ADVANTICA STOCK OPTION PLAN *
1. PURPOSE OF THE PLAN
This Advantica Stock Option Plan (the "Plan") is intended to promote
the interest of Advantica Restaurant Group, Inc. ("Advantica") and its
Subsidiaries by providing the employees of and certain consultants to the
Company, who are largely responsible for the management, growth and protection
of the business of the Company, with incentives and rewards to encourage them to
continue in their employment or consulting relationships with the Company.
2. DEFINITIONS
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Agreement" shall mean the agreement, in the form the Committee may
approve from time to time, which evidences an Option granted pursuant to the
Plan and entered into, at the direction of the Committee, with a Participant.
(b) "Board of Directors" shall mean the Board of Directors of
Advantica.
(c) "Cause" when used in connection with the termination of a
Participant's employment or consulting relationship with the Company, shall mean
the termination of the Participant's employment by or consulting relationship
with the Company because of (A) an act or acts by him, or any omission by him,
constituting a felony, if the Participant has entered a guilty plea or
confession to, or has been convicted of, such felony, (B) any act of fraud or
dishonesty by the Participant which results in or is intended to result in any
financial or economic harm to the Company as determined by the Committee in its
sole discretion or (C) a breach of a material provision of any employment or
consulting agreement between the Participant and the Company.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" shall mean the Committee designated by the Board of
Directors pursuant to Section 4 hereof from time to time.
(f) "Common Stock" shall mean Advantica's common stock, $.01 par value
per share.
(g) "Company" shall mean Advantica, a Delaware corporation, and each
of its Subsidiaries.
*(AS ADOPTED ON JANUARY 28, 1998, AMENDED ON SEPTEMBER 28, 1998, AMENDED AND
RESTATED ON MARCH 15, 1999 AND AMENDED ON MAY 19, 1999)
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(h) "Disability" shall mean any physical or mental condition which
would qualify a Participant for a disability benefit under the long-term
disability plan maintained by the Company and applicable to that particular
Participant.
(i) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(j) "Fair Market Value" of a share of Common Stock on any day shall be
the fair market value of the Common Stock on such day as determined by utilizing
a reasonable valuation method established by the Committee in its sole
discretion to be applied on a consistent basis to all Participants.
(k) "Incentive Stock Option" shall mean an Option that is intended to
satisfy the requirements applicable to an "incentive stock option" as that term
is described in Section 422(b) of the Code.
(l) "Nonqualified Stock Option" shall mean an Option that is not
intended to be treated as an "incentive stock option" as that term is described
in Section 422(b) of the Code.
(m) "Officer" shall mean any vice president or higher ranking officer
of the Company.
(n) "Option" shall mean an option to purchase shares of Common Stock
granted pursuant to Section 6 hereof. Each Option shall be identified by the
Committee in the Agreement as either a Nonqualified Stock Option or an Incentive
Stock Option.
(o) "Participant" shall mean an individual who is eligible to
participate in the Plan pursuant to Section 5 hereof and to whom an Option is
granted pursuant to the Plan, and, upon his death, his successors, heirs,
executors, and administrators, as the case may be.
(p) "Plan" shall mean this Advantica Stock Option Plan (formerly known
as the Advantica Restaurant Group Officer Stock Option Plan), as it may be
amended from time to time. Effective March 15, 1999, the Advantica Restaurant
Group Stock Option Plan merged with and into this Plan.
(q) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(r) "Subsidiary" shall mean any corporation in which, at the time of
reference, Advantica owns, directly or indirectly, stock comprising more than
fifty percent of the total combined voting power of all classes of stock of such
corporation.
(s) "Voluntary Termination" shall mean any voluntary termination by the
Participant of his employment or consulting relationship with the Company.
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3. STOCK SUBJECT TO THE PLAN
Subject to the adjustment as provided in Section 7 hereof, the
Committee may grant Options under the Plan with respect to a number of shares of
Common Stock that does not exceed 7,388,888 shares and, with respect to any
individual Participant, does not exceed 3,000,000 shares during any calendar
year. In the event that any outstanding Option expires, terminates or is
canceled for any reason, the shares of Common Stock subject to the unexercised
portion of such Option shall again be available for grants under the Plan for
purposes of the 7,388,888 share limit stated above. Shares of Common Stock
issued under the Plan may be either newly issued shares or treasury shares, at
the discretion of the Committee.
