the combined voting power of the
surviving corporation's then outstanding securities.
(e) During any period of two years, individuals who, at the beginning
of such period, constituted the Board of Directors of the Company cease, for any
reason, to constitute at least a majority thereof, unless the election or
nomination for election of each new director was approved by the vote of at
least two-thirds of the directors then still in office who were directors at the
beginning of such period.
(f) A change in control of the Company of a nature that would be
required to be reported in response to item 6(e) of Schedule 14A of Regulation
14A promulgated under the Act, or any successor regulation of similar import,
regardless of whether the Company is subject to such reporting requirement.
Notwithstanding any provision hereof to the contrary, the filing of a
proceeding for the reorganization of the Company under Chapter 11 of the General
Bankruptcy Code or any successor or other statute of similar import shall not be
deemed to be a Change of Control for purposes of this Plan.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall mean Main Street and Main Incorporated, a Delaware
corporation.
"CORPORATE TRANSACTION" shall mean (a) a merger or consolidation in which
the Company is not the surviving entity, except for a transaction the principal
purposes of which is to change the state in which the Company is incorporated;
(b) the sale, transfer of or other disposition of all or substantially all of
the assets of the Company and complete liquidation or dissolution of the
Company, or (c) any reverse merger in which the Company is the surviving entity
but in which the securities possessing more than 50 percent of the total
combined voting power of the Company's outstanding securities are transferred to
a person or persons different from those who held such securities immediately
prior to such merger.
"DISCRETIONARY AWARD" shall mean a Stock Award, SAR or Cash Award under the
Discretionary Grant Program.
"DISCRETIONARY GRANT PROGRAM" shall mean the program described in ARTICLE
II of this Agreement pursuant to which certain Eligible Persons are granted
Options or Awards in the discretion of the Plan Administrator.
"DISCRETIONARY OPTIONS" shall mean options granted under the Discretionary
Grant Program.
"DISINTERESTED DIRECTORS" shall mean those Directors who satisfy the
definition of "Disinterested Person" under Rule 16b-3(c)(2)(i) promulgated under
the Act.
"EFFECTIVE DATE" shall mean the date that the Plan has been approved by the
stockholders as required by SECTION 1.3(a) hereof.
16
<PAGE>
"ELIGIBLE DIRECTORS" shall mean, with respect to the Automatic Grant
Program, those persons who are non-employee Board members.
"ELIGIBLE PERSONS" shall mean, with respect to the Discretionary Grant
Program, those persons who, at the time that the Discretionary Option or
Discretionary Award is granted, are (i) key personnel (including officers and
directors) of the Company or Parent or Subsidiary Corporations, or (ii)
consultants or independent contractors who provide valuable services to the
Company or Parent or Subsidiary Corporations; provided that if a Senior
Committee is formed pursuant to SECTION 2.1(b) hereof, the members of that
Committee shall not be included as "Eligible Persons" under the Discretionary
Grant Program during their tenure on the Senior Committee.
"EMPLOYEE COMMITTEE" shall mean that committee appointed by the Board to
administer the Plan with respect to the Non-Affiliates and comprised of one or
more persons who are members of the Board.
"EXERCISE DATE" shall be the date on which written notice of the exercise
of an Option is delivered to the Company in accordance with the requirements of
the Plan.
"EXPIRATION DATE" shall be the 10-year anniversary of the date on which an
Automatic Option Grant was made.
"GRANTEE" shall mean an Eligible Person or Eligible Director that has
received an Award.
"INCENTIVE STOCK OPTION" shall mean a Discretionary Option that is intended
to qualify as an "inventive stock option" under Code section 422.
"INITIAL GRANT DATE" shall mean the date that an Eligible Director is first
appointed or elected to the Board.
"NON-AFFILIATES" shall mean all persons who are not Affiliates.
"$100,000 LIMITATION" shall mean the limitation in which the aggregate fair
market value (determined as of the respective date or dates of grant) of the
Stock for which one or more Options granted to any person under this Plan (or
any other option plan of the Company or any Parent or Subsidiary Corporation)
may for the first time be exercisable as Incentive Stock Options during any one
calendar year shall not exceed the sum of $100,000.
"OPTIONHOLDER" shall mean an Eligible Person or Eligible Director to whom
Options have been granted.
"OPTIONED SHARES" shall be those shares of Stock to be optioned from time
to time to any Eligible Person or Eligible Directors.
"OPTION PRICE" shall mean the option price per share as specified by the
Plan Administrator or by the terms of the Plan.
"OPTIONS" shall mean options granted under the Plan to acquire Stock.
"PARENT CORPORATION" shall mean any corporation in the unbroken chain of
corporations ending with the employer corporation, where, at each link of the
17
<PAGE>
chain, the corporation and the link above owns at least 50 percent of the
combined total voting power of all classes of the stock in the corporation in
the link below.
"PLAN" shall mean the stock option plan for the Company.
"PLAN ADMINISTRATOR" shall mean (a) either the Board, the Senior Committee,
or any other committee, whichever is applicable, with respect to the
administration of the Discretionary Grant Program as it relates to Affiliates
and (b) either the Board, the Employee Committee, or any other committee,
whichever is applicable, with respect to the administration of the Discretionary
Grant Program as it relates to Non-Affiliates.
"SAR" shall mean stock appreciation rights granted pursuant to Section 2.4
hereof.
"SENIOR COMMITTEE" shall mean that committee appointed by the Board to
administer the Discretionary Grant Program with respect to the Affiliates and
comprised of two or more Disinterested Directors.
"SERVICE" shall have the meaning set forth in Section 2.2(n) hereof.
"STOCK" shall mean shares of the Company's common stock, $.001 par value
per share, which may be unissued or treasury shares, as the Board may from time
to time determine.
"STOCK AWARDS" shall mean Stock directly granted under the Discretionary
Grant Program.
"SUBSIDIARY CORPORATION" shall mean any corporation in the unbroken chain
of corporations starting with the employer corporation, where, at each link of
the chain, the corporation and the link above owns at least 50 percent of the
combined voting power of all classes of stock in the corporation below.
EXECUTED as of the 8th day of January, 1996.
MAIN STREET AND MAIN INCORPORATED
By:
------------------------------
Name:
------------------------------
Its:
------------------------------
ATTESTED BY:
- ------------------------------
Secretary
MAIN STREET AND MAIN INCORPORATED
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made as of August 5, 1996, by
and between MAIN STREET AND MAIN INCORPORATED, a Delaware corporation (the
"Company"), and JOHN F. ANTIOCO ("Antioco").
WHEREAS, Antioco and the Company have entered into an Employment Agreement
as of August 5, 1996 (the "Employment Agreement"), whereby Antioco will serve as
the Chairman of the Board of the Company; and
WHEREAS, the Employment Agreement provides that the Company will grant to
Antioco an option to purchase shares of the Company's common stock, par value
$.001 per share (the "Common Stock"); and
WHEREAS, the Company considers it desirable and its best interest that
Antioco be given an opportunity to acquire a proprietary interest in the Company
and added incentive to advance the interest of the Company by possessing an
option to purchase shares of Common Stock.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, it is agreed by and between the parties as follows:
1. GRANT OF OPTION. Subject in all respects to the terms, conditions and
provisions of this Agreement, the Company grants to Antioco, as of the date of
this Agreement (the "Grant Date"), the right, privilege and option (the
"Option") to purchase 800,000 shares of Common Stock (the "Optioned Shares").
2. OPTION PRICE AND VESTING.
(a) GENERAL. The purchase price (the "Option Price") of the Optioned
Shares and the time at which the Optioned Shares vest and Antioco or his
permitted assignee(s) (each, an "Optionholder") may thereafter exercise this
Option with respect to such Optioned Shares shall be as follows:
PER SHARE
NUMBER OF OPTION
VESTING DATE OPTIONS PRICE
------------ ------- -----
August 5, 1996 200,000 $2.00
August 5, 1997 200,000 $2.00
August 5, 1998 200,000 $3.00
August 5, 1999 200,000 $5.00
(b) ACCELERATED VESTING AND FORFEITURE OF UNVESTED OPTIONED SHARES.
Notwithstanding the provisions of Section 2(a) hereof, the Optioned Shares that
would otherwise vest on August 5, 1997 will vest immediately on the date on
which the closing sale price of the Common Stock has exceeded $6.00 per share
for 20 consecutive days and the options that would otherwise vest on
<PAGE>
August 5, 1998 and August 5, 1999 will vest immediately on the date on which the
closing sale price of the Common Stock exceeds $8.00 per share for 20
consecutive trading days. The Optioned Shares will vest and become exercisable
on the foregoing dates only if the Employment Term (as defined in the Employment
Agreement) has not terminated prior to such dates. Any Optioned Shares granted
pursuant to this Agreement that have not vested prior to the termination of the
Employment Term will be forfeited immediately upon the termination of the
Employment Term. In the event of a "Change of Control" of Employer (as defined
in the Employment Agreement), any unvested Optioned Shares will become fully
vested and exercisable immediately upon such Change of Control. In the event of
a Change of Control that is not approved by at least two-thirds of the members
of Employer's Board of directors, the exercise price for all unexercised
Optioned Shares outstanding on the date of such Change of Control shall be
increased by 100%. Optioned Shares that have vested may be acquired in
accordance with the terms of this Agreement at any time, and from time to time,
in whole or in part, until the Option expires as provided in Section 4 hereof.
