<PAGE>
As filed with the Securities and Exchange Commission on April 18, 1997
Registration No. 333-
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
ROCK BOTTOM RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)
_________________________
DELAWARE 84-1265838
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1050 WALNUT STREET, SUITE 402
BOULDER, COLORADO 80302
(303) 417-4000
(Address Of principal executive offices)
ROCK BOTTOM RESTAURANTS, INC. EQUITY INCENTIVE PLAN
(Full title of plan)
_________________________
WITH COPIES TO:
WILLIAM S. HOPPE PAUL HILTON, ESQ.
ROCK BOTTOM RESTAURANTS, INC. DAVIS, GRAHAM & STUBBS LLP
1050 WALNUT STREET, SUITE 402 370 17TH STREET, SUITE 4700
BOULDER, COLORADO 80302 DENVER, COLORADO 80202
(303)417-4000 (303) 892-9400
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
_________________________
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Proposed Proposed
Amount Maximum Maximum
Title of Securities to be Offering Price Aggregate Amount of
to be Rgistered Registered Per Share<F1> Offering Price Registration Fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock ($.01 par value). . . . 600,000<F2> shares $10.50 $6,300,000 $1,909
====================================================================================================================
<FN>
<F1> Pursuant to Rule 457(c), the price per share and aggregate offering price are based upon
the average of the high and low prices of the Company's Common Stock on April 15, 1997
as reported on the National Association of Securities Dealers, Inc. market system.
<F2> Represents 200,000 shares added to the Plan by director and stockholder action, 75,768
shares automatically added to the Plan in accordance with the terms of the Plan, and
324,232 shares which may be added to the Plan in the future by operation of the automatic
increase provision of the Plan.
As permitted by Rule 429, the Prospectus that contains the information required pursuant to Section 10(a) of the
Securities Act of 1933, as amended (the "Securities Act"), and that relates to this Registration Statement is a
combined Prospectus that also relates to a Registration Statement on Form S-8 (File No. 33-94256), with respect to
the registration on July 3, 1995 under the Securities Act of 1,075,000 shares of Common Stock, under the Equity
Incentive Plan and the Nonemployee Directors' Stock Option Plan.
</TABLE>
<PAGE>
INTRODUCTORY NOTE
Insofar as this Registration Statement relates to the Rock
Bottom Restaurants, Inc. Equity Incentive Plan, the contents of
Company's Registration Statement on Form S-8 (No. 33-94256), filed by
the Registrant on July 3, 1995, are hereby incorporated by reference
into this Registration Statement.
-1-
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
Rock Bottom Restaurants, Inc., a Delaware corporation (the
"Company"), hereby states that the following documents filed with the
Securities and Exchange Commission (the "Commission") are hereby
incorporated or deemed to be incorporated in this Registration
Statement by reference as of their date of filing with the Commission:
(a) The Company's Annual Report on Form 10-K for the year ended
December 29, 1996, as amended (File No. 0-24502), filed with the
Commission pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
(b) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form S-1 (No. 33-89040), filed
with the Commission on February 1, 1995 pursuant to the Securities Act
of 1933, as amended (the "Securities Act").
(c) All other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Registration Statement and prior to the filing of a
post-effective amendment to this Registration Statement indicating
that all securities offered under the Registration Statement have been
sold, or deregistering all securities then remaining unsold, are also
incorporated herein by reference and shall be a part hereof from the
date of the filing of such documents.
Any statement contained in a document incorporated by, or deemed
to be incorporated by reference herein, shall be deemed to be modified
or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently
filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement
so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws and Amended and Restated Certificate of
Incorporation (the "Certificate of Incorporation") provide that the
Company shall, to the full extent permitted by the General Corporation
Law of the State of Delaware, as amended from time to time, indemnify
all directors and officers of the Company. Section 145 of the
Delaware General Corporation Law provides in part that a corporation
shall have the power to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding (other than an action by or in
the right of the corporation) by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation or
is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation or other enterprise,
against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good
faith and in a
II-1<PAGE>
manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was
unlawful. Similar indemnity is authorized for such persons against
expenses (including attorneys' fees) actually and reasonably incurred
in defense or settlement of any threatened, pending or completed
action or suit by or in the right of the corporation, if such person
acted in good faith and in a manner reasonably believed to be in or
not opposed to the best interests of the corporation, and provided
further that (unless a court of competent jurisdiction otherwise
provides) such person shall not have been adjudged liable to the
corporation. Any such indemnification may be made only as authorized
in each specific case upon a determination by the stockholders or
disinterested directors that indemnification is proper because the
indemnitee has met the applicable standard of conduct. The indemnitee
is presumed to be entitled to indemnification and the Company has the
burden of proof to overcome that presumption. Where an officer or a
director is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify him
against the expenses which such officer or director actually or
reasonably incurred.