4. ADMINISTRATION OF THE PLAN
The Plan shall be administered by a Committee of the Board of Directors
consisting of three or more persons as designated by the Board of Directors. The
Committee shall have full authority to designate, from time to time, those
individuals who shall be granted Options and the number of shares of Common
Stock covered by such Options.
The Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and the
terms of any Option issued under it and to adopt such rules and regulations for
administering the Plan as it may deem necessary. Decisions of the Committee
shall be final and binding on all parties.
The Committee may, in its absolute discretion, accelerate the date on
which any Option becomes exercisable or upon termination of the Participant's
employment or consulting relationship with the Company, permit a terminated
individual's Options to continue to be exercisable for the remainder of the term
of such Options or any portion thereof. In addition, the Committee may, in its
absolute discretion, grant Options to Participants on the condition that such
Participants surrender to the Committee for cancellation such other Options
(including, without limitation, Options with higher exercise prices) as the
Committee specifies. In such case, both the Option that is deemed to be canceled
and the Option that is deemed to be granted shall reduce the maximum number of
shares for which Options may be granted to any individual Participant as set
forth in Section 3.
The Committee shall have full authority to delegate to a subcommittee
of directors (the "Subcommittee") any and all authority granted to the Committee
with respect to the Plan, such Subcommittee to be constituted and to have such
authority as may be necessary to satisfy any and all requirements of Rule 16b-3
promulgated under Section 16 of the Exchange Act and/or Section 162(m) of the
Code and the regulations thereunder with respect to any Option granted or
exercised pursuant to the terms of the Plan.
No member of the Committee or Subcommittee shall be liable for any
action, omission, or determination relating to the Plan, and Advantica shall
indemnify and hold harmless each member of the Committee or Subcommittee and
each other director or employee of the Company to whom any duty or power
relating to the administration or interpretation of the Plan has been
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delegated against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the approval of Advantica)
arising out of any action, omission or determination relating to the Plan,
unless, in either case, such action, omission or determination was taken or made
by such member, director or employee in bad faith and without reasonable belief
that it was in the best interests of the Company.
5. ELIGIBILITY
The persons who shall be eligible to receive Options pursuant to the
Plan shall be those employees and consultants of the Company who have
responsibility for the management, growth and protection of the business of the
Company, whom the Committee in its sole discretion shall select from time to
time.
6. OPTIONS
Options granted pursuant to the Plan shall be evidenced by an
Agreement. Options shall comply with and be subject to the following terms and
conditions:
(a) Identification of Options/Incentive Stock Option Eligibility
All Options granted under the Plan shall be identified in the Agreement
as either a Nonqualified Stock Option or an Incentive Stock Option; however,
unless specifically designated and identified by the Committee as an Incentive
Stock Option, each Option granted shall be deemed to be a Nonqualified Stock
Option. Only Officers of the Company shall be eligible for grants of Incentive
Stock Options. Incentive Stock Options may not be granted after the expiration
of ten years from the date of this Plan's adoption by the Board of Directors.
(b) Exercise Price
The exercise price in respect of each share of Common Stock covered by
any Option granted under the Plan shall be such price as the Committee shall
determine on the date on which such Option is granted.
(c) Term and Exercise of Options
(1) Each Option shall be exercisable on such date or dates, during such
period and for such number of shares of Common Stock as shall be determined by
the Committee on the day on which such Option is granted and set forth in the
Option Agreement with respect to such Option; provided, however, that each
Option shall be subject to earlier termination, expiration or cancellation as
provided in this Plan.
(2) Each Option shall be exercisable in whole or in part. Any partial
exercise of an Option shall not cause the expiration, termination or
cancellation of the remaining portion thereof.
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(3) Subject to the provisions of Section 11 hereof, an Option shall be
exercised by delivering notice to Advantica's principal office, to the attention
of its Secretary or his or her designee, in such form and in accordance with
such procedures as may be provided from time to time by the office of the
Secretary of Advantica which may include the requirement that such notice: (i)
specify the number of shares of Common Stock with respect to which the Option is
being exercised and (ii) specify the effective date of the proposed exercise.