3. EXERCISE OF OPTION. All or any portion of the vested Optioned Shares may
be purchased by an Optionholder upon written notice to the Company, addressed to
the Company at its principal place of business. Such notice shall be signed by
the Optionholder and shall state the election to exercise the Option and the
number of Optioned Shares with respect to which it is being exercised. Such
notice shall be accompanied by payment in full of the Option Price for the
number of shares of Common Stock being purchased. Payment may be made in cash or
by check or by tendering duly endorsed certificates representing shares of
Common Stock then owned by the Optionholder. In the sole discretion of the
Company, an Optionholder may be provided with the election to pay for the Option
Price by having the Company withhold, from the Common Stock otherwise issuable,
a portion of those shares of Common Stock with an aggregate fair market value
equal to that portion of the Option Price designated by the Optionholder (not to
exceed 100 percent of the Option Price). Upon the exercise of the Option, the
Company shall deliver, or cause to be delivered, to the Optionholder a
certificate or certificates representing the net shares of Common Stock
purchased upon such exercise as soon as practicable after payment for those
shares has been received by the Company. All shares that are purchased and paid
for in full upon exercise of the Option shall be fully paid and non-assessable.
4. TERMINATION OF OPTION. This Option, to the extent not previously
exercised, shall terminate upon the tenth anniversary of the Grant Date, or as
otherwise set forth in this Agreement.
5. TERMINATION OF EMPLOYMENT. If Antioco's employment with the Company is
terminated pursuant to the Employment Agreement, or as a result of the death or
disability of Antioco, all Optioned Shares that are vested shall be exercisable
by an Optionholder in accordance with Section 3 hereof for a period of 30 days
(one year in the case of a termination as the result of the death or disability
of Antioco) after the expiration of the Employment Term or until the stated
expiration date of the Option, whichever occurs first. Notwithstanding the
foregoing, if Antioco is terminated "for cause" (as defined in the Employment
Agreement), the Option granted hereunder shall become immediately void and no
longer exercisable.
6. NO PRIVILEGE OF COMMON STOCK OWNERSHIP. The Optionholder shall not have
any of the rights of a stockholder with respect to the Optioned Shares until
such Optionholder has exercised the option and paid the Option Price for the
purchased shares of Common Stock.
2
<PAGE>
7. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option and
the issuance of the Common Stock upon such exercise shall be subject to
compliance by the Company and each Optionholder with all applicable requirements
of law relating thereto and with all applicable regulations of any stock
exchange or trading market on which the shares of the Common Stock may be listed
or traded at the time of such exercise and issuance. In connection with the
exercise of an Option hereunder, an Optionholder shall execute and deliver to
the Company such representations in writing as may be requested by the Company
in order for it to comply with applicable requirements of federal and state
securities laws.
8. LIABILITY OF THE COMPANY. The inability of the Company to obtain
approval from any regulatory body having authority deemed by the Company to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
Agreement shall relieve the Company of any liability with respect to the
nonissuance or sale of the Common Stock as to which such approval shall not have
been obtained. The Company, however, shall use its best efforts to obtain all
such approvals.
9. CAPITAL ADJUSTMENTS. The number of Optioned Shares shall be
proportionately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock of the Company resulting from a subdivision
or consolidation of shares or any other capital adjustment or the payment of a
stock dividend or any other increase or decrease in the number of such shares
effected without the Company's receipt of consideration therefor in money,
services or property.
10. MERGERS, ETC. If the Company is the surviving corporation in any merger
or consolidation (not including a Change of Control), the Option granted herein
shall pertain to and apply to the securities to which a holder of the number of
shares of Common Stock subject to the Option would have been entitled prior to
the merger or consolidation.
11. ASSIGNMENT. The right to acquire Common Stock under this Agreement may
not be assigned, encumbered or otherwise transferred by an Optionholder other
than by will or the laws of descent and distribution.
12. SECURITIES RESTRICTIONS.
(a) LEGEND ON CERTIFICATES. All certificates representing shares of
Common Stock issued hereunder shall be endorsed with a legend reading as
follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND ARE 'RESTRICTED SECURITIES' AS
DEFINED BY RULE 144 UNDER THAT ACT. THE SHARES MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR, IN LIEU
THEREOF, AN OPINION OF COUNSEL FOR THIS COMPANY TO
THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER
THAT ACT.
3
<PAGE>
(b) PRIVATE OFFERING FOR INVESTMENT ONLY. If the shares to be issued
to an Optionholder upon the exercise of any Option have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), the Arizona
Securities Act (the "Arizona Act") or the securities laws of any other
jurisdiction, those shares will be "restricted securities" within the meaning of
Rule 144 under the 1933 Act and must be held indefinitely without any transfer,
sale or other disposition unless (a) the shares are subsequently registered
under the 1933 Act, the Arizona Act and the securities laws of any other
applicable jurisdiction, or (b) the Optionholder obtains an opinion of counsel
which is satisfactory to counsel for the Company that the shares may be sold in
reliance on an exemption from registration requirements. By the act of accepting
an Option, Antioco agrees (i) that any shares of Common Stock acquired will be
solely for investment and not with any intention to resell or redistribute those
shares and (ii) such intention will be confirmed by an appropriate certificate
at the time the Common Stock is acquired if requested by the Company. The
neglect or failure to execute such a certificate, however, shall not limit or
negate the foregoing agreement. Notwithstanding the foregoing, Antioco may
transfer all or any portion of the Option or the Optioned Shares to his spouse,
child, estate, personal representative, heir or successor or to a trust for the
benefit of Antioco or his spouse, child, or heir. To transfer any portion of the
Option, Antioco shall execute and deliver to the Company an Assignment in the
form attached as Exhibit A hereto.
(c) REGISTRATION STATEMENT. If a registration statement covering the
shares of Common Stock issuable hereunder is filed under the 1933 Act and is
declared effective by the Securities Exchange Commission, the provisions of
Sections 12(a) and (b) shall terminate during the period of time that such
registration statement, as periodically amended, remains effective.
13. TAX WITHHOLDING.
(a) GENERAL. the Company's obligation to deliver Common Stock under
this Agreement shall be subject to Antioco's satisfaction of all applicable
federal, state and local income tax withholding requirements.
(b) Shares to Pay for Withholding. the Company may, in its discretion
and in accordance with the provisions of this Section 13(b) and such
supplemental rules as it may from time to time adopt (including any applicable
safe-harbor provisions of SEC Rule 16b-3), provide Antioco with the right to use
shares of Common Stock in satisfaction of all or part of the federal, state and
local income tax liabilities incurred by Antioco in connection with the receipt
of Common Stock ("Taxes"). Such right may be provided to Antioco in either or
both of the following formats:
(i) STOCK WITHHOLDING. Antioco may be provided with the election
to have the Company withhold, from the Common Stock otherwise issuable, a
portion of those shares of Common Stock with an aggregate fair market value
equal to the percentage of the applicable Taxes (not to exceed 100 percent)
designated by Antioco.
(ii) STOCK DELIVERY. the Company may, in its discretion, provide
Antioco with the election to deliver to the Company, at the time the Option is
exercised, one or more shares of Common Stock previously acquired by Antioco
(other than pursuant to the transaction triggering the Taxes) with an aggregate
fair market value equal to the percentage of the taxes incurred in connection
with such Option exercise (not to exceed 100 percent) designated by Antioco.
4
<PAGE>
14. BINDING EFFECT. Subject to the restrictions on transfer set forth in
Sections 11 and 12, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
15. DEFINED TERMS. All capitalized terms herein which are not otherwise
defined therein shall have the same meaning ascribed to such terms in the
Employment Agreement.
16. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to Antioco at the address indicated
on the signature page hereto. Any permitted assignee hereunder shall notify the
other party hereto of the permitted assignee's address for purposes of this
notice provision. All notices shall be deemed to have been given or delivered
upon personal delivery or upon deposit in the U.S. mail, postage prepaid return
receipt requested, and properly addressed to the party to be notified.
17. INTEGRATION AND MODIFICATION. This Agreement and the Employment
Agreement embody the full understanding of the parties with respect to the
subject matter hereof, superseding any and all prior agreements, and no
amendment or modification thereof shall be effective unless the same shall be in
writing and signed by both of said parties.
18. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the State of Arizona, without regard to application
of conflicts of law principles.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused it to be executed on the day and year first above written.
MAIN STREET AND MAIN INCORPORATED
By: /s/ Bart A. Brown
----------------------------------
Name:
--------------------------------
Its: President
---------------------------------
/s/ John F. Antioco
-------------------------------------
John F. Antioco
Address:
-------------------------------------
-------------------------------------
5
<PAGE>
EXHIBIT A
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Options)
FOR VALUE RECEIVED, the undersigned holder of the Options to purchase
shares of common stock, par value $.001 per share, of Main Street and Main
Incorporated, a Delaware corporation (the "Corporation"), described on Schedule
1 attached hereto (the "Options"), hereby sells, assigns and transfers unto the
person or persons below named Options to purchase __________ shares of the
Corporation's common stock and does hereby irrevocably constitute and appoint
__________________________________________________ attorney to transfer said
Options on the books of the Corporation, with full power of substitution in the
premises.