Additionally, the Certificate of Incorporation and Bylaws provide
for mandatory indemnification of directors to the fullest extent
permitted by Delaware law. This provision does not eliminate the
liability of a director (i) for a breach of the director's duty of
loyalty to the Company or its stockholders; (ii) for acts or omissions
by the director not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) for liability arising
under Section 174 of the Delaware General Corporation Law (relating to
the declaration of dividends and purchase or redemption of shares in
violation of the Delaware General Corporation Law); or (iv) for any
transaction from which the director derived an improper personal
benefit.
The foregoing description of certain provisions of the Company's
Amended and Restated Certificate of Incorporation and Bylaws is
qualified in its entirety by the actual Amended and Restated
Certificate of Incorporation of the Company filed as an exhibit to the
Registration Statement on Form S-1 (No. 33-79898) and the Bylaws of
the Company filed as an exhibit to the Company's Annual Report on Form
10-K for the fiscal year ended December 25, 1994, as amended (File No.
0-24502).
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS
4.1 Rock Bottom Restaurants, Inc. Equity Incentive Plan.
5.1 Opinion of Davis, Graham & Stubbs, LLP, as to the legality
of the issuance of the Shares.
23.1 Consent of Davis, Graham & Stubbs, LLP (see Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material
change to such information in the Registration Statement; (2) that,
for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and (3) to remove from
registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of
the offering.
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act, each
filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of
II-2<PAGE>
the Exchange Act that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Company certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8
and has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Boulder, State of Colorado, on this 16th day of April, 1997.
ROCK BOTTOM RESTAURANTS, INC.
By: /S/ THOMAS A. MOXCEY
-------------------------------------
Thomas A. Moxcey
Chief Executive Officer, President
and Chief Operating Officer
(Principal Executive Officer)
POWER OF ATTORNEY
-----------------
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints Frank B. Day, William
S. Hoppe, Thomas A. Moxcey and Theresa Shelton, and each or any of
them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement,
and to any Registration Statement filed under Rule 462(b) relating
hereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact
and agents, or any of them, or their or his substitutes or substitute,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed by the following
persons in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <S> <S>
FRANK B. DAY Chairman of the Board April 16, 1997
- -------------------------------------
Frank B. Day
THOMAS A. MOXCEY Chief Executive Officer, President,April 16, 1997
- -------------------------------------Chief Operating Officer and Director
Thomas A. Moxcey (Principal Executive Officer)
WILLIAM S. HOPPE Chief Financial Officer and ViceApril 16, 1997
- -------------------------------------President (Principal Financial Officer)
William S. Hoppe
THERESA D. SHELTON
- -------------------------------------Vice President Finance andApril 16, 1997
Theresa D. Shelton Assistant Secretary (Principal
Accounting Officer)
II-4<PAGE>
ROBERT D. GREENLEE Secretary and Director April 16, 1997
- -------------------------------------
Robert D. Greenlee
MARY C. HACKING Director April 16, 1997
- -------------------------------------
Mary C. Hacking
GERALD A. HORNBECK Director April 16, 1997
- -------------------------------------
Gerald A. Hornbeck
DAVID M. LUX Director April 16, 1997
- -------------------------------------
David M. Lux
ARTHUR WONG Director April 16, 1997
- -------------------------------------
Arthur Wong
DUNCAN COCROFT Director April 16, 1997
- -------------------------------------
Duncan Cocroft
</TABLE>
II-5<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
- ------------------------------------------------------------------
4.1 Rock Bottom Restaurants, Inc. Equity
Incentive Plan.
5.1 Opinion of Davis, Graham & Stubbs LLP, as to the
legality of the issuance of the Shares.
23.1 Consent of Davis, Graham & Stubbs LLP (see
Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP
<PAGE>
EXHIBIT 4.1
ROCK BOTTOM RESTAURANTS, INC.
EQUITY INCENTIVE PLAN
EFFECTIVE JUNE 3, 1994
(as amended through February 14, 1997)
<PAGE>
ROCK BOTTOM RESTAURANTS, INC.
EQUITY INCENTIVE PLAN
SECTION 1
INTRODUCTION
1.1 Establishment. Rock Bottom Restaurants, Inc., a Delaware
corporation (hereinafter referred to, together with its Affiliated
Corporations (as defined in subsection 2.1(a)) as the "Company" except
where the context otherwise requires), hereby establishes the Rock
Bottom Restaurants, Inc. Equity Incentive Plan (the "Plan") for
certain key employees of the Company.
1.2 Purposes. The purposes of the Plan are to provide the key
employees selected for participation in the Plan with added incentives
to continue in the long-term service of the Company and to create in
such employees a more direct interest in the future success of the
operations of the Company by relating incentive compensation to
increases in stockholder value, so that the income of the key
employees is more closely aligned with the income of the Company's
stockholders. The Plan is also designed to attract key employees and
to retain and motivate participating employees by providing an
opportunity for investment in the Company.
