SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
GRILL CONCEPTS, INC.
------------------------------
(Name of Registrant As Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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4. Date Filed:
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<PAGE>
GRILL CONCEPTS, INC.
11661 San Vicente Blvd., Suite 404
Los Angeles, California 90049
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD FRIDAY, JUNE 12, 1998
To the Shareholders of Grill Concepts, Inc.:
An Annual Meeting of Shareholders of Grill Concepts, Inc. (the "Company")
will be held at The Grill, 172 South Market St., San Jose, California 95113, at
10:00 a.m., on Friday, June 12, 1998 for the following purposes:
1. To elect 7 directors of the Company to hold office until the next
annual meeting of shareholders or until their successors are duly elected
and qualified.
2. To consider a proposal to adopt the Grill Concepts, Inc. 1998
Comprehensive Stock Option and Award Plan.
3. To consider a proposal to ratify the appointment of Coopers &
Lybrand L.L.P. as the Company's independent certifying accountants.
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on April 24, 1998 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you are
planning to attend the meeting, you are urged to complete, date and sign the
enclosed proxy card and return it promptly.
YOUR VOTE IS IMPORTANT! PLEASE PROMPTLY MARK, DATE, SIGN, AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE. IF YOU ARE ABLE TO ATTEND THE MEETING AND WISH
TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS
VOTED.
By Order of the Board of Directors
Michael Weinstock
Secretary
Los Angeles, California
April 27, 1998
<PAGE>
GRILL CONCEPTS, INC.
11661 San Vicente Blvd., Suite 404
Los Angeles, California 90049
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 12, 1998
INTRODUCTION
This Proxy Statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of Grill Concepts, Inc. (the
"Company") for use at the 1998 Annual Meeting of Shareholders of the Company and
at any adjournment thereof (the "Annual Meeting"). The Annual Meeting is
scheduled to be held at The Grill, 172 South Market St., San Jose, California
95113, on Friday, June 12, 1998 at 10:00 a.m. local time. This Proxy Statement
and the enclosed form of proxy will first be sent to shareholders on or about
April 27, 1998.
Proxies
The shares represented by any proxy in the enclosed form, if such proxy is
properly executed and is received by the Company prior to or at the Annual
Meeting prior to the closing of the polls, will be voted in accordance with the
specifications made thereon. Proxies on which no specification has been made by
the shareholder will be voted FOR the election to the Board of Directors of the
nominees of the Board of Directors named herein, FOR the adoption of the
adoption of the Grill Concepts, Inc. 1998 Comprehensive Stock Option and Award
Plan, FOR the ratification of the appointment of the designated independent
accountants, and as the proxy holders deem advisable on other matters that may
come before the meeting. Proxies are revocable by written notice received by the
Secretary of the Company at any time prior to their exercise or by executing a
later dated proxy. Proxies will be deemed revoked by voting in person at the
Annual Meeting.
Voting Securities
Shareholders of record at the close of business on April 24, 1998 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. On
the Record Date, the total number of shares of common stock of the Company,
$.00001 par value per share (the "Common Stock"), outstanding and entitled to
vote was 15,672,481. The holders of all outstanding shares of Common Stock are
entitled to one vote for each share of Common Stock registered in their names on
the books of the Company at the close of business on the Record Date.
Additionally, every shareholder voting for the election of directors may
cumulate such shareholder's votes and give one candidate a number of votes equal
to the number of directors to be elected multiplied by the number of shares held
by the shareholder as of the Record Date, or distribute such shareholder's votes
on the same principle among as many candidates as the shareholder may select,
provided that votes cannot be cast for more than the number of directors to be
elected. However, no shareholder shall be entitled to cumulate votes unless the
candidate's name has been placed in nomination prior to the voting and the
shareholder, or any other shareholder, has given notice at the meeting prior to
the voting of the intention to cumulate the shareholder's votes.
Quorum and Other Matters
The presence at the Annual Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum. The Board of Directors is
not aware of any matters that are expected to come before the Annual Meeting
other than those referred to in this Proxy Statement. If any other matter should
come before the Annual Meeting, the persons named in the accompanying proxy
intend to vote such proxies in accordance with their best judgment.
<PAGE>
Shares of Common Stock represented by a properly dated, signed and returned
proxy will be counted as present at the Annual Meeting for purposes of
determining a quorum, without regard to whether the proxy is marked as casting a
vote or abstaining. Directors will be elected by a plurality of the votes cast
at the Annual Meeting. Each of the other matters scheduled to come before the
Annual Meeting requires the approval of a majority of the votes cast at the
Annual Meeting. Therefore, abstentions and broker non-votes will have no effect
on the election of directors or any other matter.
PROPOSAL 1
ELECTION OF DIRECTORS
Seven directors are to be elected to serve until the next annual meeting of
shareholders and until their successors are elected and shall have qualified.
The Board of Directors has nominated Robert L. Wechsler, Robert Spivak, Michael
Weinstock, Richard Shapiro, Charles Frank, Glenn Golenberg and Peter Balas to
serve as directors (the "Nominees"). Each of the Nominees is currently serving
as a director of the Company. Directors shall be elected by shareholders holding
a plurality of the shares of Common Stock present at the Annual Meeting. It is
the intention of the persons named in the form of proxy, unless authority is
withheld, to vote the proxies given them for the election of all of the
Nominees. In the event, however, that any one of them is unable or declines to
serve as a director, the appointees named in the form of proxy reserve the right
to substitute another person of their choice as nominee, in his place and stead,
or to vote for such lesser number of directors as may be presented by the Board
of Directors in accordance with the Company's Bylaws. The Board of Directors has
no reason to believe that any nominee will be unable to serve or decline to
serve as a director. Any vacancy occurring between shareholders' meetings,
including vacancies resulting from an increase in the number of directors, may
be filled by the Board of Directors. A director elected to fill a vacancy shall
hold office until the next annual shareholders' meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
FOR THE ELECTION OF ALL NOMINEES NAMED ABOVE TO THE BOARD OF DIRECTORS.
- ---
Information Regarding Nominees
The following table sets forth information with respect to each Nominee for
election as a director. The information as to age, principal occupation and
directorships held has been furnished by each such nominee.
<TABLE>
Served as
Director
Principal Continuously Committee
Name and Age Occupation (1) Since Memberships
--------------------- ----------------- -------------- -------------
<S> <C> <C> <C>
Robert L. Wechsler (69)............. Chairman of the Board (2) 1986
Robert Spivak (54).................. President and Chief Executive 1995
Officer (3)
Michael Weinstock (55).............. Vice Chairman of the Board and 1995
Executive Vice President (4)
Richard Shapiro (55)................ President, Spectrum Investments, 1995 Compensation
Inc. (5)
Charles Frank (49).................. President, CAF Restaurant Services (6) 1995 Audit and
Compensation
Glenn Golenberg (56)................ Managing Director, Golenberg & 1995 Audit and
Co. (7) Compensation
Peter Balas (66).................... Consultant (8) 1995 Audit
</TABLE>
2
<PAGE>
(1) Unless indicated otherwise in the table or in the section of this Proxy
Statement captioned "Information Regarding Executive Officers," the
individuals named in the table have held their positions for more than five
years.
(2) From 1986 until 1995, Mr. Wechsler served as President, Chief Executive
Officer and Chairman of the Board of the Company's predecessor, Magellan
Restaurant Systems, Inc. ("Magellan").
(3) From 1988 until 1995, when Magellan and Grill Concepts, Inc. ("GCI")
combined, Mr. Spivak served as President, Chief Executive Officer and a
director of the Company's subsidiary, GCI.
(4) From 1988 until 1995, Mr. Weinstock served as Chairman of the Board and
Vice President of the Company's subsidiary, GCI.
(5) From 1988 until 1995, Mr. Shapiro served as Vice Chairman, Vice President
and a director of the Company's subsidiary, GCI. Since 1966, Mr. Shapiro
has served as President and Chief Executive Officer of Spectrum
Investments, Inc., a Budget Rent-a-Car franchisee operating locations
throughout California. Spectrum Investments, Inc. sold all of its franchise
rights and terminated active franchise operations in 1992.
(6) Mr. Frank has served as President of CAF Restaurant Services, Inc., a
restaurant consulting firm, since 1989 and has provided consulting services
to the Company and its subsidiary, GCI, since 1994. Mr. Frank served as
President of MSA Industries, a manufacturing company, from early 1995 to
July of 1997. From 1992 to 1993, Mr. Frank served as President and Chief
Operating Officer of Il Fornaio (America) Corp., a restaurant chain
operator.
(7) Mr. Golenberg has served as Managing Director of Golenberg & Co., a
merchant banking firm, since 1995. From 1991 to 1995, Mr. Golenberg served
as Managing Director of Golenberg & Geller, Inc., a merchant banking firm,
which provided financial services to the Company and GCI during 1994 and
1995.
(8) Mr. Balas has served as an independent consultant to the hospitality
industry for in excess of five years. Previously, Mr. Balas served as
President of the International Hotel Association and in various capacities
with Inter-Continental Hotels, Inc., including Vice President Food and
Beverage, President and area Chief Executive for Europe and the Middle East
and manager of the Inter-Continental Hotel, Paris.
Information Regarding Executive Officers
The following table sets forth the names, ages and offices of the present
executive officers of the Company. The periods during which such persons have
served in such capacities are indicated in the description of business
experience of such persons below. Information with respect to non-employee
directors is set forth above.
Robert L. Wechsler (69).............. Chairman of the Board
Robert Spivak (54)................... President and Chief Executive Officer
Michael Weinstock (55)............... Vice Chairman of the Board, Executive
Vice President and Secretary
Thomas Saiza (45).................... Vice President - Operations
John Sola (45)....................... Vice President - Executive Chef
Ben Sumner (62)...................... Treasurer and Chief Financial Officer
Officers and directors are elected on an annual basis. The present terms
for each director will expire at the next annual meeting of shareholders or at
such time as a successor is duly elected. Officers serve at the discretion of
the Board of Directors. See "Beneficial Ownership of Common Stock."
There are no family relationships among any of the directors or officers of
the Company.
The following is a biographical summary of the business experience of the
present executive officers of the Company.
Robert L. Wechsler. Mr. Wechsler was the founder and served as President,
Chief Executive Officer and Chairman of Magellan Restaurant Systems ("Magellan")
from 1986 to March of 1995. Following the combination (the "Exchange") of Grill
Concepts, Inc. ("GCI") and Magellan, in March of 1995, Mr. Wechsler stepped down
as President and Chief Executive Officer but continues to serve as Chairman of
the Board of the Company. Mr. Wechsler previously served in various capacities,
including President and Chief Executive Officer, of Wechsler Coffee Corporation,
a coffee wholesaler and roaster, from 1959 to 1982. Mr. Wechsler also served as
a director of Restaurant Associates, Inc., a restaurant operating company, from
1969 to 1988.
3
<PAGE>
Robert Spivak. Mr. Spivak was a co-founder of GCI and served as President,
Chief Executive Officer and a director of GCI from 1988 until the Exchange when
he assumed the same positions with the Company. Prior to forming GCI, Mr. Spivak
co-founded, and operated, The Grill on the Alley restaurant in Beverly Hills in
1984. Mr. Spivak continued to provide management services on a part-time basis
as Managing Director of The Grill on the Alley until 1996 when the Company
acquired The Grill on the Alley. Mr. Spivak previously served as (i) vice
president of Office Construction Company, where he headed that company's
restaurant construction division from 1980 to 1983, (ii) a partner of Soup 'n
Such from 1976 to 1980, (iii) food department manager of Fedco Stores from 1972
to 1976, and (iv) manager of Redwood House and Smokey Joe's, both family owned
restaurant operations, from 1965 to 1972. Mr. Spivak is a director of the
California Restaurant Association and a founder and past president of the
Beverly Hills Restaurant Association. Mr. Spivak also served on the board of
directors of the California Culinary Academy of San Francisco and serves on the
executive advisory board of the School of Hotel and Restaurant Management at
California State Polytechnic University at Pomona.
Michael Weinstock. Mr. Weinstock was a co-founder of GCI and served as
Chairman of the Board, Vice President, Secretary and a director of GCI from 1988
until the Exchange when he assumed the positions of Vice Chairman of the Board,
Executive Vice President, Secretary and director of the Company. Prior to
forming GCI, Mr. Weinstock co-founded The Grill on the Alley restaurant in
Beverly Hills in 1984. Mr. Weinstock previously served as President, Chief
Executive Officer and a director of Morse Security Group, Inc., a security
systems manufacturer.
Thomas Saiza. Mr. Saiza has served as Vice President of Operations of the
Company since November of 1997. Prior to joining the Company, Mr. Saiza served
as Senior Vice President of Feltenstein Partners, Inc., a restaurant consulting
firm, from 1996 to 1997. Previously, Mr. Saiza served in various executive
positions with El Torito Restaurants, Inc., La Salsa Holding Company and Red
Robin International.