The Participant may withdraw such notice at any time prior to the opening of
business on the business day of the proposed exercise. Payment for shares of
Common Stock purchased upon the exercise of an Option shall be made on the
effective date of such exercise either (i) in cash, by certified check, bank
cashier's check or wire transfer; (ii) subject to the disallowance by the
Committee (such disallowance may be made, in the Committee's sole discretion,
for any reason whatsoever or for no reason), in shares of Common Stock owned by
the Participant and valued at their Fair Market Value on the effective date of
such exercise, or partly in shares of Common Stock with the balance in cash, by
certified check, bank cashier's check or wire transfer, or (iii) subject to the
disallowance by the Committee (such disallowance may be made in the Committee's
sole discretion, for any reason whatsoever or for no reason) and at the election
of the Participant, in a number of shares of Common Stock to be withheld by the
Company from the total number of such shares purchased, the Fair Market Value of
which at the exercise date the Committee shall determine to be sufficient to pay
the exercise price. Any payment in shares of Common Stock shall be effected by
the delivery of such shares to the Secretary of Advantica, duly endorsed in
blank or accompanied by stock powers duly endorsed in blank, together with any
other documents and evidences as the Secretary of Advantica shall require from
time to time.
(4) Certificates for shares of Common Stock purchased upon the exercise
of an Option shall be issued in the name of the Participant or, at the election
of the Participant, in the name of a broker designated by the Committee, in its
sole discretion, to hold such shares on behalf of and for the benefit of the
Participant. Such shares shall be delivered accordingly as soon as practicable
following the effective date on which the Option is exercised.
(5) During the lifetime of a Participant, unless otherwise so provided
in the Agreement, each Option granted to him shall be exercisable only by him.
No option shall be assignable or transferable otherwise than by will or by the
laws of descent and distribution. Notwithstanding the foregoing, an Agreement
may provide, at the sole discretion of the Committee, that certain identified
Nonqualified Stock Options are transferable by gift to such persons or entities
and under such terms and conditions as specified in the Agreement.
(d) Effect of Termination of Employment
Except as otherwise provided in the Agreement or in an employment or
consulting agreement executed by the Company's President and subject to the
provisions of Section 4 hereof:
(1) In the event that the employment or consulting relationship of a
Participant with the Company shall terminate due to death, Disability or
retirement of the Participant (i) Options granted to such Participant, to the
extent that they were exercisable at the time of such
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termination, shall remain exercisable until the expiration of one year after
such termination, on which date they shall expire and terminate; and (ii)
Options granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire and terminate at the
close of business on the date of such termination; provided, however, that no
Option shall be exercisable after the expiration of its term.
(2) In the event of a Voluntary Termination of employment or consulting
relationship or other termination of a Participant's employment or consulting
relationship for any reason other than for Cause, all outstanding Options, to
the extent that they were exercisable on the date of termination, shall continue
to be exercisable for a period of 60 days from the date of termination. After
the lapse of such 60 days, all Options, exercisable or not exercisable on the
date of termination, shall expire and be terminated; provided, however, that no
Option shall be exercisable after the expiration of its term.
(3) In the event the termination of a Participant's employment or
consulting relationship is for Cause, all outstanding Options granted to such
Participant, exercisable or not exercisable, shall expire and terminate at the
commencement of business on the date of such termination.
7. ADJUSTMENT UPON CHANGES IN COMMON STOCK
(a) Shares Available for Grants
In the event of any change in the number of shares of Common Stock
outstanding by reason of any stock dividend or split, recapitalization, merger,
consolidation, combination or exchange of shares or similar corporate change,
the maximum aggregate number of shares of Common Stock with respect to which the
Committee may grant Options shall be appropriately adjusted by the Committee. In
the event of any change in the number of shares of Common Stock outstanding by
reason of any other event or transaction, the Committee may, but need not, make
such adjustments in the number and class of shares of Common Stock with respect
to which Options may be granted as the Committee may deem appropriate.
(b) Outstanding Options - Increase or Decrease in Issued Shares
Without Consideration
Subject to any required action by the shareholders of Advantica, in the
event of any increase or decrease in the number of issued shares of Common Stock
resulting from a subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend (but only on the shares of Common Stock), or any
other increase or decrease in the number of such shares effected without receipt
of consideration by Advantica, the Committee shall proportionally adjust the
number of shares of Common Stock subject to each outstanding Option and the
exercise price per share of Common Stock in respect of each such Option.