The undersigned agrees not to sell, assign, transfer, pledge or hypothecate
the Options except in compliance with applicable securities laws:
Dated:
-------------------------------------
Signature
Fill in for new Registration of Options:
- -------------------------------------
Name
- -------------------------------------
Address
- -------------------------------------
Please print name and address of assignee
(including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to this Assignment must correspond to the name as written as the
registered holder of the Options on the books of the Corporation in every
particular, without alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
<PAGE>
Schedule 1
to
Assignment
Optionholder:
Grant Date:
Optioned Shares:
Option Price:
Vesting Schedule:
Number of Options Being Transferred:
The options are nonqualified options.
MAIN STREET AND MAIN INCORPORATED
STOCK OPTION AGREEMENT
THIS STOCK OPTION CANCELLATION AGREEMENT ("Agreement") is made as of June
15, 1998 by and between MAIN STREET AND MAIN INCORPORATED, a Delaware
corporation (the "Company"), and JOHN F. ANTIOCO ("Antioco").
WHEREAS, Antioco and the Company have entered into an Employment Agreement
as of August 5, 1996 (the "Employment Agreement"), whereby Antioco will serve as
the Chairman of the Board of the Company; and
WHEREAS, the Company previously granted Antioco an option to purchase
shares of the Company's common stock, par value $.001 per share (the "Common
Stock") pursuant to the Employment Agreement and;
WHEREAS, the Company and Antioco consider it desirable and in its best
interest that Antioco transfer his holdings of $3.00 and $5.00 options to Mr.
Bart Brown, Mr. Gerard Bisceglia, Mr. Jeff Smit, Mr. Kevin Burnett and Mr. James
Yeager.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, it is agreed by and between the parties as follows:
1. CANCELLATION OF OPTIONS. Antioco agrees to the cancellation of options
to purchase 100,000 shares of Common Stock at $3.00 per share and options to
purchase 100,000 shares of Common Stock at $5.00 per share. The optioned shares
are adjusted as follows:
NUMBER OF OPTIONS PER SHARE
-------------------------- OPTION
VESTING DATE BEFORE AFTER PRICE
------------ ------ ----- -----
August 5, 1996 200,000 200,000 $2.00
August 5, 1997 200,000 200,000 $2.00
August 5, 1998 100,000 0 $3.00
August 5, 1999 100,000 0 $5.00
2. OPTION TERMS. All other terms of the Stock Option Agreement dated August
5, 1996 between Main Street and Main Incorporated and Antioco will remain in
effect.
IN WITNESS WHEREOF, the parties executed and delivered this Agreement on
the date first above written.
MAIN STREET AND MAIN INCORPORATED
By: /s/ Bart A. Brown, Jr.
---------------------------------
Bart A. Brown, Jr.
/s/ John F. Antioco
---------------------------------
John F. Antioco
MAIN STREET AND MAIN INCORPORATED
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made as of December 16, 1996,
by and between MAIN STREET AND MAIN INCORPORATED, a Delaware corporation (the
"Company"), and BART A. BROWN, JR. ("Brown").
WHEREAS, Brown and the Company have entered into an Employment Agreement as
of December 16, 1996 (the "Employment Agreement"), whereby Brown will serve as
the President and Chief Executive Officer of the Company; and
WHEREAS, the Employment Agreement provides that the Company will grant to
Brown an option to purchase shares of the Company's common stock, par value
$.001 per share (the "Common Stock"); and
WHEREAS, the Company considers it desirable and its best interest that
Brown be given an opportunity to acquire a proprietary interest in the Company
and added incentive to advance the interest of the Company by possessing an
option to purchase shares of Common Stock.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, it is agreed by and between the parties as follows:
1. GRANT OF OPTION. Subject in all respects to the terms, conditions and
provisions of this Agreement, the Company grants to Brown, as of the date of
this Agreement (the "Grant Date"), the right, privilege, and option (the
"Option") to purchase 250,000 shares of Common Stock (the "Optioned Shares").
2. OPTION PRICE AND VESTING.
(a) GENERAL. The purchase price (the "Option Price") of the Optioned
Shares and the time at which the Optioned Shares vest and Brown or his permitted
assignee(s) (each, an "Optionholder") may thereafter exercise this Option with
respect to such Optioned Shares shall be as follows:
PER SHARE
NUMBER OF OPTION
VESTING DATE OPTIONS PRICE
------------ ------- -----
December 16, 1996 100,000 $2.00
December 31, 1997 50,000 $3.00
June 30, 1998 50,000 $4.00
December 31, 1998 50,000 $5.00
(b) ACCELERATED VESTING AND FORFEITURE OF UNVESTED OPTIONED SHARES.
Except as otherwise provided herein, the Optioned Shares will vest and become
exercisable on the foregoing dates only if Brown's employment with the Company
has not terminated prior to such dates. Any Optioned Shares granted pursuant to
this Agreement that have not vested prior to the termination of Brown's
employment with the Company will be forfeited immediately upon the termination
of employment for any reason other than a termination as a result of the
circumstances specified in Sections 4(b)(i), (ii), (iii), or (vi) of the
Employment Agreement. In the event of a termination of employment under the
circumstances specified in Sections 4(b)(i), (ii), (iii), or (vi) of the
Employment Agreement, any unvested Optioned Shares will become fully vested and
exercisable immediately upon such a termination of employment. Optioned Shares
that have vested may be acquired in accordance with the terms
<PAGE>
of this Agreement at any time, and from time to time, in whole or in part, until
the Option expires as provided in Sections 4 or 5 hereof.
3. EXERCISE OF OPTION. All or any portion of the vested Optioned Shares may
be purchased by an Optionholder upon written notice to the Company, addressed to
the Company at its principal place of business. Such notice shall be signed by
the Optionholder and shall state the election to exercise the Option and the
number of Optioned Shares with respect to which it is being exercised. Such
notice shall be accompanied by payment in full of the Option Price for the
number of shares of Common Stock being purchased. Payment may be made in cash or
by check or by tendering duly endorsed certificates representing shares of
Common Stock then owned by the Optionholder. In the sole discretion of the
Company, an Optionholder may be provided with the election to pay for the Option
Price by having the Company withhold, from the Common Stock otherwise issuable,
a portion of those shares of Common Stock with an aggregate fair market value
equal to that portion of the Option Price designated by the Optionholder (not to
exceed 100 percent of the Option Price). Upon the exercise of the Option, the
Company shall deliver, or cause to be delivered, to the Optionholder a
certificate or certificates representing the net shares of Common Stock
purchased upon such exercise as soon as practicable after payment for those
shares has been received by the Company. All shares that are purchased and paid
for in full upon exercise of the Option shall be fully paid and non-assessable.
4. TERMINATION OF OPTION. This Option, to the extent not previously
exercised, shall terminate upon the tenth anniversary of the Grant Date, or as
otherwise set forth in this Agreement.
5. TERMINATION OF EMPLOYMENT. If Brown's employment with the Company is
terminated pursuant to Sections 4(b)(i), (ii), (iii), or (vi) of the Employment
Agreement, all Optioned Shares that are vested shall be exercisable by an
Optionholder in accordance with Section 3 hereof until the stated expiration
date of the Option. Notwithstanding the foregoing, if Brown's employment with
the Company is terminated pursuant to Section 4(b)(iv) or (v) of Employment
Agreement), the Option granted hereunder shall become immediately void and no
longer exercisable.
6. NO PRIVILEGE OF COMMON STOCK OWNERSHIP. The Optionholder shall not have
any of the rights of a stockholder with respect to the Optioned Shares until
such Optionholder has exercised the option and paid the Option Price for the
purchased shares of Common Stock.
7. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option and
the issuance of the Common Stock upon such exercise shall be subject to
compliance by the Company and each Optionholder with all applicable requirements
of law relating thereto and with all applicable regulations of any stock
exchange or trading market on which the shares of the Common Stock may be listed
or traded at the time of such exercise and issuance. In connection with the
exercise of an Option hereunder, an Optionholder shall execute and deliver to
the Company such representations in writing as may be requested by the Company
in order for it to comply with applicable requirements of federal and state
securities laws.
8. LIABILITY OF THE COMPANY. The inability of the Company to obtain
approval from any regulatory body having authority deemed by the Company to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
Agreement shall relieve the Company of any liability with respect to the
nonissuance or sale of the Common Stock as to which such approval shall not have
been obtained. The Company, however, shall use its best efforts to obtain all
such approvals.
9. CAPITAL ADJUSTMENTS. The number of Optioned Shares shall be
proportionately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock of the Company resulting from a subdivision
or consolidation of shares or any other capital adjustment or the payment of a
stock dividend or any other increase or decrease in the number of such shares
effected without the Company's receipt of consideration therefor in money,
services or property.
2
<PAGE>
10. MERGERS, ETC. If the Company is the surviving corporation in any merger
or consolidation (not including a Change of Control), the Option granted herein
shall pertain to and apply to the securities to which a holder of the number of
shares of Common Stock subject to the Option would have been entitled prior to
the merger or consolidation.