John Sola. Mr. Sola served as Executive Chef for GCI from 1988 until the
Exchange when he assumed the position of Vice President - Executive Chef of the
Company. Mr. Sola oversees all kitchen operations, including personnel, food
preparation and food costs, as well as monitoring and maintaining the overall
performance of the kitchens and establishing procedures and policies in
connection with the opening of new Daily Grill restaurants. Mr. Sola, along with
Mr. Spivak, created the Daily Grill menu. Prior to joining GCI, Mr. Sola served
as opening chef at The Grill on the Alley from inception in 1984 to 1988.
Previously, Mr. Sola served in various positions, including Executive Chef, at a
wide range of restaurants.
Ben Sumner. Mr. Sumner served as Chief Financial Officer of GCI from May of
1994 until the Exchange when he assumed the same position as well as the
position of Treasurer with the Company. Prior to joining GCI, Mr. Sumner served
as Controller of Ecology Control Industries, a trucking operator, from 1992 to
1993 and as Vice President of Finance, Secretary and a director of Judy's, Inc.,
a publicly-held retail chain operator, from 1972 until 1990.
Compliance With Section 16(a) of Exchange Act
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than ten percent of the
Company's Common Stock are required to report their initial ownership of the
Company's Common Stock and any subsequent changes in that ownership to the
Securities and Exchange Commission. Specific due dates for these reports have
been established and the Company is required to disclose in this Proxy Statement
any failure to file by these dates during 1997. All of the filing requirements
were satisfied on a timely basis in 1997. In making these disclosures, the
Company has relied solely on written statements of its directors, executive
officers and shareholders and copies of the reports that they filed with the
Commission.
Committees and Attendance of the Board of Directors
In order to facilitate the various functions of the Board of Directors, the
Board has created a standing Audit Committee and a standing Compensation
Committee. The Board of Directors has no standing nominating committee or any
committee performing the functions of such committee.
4
<PAGE>
The functions of the Company's Audit Committee are to review the Company's
financial statements with the Company's independent auditors; to determine the
effectiveness of the audit effort through regular periodic meetings with the
Company's independent auditors; to determine through discussion with the
Company's independent auditors that no unreasonable restrictions were placed on
the scope or implementation of their examinations; to inquire into the
effectiveness of the Company's financial and accounting functions and internal
controls through discussions with the Company's independent auditors and
officers of the Company; to recommend to the full Board of Directors the
engagement or discharge of the Company's independent auditors; and to review
with the independent auditors the plans and results of the auditing engagement.
The members of the Audit Committee are Mr. Frank, Chairman, Mr. Golenberg and
Mr. Balas.
The functions of the Company's Compensation Committee include reviewing the
existing compensation arrangements with officers and employees, periodically
reviewing the overall compensation program of the Company and recommending to
the Board modifications of such program which, in the view of the development of
the Company and its business, the Committee believes are appropriate,
recommending to the full Board of Directors the compensation arrangements for
senior management and directors, and recommending to the full Board of Directors
the adoption of compensation plans in which officers and directors are eligible
to participate and granting options or other benefits under such plans. The
members of the Compensation Committee are Mr. Frank, Chairman, Mr. Golenberg and
Mr. Shapiro.
During the year ended December 28, 1997, the Board of Directors held four
formal meetings, the Audit Committee held no meetings and the Compensation
Committee held two meetings. Each director attended at least 75% of the
aggregate of (i) the total number of meetings of the Board of Directors, plus
(ii) the total number of meetings held by all committees of the Board of
Directors on which the director served.
Compensation of Directors
Each non-employee director of the Company is paid a fee of $500 for each
Board of Directors meeting attended and $250 for each committee meeting
attended. The Company also reimburses each director for all expenses of
attending such meetings. Additionally, each non-employee director is currently
granted options, pursuant to the Company's 1995 Stock Option Plan, to purchase
25,000 shares of Common Stock upon their initial appointment as a director.
Thereafter, each non-employee director on the day following each annual meeting
of shareholders of the Company shall automatically receive options to purchase
an additional 5,000 shares, plus an additional 1,000 shares for each committee
on which such non-employee director serves. All such options are exercisable at
the fair market value of the Company's Common Stock on the date of grant. Such
options are fully vested and exercisable with respect to all of the shares
covered on the date of each grant. The Company's 1998 Comprehensive Stock Option
and Award Plan, which has been adopted by the Board of Directors subject to
approval by the shareholders at the Meeting, provides for formula stock option
grants on substantially identical terms to those set out in the 1995 Stock
Option Plan.
No additional compensation of any nature is paid to employee directors.
Executive Compensation and Other Matters
The following table sets forth information concerning cash and non-cash
compensation paid or accrued for services in all capacities to the Company
during the year ended December 28, 1997 of each person who served as the
Company's Chief Executive Officer during fiscal 1997 and the four other most
highly paid executive officers whose total annual salary and bonus exceeded
$100,000 during the fiscal year ended December 28, 1997 (the "Named Officers").
5
<PAGE>
<TABLE>
Long Term
Annual Compensation Compensation
--------------------------------------------- --------------
Other Annual Stock
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Options (#)
- --------------------------- ------ ------------ ---------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert Spivak (3).................. 1997 175,000 -0- 33,500 (1) 20,000
President and 1996 150,000 -0- 33,500 (1) 50,000
Chief Executive Officer 1995 138,365 -0- (2) 75,000
</TABLE>
- ------------
(1) Mr. Spivak receives the use of a leased automobile and reimbursement of all
expenses related to the use thereof ($13,000), a $1,500 per month
non-accountable expense allowance ($18,000) and a $1,000,000 term life
insurance policy, in addition to vacation benefits, expense reimbursements
and participation in medical, retirement and other benefit plans which are
generally available to the Company's executives.
(2) Although the officers receive certain perquisites such as auto allowances
and Company provided life insurance, the value of such perquisites did not
exceed the lesser of $50,000 or 10% of the officer's salary and bonus.
(3) Compensation indicated for Mr. Spivak for periods prior to March of 1995
represent amounts paid by the Company's subsidiary, GCI, prior to the
combination of Magellan and GCI.
Stock Option Grants
The following table sets forth information concerning the grant of stock
options made during 1997 to each of the Named Officers:
<TABLE>
Percent of
Total Options
Granted to
Options Employees in Price Expiration
Name Granted (1) Fiscal Year Per Share Date
---------- ------------ --------------- ----------- -----------
<S> <C> <C> <C> <C>
Robert Spivak....................... 20,000 6.8% $ 1.17 12/07/02
</TABLE>
- ------------
(1) All options were granted under the Company's 1995 Plan. All such options
become exercisable 20% in June, 1998 and 20% on each anniversary of the
grant of such options commencing with the second anniversary.
Stock Option Exercises
The following table sets forth information concerning the exercise of stock
options during 1997 by each of the Named Officers and the number and value of
unexercised options held by the Named Officers at the end of 1997:
<TABLE>
Number of Unexercised Value of Unexercised
Shares Options at In-the Money Options
Acquired on Value at FY-End (#) at FY-End ($)(1)
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- -------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert Spivak............... -0- -0- 35,000 110,000 -0- -0-
</TABLE>
- -------------
(1) Based on the fair market value per share of the Common Stock at year end,
minus the exercise price of "in-the-money" options. The closing price for
the Company's Common Stock on December 29, 1997 on the Nasdaq Small-Cap
Market was $1-1/8. Accordingly, none of the options held at year-end were
"in-the-money."
6
<PAGE>
Employment Contracts
Pursuant to the terms of the combination between Magellan and GCI, the
Company entered into an employment agreement with its Chairman, Robert L.
Wechsler, commencing December 1, 1994 and running for a term of five years.
Pursuant to such agreement, Mr. Wechsler serves as Chairman of the Board of the
Company and receives an annual salary of $75,000. Such agreement provides that
Mr. Wechsler or his estate will continue to receive payments thereunder for the
full term of the agreement if he is terminated without cause and that Mr.
Wechsler or his estate will continue to receive payments for one year in the
event of his death or disability.
Effective January 1, 1996, the Company entered into a three year employment
agreement with Robert Spivak, the Company's President and Chief Executive
Officer. Mr. Spivak's employment agreement provides for an annual salary of
$150,000 in 1996, $175,000 in 1997 and $200,000 in 1998. In addition, such
agreement provides that Mr. Spivak shall receive the use of a leased automobile
and reimbursement of all expenses related to the use thereof, a $1,500 per month
non-accountable expense allowance, five weeks paid vacation per year, a
$1,000,000 term life insurance policy, reimbursement of business related travel
and meal expenses and participation in all medical, retirement and other benefit
plans available to the Company's executives.
The Company has no other employment agreements with any of its employees.
Beneficial Ownership of Common Stock
The following table is furnished as of April 1, 1998, to indicate
beneficial ownership of shares of the Company's Common Stock by (1) each
shareholder of the Company who is known by the Company to be a beneficial owner
of more than 5% of the Company's Common Stock, (2) each director, nominee for
director and Named Officer of the Company, individually, and (3) all officers
and directors of the Company as a group. The information in the following table
was provided by such persons.
<TABLE>
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership (1)(2) Percent of Class (2)
--------------------- ---------------------------- ----------------------
<S> <C> <C>
Robert Spivak (3)..................................... 2,286,064 (4)(5)(6) 14.5%
Michael Weinstock (3)................................. 2,387,365 (4)(5)(7) 15.1%
Richard Shapiro (3)................................... 2,469,506 (4)(5)(8) 15.6%
Robert L. Wechsler.................................... 673,122 (9) 4.3%
Charles Frank......................................... 115,568 (10) *
Glenn Golenberg....................................... 99,500 (11) *
Peter Balas........................................... 38,500 (12) *
Lewis Wolff (13)...................................... 1,000,000 (14) 6.0%
All executive officers and directors
as a group (10 persons).............................. 8,160,641 (15) 51.7%
</TABLE>
- -------------
* Less than 1%.
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws, where applicable, and the information
contained in the footnotes to the table.
(2) Includes shares of Common Stock not outstanding, but which are subject to
options and warrants exercisable within 60 days of the date of the
information set forth in this table, which are deemed to be outstanding for
the purpose of computing the shares held and percentage of outstanding
Common Stock with respect to the holder of such options. Such shares are
not, however, deemed to be outstanding for the purpose of computing the
percentage of any other person.
(3) Address is 11661 San Vicente Blvd., Suite 404, Los Angeles, California
90049.
(4) All shares indicated as being held by Messrs. Weinstock, Shapiro and Spivak
exclude certain shares held by their spouses, children and certain trusts
for the benefit of family members. Messrs. Weinstock, Shapiro and Spivak
disclaim any beneficial interest in such shares.
7
<PAGE>
(5) 1,640,099 shares held equally by Robert Spivak, Michael Weinstock and
Richard Shapiro are pledged to a former stockholder of GCI to secure the
repayment of a $1,400,000 note evidencing the purchase price of such
shares.
(6) Includes 35,000 shares out of 145,000 shares issuable upon exercise of
incentive stock options held by Mr. Spivak.
(7) Includes 81,500 shares out of 130,000 shares issuable upon exercise of
incentive stock options held by Mr. Weinstock.
(8) Includes 99,500 shares issuable upon exercise of non-qualified stock
options held by Mr. Shapiro.
(9) Includes 19,000 shares issuable upon exercise of 107,500 incentive stock
options and 98,152 warrants held by Mr. Wechsler. Excludes 5,000 shares
held by the Wechsler Foundation with respect to which Mr. Wechsler
disclaims beneficial ownership.
(10) Includes 37,000 shares issuable upon exercise of non-qualified stock
options held by Mr. Frank.
(11) Includes 62,000 shares issuable upon exercise of 37,000 non-qualified stock
options and 25,000 warrants held by Mr. Golenberg.
(12) Includes 37,000 shares issuable upon exercise of non-qualified stock
options held by Mr. Balas.
(13) Address is 11828 La Grange Avenue, Los Angeles, California 90025.
(14) Includes (i) 800,000 shares issuable upon conversion of 1,000 shares of
Series I Convertible Preferred Stock and (iii) 200,000 shares held by Mr.
Wolff as Trustee of the Wolff Revocable Trust of 1993. The Series I
Convertible Preferred Stock is convertible, at any time, into a number of
shares determined by dividing $1,000 per share by $1.25. Excludes an
indeterminate number of shares issuable upon conversion or exercise of (i)
500 shares of Series II Convertible Preferred Stock, (ii) 750,000 five year
$2.00 Warrants and (iii) 750,000 five year $3.00 Warrants. The Series II
Convertible Preferred Stock is convertible commencing June 24, 1998 into a
number of shares determined by dividing $1,000 per share by the greater of
$1.00 or 75% of the average closing price of the Company's Common Stock
over the five trading days immediately preceding conversion, but not higher
than $2.50. The five year $2.00 Warrants and $3.00 Warrants are exercisable
to purchase one share of Common Stock per warrant commencing June 24, 2000.
Mr. Wolff, as Trustee of the Wolff Revocable Trust of 1993, may be deemed
to be the beneficial owner of all such securities.