SECTION 2
DEFINITIONS
2.1 Definitions. The following terms shall have the meanings
set forth below:
(a) "Affiliated Corporation" means any corporation or other
entity (including but not limited to a partnership) which is
affiliated with Rock Bottom Restaurants, Inc. through stock ownership
or otherwise and is treated as a common employer under the provisions
of Sections 414(b) and (c) of the Internal Revenue Code.
(b) "Award" means a grant made under this Plan in the form
of Stock, Options, Restricted Stock, Performance Shares, or
Performance Units.
(c) "Board" means the Board of Directors of the Company.
(d) "Effective Date" means the effective date of the Plan,
June 3, 1994.
(e) "Eligible Employees" means full-time employees
(including, without limitation, officers and directors who are also
employees) of the Company or any<PAGE>
Affiliated Corporation or any division thereof, upon whose judgment,
initiative and efforts the Company is, or will be, important to the
successful conduct of its business.
(f) "Employee Committee" means a committee composed of at
least one member of the Board of Directors who may, but need not be, a
disinterested person as that term is defined in Rule 16b-3 under the
Securities Exchange Act of 1934 ("1934 Act"). The Employee Committee
is empowered hereunder to grant Awards to Eligible Employees who are
not directors or "officers" of the Company as that term is defined in
Rule 16a-1(f), promulgated under the 1934 Act, and to establish the
terms of such Awards at the time of grant, but shall have no other
authority with respect to the Plan or outstanding Awards except as
expressly granted by the Plan.
(g) "Fair Market Value" means the officially quoted closing
price of the Stock on the NASDAQ National Market System on a
particular date. If there are no Stock transactions on such date, the
Fair Market Value shall be determined as of the immediately preceding
date on which there were Stock transactions. If no such prices are
reported on the NASDAQ National Market System, then Fair Market Value
shall mean the average of the high and low sale prices for the Stock
(or if no sales prices are reported, the average of the high and low
bid prices) as reported by the principal regional stock exchange, or
if not so reported, as reported by NASDAQ or a quotation system of
general circulation to brokers and dealers. If the Stock is not
publicly traded, the Fair Market Value of the Stock on any date shall
be determined in good faith by the Compensation Committee after such
consultation with outside legal, accounting and other experts as the
Compensation Committee may deem advisable, and the Committee shall
maintain a written record of its method of determining such value.
(h) "Compensation Committee" means a committee consisting
of at least two disinterested members of the Board, who are empowered
hereunder to take all actions required in the administration of the
Plan and the grant and administration of Awards hereunder. The
Compensation Committee shall be so constituted at all times as to
permit the Plan to comply with Rule 16b-3 or any successor rule
promulgated under the 1934 Act. Members of the Compensation Committee
shall be appointed from time to time by the Board, shall serve at the
pleasure of the Board, and may resign at any time upon written notice
to the Board.
(i) "Incentive Stock Option" means any Option designated as
such and granted in accordance with the requirements of Section 422 of
the Internal Revenue Code.
(j) "Internal Revenue Code" means the Internal Revenue Code
of 1986, as it may be amended from time to time.
(k) "Non-Statutory Option" means any Option other than an
Incentive Stock Option.
-2-<PAGE>
(l) "Option" means a right to purchase Stock at a stated
price for a specified period of time.
(m) "Option Price" means the price at which shares of Stock
subject to an Option may be purchased, determined in accordance with
subsection 7.2(b).
(n) "Participant" means an Eligible Employee or consultant
to the Company designated by the Compensation Committee from time to
time during the term of the Plan to receive one or more Awards under
the Plan.
(o) "Performance Cycle" means the period of time as
specified by the Compensation Committee over which Performance Share
or Performance Units are to be earned.
(p) "Performance Shares" means an Award made pursuant to
Section 9 which entitles a Participant to receive Shares, their cash
equivalent or a combination thereof based on the achievement of
performance targets during a Performance Cycle.
(q) "Performance Units" means an Award made pursuant to
Section 9 which entitles a Participant to receive cash, Stock or a
combination thereof based on the achievement of performance targets
during a Performance Cycle.
(r) "Plan Year" means the period beginning on the Monday
following the fifty-second Sunday of each year and ending on the
fifty-second Sunday of each year, except that for the first year of
the Plan it shall begin on the Effective Date and extend to the
fifty-second Sunday of that year.
(s) "Restricted Stock" means Stock granted under Section 8 that is
subject to restrictions imposed pursuant to said Section.
(t) "Share" means a share of Stock.
(u) "Stock" means the common stock, $.01 par value, of the
Company.
2.2 Gender and Number. Except when otherwise indicated by the
context, the masculine gender shall also include the feminine gender,
and the definition of any term herein in the singular shall also
include the plural
-3-<PAGE>
SECTION 3
PLAN ADMINISTRATION
The Plan shall be administered by the Compensation Committee.