11. ASSIGNMENT. The right to acquire Common Stock under this Agreement may
not be assigned, encumbered, or otherwise transferred by an Optionholder other
than by will or the laws of descent and distribution. Notwithstanding the
foregoing, Brown may transfer all or any portion of the Option or the Optioned
Shares to his spouse, child, estate, personal representative, heir, or successor
or to a trust for the benefit of Brown or his spouse, child, or heir. To
transfer any portion of the Option, Brown shall execute and deliver to the
Company an Assignment in the form attached as Exhibit A hereto.
12. SECURITIES RESTRICTIONS.
(a) LEGEND ON CERTIFICATES. All certificates representing shares of
Common Stock issued hereunder shall be endorsed with a legend reading as
follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND ARE 'RESTRICTED SECURITIES' AS
DEFINED BY RULE 144 UNDER THAT ACT. THE SHARES MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR, IN LIEU
THEREOF, AN OPINION OF COUNSEL FOR THIS COMPANY TO
THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER
THAT ACT.
(b) PRIVATE OFFERING FOR INVESTMENT ONLY. If the shares to be issued
to an Optionholder upon the exercise of any Option have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), the Arizona
Securities Act (the "Arizona Act"), or the securities laws of any other
jurisdiction, those shares will be "restricted securities" within the meaning of
Rule 144 under the 1933 Act and must be held indefinitely without any transfer,
sale, or other disposition unless (i) the shares are subsequently registered
under the 1933 Act, the Arizona Act and the securities laws of any other
applicable jurisdiction, or (ii) the Optionholder obtains an opinion of counsel
that is satisfactory to counsel for the Company that the shares may be sold in
reliance on an exemption from registration requirements. By the act of accepting
an Option, Brown or his permitted transferees agree (1) that any shares of
Common Stock acquired will be solely for investment and not with any intention
to resell or redistribute those shares, and (2) such intention will be confirmed
by an appropriate certificate at the time the Common Stock is acquired if
requested by the Company. The neglect or failure to execute such a certificate,
however, shall not limit or negate the foregoing agreement.
(c) REGISTRATION STATEMENT. If a registration statement covering the
shares of Common Stock issuable hereunder is filed under the 1933 Act and is
declared effective by the Securities and Exchange Commission, the provisions of
Sections 12(a) and (b) shall terminate during the period of time that such
registration statement, as periodically amended, remains effective.
13. TAX WITHHOLDING.
(a) GENERAL. The Company's obligation to deliver Common Stock under
this Agreement shall be subject to the Optionholder's satisfaction of all
applicable federal, state and local income tax withholding requirements.
3
<PAGE>
(b) SHARES TO PAY FOR WITHHOLDING. The Company may, in its discretion
and in accordance with the provisions of this Section 13(b) and such
supplemental rules as it may from time to time adopt, provide the Optionholder
with the right to use shares of Common Stock in satisfaction of all or part of
the federal, state, and local income tax liabilities ("Taxes") incurred by the
Optionholder in connection with the receipt of Common Stock. Such right may be
provided to the Optionholder in either or both of the following formats:
(i) STOCK WITHHOLDING. The Optionholder may be provided with the
election to have the Company withhold, from the Common Stock otherwise issuable,
a portion of those shares of Common Stock with an aggregate fair market value
equal to the percentage of the applicable Taxes (not to exceed 100 percent)
designated by the Optionholder.
(ii) STOCK DELIVERY. The Company may, in its discretion, provide
the Optionholder with the election to deliver to the Company, at the time the
Option is exercised, one or more shares of Common Stock previously acquired by
the Optionholder (other than pursuant to the transaction triggering the Taxes)
with an aggregate fair market value equal to the percentage (not to exceed 100
percent) of the Taxes incurred in connection with such Option exercise.
14. BINDING EFFECT. Subject to the restrictions on transfer set forth in
Sections 11 and 12, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
15. DEFINED TERMS. All capitalized terms herein which are not otherwise
defined herein shall have the same meaning ascribed to such terms in the
Employment Agreement.
16. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to the Optionholder shall be in
writing and addressed to the Optionholder at the address indicated on the
signature page hereto. Any permitted assignee hereunder shall notify the other
party hereto of the permitted assignee's address for purposes of this notice
provision. All notices shall be deemed to have been given or delivered upon
personal delivery or upon deposit in the U.S. mail, postage prepaid return
receipt requested, and properly addressed to the party to be notified.
17. INTEGRATION AND MODIFICATION. This Agreement and the Employment
Agreement embody the full understanding of the parties with respect to the
subject matter hereof, superseding any and all prior agreements, and no
amendment or modification thereof shall be effective unless the same shall be in
writing and signed by both of said parties.
18. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the state of Arizona, without regard to application
of conflicts of law principles.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, taken
together, shall constitute one and the same instrument.
4
<PAGE>
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused it to be executed on the day and year first above written.
MAIN STREET AND MAIN INCORPORATED
By: /s/ John Antioco
----------------------------------
John Antioco
/s/ Bart A. Brown, Jr.
-------------------------------------
Bart A. Brown, Jr.
Address:
-------------------------------------
-------------------------------------
5
<PAGE>
EXHIBIT A
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Options)
FOR VALUE RECEIVED, the undersigned holder of the Options to purchase
shares of common stock, par value $.001 per share, of Main Street and Main
Incorporated, a Delaware corporation (the "Corporation"), described on Schedule
1 attached hereto (the "Options"), hereby sells, assigns and transfers unto the
person or persons below named Options to purchase __________ shares of the
Corporation's common stock and does hereby irrevocably constitute and appoint
__________________________________________________ attorney to transfer said
Options on the books of the Corporation, with full power of substitution in the
premises.
The undersigned agrees not to sell, assign, transfer, pledge or hypothecate
the Options except in compliance with applicable securities laws:
Dated:
-------------------------------------
Signature
Fill in for new Registration of Options:
- -------------------------------------
Name
- -------------------------------------
Address
- -------------------------------------
Please print name and address of assignee
(including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to this Assignment must correspond to the name as written as the
registered holder of the Options on the books of the Corporation in every
particular, without alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
<PAGE>
Schedule 1
to
Assignment
Optionholder:
Grant Date:
Optioned Shares:
Option Price:
Vesting Schedule:
Number of Options Being Transferred:
The options are nonqualified options.
EXHIBIT 10.23A
SCHEDULE OF STOCK OPTION AGREEMENTS
SUBSTANTIALLY IDENTICAL TO EXHIBIT 10.23
1. Stock Option Agreement dated July 14, 1997, between the Company and Bart A.
Brown, Jr. for 250,000 shares of Common Stock at an exercise price of $2.50
per share.
2. Stock Option Agreement dated June 15, 1998, between the Company and Bart A.
Brown, Jr. for 75,000 shares of Common Stock at an exercise price of $3.25
per share.
3. Stock Option Agreement dated June 15, 1998, between the Company and Bart A.
Brown, Jr. for 50,000 shares of Common Stock at an exercise price of $3.25
per share.
MAIN STREET AND MAIN INCORPORATED
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made as of June 15, 1998, by
and between MAIN STREET AND MAIN INCORPORATED, a Delaware corporation (the
"Company"), and BART A. BROWN, JR. ("Brown").
WHEREAS, Brown and the Company have entered into an Employment Agreement as
of December 16, 1996 (the "Employment Agreement"), whereby Brown will serve as
the President and Chief Executive Officer of the Company; and
WHEREAS, Mr. John Antioco was previously granted options to purchase Main
Street Common Stock and desires to transfer some his holdings of $3.00 and $5.00
options to Brown, through the cancellation of 200,000 of Antioco's options and
regranting of 75,000 options to Brown and;
WHEREAS, the Company considers it desirable and its best interest that
Brown be given an opportunity to acquire a proprietary interest in the Company
and added incentive to advance the interest of the Company by possessing an
option to purchase shares of Common Stock.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, it is agreed by and between the parties as follows:
1. GRANT OF OPTION. Subject in all respects to the terms, conditions and
provisions of this Agreement, the Company grants to Brown, as of the date of
this Agreement (the "Grant Date"), the right, privilege, and option (the
"Option") to purchase 75,000 shares of Common Stock (the "Optioned Shares").
2. OPTION PRICE AND VESTING.
(a) GENERAL. The purchase price (the "Option Price") of the Optioned
Shares and the time at which the Optioned Shares vest and Brown or his permitted
assignee(s) each, an "Optionholder") may thereafter exercise this Option with
respect to such Optioned Shares shall be as follows:
PER SHARE
NUMBER OF OPTION
VESTING DATE OPTIONS PRICE
------------ ------- -----
December 31, 1998 37,500 $3.00
December 31, 1999 37,500 $5.00
(b) ACCELERATED VESTING AND FORFEITURE OF UNVESTED OPTIONED SHARES.