(15) Includes 509,152 shares of Common Stock subject to stock options and
warrants held by the officers and directors and exercisable within 60 days.
Certain Relationships and Transactions
In April of 1996, the Company acquired The Grill restaurant in Beverly
Hills for 850,000 shares of common stock. The Grill was established by Messrs.
Spivak, Weinstock and Shapiro, the principal shareholders and directors of the
Company, and was owned and operated by a partnership of which Messrs. Spivak,
Weinstock and Shapiro controlled the managing partner and 50.9% of the total
partnership interests. Messrs. Spivak, Weinstock and Shapiro abstained from
voting on such transaction, both with respect to determination by the Company's
Board to pursue such transaction and the partnership's determination to pursue
the transaction. Pursuant to the terms of the acquisition of The Grill, Messrs.
Spivak, Weinstock and Shapiro received an aggregate of approximately 432,735
shares of common stock of the Company.
Since June of 1989, the Company has leased its Cherry Hill restaurant from
Denbob Corporation ("Denbob"), a company controlled by Robert L. Wechsler, the
Company's Chairman, and Dennis Pedra, the former President of Magellan. The
premises are occupied under a twenty year lease with annual rent commencing at
approximately $118,500, plus 6% of annual gross sales in excess of $1,800,000,
15% of the landlord's cost for leasehold improvements, equipment and fixtures,
and a pro rata share of real estate taxes, insurance and other common area
charges. After five years, the Company had the option to pay for all or part of
any improvements and reduce or eliminate the 15% additional rent. At the end of
each five years, the rent and the gross sales level at which the 6% charge
commences increase by 15%. During 1995, the Company also entered into a lease
with Denbob pursuant to which the Company leases office space in the same
facility which houses the Cherry Hill restaurant. Such offices, which serve as
the Company's east coast offices, are leased on a month to month basis for $400
per month. During fiscal year 1997, the Company paid a total of $246,786 to
Denbob for the lease of the Cherry Hill restaurant and office space.
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<PAGE>
The Company believes that its leases with Denbob are on terms no less
favorable to the Company than could have been obtained from unaffiliated third
parties. Such belief is based on management's knowledge of the prevailing rental
market in the area at the time the leases were entered into, as well as a review
of the Company's leases with third party landlords on its other restaurants,
each of which contains comparable percentage lease provisions and other charges.
The Company has no existing corporate policy which prohibits or governs the
terms of any such transactions. Any such transactions are, however, reviewed by
the Audit Committee to determine the fairness of such transactions.
Other than elections to office, no director, nominee for director,
executive officer or associate of any of the foregoing persons has any
substantial interest, direct or indirect, by security holdings or otherwise, in
any matter to be acted upon at the Annual Meeting.
PROPOSAL 2
APPROVAL OF THE COMPANY'S 1998 COMPREHENSIVE
STOCK OPTION AND AWARD PLAN
As of March 30, 1998, there were 113,900 shares of Common Stock available
for future grants of options under the Company's existing stock option plans.
The Compensation Committee determined that it would be desirable to have an
additional 750,000 shares of Common Stock available for future grants of options
and other stock-based awards to employees of the Company and its subsidiaries,
as well as to directors and consultants of the Company who are not also
employees of the Company or any of its subsidiaries. Therefore, the Board of
Directors has adopted the Grill Concepts, Inc. 1998 Comprehensive Stock Option
and Award Plan (the "Plan"), which is subject to the approval of the
shareholders of the Company. The text of the Plan is set forth in its entirety
as Appendix A, and the following summary is qualified in its entirety by
reference thereto. The proposal for approval of the Plan will require the
affirmative vote of the holders of a majority of the votes cast with respect to
this matter at the Annual Meeting. Accordingly, while abstentions and broker
non-votes, if any, will count for purposes of establishing a quorum with respect
to this matter at the Annual Meeting, neither abstentions nor broker non-votes
will have the effect of a negative vote with respect to this matter.
General
The purpose of the Plan is to provide the Company with a means of providing
employees of the Company and its subsidiaries and directors and consultants of
the Company the benefits of ownership of the Common Stock. The Plan is designed
to help attract and retain for the Company and its subsidiaries personnel of
superior ability for positions of exceptional responsibility, to reward
employees, directors and consultants for past services and to motivate such
individuals through added incentives to further contribute to the future growth
and the success of the Company.
Under the Plan, stock options, shares of restricted stock, stock awards or
performance shares, or a combination of any such awards (collectively,
"Awards"), may be granted from time to time to Eligible Persons (hereinafter
defined), all generally in the discretion of the Committee responsible for
administering the Plan (hereinafter described). Each Award under the Plan will
be evidenced by a separate written agreement which sets forth the terms and
conditions of the Award. "Eligible Persons" generally include any employee of
the Company or its subsidiaries, members of the Board of Directors of the
Company and any consultant or other person whose participation the Committee
determines is in the best interest of the Company. Grants under the Plan to
non-employee directors are limited to an initial grant of nonqualified stock
options in an amount equal to 25,000 shares commencing with the first annual
shareholders meeting following the adoption of the Plan and additional grants of
nonqualified stock options in an amount equal to 5,000 shares plus 1,000 shares
for committee on which such non-employee director serves on each subsequent
reelection of a non-employee director. There is no maximum number of persons
eligible to receive Awards under the Plan, nor is there any limit on the amount
of Awards that may be granted to any such person, except as described below with
respect to incentive stock options. The Company intends that stock options or
other grants of Awards under the Plan to persons subject to Section 16 of the
Exchange Act will satisfy the requirements of Rule 16b-3 under the Exchange Act
("Rule 16b-3").
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<PAGE>
The Company has reserved 750,000 shares of its Common Stock for issuance
under the Plan, subject to adjustment to protect against dilution in the event
of certain changes in capitalization of the Company.
Administration
The Plan will be administered by a committee of the Board of Directors of
the Company that consists of two or more directors (the "Committee"). To the
extent necessary to comply with Rule 16b-3, the Committee will consist solely of
two or more "non-employee directors," as that term is defined in Rule 16b-3.
Under the Plan, generally the Committee will have complete authority to
determine the persons to whom Awards will be granted from time to time, as well
as the terms and conditions of such Awards. The Committee also will have
discretion to interpret the Plan and the Awards granted under the Plan and to
make other determinations necessary or advisable for the administration of the
Plan. Under the Plan, the full Board of Directors can act as the Committee, if
all of the members of the Board of Directors otherwise are eligible to serve on
the Committee. The full Board of Directors generally also may grant Awards under
the Plan from time to time. The Compensation Committee of the Board of Directors
will act as the Committee until otherwise determined by the Board of Directors.
Stock Options
General. The Committee may grant either incentive stock options (for
purposes of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code")) or nonqualified stock options under the Plan. Except as described below
for incentive stock options, the Committee generally has the discretion to
determine the persons to whom stock options will be granted, the numbers of
shares subject to such options, the exercise prices of such options, the vesting
schedules with respect to such options, the terms of such options, as well as
the period, if any, following a participant's Termination of Service (as defined
in the Plan) during which such option may be exercised, and the circumstances in
which all or a portion of an option may become immediately exercisable or be
forfeited. The Committee also has the discretion, exercisable either at the time
an option is granted or at the time of a participant's Termination of Service,
to provide for accelerated vesting of the exercisability of an option for a
limited period following such Termination of Service. Such terms may differ
among the various persons to whom the options are granted and among the various
options granted to any such person. Notwithstanding the foregoing, under the
terms of the Plan, no options may be exercised following the Termination of
Service of a participant for cause.
In the discretion of the Committee, the price due upon exercise of an
option may be paid in cash or in shares of the Company's Common Stock valued at
their then current Fair Market Value (as defined in the Plan), or a combination
of both. Shares delivered in payment of such price may be shares acquired by
prior exercises of options or otherwise, in the Committee's discretion. Also in
the discretion of the Committee, a participant may exercise an option as to only
a part of the shares covered thereby and then, in an essentially simultaneous
transaction, use the shares so acquired in payment of the exercise price for
additional option shares.
Generally, options granted under the Plan may not be transferred by a
participant other than by will or by the laws of descent and distribution and
generally will be exercisable during the participant's lifetime only by such
participant or his or her guardian or legal representative. With respect to
nonqualified stock options, however, the Committee may, in its sole and absolute
discretion, permit a participant to transfer such option for no consideration to
or for the benefit of one or more members of the participant's Immediate Family
(as defined in the Plan) or in certain circumstances family trusts, partnerships
or limited liability companies.
The Committee may also, in its discretion, allow the voluntary surrender of
all or a portion of a stock option conditioned upon the granting to the
participant of a new stock option for the same or a different number of shares,
or may require the surrender as a condition precedent to the grant of a new
stock option. The Committee may also purchase a participant's outstanding
option, on such terms and conditions as the Committee in its discretion
determines.
Holders of options shall have no rights as shareholders of the Company
unless and until such options are exercised and shares are delivered to such
persons in accordance with the Plan.
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<PAGE>
Incentive Stock Options. Incentive stock options may be granted only to
persons who are employees of the Company or its subsidiaries (including
directors of the Company who are also employees of the Company or a subsidiary
but excluding non-employee directors of the Company). Generally, incentive stock
options must be granted within ten years of the date the Plan is adopted, and
the term of any incentive stock option may not exceed ten years. Furthermore,
the aggregate Fair Market Value of shares of Common Stock with respect to which
any incentive stock options are exercisable for the first time by a participant
during any calendar year, whether such incentive stock options are granted under
the Plan or any other plans of the Company, may not exceed $100,000. Under the
Plan, however, if the aggregate Fair Market Value of such incentive stock
options exceeds this limit (whether due to its original terms, or due to
accelerated exercisability following a Termination of Service due to death,
Disability or Retirement (as such terms are defined in the Plan), or following a
Change of Control (hereinafter defined)), then to the extent permitted by
Section 422 of the Code, the excess will be treated as a nonqualified stock
option. Furthermore, the exercise price of incentive stock options must be at
least 100% of the Fair Market Value of the Common Stock at the time the
incentive stock option is granted, except in the case of incentive stock options
granted to any individual who owns more than 10% of the total combined voting
power of all classes of stock of the Company, in which case the exercise price
of incentive stock options must be at least 110% of the Fair Market Value of the
Common Stock at the time of grant.
The Plan also provides that, with respect to incentive stock options, the
period during which an option may be exercisable following a Termination of
Service generally may not exceed three months, unless (i) employment is
terminated as the result of Disability, in which case in the discretion of the
Committee the incentive stock options may be exercised during a period of one
year following the date of such Disability, or (ii) employment is terminated as
the result of death, or if the employee dies following a Termination of Service
(other than as a result of Disability) and during the period that the incentive
stock option is still exercisable, in which case in the discretion of the
Committee the incentive stock option may be exercised during a period of one
year following the date of such death. In no event, however, may an incentive
stock option be exercised after the expiration of its original term.
Restricted Stock, Stock Awards and Performance Shares
Under the Plan, the Committee has broad discretion to grant other
equity-based incentives and/or compensation in the form of restricted stock or
other stock awards, as well as performance shares.
Restricted Stock. The Committee may award shares of restricted stock under
the Plan to any Eligible Person, for such consideration, if any, as may be
determined by the Committee or required by law, as a reward for past service and
an incentive for the performance of future services that will contribute
materially to the successful operation of the Company or its subsidiaries.
Restricted stock generally consists of shares of Common Stock that at the time
of award are subject to restrictions or limitations as to the participant's
ability to sell, transfer, pledge or assign such shares. Shares of restricted
stock may vest (separately or in combination), and all or a portion of the
applicable restrictions may lapse, from time to time over one or more restricted
periods, based on such factors as continued employment, the passage of time or
other measures as the Committee determines. The Committee also may determine the
circumstances, if any, in which shares of restricted stock that have not
previously vested may be forfeited by the participant or may be required to be
resold to the Company, as well as the circumstances, if any, in which the
vesting of such shares might be accelerated or delayed. Generally, in the
discretion of the Committee, any shares of restricted stock that have not vested
in full will be forfeited upon the participant's Termination of Service and
shall be canceled by the Company. Unless otherwise provided in the applicable
award agreement, however, the Committee may in its discretion waive any
remaining restrictions in the event of the death, Disability or Retirement of
the participant during the applicable restricted period or in other cases of
special circumstances. Notwithstanding the foregoing, under the terms of the
Plan all shares of restricted stock which have not vested in full shall be
forfeited and canceled if the participant is terminated for cause, as determined
by the Committee. In the discretion of the Committee, cash dividends with
respect to shares of restricted stock may be automatically reinvested in
additional shares of stock subject to the same restrictions, or cash dividends
(or other distributions) with respect to such shares may be withheld by the
Committee for the account of the participant, with or without interest. Except
as expressly provided otherwise, persons to whom shares of restricted stock have
been awarded will have all rights of a shareholder of the Company with respect
to such shares, unless and until such shares are otherwise forfeited by such
person.