References herein to the "Committee" shall mean the Employee Committee
and/or Compensation Committee, as applicable. References herein to
the Compensation Committee refer solely to the Compensation Committee.
In accordance with the provisions of the Plan, the Committee
shall, in its sole discretion, select Participants from among the
Eligible Employees and consultants to whom Awards will be granted, the
form of each Award, the amount of each Award and any other terms and
conditions of each Award as the Committee may deem necessary or
desirable and consistent with the terms of the Plan. The Compensation
Committee shall determine the form or forms of the agreements with
participants which shall evidence the particular provisions, terms,
conditions, rights and duties of the Company and the Participants with
respect to Awards granted pursuant to the Plan, which provisions need
not be identical except as may be provided herein.
The Compensation Committee may from time to time adopt such rules
and regulations for carrying out the purposes of the Plan as it may
deem proper and in the best interests of the Company. The
Compensation Committee may correct any defect, supply any omission or
reconcile any inconsistency in the Plan, and the Compensation
Committee may correct, supply any omission or reconcile any
inconsistency in any agreement entered into hereunder in the manner
and to the extent it shall deem expedient and it shall be the sole and
final judge of such expediency. No member of the Committee shall be
liable for any action or determination made in good faith, and all
members of the Committee shall, in addition to their rights as
directors, be fully protected by the Company with respect to any such
action, determination or interpretation. The determination,
interpretations and other actions of the Committee pursuant to the
provisions of the Plan shall be binding and conclusive for all
purposes and on all persons.
SECTION 4
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. As of February 14, 1997, 1,275,768
Shares are authorized for issuance under the Plan in accordance with
the provisions of the Plan and subject to such restrictions or other
provisions as the Compensation Committee may from time to time deem
necessary. This authorization shall be increased automatically on
each succeeding annual anniversary of the Effective Date after
February 14, 1997 by an amount equal to that number of Shares equal to
one-half of one percent of the Company's then issued and outstanding
Shares. The Shares may be divided among the various Plan components
as the Compensation Committee shall determine, except that no more
than 1,275,768 Shares shall be issued as Incentive Stock Options under
the Plan. Any portion of the Shares added on each
-4-<PAGE>
succeeding anniversary of the Effective Date which are unused during
the Plan Year beginning on such anniversary date shall be carried
forward and be available for grant and issuance in subsequent Plan
Years, while up to 100% of the Shares to be added in the next
succeeding Plan Year (calculated on the basis of the current Plan
Year's allocation) may be borrowed for use in the current Plan Year.
Shares which may be issued upon the exercise of Options shall be
applied to reduce the maximum number of Shares remaining available for
use under the Plan. The Company shall at all times during the term of
the Plan and while any Options are outstanding retain as authorized
and unissued Stock, or as treasury Stock, at least the number of
Shares from time to time required under the provisions of the Plan, or
otherwise assure itself of its ability to perform its obligations
hereunder.
4.2 Unused and Forfeited Stock. Any Shares that are subject to
an Award under this Plan which are not issued because the terms and
conditions of the Award are not met, including any Shares that are
subject to an Option which expires or is terminated for any reason,
shall become automatically available for use under the Plan.
4.3 Adjustments for Stock Split, Stock Dividend, Etc. If the
Company shall at any time increase or decrease the number of its
outstanding Shares of Stock or change in any way the rights and
privileges of such Shares by means of the payment of a stock dividend
or any other distribution upon such Shares payable in Stock, or
through a stock split, subdivision, consolidation, combination,
reclassification or recapitalization involving the Stock, or other
event that results in a change in the number or the kind of
outstanding shares of Stock or of any stock or other securities into
which the Stock shall be changed or for which it shall have been
exchanged, then in relation to the Stock that is affected by one or
more of the above events, the numbers, rights and privileges of the
following shall be increased, decreased or changed in like manner as
if they had been issued and outstanding, fully paid and nonassessable
at the time of such occurrence: (i) the shares of Stock as to which
Awards may be granted under the Plan; (ii) the Shares of Stock then
included in each outstanding Option, Performance Share or Performance
Unit granted hereunder; and (iii) the Shares of stock which have been
reserved for issuance pursuant to the Plan.
4.4 Dividend Payable in Stock of Another Corporation, Etc. If
the Company shall at any time pay or make any dividend or other
distribution upon the Stock payable in securities of another
corporation or other property (except money or Stock), a proportionate
part of such securities or other property shall be set aside and
delivered to any Participant then holding an Award for the particular
type of Stock for which the dividend or other distribution was made,
upon exercise thereof in the case of Options, and the vesting thereof
in the case of other Awards. Prior to the time that any such
securities or other property are delivered to a Participant in
accordance with the foregoing, the Company shall be the owner of such
securities or other property and shall have the right to vote the
securities, receive any dividends payable on such securities, and in
all other respects shall be treated as the owner. If securities or
other property which have been set aside by the Company in accordance
with this Section are not delivered to a Participant because an Award
is not exercised or otherwise
-5-<PAGE>
vested, then such securities or other property shall remain the
property of the Company and shall be dealt with by the Company as it
shall determine in its sole discretion.