Except as otherwise provided herein, the Optioned Shares will vest and become
exercisable on the foregoing dates only if Brown's employment with the Company
has not terminated prior to such dates. Any Optioned Shares granted pursuant to
this Agreement that have not vested prior to the termination of Brown's
employment with the Company will be forfeited immediately upon the termination
of employment for any reason other than a termination as a result of the
circumstances specified in Sections 4(b)(i), (ii), (iii), or (vi) of the
Employment Agreement. In the event of a termination of employment under the
circumstances specified in Sections 4(b)(i), (ii), (iii), or (vi) of the
Employment Agreement, any unvested Optioned Shares will become fully vested and
exercisable immediately upon such a termination of employment. Optioned Shares
that have vested may be acquired in accordance with the terms of this Agreement
at any time, and from time to time, in whole or in part, until the Option
expires as provided in Sections 4 or 5 hereof.
3. EXERCISE OF OPTION. All or any portion of the vested Optioned Shares may
be purchased by an Optionholder upon written notice to the Company, addressed to
the Company at its principal place of business. Such notice shall be signed by
the Optionholder and shall state the election to exercise the Option and the
number of Optioned Shares with respect to which it is being exercised. Such
notice shall be accompanied by payment in full of the Option Price for the
number of shares of Common Stock being purchased. Payment may be made in cash or
by
1
<PAGE>
check or by tendering duly endorsed certificates representing shares of Common
Stock then owned by the Optionholder. In the sole discretion of the Company, an
Optionholder may be provided with the election to pay for the Option Price by
having the Company withhold, from the Common Stock otherwise issuable, a portion
of those shares of Common Stock with an aggregate fair market value equal to
that portion of the Option Price designated by the Optionholder (not to exceed
100 percent of the Option Price). Upon the exercise of the Option, the Company
shall deliver, or cause to be delivered, to the Optionholder a certificate or
certificates representing the net shares of Common Stock purchased upon such
exercise as soon as practicable after payment for those shares has been received
by the Company. All shares that are purchased and paid for in full upon exercise
of the Option shall be fully paid and non-assessable.
4. TERMINATION OF OPTION. This Option, to the extent not previously
exercised, shall terminate upon the tenth anniversary of the Grant Date, or as
otherwise set forth in this Agreement.
5. TERMINATION OF EMPLOYMENT. If Brown's employment with the Company is
terminated pursuant to Sections 4(b)(i), (ii), (iii), or (vi) of the Employment
Agreement, all Optioned Shares that are vested shall be exercisable by an
Optionholder in accordance with Section 3 hereof until the stated expiration
date of the Option. Notwithstanding the foregoing, if Brown's employment with
the Company is terminated pursuant to Section 4(b)(iv) or (v) of Employment
Agreement), the Option granted hereunder shall become immediately void and no
longer exercisable.
6. NO PRIVILEGE OF COMMON STOCK OWNERSHIP. The Optionholder shall not have
any of the rights of a stockholder with respect to the Optioned Shares until
such Optionholder has exercised the option and paid the Option Price for the
purchased shares of Common Stock.
7. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option and
the issuance of the Common Stock upon such exercise shall be subject to
compliance by the Company and each Optionholder with all applicable requirements
of law relating thereto and with all applicable regulations of any stock
exchange or trading market on which the shares of the Common Stock may be listed
or traded at the time of such exercise and issuance. In connection with the
exercise of an Option hereunder, an Optionholder shall execute and deliver to
the Company such representations in writing as may be requested by the Company
in order for it to comply with applicable requirements of federal and state
securities laws.
8. LIABILITY OF THE COMPANY. The inability of the Company to obtain
approval from any regulatory body having authority deemed by the Company to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
Agreement shall relieve the Company of any liability with respect to the
nonissuance or sale of the Common Stock as to which such approval shall not have
been obtained. The Company, however, shall use its best efforts to obtain all
such approvals.
9. CAPITAL ADJUSTMENTS. The number of Optioned Shares shall be
proportionately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock of the Company resulting from a subdivision
or consolidation of shares or any other capital adjustment or the payment of a
stock dividend or any other increase or decrease in the number of such shares
effected without the Company's receipt of consideration therefor in money,
services or property.
10. MERGERS, ETC. If the Company is the surviving corporation in any merger
or consolidation (not including a Change of Control), the Option granted herein
shall pertain to and apply to the securities to which a holder of the number of
shares of Common Stock subject to the Option would have been entitled prior to
the merger or consolidation.
11. ASSIGNMENT. The right to acquire Common Stock under this Agreement may
not be assigned, encumbered, or otherwise transferred by an Optionholder other
than by will or the laws of descent and distribution. Notwithstanding the
foregoing, Brown may transfer all or any portion of the Option or the Optioned
Shares to his spouse, child, estate, personal representative, heir, or successor
or to a trust for the benefit of Brown or his spouse, child, or heir. To
transfer any portion of the Option, Brown shall execute and deliver to the
Company an Assignment in the form attached as Exhibit A hereto.
2
<PAGE>
12. SECURITIES RESTRICTIONS.
(a) LEGEND ON CERTIFICATES. All certificates representing shares of
Common Stock issued hereunder shall be endorsed with a legend reading as
follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND ARE 'RESTRICTED SECURITIES' AS
DEFINED BY RULE 144 UNDER THAT ACT. THE SHARES MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR, IN LIEU
THEREOF, AN OPINION OF COUNSEL FOR THIS COMPANY TO
THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER
THAT ACT.
(b) PRIVATE OFFERING FOR INVESTMENT ONLY. If the shares to be issued
to an Optionholder upon the exercise of any Option have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), the Arizona
Securities Act (the "Arizona Act"), or the securities laws of any other
jurisdiction, those shares will be "restricted securities" within the meaning of
Rule 144 under the 1933 Act and must be held indefinitely without any transfer,
sale, or other disposition unless (i) the shares are subsequently registered
under the 1933 Act, the Arizona Act and the securities laws of any other
applicable jurisdiction, or (ii) the Optionholder obtains an opinion of counsel
that is satisfactory to counsel for the Company that the shares may be sold in
reliance on an exemption from registration requirements. By the act of accepting
an Option, Brown or his permitted transferees agree (1) that any shares of
Common Stock acquired will be solely for investment and not with any intention
to resell or redistribute those shares, and (2) such intention will be confirmed
by an appropriate certificate at the time the Common Stock is acquired if
requested by the Company. The neglect or failure to execute such a certificate,
however, shall not limit or negate the foregoing agreement.
(c) REGISTRATION STATEMENT. If a registration statement covering the
shares of Common Stock issuable hereunder is filed under the 1933 Act and is
declared effective by the Securities and Exchange Commission, the provisions of
Sections 12(a) and (b) shall terminate during the period of time that such
registration statement, as periodically amended, remains effective.
13. TAX WITHHOLDING.
(a) GENERAL. The Company's obligation to deliver Common Stock under
this Agreement shall be subject to the Optionholder's satisfaction of all
applicable federal, state and local income tax withholding requirements.
(b) SHARES TO PAY FOR WITHHOLDING. The Company may, in its discretion
and in accordance with the provisions of this Section 13(b) and such
supplemental rules as it may from time to time adopt, provide the Optionholder
with the right to use shares of Common Stock in satisfaction of all or part of
the federal, state, and local income tax liabilities ("Taxes") incurred by the
Optionholder in connection with the receipt of Common Stock. Such right may be
provided to the Optionholder in either or both of the following formats:
(i) STOCK WITHHOLDING. The Optionholder may be provided with the
election to have the Company withhold, from the Common Stock otherwise issuable,
a portion of those shares of Common Stock with an aggregate fair market value
equal to the percentage of the applicable Taxes (not to exceed 100 percent)
designated by the Optionholder.
(ii) STOCK DELIVERY. The Company may, in its discretion, provide
the Optionholder with the election to deliver to the Company, at the time the
Option is exercised, one or more shares of Common Stock previously acquired by
the Optionholder (other than pursuant to the transaction triggering the Taxes)
with an aggregate fair market value equal to the percentage (not to exceed 100
percent) of the Taxes incurred in connection with such Option exercise.
3
<PAGE>
14. BINDING EFFECT. Subject to the restrictions on transfer set forth in
Sections 11 and 12, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
15. DEFINED TERMS. All capitalized terms herein which are not otherwise
defined herein shall have the same meaning ascribed to such terms in the
Employment Agreement.
16. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to the Optionholder shall be in
writing and addressed to the Optionholder at the address indicated on the
signature page hereto. Any permitted assignee hereunder shall notify the other
party hereto of the permitted assignee's address for purposes of this notice
provision. All notices shall be deemed to have been given or delivered upon
personal delivery or upon deposit in the U.S. mail, postage prepaid return
receipt requested, and properly addressed to the party to be notified.
17. INTEGRATION AND MODIFICATION. This Agreement and the Employment
Agreement embody the full understanding of the parties with respect to the
subject matter hereof, superseding any and all prior agreements, and no
amendment or modification thereof shall be effective unless the same shall be in
writing and signed by both of said parties.
18. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the state of Arizona, without regard to application
of conflicts of law principles.
19. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused it to be executed on the day and year first above written.
MAIN STREET AND MAIN INCORPORATED
By: /s/ John Antioco
----------------------------------
John Antioco
/s/ Bart A. Brown, Jr.
-------------------------------------
Bart A. Brown, Jr.