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<PAGE>
Stock Awards. The Committee may grant stock awards under the Plan to any
Eligible Person in payment of compensation that has been earned or as
compensation to be earned. All shares subject to a stock award shall be valued
at not less than 100% of the Fair Market Value of the shares of Common Stock on
the grant date of such stock award. Upon the issuance of shares subject to a
stock award and the delivery of certificate(s) representing such shares to the
participant, the participant will become a shareholder of the Company fully
entitled to receive dividends, to vote and to exercise all other rights of a
shareholder of the company with respect to such shares.
Performance Shares. The Committee may award performance shares under the
Plan to any Eligible Person, for such consideration, if any, as may be
determined by the Committee or required by law, as an incentive for the
performance of future services that will contribute materially to the successful
operation of the Company and its subsidiaries. A performance share generally
consists of a unit valued by reference to the Common Stock; the value of one
performance share will be equal at any given time to the Fair Market Value of
one share of Common Stock. Performance shares generally may be earned by a
participant only if the participant achieves certain performance objectives that
are determined by the Committee at the time of the award. The performance
objectives generally will be measured over one or more performance periods
applicable to the Award of such shares as determined by the Committee at the
time of the award. The Committee also has the discretion to determine the number
of performance shares that will be paid to a participant if the applicable
performance objectives are exceeded or met in whole or in part and the form of
settlement of a performance share. Performance objectives may vary from
participant to participant and will be based on such performance criteria (for
example, minimum earnings per share or return on equity) as the Committee in its
sole discretion determines appropriate. The Committee also has the discretion to
revise the performance objectives during the duration of the performance period
if it determines that significant events that have a substantial effect on the
existing performance objectives have occurred. Generally, any performance shares
that have not been earned in full will be forfeited upon a participant's
Termination of Service. Unless otherwise provided in the applicable award
agreement, however, in the event of the death, Disability or Retirement of the
participant during the performance period or in other cases of special
circumstances, the Committee may in its discretion determine to make a
settlement of such performance shares based on the extent to which the
applicable performance objectives were satisfied and pro rated for the portion
of the period during which the Participant was employed. Notwithstanding the
foregoing, under the terms of the Plan all performance shares which have not
been earned in full shall be forfeited and canceled if the participant is
terminated for cause, as determined by the Committee.
The settlement of a performance share may be made in cash, in whole shares
of Common Stock or any combination thereof. Performance shares are not
transferable by a participant, and holders of performance shares shall have no
rights as shareholders of the Company unless and until shares of Common Stock
are issued and delivered to such persons upon settlement of performance shares,
as provided in the Plan. The Committee may also, in its discretion, place
restrictions on the transfer of any shares of Common Stock delivered to the
participant in payment of the performance shares.
Changes of Control or Other Fundamental Change
The Plan provides that upon certain mergers or other reorganizations to
which the Company or any subsidiary is a party that involves an exchange or
conversion or other adjustment of the Company's outstanding Common Stock, each
participant generally shall be entitled upon the exercise of his or her stock
options to receive the number and class of securities or other property to which
such participant would have been entitled in the merger or reorganization if
such participant had exercised such stock option prior to such merger or
reorganization. The Committee, in its discretion, may provide for similar
adjustments upon the occurrence of such events with respect to other Awards
outstanding under the Plan.
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<PAGE>
The Plan also provides that, upon the occurrence of a Change of Control:
(i) outstanding stock options will become immediately exercisable in full
(subject to any appropriate adjustments in the number of shares subject to the
option and the option price), regardless of their terms, and shall remain
exercisable for the remaining term of the option; (ii) outstanding performance
shares will be deemed 100% earned and a pro rata portion of such performance
shares (based on the portion of the applicable performance period that has
elapsed at such time) shall be paid to the participant; and (iii) outstanding
shares of restricted stock shall be deemed vested and all restrictions thereon
shall be deemed lapsed. A Change of Control is defined under the Plan as (a) the
adoption of a plan of merger or consolidation of the Company with any other
corporation or association as a result of which the holders of the voting
capital stock of the Company as a group would receive less than 50% of the
voting capital stock of the surviving or resulting corporation, (b) the approval
by the Board of Directors of the Company of an agreement providing for the sale
or transfer (other than as security for obligations of the Company) of
substantially all the assets of the Company, or (c) in the absence of a prior
expression of approval by the Board of Directors of the Company, the acquisition
of more than 20% of the Company's voting capital stock by any person within the
meaning of Section 13(d)(3) of the Exchange Act, other than a person, or group
including a person, who beneficially owned, at the date of adoption of the Plan
by the Board of Directors, more than 5.0% of the Company's voting capital stock.
In addition, the Committee generally has the discretion to take such actions and
make such adjustments with respect to outstanding Awards as it deems necessary
or advisable, and fair and equitable, in the event of a Change of Control or
other similar event.
Upon the dissolution or liquidation of the Company, all outstanding Awards
under the Plan shall terminate. Upon the adoption of a plan of such dissolution
or liquidation, however, all outstanding Awards shall be exercisable in full and
all restrictions shall lapse, to the extent described in the previous paragraph.
Miscellaneous
The Board of Directors generally may amend or terminate the Plan or any
provision of the Plan at any time. To the extent required by the Exchange Act or
the Code, however, absent approval by the Company's shareholders, no amendment
may (i) materially alter the group of persons eligible to participate in the
Plan; (ii) except as specifically provided in Section 3.6 of the Plan, increase
the number of shares available for Awards under the Plan; (iii) extend the
period during which incentive stock options may be granted beyond March 27,
2008; or (iv) alter the class of individuals eligible to receive an incentive
stock option or increase the limit on incentive stock options or the value of
shares of Common Stock for which eligible employees may be granted an incentive
stock option. Furthermore, without the consent of the participant, no amendment
to or discontinuance of the Plan or any provision thereof shall adversely affect
(in the sole discretion of the Committee) any Award granted to the participant
under the Plan, except that the Committee shall always have the right and power
to annul any Award if the participant is terminated for cause and to convert any
outstanding incentive stock option to a nonqualified stock option.
If a participant is required to pay to the Company any amount with respect
to income or employment tax withholding obligations in connection with an Award,
no Common Stock will be transferred to such participant until the Committee in
its sole discretion is satisfied as to the payment of such liabilities. The
Committee in its discretion may allow a participant to satisfy any such
obligation by withholding shares of Common Stock that otherwise would be
delivered to such participant with a Fair Market Value equal to the amount of
the withholding obligation.
Federal Income Tax Consequences
The following is a brief description of the Federal income tax consequences
to the participants and the Company of the issuance and exercise of stock
options under the Plan, as well as the grant of restricted stock, stock awards
and performance shares. All ordinary income recognized by a participant with
respect to Awards under the Plan shall be subject to both wage withholding and
employment taxes. The deduction allowed to the Company for the ordinary income
recognized by a participant with respect to an Award under the Plan will be
limited to amounts that constitute reasonable, ordinary and necessary business
expenses of the Company.
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<PAGE>
Incentive Stock Options. In general, no income will result for Federal
income tax purposes upon either the granting or the exercise of any incentive
option issued under the Plan. If certain holding period requirements (at least
two years from the date of grant of the option and at least one year from the
date of exercise of the option) are satisfied prior to a disposition of stock
acquired upon exercise of an incentive option, the excess of the sales price
upon disposition over the option exercise price generally will be recognized by
the participant as a capital gain, and the Company will not be allowed a
business expense deduction.
If the holding period requirements with respect to incentive options are
not met, the participant generally will recognize, at the time of the
disposition of the stock, ordinary income in an amount equal to the difference
between the option price of such stock and the lower of the Fair Market Value of
the stock on the date of exercise and the amount realized on the sale or
exchange. The difference between the option price of such stock and the Fair
Market Value of the stock on the date of exercise is a tax preference item for
purposes of calculating the alternative minimum tax on an participant's federal
income tax return. If the amount realized on the sale or exchange exceeds the
Fair Market Value of the stock on the date of exercise, then such excess
generally will be recognized as a capital gain. In the case of a disposition
prior to satisfaction of the holding period requirements which results in the
recognition of ordinary income by the participant, the Company generally will be
entitled to a deduction in the amount of such ordinary income in the year of the
disposition.
If a participant delivers shares of the Company's Common Stock in payment
of the option price, the participant generally will be treated as having made a
like-kind exchange of such shares for an equal number of the shares so
purchased, and no gain or loss will be recognized with respect to the shares
surrendered to the Company in payment of said option price. In such a case, the
participant will have a tax basis in a number of shares received pursuant to the
exercise of the option equal to the number of shares of Common Stock used to
exercise the option and equal to such participant's tax basis in the shares of
Common Stock submitted in payment of the option price. The remaining shares of
Common Stock acquired pursuant to the exercise of the option will have a tax
basis equal to the gain, if any, recognized on the exercise of the option and
any other consideration paid for such shares on the exercise of the option.
Notwithstanding the foregoing, if a participant delivers any stock that was
previously acquired through the exercise of an incentive stock option in payment
of all or a portion of the option price of an option, and the holding period
requirements described above have not been satisfied with respect to the shares
of stock so delivered, the use of such stock to pay a portion of the option
price will be treated as a disqualifying disposition of such shares, and the
participant generally will recognize income.
Nonqualified Stock Options. The grant of nonqualified stock options under
the Plan will not result in any income being taxed to the participant at the
time of the grant or in any tax deduction for the Company at such time. At the
time a nonqualified stock option is exercised, the participant will be treated
as having received ordinary income equal to the excess of the Fair Market Value
of the shares of Common Stock acquired as of the date of exercise over the price
paid for such stock. At that time, the Company will be allowed a deduction for
Federal income tax purposes equal to the amount of ordinary income attributable
to the participant upon exercise. The participant's holding period for the
shares of Common Stock acquired will commence on the date of exercise, and the
tax basis of the shares will be the greater of their Fair Market Value at the
time of exercise or the exercise price.
Restricted Stock. If a participant receiving a grant of restricted stock
under the Plan makes an election with respect to such shares under Section 83(b)
of the Code not later than 30 days after the date the shares are transferred to
the participant pursuant to such grant, the participant will recognize ordinary
income at the time of receipt of such restricted stock in an amount equal to the
excess of the Fair Market Value of the shares of Common Stock as of the date of
receipt (determined without regard to any vesting conditions or other
restrictions other than a restriction which by its terms will never lapse) over
the price paid (if any) for such restricted stock. In the absence of such an
election, the participant will recognize ordinary income at the time the
restrictions lapse in an amount equal to the excess of the Fair Market Value of
the shares of Common Stock as of the date the restrictions lapse over the price
paid (if any) for such stock. At the first to occur of the election or the
lapsing of the restrictions, the Company will be allowed a deduction for Federal
income tax purposes equal to the amount of ordinary income attributable to the
participant. The participant's holding period for the shares of Common Stock
acquired will commence upon the first to occur of the date the participant makes
an election under Section 83(b) of the Code or on the date that the restrictions
lapse, and the tax basis of the shares will be the greater of their Fair Market
Value on that date or the price paid for the shares (if any).
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If an election is made under Section 83(b) of the Code, dividends received
on shares of restricted stock will be treated as ordinary income. If a
participant does not make an election under Section 83(b) of the Code, dividends
received on the shares of restricted stock prior to the date that such
restrictions lapse will be treated as additional compensation and not as
dividend income for Federal income tax purposes.
If (i) an election is made under Section 83(b) of the Code and (ii) before
the restrictions on the shares lapse, the shares which are subject to such
election are forfeited to or reacquired by the Company, then (A) no deduction
would be allowed to such participant for the amount included in the income of
such participant by reason of such election, and (B) the participant would
realize a loss in an amount equal to the excess, if any, of the ordinary income
previously recognized by the participant with respect to such shares over the
value of such shares at the time of forfeiture. Such loss would be a capital
loss if the shares are held as a capital asset at such time. In such event, the
Company would be required to include in its income the amount of any deduction
previously allowable to it in connection with the transfer of such shares.
Stock Awards. At the time a stock award is granted, the participant will be
treated as having received ordinary income equal to the Fair Market Value of the
shares of Common Stock acquired. At that time, the Company will be allowed a
deduction for federal income tax purposes equal to the amount of ordinary income
which the participant receives. The participant's holding period for the shares
of Common Stock acquired will commence on the date of grant, and the tax basis
of the shares will be their Fair Market Value at that time.
Performance Shares. At the time performance shares are earned, the
participant will be treated as having received ordinary income equal to the Fair
Market Value of the shares of Common Stock subject to such performance shares,
whether such performance shares are settled in cash of by delivery of shares of
Common Stock. At that time, the Company will be allowed a deduction for federal
income tax purposes equal to the amount of ordinary income which the participant
receives. The participant's holding period for the shares of Common Stock
acquired (if any) will commence on the date of grant, and the tax basis of such
shares will be their Fair Market Value at that time.