4.5 Rights to Subscribe. If the Company shall at any time
grant to the holders of its Stock rights to subscribe pro rata for
additional shares thereof or for any other securities of the Company
or of any other corporation, there shall be reserved with respect to
the Shares then subject to an Award held by any Participant of the
particular class of Stock involved, the Stock or other securities
which the Participant would have been entitled to subscribe for if
immediately prior to such grant the Participant had exercised his
entire Option, or otherwise vested in his entire Award. If, upon
exercise of any such Option or the vesting of any other Award, the
Participant subscribes for the additional Stock or other securities,
the Participant shall pay to the Company the price that is payable by
the Participant in respect of the rights to subscribe for such Stock
or other securities.
4.6 General Adjustment Rules. If any adjustment or substitution
provided for in this Section 4 shall result in the creation of a
fractional Share under any Award, the Company shall, in lieu of
selling or otherwise issuing such fractional Share, pay to the
Participant a cash sum in an amount equal to the product of such
fraction multiplied by the Fair Market Value of a Share on the date
the fractional Share would otherwise have been issued. In the case of
any such substitution or adjustment affecting an Option, the total
Option Price for the shares of Stock then subject to an Option shall
remain unchanged but the Option Price per shall under each such Option
shall be equitably adjusted by the Compensation Committee to reflect
the greater or lesser number of shares of Stock or other securities
into which the Stock subject to the Option may have been changed.
4.7 Determination by Compensation Committee, Etc. Adjustments
under this Section 4 shall be made by the Compensation Committee,
whose determinations with regard thereto shall be final and binding
upon all parties thereto.
SECTION 5
REORGANIZATION OR LIQUIDATION
In the event that the Company is merged or consolidated with
another corporation (other than a merger or consolidation in which the
Company is the continuing corporation and which does not result in any
reclassification or change of outstanding Shares), or if all or
substantially all of the assets or more than 50% of the outstanding
voting stock of the Company is acquired by any other corporation,
business entity or person (other than a sale or conveyance in which
the Company continues as a holding company of an entity or entities
that conduct the business or businesses formerly conducted by the
Company), or in case of a reorganization (other than a reorganization
under the United States Bankruptcy Code) or liquidation of the
Company, and if the provisions of Section 10 do not apply, the
Compensation Committee, or the board of directors of any corporation
assuming the obligations of the Company, shall, have the power and
discretion to prescribe the terms and
-6-<PAGE>
conditions for the exercise of, or modification of, any outstanding
Awards granted hereunder. By way of illustration, and not by way of
limitation, the Compensation Committee may provide for the complete or
partial acceleration of the dates of exercise of the Options, or may
provide that such Options will be exchanged or converted into options
to acquire securities of the surviving or acquiring corporation, or
may provide for a payment or distribution in respect of outstanding
Options (or the portion thereof that is currently exercisable) in
cancellation thereof. The Compensation Committee may remove
restrictions on Restricted Stock and may modify the performance
requirements for any other Awards. The Compensation Committee may
provide that Stock or other Awards granted hereunder must be exercised
in connection with the closing of such transaction, and that if not so
exercised such Awards will expire. Any such determinations by the
Compensation Committee may be made generally with respect to all
Participants, or may be made on a case-by-case basis with respect to
particular Participants. The provisions of this Section 5 shall not
apply to any transaction undertaken for the purpose of reincorporating
the Company under the laws of another jurisdiction, if such
transaction does not materially affect the beneficial ownership of the
Company's capital stock.
SECTION 6
PARTICIPATION
Participants in the Plan shall be those Eligible Employees or
consultants who, in the judgment of the Committee, are performing, or
during the term of their incentive arrangement will perform, important
services in the management, operation and development of the Company,
and significantly contribute, or are expected to significantly
contribute, to the achievement of long-term corporate economic
objectives. Participants may be granted from time to time one or more
Awards; provided, however, that the grant of each such Award shall be
separately approved by the Committee and receipt of one such Award
shall not result in automatic receipt of any other Award. Written
notice shall be given to such person, specifying the terms,
conditions, rights and duties related thereto. Incentive Stock
Options shall not be granted to consultants, or to Eligible Employees
of any partnership which is included within the definition of an
Affiliated Corporation but whose employees are not permitted to
receive Incentive Stock Options under the Internal Revenue Code. Each
Participant shall enter into an agreement with the Company, in such
form as the Compensation Committee shall determine and which is
consistent with the provisions of the Plan, specifying such terms,
conditions, rights and duties. Awards shall be deemed to be granted
as of the date specified in the grant resolution of the Committee,
which date shall be the date of any related agreement with the
Participant. In the event of any inconsistency between the provisions
of the Plan and any such agreement entered into hereunder, the
provisions of the Plan shall govern.