4
<PAGE>
EXHIBIT A
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Options)
FOR VALUE RECEIVED, the undersigned holder of the Options to purchase
shares of common stock, par value $.001 per share, of Main Street and Main
Incorporated, a Delaware corporation (the "Corporation"), described on Schedule
1 attached hereto (the "Options"), hereby sells, assigns and transfers unto the
person or persons below named Options to purchase __________ shares of the
Corporation's common stock and does hereby irrevocably constitute and appoint
__________________________________________________ attorney to transfer said
Options on the books of the Corporation, with full power of substitution in the
premises.
The undersigned agrees not to sell, assign, transfer, pledge or hypothecate
the Options except in compliance with applicable securities laws:
Dated:
-------------------------------------
Signature
Fill in for new Registration of Options:
- -------------------------------------
Name
- -------------------------------------
Address
- -------------------------------------
Please print name and address of assignee
(including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to this Assignment must correspond to the name as written as the
registered holder of the Options on the books of the Corporation in every
particular, without alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
<PAGE>
Schedule 1
to
Assignment
Optionholder:
Grant Date:
Optioned Shares:
Option Price:
Vesting Schedule:
Number of Options Being Transferred:
The options are nonqualified options.
EXHIBIT 10.24A
SCHEDULE OF STOCK OPTION AGREEMENTS
SUBSTANTIALLY IDENTICAL TO EXHIBIT 10.24
1. Stock Option Agreement dated June 15, 1998, between the Company and Bart A.
Brown, Jr. for 100,000 shares of Common Stock, with 50,000 shares at an
exercise price of $3.00 per share and 50,000 shares at an exercise price of
$5.00 per share.
MAIN STREET AND MAIN INCORPORATED
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made as of June 15, 1998, by
and between MAIN STREET AND MAIN INCORPORATED, a Delaware corporation (the
"Company"), and JAMES YEAGER ("Yeager").
WHEREAS, Yeager became employed with the company on June 16, 1997 to serve
as the Controller of the Company; and
WHEREAS, Mr. John Antioco was previously granted options to purchase Main
Street Common Stock and desires to transfer some his holdings of $3.00 and $5.00
options to Yeager through the cancellation of 200,000 of Antioco's options and
regranting of 15,000 options to Yeager and;
WHEREAS, the Company considers it desirable and its best interest that
Yeager be given an opportunity to acquire a proprietary interest in the Company
and added incentive to advance the interest of the Company by possessing an
option to purchase shares of Common Stock.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, it is agreed by and between the parties as follows:
1. GRANT OF OPTION. Subject in all respects to the terms, conditions and
provisions of this Agreement, the Company grants to Yeager, as of the date of
this Agreement (the "Grant Date"), the right, privilege, and option (the
"Option") to purchase 15,000 shares of Common Stock (the "Optioned Shares").
2. OPTION PRICE AND VESTING.
(a) GENERAL. The purchase price (the "Option Price") of the Optioned
Shares and the time at which the Optioned Shares vest and Yeager or his
permitted assignee(s) each, an "Optionholder") may thereafter exercise this
Option with respect to such Optioned Shares shall be as follows:
PER SHARE
NUMBER OF OPTION
VESTING DATE OPTIONS PRICE
------------ ------- -----
December 31, 1998 7,500 $3.00
December 31, 1999 7,500 $5.00
(b) ACCELERATED VESTING AND FORFEITURE OF UNVESTED OPTIONED SHARES.
The Optioned Shares will vest and become exercisable on the foregoing dates only
if Yeager's employment with the Company has not terminated prior to such dates.
Any Optioned Shares granted pursuant to this Agreement that have not vested
prior to the termination of Yeager's employment with the Company will be
forfeited immediately upon the termination of employment for any reason,
including death or disability. In the event of a "Change of Control" of the
Company any unvested Optioned Shares will become fully vested and exercisable
immediately upon such Change of Control. Optioned Shares that have vested may be
acquired in accordance with the terms of this Agreement at any time, and from
time to time, in whole or in part, until the Option expires as provided in
Section 4 hereof.
3. EXERCISE OF OPTION. All or any portion of the vested Optioned Shares may
be purchased by an Optionholder upon written notice to the Company, addressed to
the Company at its principal place of business. Such notice shall be signed by
the Optionholder and shall state the election to exercise the Option and the
number of Optioned Shares with respect to which it is being exercised. Such
notice shall be accompanied by payment in full of the Option Price for the
number of shares of Common Stock being purchased. Payment may be made in cash or
by check or by tendering duly endorsed certificates representing shares of
Common Stock then owned by the Optionholder. In the sole discretion of the
Company, an Optionholder may be provided with the election to pay for the Option
Price by having the Company withhold, from the Common Stock otherwise issuable,
a portion of those shares of Common Stock with an aggregate fair market value
equal to that portion of the Option Price designated by the Optionholder (not to
exceed 100 percent of the Option Price). Upon the exercise of the Option, the
Company shall deliver, or cause to be delivered, to the Optionholder a
certificate or certificates representing the net shares of Common Stock
purchased upon such exercise as soon as practicable after payment for those
shares has been received by the Company. All shares that are purchased and paid
for in full upon exercise of the Option shall be fully paid and non-assessable.
1
<PAGE>
4. TERMINATION OF OPTION. This Option, to the extent not previously
exercised, shall terminate upon the tenth anniversary of the Grant Date, or as
otherwise set forth in this Agreement.
5. TERMINATION OF EMPLOYMENT. If Yeager's employment with the Company is
terminated or as a result of the death or disability of Yeager, all Optioned
Shares that are vested shall be exercisable by an Optionholder in accordance
with Section 3 hereof for a period of 30 days (one year in the case of a
termination as the result of the death or disability of Yeager) after the
expiration of Yeager's employment or until the stated expiration date of the
Option, whichever occurs first. Notwithstanding the foregoing, if Yeager is
terminated "for cause", the Option granted hereunder shall become immediately
void and no longer exercisable.
6. NO PRIVILEGE OF COMMON STOCK OWNERSHIP. The Optionholder shall not have
any of the rights of a stockholder with respect to the Optioned Shares until
such Optionholder has exercised the option and paid the Option Price for the
purchased shares of Common Stock.
7. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option and
the issuance of the Common Stock upon such exercise shall be subject to
compliance by the Company and each Optionholder with all applicable requirements
of law relating thereto and with all applicable regulations of any stock
exchange or trading market on which the shares of the Common Stock may be listed
or traded at the time of such exercise and issuance. In connection with the
exercise of an Option hereunder, an Optionholder shall execute and deliver to
the Company such representations in writing as may be requested by the Company
in order for it to comply with applicable requirements of federal and state
securities laws.
8. LIABILITY OF THE COMPANY. The inability of the Company to obtain
approval from any regulatory body having authority deemed by the Company to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
Agreement shall relieve the Company of any liability with respect to the
nonissuance or sale of the Common Stock as to which such approval shall not have
been obtained. The Company, however, shall use its best efforts to obtain all
such approvals.
9. CAPITAL ADJUSTMENTS. The number of Optioned Shares shall be
proportionately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock of the Company resulting from a subdivision
or consolidation of shares or any other capital adjustment or the payment of a
stock dividend or any other increase or decrease in the number of such shares
effected without the Company's receipt of consideration therefor in money,
services or property.
10. MERGERS, ETC. If the Company is the surviving corporation in any merger
or consolidation (not including a Change of Control), the Option granted herein
shall pertain to and apply to the securities to which a holder of the number of
shares of Common Stock subject to the Option would have been entitled prior to
the merger or consolidation.
11. ASSIGNMENT. The right to acquire Common Stock under this Agreement may
not be assigned, encumbered, or otherwise transferred by an Optionholder other
than by will or the laws of descent and distribution. Notwithstanding the
foregoing, Yeager may transfer all or any portion of the Option or the Optioned
Shares to his spouse, child, estate, personal representative, heir, or successor
or to a trust for the benefit of Yeager or his spouse, child, or heir. To
transfer any portion of the Option, Yeager shall execute and deliver to the
Company an Assignment in the form attached as Exhibit A hereto.
2
<PAGE>
12. SECURITIES RESTRICTIONS.
(a) LEGEND ON CERTIFICATES. All certificates representing shares of
Common Stock issued hereunder shall be endorsed with a legend reading as
follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND ARE 'RESTRICTED SECURITIES' AS
DEFINED BY RULE 144 UNDER THAT ACT. THE SHARES MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR, IN LIEU
THEREOF, AN OPINION OF COUNSEL FOR THIS COMPANY TO
THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER
THAT ACT.
(b) PRIVATE OFFERING FOR INVESTMENT ONLY. If the shares to be issued
to an Optionholder upon the exercise of any Option have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), the Arizona
Securities Act (the "Arizona Act"), or the securities laws of any other
jurisdiction, those shares will be "restricted securities" within the meaning of
Rule 144 under the 1933 Act and must be held indefinitely without any transfer,
sale, or other disposition unless (i) the shares are subsequently registered
under the 1933 Act, the Arizona Act and the securities laws of any other
applicable jurisdiction, or (ii) the Optionholder obtains an opinion of counsel
which is satisfactory to counsel for the Company that the shares may be sold in
reliance on an exemption from registration requirements. By the act of accepting
an Option, Yeager or his permitted transferees agree (1) that any shares of
Common Stock acquired will be solely for investment and not with any intention
to resell or redistribute those shares, and (2) such intention will be confirmed
by an appropriate certificate at the time the Common Stock is acquired if
requested by the Company. The neglect or failure to execute such a certificate,
however, shall not limit or negate the foregoing agreement.