New Plan Benefits
The following table shows plan benefits that would have accrued to or been
allocated to each of the Named Officers, all nominees for election as directors,
all executives as a group, all non-executive directors as a group and all
nonexecutive officer employees as a group under the Plan as proposed for
approval at the Annual Meeting if the Plan had been in effect for the fiscal
year ended December 28, 1997.
<TABLE>
1998 Comprehensive Stock
Option and Award Plan
Name and Position Stock Options (#)
- ----------------------------------------------------------------- ----------------------------
<S> <C>
Robert Wechsler
Chairman of the Board -0-
Robert Spivak
President, Chief Executive Officer and Director -0-
Michael Weinstock
Executive Vice President and Vice Chairman of the Board -0-
Richard Shapiro
Director 6,000
Charles Frank
Director 7,000
Glenn Golenberg
Director 7,000
Peter Balas
Director 6,000
All current executive officers as a group (five persons) -0-
All current directors, excluding executives, as a group (four persons) 26,000
All employees, excluding executive officers, as a group -0-
</TABLE>
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No options have been granted to date under the Plan and the benefits to the
persons described in the table are not presently determinable. The benefits
indicated in the table represent formula grants to non-employee directors which
would have been made had the Plan been in effect for the last completed fiscal
year.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
COMPANY'S 1998 COMPREHENSIVE STOCK OPTION AND AWARD PLAN.
PROPOSAL 3
INDEPENDENT AUDITORS
The Board of Directors has selected Coopers & Lybrand L.L.P. as independent
auditors for the fiscal year ending December 27, 1998, and recommends that the
shareholders vote for ratification of such appointment. Coopers & Lybrand L.L.P.
were also the Company's independent auditors in fiscal years 1997, 1996 and
1995. In the event of a negative vote on such ratification, the Board of
Directors will reconsider its selection.
Representatives of Coopers & Lybrand L.L.P. are expected to be present at
the Annual Meeting, will be afforded an opportunity to make a statement if they
desire to do so, and are expected to be available to respond to appropriate
inquiries from shareholders.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR RATIFICATION OF
THE APPOINTMENT OF COOPERS & LYBRAND L.L.P. AS INDEPENDENT ACCOUNTANTS FOR THE
COMPANY.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
In order for shareholder proposals to be included in the Company's Proxy
Statement and proxy relating to the Company's 1999 Annual Meeting of
Shareholders, such proposals must be received by the Company at its principal
executive offices not later than January 1, 1999.
EXPENSES OF SOLICITATION
All of the expenses of soliciting proxies from shareholders, including the
reimbursement of brokerage firms and others for their expenses in forwarding
proxies and proxy statements to the beneficial owners of the Company's Common
Stock, will be borne by the Company.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before
the Annual Meeting and has not been informed that any other matters are to be
presented by others. In the event any other matters properly come before the
Annual Meeting, the persons named in the enclosed form of proxy will vote all
such proxies in accordance with their best judgment on such matters.
Whether or not you are planning to attend the Annual Meeting, you are urged
to complete, date and sign the enclosed proxy and return it in the enclosed
stamped envelope at your earliest convenience.
By Order of the Board of Directors
Michael Weinstock
Secretary
Los Angeles, California
April 27, 1998
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APPENDIX A
GRILL CONCEPTS, INC. 1998
COMPREHENSIVE STOCK OPTION AND AWARD PLAN
ARTICLE I -- PREAMBLE
1.1 The Grill Concepts, Inc. 1998 Comprehensive Stock Option and Award Plan
is intended to secure for the Corporation, its Subsidiaries and its shareholders
the benefits arising from ownership of the Corporation's Common Stock by the
employees of the Corporation and its Subsidiaries and by the directors and
certain key consultants of the Corporation, all of whom are and will be
responsible for the Corporation's future growth. The Plan is designed to help
attract and retain for the Corporation and its Subsidiaries personnel of
superior ability for positions of exceptional responsibility, to reward
employees, directors and consultants for past services and to motivate such
individuals through added incentives to further contribute to the success of the
Corporation. With respect to persons subject to Section 16 of the Act,
transactions under this Plan are intended to satisfy the requirements of Rule
16b-3 of the Act.
1.2 Awards under the Plan may be made to Eligible Persons in the form of
(i) Incentive Stock Options (to Eligible Employees only); (ii) Nonqualified
Stock Options; (iii) Restricted Stock; (iv) Stock Awards; (v) Performance
Shares; or (vi) any combination of the foregoing.
1.3 The Plan shall be effective March 27, 1998 (the "Effective Date"),
subject to approval by the shareholders of the Corporation to the extent
necessary to satisfy the requirements of the Code, The Nasdaq Stock Market, or
other applicable federal or state law.
ARTICLE II -- DEFINITIONS
DEFINITIONS. Except where the context otherwise indicates, the following
definitions apply:
2.1 "Act" means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended.
2.2 "Award" means an award granted to a Participant in accordance with the
provisions of the Plan, including, but not limited to, Stock Options, Restricted
Stock, Stock Awards, Performance Shares, or any combination of the foregoing.
2.3 "Award Agreement" means the separate written agreement evidencing each
Award granted to a Participant under the Plan.
2.4 "Board of Directors" means the Board of Directors of the Corporation.
2.5 "Change of Control" means (i) the adoption of a plan of merger or
consolidation of the Corporation with any other corporation or association as a
result of which the holders of the voting capital stock of the Corporation as a
group would receive less than 50% of the voting capital stock of the surviving
or resulting corporation; (ii) the approval by the Board of Directors of an
agreement providing for the sale or transfer (other than as security for
obligations of the Corporation) of substantially all the assets of the
Corporation; or (iii) in the absence of a prior expression of approval by the
Board of Directors, the acquisition of more than 20% of the Corporation's voting
capital stock by any person within the meaning of Section 13(d)(3) of the Act,
other than a person, or group including a person, who beneficially owned, as of
the Effective Date, more than 5.0% of the Corporation's voting capital stock.
2.6 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. (All citations to sections of the Code are to such sections
as they may from time to time be amended or renumbered.)
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2.7 "Committee" means a committee of the Board of Directors established for
the administration of the Plan pursuant to Article III and consisting of two or
more Directors. To the extent necessary to comply with Rule 16b-3 under the Act,
the Committee shall consist solely of two or more Non-Employee Directors. The
Compensation Committee of the Board of Directors shall constitute the Committee
until otherwise determined by the Board of Directors.
2.8 "Common Stock" means the common stock of the Corporation to be issued
pursuant to the Plan.
2.9 "Corporation" means Grill Concepts, Inc., a Delaware corporation, and
its successors and assigns.
2.10 "Director" means a member of the Board of Directors of the
Corporation.
2.11 "Disability" means disability as determined under procedures
established by the Committee or in any Award, as set forth in a Participant's
Award Agreement.
2.12 "Effective Date" shall be the date set forth in Section 1.3 of the
Plan.
2.13 "Eligible Employee" means an Eligible Person who is an employee of the
Corporation or any Subsidiary.
2.14 "Eligible Person" means any employee of the Corporation or any
Subsidiary or any Director, as well as any consultant or other person whose
participation the Committee determines is in the best interest of the
Corporation, subject to limitations as may be provided by the Code, the Act or
the Committee.
2.15 "ERISA" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
2.16 "Fair Market Value" means, as of a given date and for so long as
shares of the Common Stock are listed on a national securities exchange or
reported on The Nasdaq Stock Market as a Nasdaq National Market security, the
mean between the high and low sales prices for the Common Stock on such date,
or, if no such shares were sold on such date, the most recent date on which
shares of such Common Stock were sold, as reported in The Wall Street Journal.
If the Common Stock is not listed on a national securities exchange or reported
on The Nasdaq Stock Market as a Nasdaq National Market security, Fair Market
Value shall mean the average of the closing bid and asked prices for such stock
in the over-the-counter market as reported by The Nasdaq Stock Market. If the
Common Stock is not listed on a national securities exchange or reported on The
Nasdaq Stock Market as a Nasdaq National Market security, or the
over-the-counter market, Fair Market Value shall be the fair value thereof
determined in good faith by the Board of Directors.
2.17 "Grant Date" means, as to any Award, the latest of:
(a) the date on which the Committee authorizes the grant of the Award;
or
(b) the date the Participant receiving the Award becomes an employee
or a director of the Corporation or its Subsidiaries, to the extent
employment status is a condition of the grant or a requirement of the Code
or the Act; or
(c) such other date (later than the dates described in (a) and (b)
above) as the Committee may designate and as set forth in the Participant's
Award Agreement.
2.18 "Immediate Family" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law and shall include
adoptive relationships.
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2.19 "Incentive Stock Option" means a Stock Option that meets the
requirements of Section 422 of the Code and is granted under Article IV of the
Plan and designated as an Incentive Stock Option in a Participant's Award
Agreement.
2.20 "Non-Employee Director" shall have the meaning set forth in Rule 16b-3
under the Act.
2.21 "Nonqualified Stock Option" means a Stock Option that does not meet
the requirements of Section 422 of the Code and is granted under Article V of
the Plan, or, even if meeting the requirements of Section 422 of the Code, is
not intended to be an Incentive Stock Option and is not so designated in the
Participant's Award Agreement.
2.22 "Option Period" means the period during which a Stock Option may be
exercised from time to time, as established by the Committee and set forth in
the Award Agreement for each Participant who is granted a Stock Option.
2.23 "Option Price" means the purchase price for a share of Common Stock
subject to purchase pursuant to a Stock Option, as established by the Committee
and set forth in the Award Agreement for each Participant who is granted a Stock
Option.
2.24 "Participant" means an Eligible Person to whom an Award has been
granted and who has entered into an Award Agreement evidencing the Award.
2.25 "Performance Objectives" shall have the meaning set forth in Article
IX of the Plan.
2.26 "Performance Period" shall have the meaning set forth in Article IX of
the Plan.
2.27 "Performance Share" means an Award under Article IX of the Plan of a
unit valued by reference to the Common Stock, the payout of which is subject to
achievement of such Performance Objectives, measured during one or more
Performance Periods, as the Committee, in its sole discretion, shall establish
at the time of such Award and set forth in a Participant's Award Agreement.
2.28 "Plan" means the Grill Concepts, Inc. 1998 Comprehensive Stock Option
and Award Plan, as amended from time to time.
2.29 "Restricted Stock" means an Award under Article VII of the Plan of
shares of Common Stock that are at the time of the Award subject to restrictions
or limitations as to the Participant's ability to sell, transfer, pledge or
assign such shares, which restrictions or limitations may lapse separately or in
combination at such time or times, in installments or otherwise, as the
Committee, in its sole discretion, shall determine at the time of such Award and
set forth in a Participant's Award Agreement.
2.30 "Restriction Period" means the period commencing on the Grant Date
with respect to such shares of Restricted Stock and ending on such date as the
Committee, in its sole discretion, shall establish and set forth in a
Participant's Award Agreement.
2.31 "Retirement" means retirement as determined under procedures
established by the Committee or in any Award, as set forth in a Participant's
Award Agreement.
2.32 "Stock Award" means an Award of shares of Common Stock under Article
VIII of the Plan.
2.33 "Stock Option" means an Award under Article IV or Article V of the
Plan of an option to purchase Common Stock. A Stock Option may be either an
Incentive Stock Option or a Nonqualified Stock Option.
2.34 "Subsidiary" means a subsidiary corporation of the Corporation as that
term is defined in Code section 424(f). "Subsidiaries" means more than one
Subsidiary.
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2.35 "Ten Percent Stockholder" means an individual who, at the time of
grant, owns stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Corporation.
2.36 "Termination of Service" means (i) in the case of an Eligible
Employee, the discontinuance of employment of such Participant with the
Corporation or its Subsidiaries for any reason other than a transfer to another
member of the group consisting of the Corporation and its Subsidiaries and (ii)
in the case of a Director who is not an employee of the Corporation or any
Subsidiary, the date such Participant ceases to serve as a Director. The
determination of whether a Participant has discontinued service shall be made by
the Committee in its sole discretion. In determining whether a Termination of
Service has occurred, the Committee may provide that service as a consultant or
service with a business enterprise in which the Corporation has a significant
ownership interest shall be treated as employment with the Corporation.
ARTICLE III -- ADMINISTRATION
3.1 The Plan shall be administered by the Committee. Except as otherwise
required by Rule 16b-3 under the Act, the Committee, in its discretion, may
delegate to one or more of its members such of its powers as it deems
appropriate. The Committee also may limit the power of any member to the extent
necessary to comply with Rule 16b-3 under the Act or any other law, rule or
regulation. The Board of Directors may serve as the Committee, if by the terms
of the Plan all members of the Board of Directors are otherwise eligible to
serve on the Committee.
3.2 The Committee shall meet at such times and places as it determines. The
Committee shall at all times operate and be governed, and Committee meetings
shall be conducted and action taken, in accordance with the provisions of the
Corporation's Bylaws or resolutions or policies adopted by the Board of
Directors from time to time regarding the operation of committees of the
Corporation.