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<PAGE>
SECTION 7
STOCK OPTIONS
7.1 Grant of Options. Coincident with the following designation
for participation in the Plan, a Participant may be granted one or
more Options. The Committee in its sole discretion shall designate
whether an Option is to be considered an Incentive Stock Option or a
Non-Statutory Option. The Committee may grant both an Incentive Stock
Option and a Non-Statutory Option to the same Participant at the same
time or at different times. Incentive Stock Options and Non-Statutory
Options, whether granted at the same or different times, shall be
deemed to have been awarded in separate grants, shall be clearly
identified, and in no event shall the exercise of one Option affect
the right to exercise any other Option or affect the number of Shares
for which any other Option may be exercised.
7.2 Option Agreements. Each Option granted under the Plan shall
be evidenced by a written stock option agreement which shall be
entered into by the Company and the Participant to whom the Option is
granted (the "Option Holder"), and which shall contain the following
terms and conditions, as well as such other terms and conditions not
inconsistent therewith, as the Committee may consider appropriate in
each case.
(a) Number of Shares. Each stock option agreement shall
state that it covers a specified number of Shares, as determined by
the Committee. Notwithstanding any other provision of the Plan, the
aggregate Fair Market Value of the Shares with respect to which
Incentive Stock Options are exercisable for the first time by an
Option Holder in any calendar year, under the Plan or otherwise, shall
not exceed $100,000. For this purpose, the Fair Market Value of the
Shares shall be determined as of the time an Option is granted.
(b) Price. The price at which each Share covered by an
Option may be purchased shall be determined in each case by the
Committee and set forth in the stock option agreement, but in no event
shall the Option Price for each Share covered by an Incentive Stock
Option be less than the Fair Market Value of the Stock on the date the
Option is granted. The Option Price for each Share covered by a
Non-Statutory Option may be less than Fair Market Value, in the sole
discretion of the Committee. In addition, the Option Price for each
Share covered by an Incentive Stock Option granted to an Eligible
Employee who then owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or any
parent or subsidiary corporation of the Company must be at least 110%
of the Fair Market Value of the Stock subject to the Incentive Stock
Option on the date the Option is granted.
(c) Duration of Options. Each stock option agreement shall
state the period of time, determined by the Committee within which the
Option may be exercised by the Option Holder (the "Option Period").
The Option Period must expire, in all cases, not more than ten years
from the date an Option is granted; provided, however, that the Option
Period of an Option granted to an Eligible Employee or consultant who
then owns stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or
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any parent or subsidiary corporation of the Company must expire not
more than five years from the date such an Option is granted. Each
stock option agreement shall also state the periods of time, if any,
as determined by the Committee when incremental portions of each
Option shall vest. Except as provided in Sections 5 and 10, no
portion of any Option shall vest before six months after the date of
grant of the Option.
(d) Termination of Employment, Death, Disability, Etc.
Except as otherwise determined by the Committee, each stock option
agreement shall provide as follows with respect to the exercise of the
Option upon termination of the employment or the death of the Option
Holder:
(i) If the employment of the Option Holder is terminated
within the Option Period for cause, as determined by the Company, the
Option shall thereafter be void for all purposes. As used in this
subsection 7.2(d), "cause" shall mean a gross violation, as determined
by the Company, of the Company's established policies and procedures.
The effect of this subsection 7.2(d)(i) shall be limited to
determining the consequences of a termination, and nothing in this
subsection 7.2(d)(i) shall restrict or otherwise interfere with the
Company's discretion with respect to the termination of any employee.
(ii) If the Option Holder terminates his employment with
the Company in a manner determined by the Board, in its sole
discretion, to constitute retirement (which determination shall be
communicated to the Option Holder within 10 days of such termination),
the Option may be exercised by the Option Holder, or in the case of
death by the persons specified in subsection (iii) of this subsection
7.2(d), within three months following his or her retirement if the
Option is an Incentive Stock Option or within twelve months following
his or her retirement if the Option is a Non-Statutory Stock Option
(provided that in each case that such exercise must occur within the
Option Period), but not thereafter. In any such case, the Option may
be exercised only as to the Shares as to which the Option had become
exercisable on or before the date of the Option Holder's termination
of employment.
(iii) If the Option Holder dies, or if the Option Holder
becomes disabled (within the meaning of Section 22(e) of the Internal
Revenue Code), during the Option Period while still employed, or with
respect to a Non-Statutory Stock Option if the Option Holder dies
within the three-month period referred to in (iv) below or within the
three or twelve-month period referred to in (ii) above, the Option may
be exercised by those entitled to do so under the Option Holder's will
or by the laws of descent and distribution within twelve months
following the Option Holder's death or disability (provided that in
each case such exercise must occur within the Option Period), but not
thereafter. In any such case, the Option may be exercised only as to
the Shares as to which the Option had become exercisable on or before
the date of the Option Holder's death or disability.