(c) REGISTRATION STATEMENT. If a registration statement covering the
shares of Common Stock issuable hereunder is filed under the 1933 Act and is
declared effective by the Securities and Exchange Commission, the provisions of
Sections 12(a) and (b) shall terminate during the period of time that such
registration statement, as periodically amended, remains effective.
13. TAX WITHHOLDING.
(a) GENERAL. The Company's obligation to deliver Common Stock under
this Agreement shall be subject to the Optionholder's satisfaction of all
applicable federal, state, and local income tax withholding requirements.
(b) SHARES TO PAY FOR WITHHOLDING. The Company may, in its discretion
and in accordance with the provisions of this Section 13(b) and such
supplemental rules as it may from time to time adopt, provide the Optionholder
with the right to use shares of Common Stock in satisfaction of all or part of
the federal, state and local income tax liabilities ("Taxes") incurred by the
Optionholder in connection with the receipt of Common Stock. Such right may be
provided to the Optionholder in either or both of the following formats:
(i) STOCK WITHHOLDING. The Optionholder may be provided with the
election to have the Company withhold, from the Common Stock otherwise issuable,
a portion of those shares of Common Stock with an aggregate fair market value
equal to the percentage of the applicable Taxes (not to exceed 100 percent)
designated by the Optionholder.
(ii) STOCK DELIVERY. The Company may, in its discretion, provide
the Optionholder with the election to deliver to the Company, at the time the
Option is exercised, one or more shares of Common Stock previously acquired by
the Optionholder (other than pursuant to the transaction triggering the Taxes)
with an aggregate fair market value equal to the percentage (not to exceed 100
percent) of the Taxes incurred in connection with such Option exercise.
14. BINDING EFFECT. Subject to the restrictions on transfer set forth in
Sections 11 and 12, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
3
<PAGE>
15. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to the Optionholder shall be in
writing and addressed to the Optionholder at the address indicated on the
signature page hereto. Any permitted assignee hereunder shall notify the other
party hereto of the permitted assignee's address for purposes of this notice
provision. All notices shall be deemed to have been given or delivered upon
personal delivery or upon deposit in the U.S. mail, postage prepaid return
receipt requested, and properly addressed to the party to be notified.
16. INTEGRATION AND MODIFICATION. This Agreement embody the full
understanding of the parties with respect to the subject matter hereof,
superseding any and all prior agreements, and no amendment or modification
thereof shall be effective unless the same shall be in writing and signed by
both of said parties.
17. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the state of Arizona, without regard to application
of conflicts of law principles.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused it to be executed on the day and year first above written.
MAIN STREET AND MAIN INCORPORATED
By /s/ Bart A. Brown, Jr.
-------------------------------------
Bart A. Brown, Jr.
/s/ James Yeager
----------------------------------
James Yeager
4
<PAGE>
EXHIBIT A
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Options)
FOR VALUE RECEIVED, the undersigned holder of the Options to purchase
shares of common stock, par value $.001 per share, of Main Street and Main
Incorporated, a Delaware corporation (the "Corporation"), described on Schedule
1 attached hereto (the "Options"), hereby sells, assigns and transfers unto the
person or persons below named Options to purchase __________ shares of the
Corporation's common stock and does hereby irrevocably constitute and appoint
__________________________________________________ attorney to transfer said
Options on the books of the Corporation, with full power of substitution in the
premises.
The undersigned agrees not to sell, assign, transfer, pledge or hypothecate
the Options except in compliance with applicable securities laws:
Dated:
-------------------------------------
Signature
Fill in for new Registration of Options:
- -------------------------------------
Name
- -------------------------------------
Address
- -------------------------------------
Please print name and address of assignee
(including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to this Assignment must correspond to the name as written as the
registered holder of the Options on the books of the Corporation in every
particular, without alteration or enlargement or any change whatsoever.
- --------------------------------------------------------------------------------
<PAGE>
Schedule 1
to
Assignment
Optionholder:
Grant Date:
Optioned Shares:
Option Price:
Vesting Schedule:
Number of Options Being Transferred:
The options are nonqualified options.
EXHIBIT 10.25A
SCHEDULE OF STOCK OPTION AGREEMENTS
SUBSTANTIALLY IDENTICAL TO EXHIBIT 10.25
1. Stock Option Agreement dated June 15, 1998, between the Company and Kevin
Burnett for 15,000 shares of Common Stock, with 7,500 shares at an exercise
price of $3.00 per share and 7,500 shares at an exercise price of $5.00 per
share.
2. Stock Option Agreement dated June 15, 1998, between the Company and Jeff
Smit for 20,000 shares of Common Stock, with 10,000 shares at an exercise
price of $3.00 per share and 10,000 shares at an exercise price of $5.00
per share.
MAIN STREET AND MAIN INCORPORATED
NONQUALIFIED STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT ("Agreement") is made as of DECEMBER 31, 1998,
(the "Grant Date") by and between MAIN STREET AND MAIN INCORPORATED, a Delaware
corporation (the "Company"), and TIM ROSE ("Optionee").
WHEREAS, the Company considers it desirable and in its best interest that
Optionee be given an opportunity to acquire a proprietary interest in the
Company and an added incentive to advance the interest of the Company by
possessing an option to purchase shares of Common Stock.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, it is agreed by and between the parties as follows:
1. GRANT OF OPTION. Subject in all respects to the terms, conditions and
provisions of this Agreement, the Company grants to Optionee, as of the date of
this Agreement (the "Grant Date"), the right, privilege, and option (the
"Option") to purchase 10,000 SHARES OF COMMON STOCK (the "Optioned Shares").
2. OPTION PRICE AND VESTING.
(a) GENERAL. The purchase price (the "Option Price") of the Optioned
Shares and the time at which the Optioned Shares vest and Optionee or his
permitted assignee(s) each, (an "Optionholder") may thereafter exercise this
Option with respect to such Optioned Shares shall be as follows:
PER SHARE
NUMBER OF OPTION
VESTING DATE OPTIONS PRICE
------------ ------- -----
December 31, 1999 3,333 $3.375
December 31, 2000 3,333 $3.375
December 31, 2001 3,334 $3.375
(b) ACCELERATED VESTING AND FORFEITURE OF UNVESTED OPTIONED SHARES.
The Optioned Shares will vest and become exercisable on the foregoing dates only
if Optionee's employment with the Company has not terminated prior to such
dates. Any Optioned Shares granted pursuant to this Agreement that have not
vested prior to the termination of Optionee's employment with the Company will
be forfeited immediately upon the termination of employment for any reason,
including death or disability. In the event of a "Change of Control" of the
Company any unvested Optioned Shares will become fully vested and exercisable
immediately upon such Change of Control. Optioned Shares that have vested may be
acquired in accordance with the terms of this Agreement at any time, and from
time to time, in whole or in part, until the Option expires as provided in
Section 4 hereof.
3. EXERCISE OF OPTION. All or any portion of the vested Optioned Shares may
be purchased by an Optionholder upon written notice to the Company, addressed to
the Company at its principal place of business. Such notice shall be signed by
the Optionholder and shall state the election to exercise the Option and the
number of Optioned Shares with respect to which it is being exercised. Such
notice shall be accompanied by payment in full of the Option Price for the
number of shares of Common Stock being purchased. Payment may be made in cash or
by check or by tendering duly endorsed certificates representing shares of
Common Stock then owned by the Optionholder. In the sole discretion of the
Company, an Optionholder may be provided with the election to pay for the Option
Price by having the Company withhold, from the Common Stock otherwise issuable,
a portion of those shares of Common Stock with an aggregate fair market value
equal to that portion of the Option Price designated by the Optionholder (not to
exceed 100 percent of the Option Price). Upon the exercise of the Option, the
Company
<PAGE>
Nonqualified Option Agreement
Page 2
shall deliver, or cause to be delivered, to the Optionholder a certificate or
certificates representing the net shares of Common Stock purchased upon such
exercise as soon as practicable after payment for those shares has been received
by the Company. All shares that are purchased and paid for in full upon exercise
of the Option shall be fully paid and non-assessable.
4. TERMINATION OF OPTION. This Option, to the extent not previously
exercised, shall terminate upon the tenth anniversary of the Grant Date, or as
otherwise set forth in this Agreement.
5. TERMINATION OF EMPLOYMENT. If Optionee's employment with the Company is
terminated or as a result of the death or disability of Optionee, all Optioned
Shares that are vested shall be exercisable by an Optionholder in accordance
with Section 3 hereof for a period of 30 days (one year in the case of a
termination as the result of the death or disability of Optionee) after the
expiration of Optionee's employment or until the stated expiration date of the
Option, whichever occurs first. Notwithstanding the foregoing, if Optionee is
terminated "for cause", the Option granted hereunder shall become immediately
void and no longer exercisable.
6. NO PRIVILEGE OF COMMON STOCK OWNERSHIP. The Optionholder shall not have
any of the rights of a stockholder with respect to the Optioned Shares until
such Optionholder has exercised the option and paid the Option Price for the
purchased shares of Common Stock.
7. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of this Option and
the issuance of the Common Stock upon such exercise shall be subject to
compliance by the Company and each Optionholder with all applicable requirements
of law relating thereto and with all applicable regulations of any stock
exchange or trading market on which the shares of the Common Stock may be listed
or traded at the time of such exercise and issuance. In connection with the
exercise of an Option hereunder, an Optionholder shall execute and deliver to
the Company such representations in writing as may be requested by the Company
in order for it to comply with applicable requirements of federal and state
securities laws.
8. LIABILITY OF THE COMPANY. The inability of the Company to obtain
approval from any regulatory body having authority deemed by the Company to be
necessary to the lawful issuance and sale of any Common Stock pursuant to this
Agreement shall relieve the Company of any liability with respect to the
nonissuance or sale of the Common Stock as to which such approval shall not have
been obtained. The Company, however, shall use its best efforts to obtain all
such approvals.
9. CAPITAL ADJUSTMENTS. The number of Optioned Shares shall be
proportionately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock of the Company resulting from a subdivision
or consolidation of shares or any other capital adjustment or the payment of a
stock dividend or any other increase or decrease in the number of such shares
effected without the Company's receipt of consideration therefor in money,
services or property.
10. MERGERS, ETC. If the Company is the surviving corporation in any merger
or consolidation (not including a Change of Control), the Option granted herein
shall pertain to and apply to the securities to which a holder of the number of
shares of Common Stock subject to the Option would have been entitled prior to
the merger or consolidation.
<PAGE>
Nonqualified Option Agreement
Page 3
11. ASSIGNMENT. The right to acquire Common Stock under this Agreement may
not be assigned, encumbered, or otherwise transferred by an Optionholder other
than by will or the laws of descent and distribution. Notwithstanding the
foregoing, Optionee may transfer all or any portion of the Option or the
Optioned Shares to his spouse, child, estate, personal representative, heir, or
successor or to a trust for the benefit of Optionee or his spouse, child, or
heir. To transfer any portion of the Option, Optionee shall execute and deliver
to the Company an Assignment in the form attached as Exhibit A hereto.
12. SECURITIES RESTRICTIONS.
(a) LEGEND ON CERTIFICATES. All certificates representing shares of
Common Stock issued hereunder shall be endorsed with a legend reading as
follows:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND ARE 'RESTRICTED SECURITIES' AS
DEFINED BY RULE 144 UNDER THAT ACT. THE SHARES MAY
NOT BE SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT REGISTERING THE SHARES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR, IN LIEU
THEREOF, AN OPINION OF COUNSEL FOR THIS COMPANY TO
THE EFFECT THAT REGISTRATION IS NOT REQUIRED UNDER
THAT ACT.
(b) PRIVATE OFFERING FOR INVESTMENT ONLY. If the shares to be issued
to an Optionholder upon the exercise of any Option have not been registered
under the Securities Act of 1933, as amended (the "1933 Act"), the Arizona
Securities Act (the "Arizona Act"), or the securities laws of any other
jurisdiction, those shares will be "restricted securities" within the meaning of
Rule 144 under the 1933 Act and must be held indefinitely without any transfer,
sale, or other disposition unless (i) the shares are subsequently registered
under the 1933 Act, the Arizona Act and the securities laws of any other
applicable jurisdiction, or (ii) the Optionholder obtains an opinion of counsel
which is satisfactory to counsel for the Company that the shares may be sold in
reliance on an exemption from registration requirements. By the act of accepting
an Option, Optionee or his permitted transferees agree (1) that any shares of
Common Stock acquired will be solely for investment and not with any intention
to resell or redistribute those shares, and (2) such intention will be confirmed
by an appropriate certificate at the time the Common Stock is acquired if
requested by the Company. The neglect or failure to execute such a certificate,
however, shall not limit or negate the foregoing agreement.
(c) REGISTRATION STATEMENT. If a registration statement covering the
shares of Common Stock issuable hereunder is filed under the 1933 Act and is
declared effective by the Securities and Exchange Commission, the provisions of
Sections 12(a) and (b) shall terminate during the period of time that such
registration statement, as periodically amended, remains effective.
13. TAX WITHHOLDING.
(a) GENERAL. The Company's obligation to deliver Common Stock under
this Agreement shall be subject to the Optionholder's satisfaction of all
applicable federal, state, and local income tax withholding requirements.
(b) SHARES TO PAY FOR WITHHOLDING. The Company may, in its discretion
and in accordance with the provisions of this Section 13(b) and such
supplemental rules as it may from time to time adopt, provide the Optionholder
with the right to use shares of Common Stock in satisfaction of all or part of
the federal, state and local income tax liabilities ("Taxes") incurred by the
Optionholder in connection with the receipt of Common Stock. Such right may be
provided to the Optionholder in either or both of the following formats:
<PAGE>
Nonqualified Option Agreement
Page 4
(i) STOCK WITHHOLDING. The Optionholder may be provided with the
election to have the Company withhold, from the Common Stock otherwise issuable,
a portion of those shares of Common Stock with an aggregate fair market value
equal to the percentage of the applicable Taxes (not to exceed 100 percent)
designated by the Optionholder.
(ii) STOCK DELIVERY. The Company may, in its discretion, provide
the Optionholder with the election to deliver to the Company, at the time the
Option is exercised, one or more shares of Common Stock previously acquired by
the Optionholder (other than pursuant to the transaction triggering the Taxes)
with an aggregate fair market value equal to the percentage (not to exceed 100
percent) of the Taxes incurred in connection with such Option exercise.
14. BINDING EFFECT. Subject to the restrictions on transfer set forth in
Sections 11 and 12, this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors, administrators,
successors and assigns.
15. NOTICES. Any notice required to be given or delivered to the Company
under the terms of this Agreement shall be in writing and addressed to the
Company in care of the Corporate Secretary at its principal corporate offices.
Any notice required to be given or delivered to the Optionholder shall be in
writing and addressed to the Optionholder at the address indicated on the
signature page hereto. Any permitted assignee hereunder shall notify the other
party hereto of the permitted assignee's address for purposes of this notice
provision. All notices shall be deemed to have been given or delivered upon
personal delivery or upon deposit in the U.S. mail, postage prepaid return
receipt requested, and properly addressed to the party to be notified.
16. INTEGRATION AND MODIFICATION. This Agreement shall embody the full
understanding of the parties with respect to the subject matter hereof,
superseding any and all prior agreements, and no amendment or modification
thereof shall be effective unless the same shall be in writing and signed by
both of said parties.
17. GOVERNING LAW. This Agreement shall be construed in accordance with,
and governed by, the laws of the state of Arizona, without regard to application
of conflicts of law principles.
18. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which, taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties hereto have executed this Agreement or
caused it to be executed on the day and year first above written.
MAIN STREET AND MAIN INCORPORATED
By /s/ Bart A. Brown, Jr.
-------------------------------------
Bart A. Brown, Jr.
/s/ Tim Rose
----------------------------------
Tim Rose
<PAGE>
EXHIBIT A
ASSIGNMENT
(To be executed by the registered holder
desiring to transfer the Options)
FOR VALUE RECEIVED, the undersigned holder of the Options to purchase
shares of common stock, par value $.001 per share, of Main Street and Main
Incorporated, a Delaware corporation (the "Corporation"), described on Schedule
1 attached hereto (the "Options"), hereby sells, assigns and transfers unto the
person or persons below named Options to purchase __________ shares of the
Corporation's common stock and does hereby irrevocably constitute and appoint
__________________________________________________ attorney to transfer said
Options on the books of the Corporation, with full power of substitution in the
premises.
The undersigned agrees not to sell, assign, transfer, pledge or hypothecate
the Options except in compliance with applicable securities laws.
Dated:
-------------------------------------
Signature
Fill in for new Registration of Options:
- -------------------------------------
Name
- -------------------------------------
Address
- -------------------------------------
Please print name and address of assignee
(including zip code number)
- --------------------------------------------------------------------------------
NOTICE
The signature to this Assignment must correspond to the name as written as the
registered holder of the Options on the books of the Corporation in every
particular, without alteration or enlargement or any change whatsoever.
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<PAGE>
Schedule 1
to
Assignment
Optionholder:
Grant Date:
Optioned Shares:
Option Price:
Vesting Schedule:
Number of Options Being Transferred:
The options are nonqualified options.
EXHIBIT 10.26A
SCHEDULE OF STOCK OPTION AGREEMENTS
SUBSTANTIALLY IDENTICAL TO EXHIBIT 10.26
1. Stock Option Agreement dated March 1, 1999, between the Company and William
G. Shrader for 150,000 shares of Common Stock at an exercise price of
$3.438 per share.
EXHIBIT 23.2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated February 19,
1999, included in Main Street and Main Incorporated's Form 10-K for the year
ended December 28, 1998, and to all references to our firm included in this
registration statement.
/s/ Arthur Andersen LLP
Phoenix, Arizona,
April 30, 1999.