3.3 Except as set forth in Sections 3.15 and 3.16 regarding grants of
Awards by the Board of Directors and grants of Awards to Non-employee Directors,
the Committee shall have the exclusive right to interpret, construe and
administer the Plan, to select the Eligible Persons who shall receive an Award,
and to act in all matters pertaining to the grant of an Award and the
determination and interpretation of the provisions of the related Award
Agreement, including, without limitation, the determination of the number of
shares subject to Stock Options and the Option Period(s) and Option Price(s)
thereof, the number of shares of Restricted Stock or shares subject to Stock
Awards or Performance Shares subject to an Award, the vesting periods (if any)
and the form, terms, conditions and duration of each Award, and any amendment
thereof consistent with the provisions of the Plan. All acts, determinations and
decisions of the Committee made or taken pursuant to the Plan or with respect to
any questions arising in connection with the administration and interpretation
of the Plan or any Award Agreement, including the severability of any and all of
the provisions thereof, shall be conclusive, final and binding upon all
Participants, Eligible Persons and their beneficiaries.
3.4 The Committee may adopt such rules, regulations and procedures of
general application for the administration of this Plan as it deems appropriate.
3.5 Without limiting the provisions of this Article III, and subject to the
provisions of Article X, the Committee is authorized to take such action as it
determines to be necessary or advisable, and fair and equitable to Participants
and to the Corporation, with respect to an outstanding Award in the event of a
Change of Control as described in Article X or other similar event. Such action
may include, but shall not be limited to, establishing, amending or waiving the
form, terms, conditions and duration of an Award and the related Award
Agreement, so as to provide for earlier, later, extended or additional times for
exercise or payments, differing methods for calculating payments, alternate
forms and amounts of payment, an accelerated release of restrictions or other
modifications. The Committee may take such actions pursuant to this Section 3.5
by adopting rules and regulations of general applicability to all Participants
or to certain categories of Participants, by including, amending or waiving
terms and conditions in an Award and the related Award Agreement, or by taking
action with respect to individual Participants from time to time.
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3.6 Subject to the provisions of Section 3.11, the aggregate number of
shares of Common Stock which may be issued pursuant to Awards under the Plan
shall be seven hundred fifty thousand (750,000) shares. Such shares of Common
Stock shall be made available from authorized and unissued shares of the
Corporation.
(a) For all purposes under the Plan, each Performance Share awarded
shall be counted as one share of Common Stock subject to an Award.
(b) If, for any reason, any shares of Common Stock (including shares
of Common Stock subject to Performance Shares) that have been awarded or
are subject to issuance or purchase pursuant to Awards outstanding under
the Plan are not delivered or purchased, or are reacquired by the
Corporation, for any reason, including but not limited to a forfeiture of
Restricted Stock or failure to earn Performance Shares or the termination,
expiration or cancellation of a Stock Option, or any other termination of
an Award without payment being made in the form of shares of Common Stock
(whether or not Restricted Stock), such shares of Common Stock shall not be
charged against the aggregate number of shares of Common Stock available
for Award under the Plan and shall again be available for Awards under the
Plan. In no event, however, may Common Stock that is surrendered or
withheld to pay the exercise price of a Stock Option or to satisfy tax
withholding requirements be available for future grants under the Plan.
(c) The foregoing subsections (a) and (b) of this Section 3.6 shall be
subject to any limitations provided by the Code or by Rule 16b-3 under the
Act or by any other applicable law, rule or regulation.
3.7 Each Award granted under the Plan shall be evidenced by a written Award
Agreement, which shall be subject to and shall incorporate (by reference or
otherwise) the applicable terms and conditions of the Plan and shall include any
other terms and conditions (not inconsistent with the Plan) required by the
Committee.
3.8 The Corporation shall not be required to issue or deliver any
certificates for shares of Common Stock under the Plan prior to:
(a) any required approval of the Plan by the shareholders of the
Corporation; and
(b) the completion of any registration or qualification of such shares
of Common Stock under any federal or state law, or any ruling or regulation
of any governmental body that the Corporation shall, in its sole
discretion, determine to be necessary or advisable.
3.9 The Committee may require any Participant acquiring shares of Common
Stock pursuant to any Award under the Plan to represent to and agree with the
Corporation in writing that such person is acquiring the shares of Common Stock
for investment purposes and without a view to resale or distribution thereof.
Shares of Common Stock issued and delivered under the Plan shall also be subject
to such stop-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any stock exchange upon which the Common Stock is then
listed and any applicable federal or state laws, and the Committee may cause a
legend or legends to be placed on the certificate or certificates representing
any such shares to make appropriate reference to any such restrictions. In
making such determination, the Committee may rely upon an opinion of counsel for
the Corporation.
3.10 Except as otherwise expressly provided in the Plan or in an Award
Agreement with respect to an Award, no Participant shall have any right as a
shareholder of the Corporation with respect to any shares of Common Stock
subject to such Participant's Award except to the extent that, and until, one or
more certificates representing such shares of Common Stock shall have been
delivered to the Participant. No shares shall be required to be issued, and no
certificates shall be required to be delivered, under the Plan unless and until
all of the terms and conditions applicable to such Award shall have, in the sole
discretion of the Committee, been satisfied in full and any restrictions shall
have lapsed in full, and unless and until all of the requirements of law and of
all regulatory bodies having jurisdiction over the offer and sale, or issuance
and delivery, of the shares shall have been fully complied with.
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3.11 The total amount of shares with respect to which Awards may be granted
under the Plan and rights of outstanding Awards (both as to the number of shares
subject to the outstanding Awards and the Option Price(s) or other purchase
price(s) of such shares, as applicable) shall be appropriately adjusted for any
increase or decrease in the number of outstanding shares of Common Stock of the
Corporation resulting from payment of a stock dividend on the Common Stock, a
stock split or subdivision or combination of shares of the Common Stock, or a
reorganization or reclassification of the Common Stock, or any other change in
the structure of shares of the Common Stock. The foregoing adjustments and the
manner of application of the foregoing provisions shall be determined by the
Committee in its sole discretion. Any such adjustment may provide for the
elimination of any fractional shares which might otherwise become subject to an
Award. All adjustments made as the result of the foregoing in respect of each
Incentive Stock Option shall be made so that such Incentive Stock Option shall
continue to be an Incentive Stock Option, as defined in Section 422 of the Code.
3.12 The members of the Committee shall be entitled to indemnification by
the Corporation in the manner and to the extent set forth in the Corporation's
Bylaws or as otherwise provided from time to time regarding indemnification of
Directors.
3.13 The Committee shall be authorized to make adjustments in any
performance based criterium or in the other terms and conditions of outstanding
Awards in recognition of unusual or nonrecurring events affecting the
Corporation (or any Subsidiary, if applicable) or its financial statements or
changes in applicable laws, regulations or accounting principles. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award Agreement in the manner and to the extent it shall deem
necessary or desirable to reflect any such adjustment. In the event the
Corporation (or any Subsidiary, if applicable) shall assume outstanding employee
benefit awards or the right or obligation to make future such awards in
connection with the acquisition of another corporation or business entity, the
Committee may, in its sole discretion, make such adjustments in the terms of
outstanding Awards under the Plan as it shall deem appropriate.
3.14 Subject to the express provisions of the Plan, the Committee shall
have full power and authority to determine whether, to what extent and under
what circumstances any outstanding Award shall be terminated, canceled,
forfeited or suspended. Notwithstanding the foregoing or any other provision of
the Plan or an Award Agreement, all Awards to any Participant that are subject
to any restriction or have not been earned or exercised in full by the
Participant shall be terminated and canceled if the Participant is terminated
for cause, as determined by the Committee in its sole discretion.
3.15 In addition to, and not in limitation of, the right of the Committee
to grant Awards to Eligible Persons under this Plan the full Board of Directors
may from time to time grant Awards to Eligible Persons pursuant to the terms and
conditions of this Plan, subject to the requirements of the Code, Rule 16b-3
under the Act or any other applicable law, rule or regulation. In connection
with any such grants, the Board of Directors shall have all of the power and
authority of the Committee to determine the Eligible Persons to whom such Awards
shall be granted and the other terms and conditions of such Awards.
3.16 Notwithstanding anything herein to the contrary, grants of Awards to
Non-Employee Directors shall only be made pursuant to the following formula:
Each Non-Employee Director shall automatically be granted, on the date that the
person first becomes a Non-Employee Director, 25,000 Non-Qualified Stock
Options. Thereafter, each person who is a Non-Employee Director on the day
following any annual meeting of shareholders of the Company shall automatically
be granted a number of Non-Qualified Stock Options equal to 5,000 plus 1,000 for
each committee on which such Non-Employee Director serves. All such Nonqualified
Stock Options shall vest on the Grant Date. The date on which each Non-Employee
Director is elected, or reelected, in such capacity by the shareholders of the
Corporation shall constitute the Grant Date for all Nonqualified Stock Options
granted pursuant to this Section 3.16 and the Option Price shall be fixed at the
Fair Market Value of the Common Stock on the Grant Date. The Option Period of
each Nonqualified Stock Option granted pursuant to this Section 3.16 shall be
ten years from the Grant Date. No additional grants of stock options under any
prior plans of the Corporation shall be made after the Effective Date of this
Plan.
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ARTICLE IV -- INCENTIVE STOCK OPTIONS
4.1 The Committee, in its sole discretion, may from time to time on or
after the Effective Date grant Incentive Stock Options to Eligible Employees,
subject to the provisions of this Article IV and Articles III and VI and subject
to the following conditions:
(a) Incentive Stock Options shall be granted only to Eligible
Employees, each of whom may be granted one or more of such Incentive Stock
Options at such time or times determined by the Committee.
(b) The Option Price per share of Common Stock for an Incentive Stock
Option shall be set in the Award Agreement, but shall not be less than (i)
one hundred percent (100%) of the Fair Market Value of the Common Stock at
the Grant Date, or (ii) in the case of an Incentive Stock Option granted to
a Ten Percent Stockholder, one hundred ten percent (110%) of the Fair
Market Value of the Common Stock at the Grant Date.
(c) An Incentive Stock Option may be exercised in full or in part from
time to time within ten (10) years from the Grant Date, or such shorter
period as may be specified by the Committee as the Option Period and set
forth in the Award Agreement; provided, however, that, in the case of an
Incentive Stock Option granted to a Ten Percent Stockholder, such period
shall not exceed five years from the Grant Date; and further, provided
that, in any event, the Incentive Stock Option shall lapse and cease to be
exercisable upon a Termination of Service or within such period following a
Termination of Service as shall have been determined by the Committee and
set forth in the related Award Agreement; and provided, further, that such
period following a Termination of Service shall not exceed three (3) months
unless employment shall have terminated:
(i) as a result of Disability, in which event such period shall
not exceed one year after the date of Disability; or
(ii) as a result of death, or if death shall have occurred
following a Termination of Service (other than as a result of
Disability) and during the period that the Incentive Stock Option was
still exercisable, in which event such period may not exceed one year
after the date of death; and provided, further, that such period
following a Termination of Service shall in no event extend beyond the
original Option Period of the Incentive Stock Option.
(d) The aggregate Fair Market Value of the shares of Common Stock with
respect to which any incentive stock options (whether under this Plan or
any other plan established by the Corporation) are first exercisable during
any calendar year by any Eligible Employee shall not exceed one hundred
thousand dollars ($100,000), determined based on the Fair Market Value(s)
of such shares as of their respective grant dates; provided, however, that
to the extent permitted under Section 422 of the Code:
(i) if the aggregate Fair Market Values of the shares of Common
Stock with respect to which incentive stock options are first
exercisable during any calendar year (whether such Incentive Stock
Options are granted under this Plan or any other plan established by
the Corporation) exceeds one hundred thousand dollars ($100,000), such
excess shall be treated as a Nonqualified Stock Option;
(ii) if a Participant's employment is terminated by reason of
death, Disability or Retirement and the portion of any incentive stock
option that is otherwise exercisable during the post-termination
period applied without regard to the one hundred thousand dollar
($100,000) limitation contained in Section 422 of the Code is greater
than the portion of such option that is immediately exercisable as an
Incentive Stock Option during such post-termination period under
Section 422, such excess shall be treated as a Nonqualified Stock
Option; and
(iii) if the exercise of an Incentive Stock Option is accelerated
by reason of a Change of Control, any portion of such Award that is
not exercisable as an incentive stock option by reason of the one
hundred thousand dollar ($100,000) limitation contained in Section 422
of the Code shall be treated as a Nonqualified Stock Option.
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(e) No Incentive Stock Options may be granted more than ten (10) years
from the Effective Date.
(f) The Award Agreement for each Incentive Stock Option shall provide
that the Participant shall notify the Corporation if such Participant sells
or otherwise transfers any shares of Common Stock acquired upon exercise of
the Incentive Stock Option within two (2) years of the Grant Date of such
Incentive Stock Option or within one (1) year of the date such shares were
acquired upon the exercise of such Incentive Stock Option.
4.2 Subject to the limitations of Section 3.6, the maximum number of shares
of Common Stock subject to Incentive Stock Option Awards shall be the maximum
number of shares available for Awards under the Plan.