(c) Outstanding Options - Certain Mergers
Subject to any required action by the shareholders of Advantica, in the
event that Advantica shall be the surviving corporation in any merger or
consolidation (except a merger or
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consolidation as a result of which the holders of shares of Common Stock receive
securities of another corporation), each Option outstanding on the date of such
merger or consolidation shall pertain to and apply to the securities which a
holder of the number of shares of Common Stock subject to such Option would have
received in such merger or consolidation.
(d) Outstanding Options - Certain Other Transactions
In the event of (i) a dissolution or liquidation of Advantica, (ii) a
sale of all or substantially all of Advantica's assets, (iii) a merger or
consolidation involving Advantica in which Advantica is not the surviving
corporation or (iv) a merger or consolidation involving Advantica in which
Advantica is the surviving corporation but the holders of shares of Common Stock
receive securities of another corporation and/or other property, including cash,
the Committee shall, in its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of such
event, each Option outstanding immediately prior to such event (whether
or not then exercisable), and, in full consideration of such
cancellation, pay to the Participant to whom such Option was granted an
amount in cash for each share of Common Stock subject to such Option,
equal to the excess of (a) the value, as determined by the Committee in
its absolute discretion, of the property (including cash) received or
to be received by the holder of a share of Common Stock as a result of
such event over (b) the exercise price in respect of each share of
Common Stock covered by such Option; or
(ii) provide for the exchange of each Option outstanding immediately
prior to such event (whether or not then exercisable) for an option on
some or all of the property for which each share of Common Stock
subject to such Option is exchanged and, incident thereto, make an
equitable adjustment as determined by the Committee in its absolute
discretion in the exercise price of the Option, or the number of shares
or amount of property subject to the Option or, if appropriate, provide
for a cash payment to the Participant to whom such Option was granted
in partial consideration for the exchange of the Option.
(e) Outstanding Options - Other Changes
In the event of any change in the capitalization of Advantica or
corporate change other than those specifically referred to in Section 7(a), (b),
(c) or (d) hereof, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to Options outstanding on
the date on which such change occurs and in the per share exercise price of each
such Option as the Committee may consider appropriate to prevent dilution or
enlargement of rights.
(f) No Other Rights
Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution,
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liquidation, merger or consolidation of Advantica or any other corporation.
Except as expressly provided in the Plan, no issuance by Advantica of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number of shares of Common Stock subject to an Option or the exercise price
of any Option.
8. RIGHTS AS A STOCKHOLDER
No person shall have any rights as a stockholder with respect to any
shares of Common Stock covered by or relating to any Option granted pursuant to
this Plan until the date of the issuance of a stock certificate with respect to
such shares. Except as otherwise expressly provided in Section 7 hereof, no
adjustment to any Option shall be made for dividends or other rights for which
the record date occurs prior to the date on which such stock certificate is
issued.
9. NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO OPTION
Nothing contained in the Plan or any Option shall confer upon any
Participant any right with respect to the continuation of his or her employment
or consulting relationship with the Company or interfere in any way with the
right of the Company, subject to the terms of any
separate employment or consulting agreement to the contrary, at any time to
terminate such relationship or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Option.
No person shall have any claims or right to receive an Option
hereunder. The Committee's granting of an Option to a Participant at any time
shall neither require the Committee to grant an Option to such Participant or
any other Participant or other person at any time nor preclude the Committee
from making subsequent grants to such Participant or any other Participant or
other person.
10. SECURITIES LAW MATTERS
(a) Advantica shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, Advantica shall not be obligated to cause to be
issued or delivered any certificates evidencing shares of Common Stock pursuant
to the Plan unless and until Advantica is advised by its counsel that the
issuance and delivery of such certificates is in compliance with all applicable
laws, regulations of governmental authority and the requirements of any
securities exchange on which shares of Common Stock are traded. The Committee
may require, as a condition of the issuance and delivery of certificates
evidencing shares of Common Stock pursuant to the terms hereof, that the
recipient of such shares make such covenants, agreements and representations,
and that such certificates bear such legends, as the Committee, in its sole
discretion, deems necessary or desirable.