(iv) If the employment of the Option Holder by the
Company is terminated (which for this purpose means that the Option
Holder is no longer employed by the Company or by an Affiliated
Corporation) within the Option Period for any reason other
-9-<PAGE>
than cause, retirement as provided in (ii) above, disability or the
Option Holder's death, the Option may be exercised by the Option
Holder within three months following the date of such termination
(provided that such exercise must occur within the Option Period), but
not thereafter. In any such case, the Option may be exercised only as
to the Shares as to which the Option had become exercisable on or
before the date of termination of employment.
(e) Transferability. Each stock option agreement shall
provide that the Option granted therein is not transferable by the
Option Holder except by will or pursuant to the laws of descent and
distribution, and that such Option is exercisable during the Option
Holder's lifetime only by him or her, or in the event of disability or
incapacity, by his or her guardian or legal representative.
(f) Exercise, Payments, Etc.
(i) Each stock option agreement shall provide that the
method for exercising the Option granted therein shall be by delivery
to the Corporate Secretary of the Company of written notice specifying
the number of Shares with respect to which such Option is exercised
(which must be in an amount evenly divisible by 100) and payment of
the Option Price. Such notice shall be in a form satisfactory to the
Compensation Committee and shall specify the particular Option (or
portion thereof) which is being exercised and the number of Shares
with respect to which the Option is being exercised. The exercise of
the Option shall be deemed effective upon receipt of such notice by
the Corporate Secretary and payment to the Company. The purchase of
such Stock shall take place at the principal offices of the Company
upon delivery of such notice, at which time the purchase price of the
Stock shall be paid in full by any of the methods or any combination
of the methods set forth in (ii) below. A properly executed
certificate or certificates representing the Stock shall be issued by
the Company and delivered to the Option Holder. If certificates
representing Stock are used to pay all or part of the Option Price,
separate certificates for the same number of shares of Stock shall be
issued by the Company and delivered to the Option Holder representing
each certificate used to pay the Option Price, and an additional
certificate shall be issued by the Company and delivered to the Option
Holder representing the additional shares, in excess of the Option
Price, to which the Option Holder is entitled as a result of the
exercise of the Option.
(ii) The exercise price shall be paid by any of the
following methods or any combination of the following methods:
(A) in cash;
(B) by cashier's check payable to the order
of the Company;
(C) by delivery to the Company of certificates
representing the number of Shares then owned by the Option Holder, the
Fair Market Value of which equals the purchase price of the Stock
purchased pursuant to the Option, properly
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<PAGE>
endorsed for transfer to the Company; provided however, that Shares
used for this purpose must have been held by the Option Holder for
such minimum period of time as may be established from time to time by
the Compensation Committee; for purposes of this Plan, the Fair Market
Value of any Shares delivered in payment of the purchase price upon
exercise of the Option shall be the Fair Market Value as of the
exercise date; the exercise date shall be the day the delivery of the
certificates for the Stock used as payment of the Option Price; or
(D) by delivery to the Company of a properly executed
notice of exercise together with irrevocable instructions to a broker
to deliver to the Company promptly the amount of the proceeds of the
sale of all or a portion of the Stock or of a loan from the broker to
the Option Holder necessary to pay the exercise price.
(iii) In the discretion of the Compensation Committee, the
Company may guaranty a third-party loan obtained by a Participant to
pay part or all of the Option Price of the Shares provided that such
loan or the Company's guaranty is secured by the Shares.
(g) Date of Grant. An option shall be considered as having
been granted on the date specified in the grant resolution of the
Committee.
(h) Withholding. Each stock option agreement covering
Non-Statutory Options shall provide that, upon exercise of the Option,
the Option Holder shall make appropriate arrangements with the Company
to provide for the amount of additional withholding required by
applicable federal and state income tax laws, including payment of
such taxes through delivery of Stock or by withholding Stock to be
issued under the Option, as provided in Section 15.
(i) Adjustment of Options. Subject to the limitations
contained in Sections 7 and 14, the Compensation Committee may make
any adjustment in the Option Price, the number of shares subject to,
or the terms of, an outstanding Option and a subsequent granting of an
Option by amendment or by substitution of an outstanding Option. Such
amendment, substitution, or re-grant may result in terms and
conditions (including Option Price, number of shares covered, vesting
schedule or exercise period) that differ from the terms and conditions
of the original Option. The Compensation Committee may not, however,
adversely affect the rights of any Participant to previously granted
Options without the consent of such Participant. If such action is
affected by amendment, the effective date of such amendment shall be
the date of the original grant.
7.3 Stockholder Privileges. No Option Holder shall have any
rights as a stockholder with respect to any Shares covered by an
Option until the Option Holder becomes the holder of record of such
Stock, and no adjustments shall be made for dividends or other
distributions or other rights as to which there is a record date
preceding the date such Option Holder becomes the holder of record of
such Stock, except as provided in Section 4.