4.3 The Committee may provide for any other terms and conditions which it
determines should be imposed for an Incentive Stock Option to qualify under
Section 422 of the Code, as well as any other terms and conditions not
inconsistent with this Article IV or Articles III or VI, as determined in its
sole discretion and set forth in the Award Agreement for such Incentive Stock
Option.
4.4 Each provision of this Article IV and of each Incentive Stock Option
granted hereunder shall be construed in accordance with the provisions of
Section 422 of the Code, and any provision hereof that cannot be so construed
shall be disregarded.
ARTICLE V -- NONQUALIFIED STOCK OPTIONS
5.1 The Committee, in its sole discretion, may from time to time on or
after the Effective Date grant Nonqualified Stock Options to Eligible Persons,
subject to the provisions of this Article V and Articles III and VI and subject
to the following conditions:
(a) Nonqualified Stock Options may be granted to any Eligible Persons,
each of whom may be granted one or more of such Nonqualified Stock Options,
at such time or times determined by the Committee.
(b) The Option Price per share of Common Stock for a Nonqualified
Stock Option shall be set in the Award Agreement and may be less than one
hundred percent (100%) of the Fair Market Value of the Common Stock at the
Grant Date.
(c) A Nonqualified Stock Option may be exercised in full or in part
from time to time within the Option Period specified by the Committee and
set forth in the Award Agreement; provided, however, that, in any event,
the Nonqualified Stock Option shall lapse and cease to be exercisable upon
a Termination of Service or within such period following a Termination of
Service as shall have been determined by the Committee and set forth in the
related Award Agreement.
5.2 The Committee may provide for any other terms and conditions for a
Nonqualified Stock Option not inconsistent with this Article V or Articles III
or VI, as determined in its sole discretion and set forth in the Award Agreement
for such Nonqualified Stock Option.
ARTICLE VI -- INCIDENTS OF STOCK OPTIONS
6.1 Each Stock Option shall be granted subject to such terms and
conditions, if any, not inconsistent with this Plan, as shall be determined by
the Committee and set forth in the related Award Agreement, including any
provisions as to continued employment as consideration for the grant or exercise
of such Stock Option and any provisions which may be advisable to comply with
applicable laws, regulations or rulings of any governmental authority.
6.2 Except as hereinafter described, a Stock Option shall not be
transferable by the Participant other than by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the Participant
only by the Participant or the Participant's guardian or legal representative.
In the event of the death of a Participant, any unexercised Stock Options may be
exercised to the extent otherwise provided herein or in such Participant's Award
Agreement by the executor or personal representative of such Participant's
estate or by any person who acquired the right to exercise such Stock Options by
bequest under the Participant's will or by inheritance. The Committee, in its
sole discretion, may at any time permit a Participant to transfer a Nonqualified
Stock Option for no consideration to or for the benefit of one or more members
of the Participant's Immediate Family (including, without limitation, to a trust
for the benefit of the Participant and/or one or more members of such
Participant's Immediate Family or a corporation, partnership or limited
liability company established and controlled by the Participant and/or one or
more members of such Participant's Immediate Family), subject to such limits as
the Committee may establish. The transferee of such Nonqualified Stock Option
shall remain subject to all terms and conditions applicable to such Nonqualified
Stock Option prior to such transfer. The foregoing right to transfer the
Nonqualified Stock Option, if granted by the Committee, shall apply to the right
to consent to amendments to the Award Agreement.
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6.3 Shares of Common Stock purchased upon exercise of a Stock Option shall
be paid for in such amounts, at such times and upon such terms as shall be
determined by the Committee, subject to limitations set forth in the Stock
Option Award Agreement. The Committee may, in its sole discretion, permit the
exercise of a Stock Option by payment in cash or by tendering shares of Common
Stock (either by actual delivery of such shares or by attestation), or any
combination thereof, as determined by the Committee. In the sole discretion of
the Committee, payment in shares of Common Stock also may be made with shares
received upon the exercise or partial exercise of the Stock Option, whether or
not involving a series of exercises or partial exercises and whether or not
share certificates for such shares surrendered have been delivered to the
Participant. The Committee also may, in its sole discretion, permit the payment
of the exercise price of a Stock Option by the voluntary surrender of all or a
portion of the Stock Option. Shares of Common Stock previously held by the
Participant and surrendered in payment of the Option Price of a Stock Option
shall be valued for such purpose at the Fair Market Value thereof on the date
the Stock Option is exercised.
6.4 No cash dividends shall be paid on shares of Common Stock subject to
unexercised Stock Options.
6.5 The Committee may permit the voluntary surrender of all or a portion of
any Stock Option granted under the Plan to be conditioned upon the granting to
the Participant of a new Stock Option for the same or a different number of
shares of Common Stock as the Stock Option surrendered, or may require such
voluntary surrender as a condition precedent to a grant of a new Stock Option to
such Participant. Subject to the provisions of the Plan, such new Stock Option
shall be exercisable at such Option Price, during such Option Period and on such
other terms and conditions as are specified by the Committee at the time the new
Stock Option is granted. Upon surrender, the Stock Options surrendered shall be
canceled and the shares of Common Stock previously subject to them shall be
available for the grant of other Stock Options.
6.6 The Committee may at any time offer to purchase a Participant's
outstanding Stock Option for a payment equal to the value of such Stock Option
payable in cash, shares of Common Stock or Restricted Stock or other property
upon surrender of the Participant's Stock Option, based on such terms and
conditions as the Committee shall establish and communicate to the Participant
at the time that such offer is made.
6.7 The Committee shall have the discretion, exercisable either at the time
the Award is granted or at the time the Participant discontinues employment, to
establish as a provision applicable to the exercise of one or more Stock Options
that, during a limited period of exercisability following a Termination of
Service, the Stock Option may be exercised not only with respect to the number
of shares of Common Stock for which it is exercisable at the time of the
Termination of Service but also with respect to one or more subsequent
installments for which the Stock Option would have become exercisable had the
Termination of Service not occurred.
ARTICLE VII -- RESTRICTED STOCK
7.1 The Committee, in its sole discretion, may from time to time on or
after the Effective Date award shares of Restricted Stock to Eligible Persons as
a reward for past service and an incentive for the performance of future
services that will contribute materially to the successful operation of the
Corporation and its Subsidiaries, subject to the terms and conditions set forth
in this Article VII.
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7.2 The Committee shall determine the terms and conditions of any Award of
Restricted Stock, which shall be set forth in the related Award Agreement,
including without limitation:
(a) the purchase price, if any, to be paid for such Restricted Stock,
which may be zero, subject to such minimum consideration as may be required
by applicable law;
(b) the duration of the Restriction Period or Restriction Periods with
respect to such Restricted Stock and whether any events may accelerate or
delay the end of such Restriction Period(s);
(c) the circumstances upon which the restrictions or limitations shall
lapse, and whether such restrictions or limitations shall lapse as to all
shares of Restricted Stock at the end of the Restriction Period or as to a
portion of the shares of Restricted Stock in installments during the
Restriction Period by means of one or more vesting schedules;
(d) whether such Restricted Stock is subject to repurchase by the
Corporation or to a right of first refusal at a predetermined price or if
the Restricted Stock may be forfeited entirely under certain conditions;
(e) whether any performance goals may apply to a Restriction Period to
shorten or lengthen such period; and
(f) whether dividends and other distributions with respect to such
Restricted Stock are to be paid currently to the Participant or withheld by
the Corporation for the account of the Participant.
7.3 Awards of Restricted Stock must be accepted within a period of thirty
(30) days after the Grant Date (or such shorter or longer period as the
Committee may specify at such time) by executing an Award Agreement with respect
to such Restricted Stock and tendering the purchase price, if any. A prospective
recipient of an Award of Restricted Stock shall not have any rights with respect
to such Award, unless such recipient has executed an Award Agreement with
respect to such Restricted Stock, has delivered a fully executed copy thereof to
the Committee and has otherwise complied with the applicable terms and
conditions of such Award.
7.4 In the sole discretion of the Committee and as set forth in the Award
Agreement for an Award of Restricted Stock, all shares of Restricted Stock held
by a Participant and still subject to restrictions shall be forfeited by the
Participant upon the Participant's Termination of Service and shall be
reacquired, canceled and retired by the Corporation. Notwithstanding the
foregoing, unless otherwise provided in an Award Agreement with respect to an
Award of Restricted Stock, in the event of the death, Disability or Retirement
of a Participant during the Restriction Period, or in other cases of special
circumstances (including hardship or other special circumstances of a
Participant whose employment is involuntarily terminated), the Committee may
elect to waive in whole or in part any remaining restrictions with respect to
all or any part of such Participant's Restricted Stock, if it finds that a
waiver would be appropriate.
7.5 Except as otherwise provided in this Article VII, no shares of
Restricted Stock received by a Participant shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period.
7.6 Upon an Award of Restricted Stock to a Participant, a certificate or
certificates representing the shares of such Restricted Stock will be issued to
and registered in the name of the Participant. Unless otherwise determined by
the Committee, such certificate or certificates will be held in custody by the
Corporation until (i) the Restriction Period expires and the restrictions or
limitations lapse, in which case one or more certificates representing such
shares of Restricted Stock that do not bear a restrictive legend (other than any
legend as required under applicable federal or state securities laws) shall be
delivered to the Participant, or (ii) a prior forfeiture by the Participant of
the shares of Restricted Stock subject to such Restriction Period, in which case
the Corporation shall cause such certificate or certificates to be canceled and
the shares represented thereby to be retired, all as set forth in the
Participant's Award Agreement. It shall be a condition of an Award of Restricted
Stock that the Participant deliver to the Corporation a stock power endorsed in
blank relating to the shares of Restricted Stock to be held in custody by the
Corporation.
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7.7 Except as provided in this Article VII or in the related Award
Agreement, a Participant receiving an Award of shares of Restricted Stock Award
shall have, with respect to such shares, all rights of a shareholder of the
Corporation, including the right to vote the shares and the right to receive any
distributions, unless and until such shares are otherwise forfeited by such
Participant; provided, however, the Committee may require that any cash
dividends with respect to such shares of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock subject to the same
restrictions as the underlying Award, or may require that cash dividends and
other distributions on Restricted Stock be withheld by the Corporation or its
Subsidiaries for the account of the Participant. The Committee shall determine
whether interest shall be paid on amounts withheld, the rate of any such
interest, and the other terms applicable to such withheld amounts.
ARTICLE VIII -- STOCK AWARDS
8.1 The Committee, in its sole discretion, may from time to time on or
after the Effective Date grant Stock Awards to Eligible Persons in payment of
compensation that has been earned or as compensation to be earned, including
without limitation compensation awarded or earned concurrently with or prior to
the grant of the Stock Award, subject to the terms and conditions set forth in
this Article VIII.
8.2 For the purposes of this Plan, in determining the value of a Stock
Award, all shares of Common Stock subject to such Stock Award shall be valued at
not less than one hundred percent (100%) of the Fair Market Value of such shares
of Common Stock on the Grant Date of such Stock Award, regardless of when such
shares of Common Stock are issued and certificates representing such shares are
delivered to the Participant.
8.3 Unless otherwise determined by the Committee and set forth in the
related Award Agreement, shares of Common Stock subject to a Stock Award will be
issued, and one or more certificates representing such shares will be delivered,
to the Participant as soon as practicable following the Grant Date of such Stock
Award. Upon the issuance of such shares and the delivery of one or more
certificates representing such shares to the Participant, such Participant shall
be and become a shareholder of the Corporation fully entitled to receive
dividends, to vote and to exercise all other rights of a shareholder of the
Corporation. Notwithstanding any other provision of this Plan, unless the
Committee expressly provides otherwise with respect to a Stock Award, as set
forth in the related Award Agreement, no Stock Award shall be deemed to be an
outstanding Award for purposes of the Plan.
ARTICLE IX -- PERFORMANCE SHARES
9.1 The Committee, in its sole discretion, may from time to time on or
after the Effective Date award Performance Shares to Eligible Persons as an
incentive for the performance of future services that will contribute materially
to the successful operation of the Corporation and its Subsidiaries, subject to
the terms and conditions set forth in this Article IX.
9.2 The Committee shall determine the terms and conditions of any Award of
Performance Shares, which shall be set forth in the related Award Agreement,
including without limitation:
(a) the purchase price, if any, to be paid for such Performance
Shares, which may be zero, subject to such minimum consideration as may be
required by applicable law;
(b) the performance period (the "Performance Period") and/or
performance objectives (the "Performance Objectives") applicable to such
Awards;
(c) the number of Performance Shares that shall be paid to the
Participant if the applicable Performance Objectives are exceeded or met in
whole or in part; and
(d) the form of settlement of a Performance Share.
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9.3 At any date, each Performance Share shall have a value equal to the
Fair Market Value of a share of Common Stock.
9.4 Performance Periods may overlap, and Participants may participate
simultaneously with respect to Performance Shares for which different
Performance Periods are prescribed.