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(b) The exercise of any Option granted hereunder shall only be
effective at such time as counsel to Advantica shall have determined that the
issuance and delivery of shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority and
the requirements of any securities exchange or market on which shares of Common
Stock are traded. Advantica may, in its sole discretion, defer the effectiveness
of any exercise of an Option granted hereunder in order to allow the issuance of
shares of Common Stock pursuant thereto to be made pursuant to an effective
registration statement or an exemption from such registration or other methods
for compliance available under federal or state securities laws. Advantica shall
inform the Participant in writing of its decision to defer the effectiveness of
the exercise of an Option granted hereunder. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain the refund of any
amount paid or delivered with respect thereto.
11. WITHHOLDING TAXES
(a) Cash Remittance
Whenever shares of Common Stock are to be issued upon the exercise of
an Option, the Participant shall be required, as a condition to the exercise of
the related Option, to remit to the Company in cash an amount sufficient to
satisfy federal, state and local withholding tax requirements, if any,
attributable to such exercise prior to the delivery of any certificate or
certificates for such shares.
(b) Stock Remittance
At the election of the Participant, subject to the disallowance of the
Committee (such disallowance may be made by the Committee in its sole discretion
for any reason whatsoever or for no reason), when shares of Common Stock are to
be issued upon the exercise of any Option, in lieu of the cash remittance
required by Section 11(a) hereof, the Participant may tender to the Company a
number of shares of Common Stock determined by such Participant, the Fair Market
Value of which at the tender date the Committee determines, in its sole
discretion, to be sufficient to satisfy the federal, state and local withholding
tax requirements, if any, attributable to such exercise and not greater than the
Participant's calculated total federal, state and local tax obligations
associated with such exercise.
(c) Stock Withholding
At the election of the Participant, subject to the disallowance of the
Committee (such disallowance may be made by the Committee in its sole discretion
for any reason whatsoever or for no reason), when shares of Common Stock are to
be issued upon the exercise of an Option, in lieu of the cash remittance
required by Section 11(a) hereof, the Company shall withhold a number of such
shares, the Fair Market Value of which at the exercise date the Committee
determines (in its sole discretion) to be sufficient to satisfy the federal,
state and local
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withholding tax requirements, if any, attributable to such exercise and not
greater than the Participant's calculated total federal, state and local tax
obligations associated with such exercise.
12. AMENDMENT OF THE PLAN; TERM OF THE PLAN
The Board of Directors or the Committee may at any time suspend,
discontinue or terminate the Plan. Additionally, the Board of Directors or the
Committee may revise or amend the Plan in any respect whatsoever subject only to
any applicable law, regulation or exchange/market requirement, provided that no
amendment or discontinuance may, in the absence of written consent to the change
by the affected Participant, adversely affect the rights of any Participant
under any Option granted under the Plan prior to the date such amendment is
adopted by the Board or the Committee. The Plan shall continue in existence
until terminated by the Board of Directors or the Committee pursuant to the
terms set forth herein.
13. NO OBLIGATION TO EXERCISE
The grant to a Participant of an Option shall impose no obligation upon
such Participant to exercise such Option.
14. TRANSFERS UPON DEATH
Unless otherwise provided in the Agreement, upon the death of a
Participant, outstanding Options granted to such Participant may be exercised
only by the executors or administrators of the Participant's estate or by any
person or persons who shall have acquired such right to exercise by will or by
the laws of descent and distribution. No transfer by will or the laws of descent
and distribution of any Option, or the right to exercise any Option, shall be
effective to bind the Company unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of the will and/or such evidence
as the Committee may deem necessary to establish the validity of the transfer
and (b) an agreement by the transferee to comply with all the terms and
conditions of the Option that are or would have been applicable to the
Participant and to be bound by the acknowledgments made by the Participant in
connection with the grant of the Option.
15. EXPENSES
The expenses of the Plan shall be paid by the Company.
16. FAILURE TO COMPLY
In addition to the remedies of the Company elsewhere provided for
herein, if a Participant shall fail to comply with any of the terms or
conditions of the Plan or the Agreement, the Committee may cancel such Option
and cause such Option to be forfeited, in whole or in part,
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as the Committee, in its absolute discretion, may determine, unless such failure
is remedied by such Participant within ten days after such Participant's receipt
of written notice of such failure from the Committee or the Company.
17. EFFECTIVE DATE
The Plan initially was adopted by the Board of Directors and effective on
January 28, 1998, subject to the approval of shareholders of Advantica in
accordance with applicable laws and regulations. Such shareholder approval was
received on June 18, 1998. The Plan, as last amended, is effective on May 19,
1999.
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