9.5 Performance Objectives may vary from Participant to Participant and
between Awards and shall be based upon such performance criteria or combination
of factors as the Committee may deem appropriate, including, but not limited to,
minimum earnings per share or return on equity. If during the course of a
Performance Period there shall occur significant events which the Committee
expects to have a substantial effect on the applicable Performance Objectives
during such period, the Committee may revise such Performance Objectives.
9.6 In the sole discretion of the Committee and as set forth in the Award
Agreement for an Award of Performance Shares, all Performance Shares held by a
Participant and not earned shall be forfeited by the Participant upon the
Participant's Termination of Service. Notwithstanding the foregoing, unless
otherwise provided in an Award Agreement with respect to an Award of Performance
Shares, in the event of the death, Disability or Retirement of a Participant
during the applicable Performance Period, or in other cases of special
circumstances (including hardship or other special circumstances of a
Participant whose employment is involuntarily terminated), the Committee may
determine to make a payment in settlement of such Performance Shares at the end
of the Performance Period, based upon the extent to which the Performance
Objectives were satisfied at the end of such period and pro rated for the
portion of the Performance Period during which the Participant was employed by
the Corporation or a Subsidiary; provided, however, that the Committee may
provide for an earlier payment in settlement of such Performance Shares in such
amount and under such terms and conditions as the Committee deems appropriate or
desirable.
9.7 The settlement of a Performance Share shall be made in cash, whole
shares of Common Stock or a combination thereof and shall be made as soon as
practicable after the end of the applicable Performance Period. Notwithstanding
the foregoing, the Committee in its sole discretion may allow a Participant to
defer payment in settlement of Performance Shares on terms and conditions
approved by the Committee and set forth in the related Award Agreement entered
into in advance of the time of receipt or constructive receipt of payment by the
Participant.
9.8 Performance Shares shall not be transferable by the Participant. The
Committee shall have the authority to place additional restrictions on the
Performance Shares including, but not limited to, restrictions on transfer of
any shares of Common Stock that are delivered to a Participant in settlement of
any Performance Shares.
ARTICLE X -- CHANGES OF CONTROL OR OTHER FUNDAMENTAL CHANGES
10.1 Upon the occurrence of a Change of Control and unless otherwise
provided in the Award Agreement with respect to a particular Award:
(a) all outstanding Stock Options shall become immediately exercisable
in full, subject to any appropriate adjustments in the number of shares
subject to the Stock Option and the Option Price, and shall remain
exercisable for the remaining term of such Stock Option, regardless of any
provision in the related Award Agreement limiting the exercisability of
such Stock Option or any portion thereof for any length of time;
(b) all outstanding Performance Shares with respect to which the
applicable Performance Period has not been completed shall be paid out as
soon as practicable as follows:
(i) all Performance Objectives applicable to the Award of
Performance Shares shall be deemed to have been satisfied to the
extent necessary to earn one hundred percent (100%) of the Performance
Shares covered by the Award;
(ii) the applicable Performance Period shall be deemed to have
been completed upon occurrence of the Change of Control;
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(iii) the payment to the Participant in settlement of the
Performance Shares shall be the amount determined by the Committee, in
its sole discretion, or in the manner stated in the Award Agreement,
as multiplied by a fraction, the numerator of which is the number of
full calendar months of the applicable Performance Period that have
elapsed prior to occurrence of the Change of Control, and the
denominator of which is the total number of months in the original
Performance Period; and
(iv) upon the making of any such payment, the Award Agreement as
to which it relates shall be deemed terminated and of no further force
and effect.
(c) all outstanding shares of Restricted Stock with respect to which
the restrictions have not lapsed shall be deemed vested, and all such
restrictions shall be deemed lapsed and the Restriction Period ended.
10.2 Anything contained herein to the contrary notwithstanding, upon the
dissolution or liquidation of the Corporation, each Award granted under the Plan
and then outstanding shall terminate; provided, however, that following the
adoption of a plan of dissolution or liquidation, and in any event prior to the
effective date of such dissolution or liquidation, each such outstanding Award
granted hereunder shall be exercisable in full and all restrictions shall lapse,
to the extent set forth in Section 10.1(a), (b) and (c) above.
10.3 After the merger of one or more corporations into the Corporation or
any Subsidiary, any merger of the Corporation into another corporation, any
consolidation of the Corporation or any Subsidiary of the Corporation and one or
more corporations, or any other corporate reorganization of any form involving
the Corporation as a party thereto and involving any exchange, conversion,
adjustment or other modification of the outstanding shares of the Common Stock,
each Participant shall, at no additional cost, be entitled, upon any exercise of
such Participant's Stock Option, to receive, in lieu of the number of shares as
to which such Stock Option shall then be so exercised, the number and class of
shares of stock or other securities or such other property to which such
Participant would have been entitled to pursuant to the terms of the agreement
of merger or consolidation or reorganization, if at the time of such merger or
consolidation or reorganization, such Participant had been a holder of record of
a number of shares of Common Stock equal to the number of shares as to which
such Stock Option shall then be so exercised. Comparable rights shall accrue to
each Participant in the event of successive mergers, consolidations or
reorganizations of the character described above. The Committee may, in its sole
discretion, provide for similar adjustments upon the occurrence of such events
with regard to other outstanding Awards under this Plan. The foregoing
adjustments and the manner of application of the foregoing provisions shall be
determined by the Committee in its sole discretion. Any such adjustment may
provide for the elimination of any fractional shares which might otherwise
become subject to an Award. All adjustments made as the result of the foregoing
in respect of each Incentive Stock Option shall be made so that such Incentive
Stock Option shall continue to be an Incentive Stock Option, as defined in
Section 422 of the Code.
ARTICLE XI -- AMENDMENT AND TERMINATION
11.1 Subject to the provisions of Section 11.2, the Board of Directors,
upon recommendation of the Committee or otherwise, at any time and from time to
time may amend or terminate the Plan as may be necessary or desirable to
implement or discontinue the Plan or any provision hereof. To the extent
required by the Act or the Code, however, no amendment, without approval by the
Corporation's shareholders, shall:
(a) materially alter the group of persons eligible to participate in
the Plan;
(b) except as provided in Section 3.6, increase the maximum number of
shares of Common Stock that are available for Awards under the Plan;
(c) extend the period during which Incentive Stock Option Awards may
be granted beyond March 27, 2008; or
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(d) alter the class of individuals eligible to receive an Incentive
Stock Option or increase the limit on Incentive Stock Options set forth in
Section 4.1(d) or the value of shares of Common Stock for which an Eligible
Employee may be granted an Incentive Stock Option.
11.2 No amendment to or discontinuance of the Plan or any provision hereof
by the Board of Directors or the shareholders of the Corporation shall, without
the written consent of the Participant, adversely affect (in the sole discretion
of the Committee) any Award theretofore granted to such Participant under this
Plan; provided, however, that the Committee retains the right and power to:
(a) annul any Award if the Participant is terminated for cause as
determined by the Committee; and
(b) convert any outstanding Incentive Stock Option to a Nonqualified
Stock Option.
11.3 If a Change of Control has occurred, no amendment or termination shall
impair the rights of any person with respect to an outstanding Award as provided
in Article X.
ARTICLE XII -- MISCELLANEOUS PROVISIONS
12.1 Nothing in the Plan or any Award granted hereunder shall confer upon
any Participant any right to continue in the employ of the Corporation or its
Subsidiaries or to serve as a Director or shall interfere in any way with the
right of the Corporation or its Subsidiaries or the shareholders of the
Corporation, as applicable, to terminate the employment of a Participant or to
release or remove a Director at any time. Unless specifically provided
otherwise, no Award granted under the Plan shall be deemed salary or
compensation for the purpose of computing benefits under any employee benefit
plan or other arrangement of the Corporation or its Subsidiaries for the benefit
of their respective employees unless the Corporation shall determine otherwise.
No Participant shall have any claim to an Award until it is actually granted
under the Plan and an Award Agreement has been executed and delivered to the
Corporation. To the extent that any person acquires a right to receive payments
from the Corporation under the Plan, such right shall, except as otherwise
provided by the Committee, be no greater than the right of an unsecured general
creditor of the Corporation. All payments to be made hereunder shall be paid
from the general funds of the Corporation, and no special or separate fund shall
be established and no segregation of assets shall be made to assure payment of
such amounts, except as provided in Article VII with respect to Restricted Stock
and except as otherwise provided by the Committee.
12.2 The Plan and the grant of Awards shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required. Any provision herein
relating to compliance with Rule 16b-3 under the Act shall not be applicable
with respect to participation in the Plan by Participants who are not subject to
Section 16 of the Act.
12.3 The terms of the Plan shall be binding upon the Corporation, its
successors and assigns.
12.4 Neither a Stock Option nor any other type of equity-based compensation
provided for hereunder shall be transferable except as provided for in Section
6.2. In addition to the transfer restrictions otherwise contained herein,
additional transfer restrictions shall apply to the extent required by federal
or state securities laws. If any Participant makes such a transfer in violation
hereof, any obligation hereunder of the Corporation to such Participant shall
terminate immediately.
12.5 This Plan and all actions taken hereunder shall be governed by the
laws of the State of California.
12.6 Each Participant exercising an Award hereunder agrees to give the
Committee prompt written notice of any election made by such Participant under
Section 83(b) of the Code, or any similar provision thereof.
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12.7 If any provision of this Plan or an Award Agreement is or becomes or
is deemed invalid, illegal or unenforceable in any jurisdiction, or would
disqualify the Plan or any Award Agreement under any law deemed applicable by
the Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award Agreement, it shall be stricken, and the remainder of the Plan or the
Award Agreement shall remain in full force and effect.
12.8 The grant of an Award pursuant to this Plan shall not affect in any
way the right or power of the Corporation or any of its Subsidiaries to make
adjustments, reclassification, reorganizations, or changes of its capital or
business structure, or to merge or consolidate, or to dissolve, liquidate or
sell, or to transfer all or part of its business or assets.
12.9 The Plan is not subject to the provisions of ERISA or qualified under
Section 401(a) of the Code.
12.10 If a Participant is required to pay to the Corporation an amount with
respect to income and employment tax withholding obligations in connection with
(i) the exercise of a Nonqualified Stock Option, (ii) certain dispositions of
Common Stock acquired upon the exercise of an Incentive Stock Option, or (iii)
the receipt of Common Stock pursuant to any other Award, then the issuance of
Common Stock to such Participant shall not be made (or the transfer of shares by
such Participant shall not be required to be effected, as applicable) unless
such withholding tax or other withholding liabilities shall have been satisfied
in a manner acceptable to the Corporation. The Committee, in its sole discretion
and subject to such rules as it may adopt, may permit the Participant to satisfy
such obligation, in whole or in part, by making an irrevocable election that a
portion of the total Fair Market Value of the shares of Common Stock be paid in
the form of cash in lieu of the issuance of Common Stock and that such cash
payment be applied to the satisfaction of the withholding obligations. The
amount to be withheld shall not exceed the statutory minimum federal and state
income and employment tax liability arising from the transfer of the Common
Stock to the Participant. Notwithstanding any other provision of the Plan, any
election under this Section 12.10 is required to satisfy the applicable
requirements of Rule 16b-3 under the Act.
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GRILL CONCEPTS, INC.
11661 San Vicente Blvd., Suite 404
Los Angeles, California 90049
Proxy for Annual Meeting of Shareholders
to be held on June 12, 1998
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Robert Spivak and Michael Weinstock, and
each of them, as Proxies, with full power of substitution in each of them, in
the name, place and stead of the undersigned, to vote at an Annual Meeting of
Shareholders (the "Meeting") of Grill Concepts, Inc., a Delaware corporation
(the "Company"), on June 12, 1998, at 10:00 a.m., or at any adjournment or
adjournments thereof, in the manner designated below, all of the shares of the
Company's common stock that the undersigned would be entitled to vote if
personally present.
1. GRANTING---WITHHOLDING---authority to vote for the election as directors
of the Company the following nominees: Robert L. Wechsler, Robert Spivak,
Michael Weinstock, Richard Shapiro, Charles Frank, Glenn Golenberg and Peter
Balas.
(Instructions: To withhold authority to vote for any individual nominee, strike
a line through the nominee's name.)
2. Proposal to adopt the Grill Concepts, Inc. 1998 Comprehensive Stock
Option and Award Plan.
FOR AGAINST ABSTAIN
------- ------- --------
3. Proposal to ratify the appointment of Coopers & Lybrand LLP as the
Company's independent certifying accountants.
FOR AGAINST ABSTAIN
------- -------- -------
4. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSALS 2 AND 3 AND FOR
THE ELECTION OF ALL NOMINEES AS DIRECTORS.
Please sign exactly as your name appears hereon.
When shares are held by joint tenants, both should
sign. When signing as an attorney, executor,
administrator, trustee, guardian, or corporate
officer, please indicate the capacity in which
signing.
DATED: , 199
-------------------------- ------
--------------------------------------------
Signature
--------------------------------------------
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE