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SECTION 8
RESTRICTED STOCK AWARDS
8.1 Awards Granted. Coincident with or following designation
for participation in the Plan, a Participant may be granted one or
more Restricted Stock Awards consisting of Shares. The number of
Shares granted as a Restricted Stock Award shall be determined by the
Committee.
8.2 Restrictions. A Participant's right to retain a Restricted
Stock Award granted to him under Section 8.1 shall be subject to such
restrictions, including but not limited to his continuous employment
by the Company for a restriction period specified by the Committee or
the attainment of specified performance goals and objectives, as may
be established by the Committee with respect to such award. The
Committee may in its sole discretion require different periods of
employment or different performance goals and objectives with respect
to different Participants, to different Restricted Stock Awards or to
separate, designated portions of the Shares constituting a Restricted
Stock Award.
8.3 Privileges of a Stockholder, Transferability. A Participant
shall have all voting, dividend, liquidation and other rights with
respect to Stock in accordance with its terms received by him as a
Restricted Stock Award under this Section 8 upon his becoming the
holder of record of such Stock; provided, however, that the
Participant's right to sell, encumber or otherwise transfer such Stock
shall be subject to the limitations of Section 11.2 hereof.
8.4 Enforcement of Restrictions. The Committee may in its sole
discretion require one or more of the following methods of enforcing
the restrictions referred to in Section 8.2 and 8.3:
(a) Placing a legend on the stock certificates referring to
the restrictions;
(b) Requiring the Participant to keep the stock
certificates, duly endorsed, in the custody of the Company while the
restrictions remain in effect; or
(c) Requiring that the stock certificates, duly endorsed,
be held in the custody of a third party while the restrictions remain
in effect.
8.5 Termination of Employment, Death, Disability, Etc. In the
event of the death or disability (within the meaning of Section 22(e)
of the Internal Revenue Code) of a Participant, or the retirement of a
Participant as provided in Section 7.2(d)(ii), all employment period
and other restrictions applicable to Restricted Stock Awards then held
by him shall lapse, and such awards shall become fully nonforfeitable.
Subject to Sections 5 and 10, in the event of a Participant's
termination of employment for any other reason, any Restricted Stock
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Awards as to which the employment period or other restrictions have
not been satisfied shall be forfeited.
SECTION 9
PERFORMANCE SHARES AND PERFORMANCE UNITS
9.1 Awards Granted. Coincident with or following designation
for participation in the Plan, a Participant may be granted
Performance Shares or Performance Units.
9.2 Amount of Award. The Committee shall establish a maximum
amount of a Participant's Award, which amount shall be denominated in
Shares in the case of Performance Shares or in dollars in the case of
Performance Units.
9.3 Communication of Award. Written notice of the maximum
amount of a Participant's Award and the Performance Cycle determined
by the Committee shall be given to a Participant as soon as
practicable after approval of the Award by the Committee.
9.4 Amount of Award Payable. The Committee shall establish
maximum and minimum performance targets to be achieved during the
applicable Performance Cycle. Performance targets established by the
Committee shall relate to corporate, group, unit or individual
performance and may be established in terms of earnings, growth in
earnings, ratios of earnings to equity or assets, or such other
measures or standards determined by the Committee. Multiple
performance targets may be used and the components of multiple
performance targets may be given the same or different weights in
determining the amount of an Award earned, and may relate to absolute
performance or relative performance measured against other groups,
units, individuals or entities. Achievement of the maximum
performance target shall entitle the Participant to payment (subject
to Section 9.6) at the full or maximum amount specified with respect
to the Award; provided, however, that notwithstanding any other
provisions of this Plan, in the case of an Award of Performance Shares
the Committee, in its discretion may establish an upper limit on the
amount payable (whether in cash or Stock) as a result of the
achievement of the maximum performance target. The Committee may also
establish that a portion of a full or maximum amount of a
Participant's Award will be paid (subject to Section 9.6) for
performance which exceeds the minimum performance target but falls
below the maximum performance target applicable to such Award.
9.5 Adjustments. At any time prior to payment of a Performance
Share or Performance Unit Award, the Compensation Committee may adjust
previously established performance targets or other terms and
conditions to reflect events such as changes in laws, regulations, or
accounting practice, or mergers, acquisitions or divestitures.
9.6 Payments of Awards. Following the conclusion of each
Performance Cycle, the Committee shall determine the extent to which
performance targets have been attained, and the satisfaction of any
other terms and conditions with respect to an Award
-13-<PAGE>
relating to such Performance Cycle. The Committee shall determine
what, if any, payment is due with respect to an Award and whether such
payment shall be made in cash, Stock or some combination. Payment
shall be made in a lump sum or installments, as determined by the
Committee, and be made as promptly as practicable following the end of
the applicable Performance Cycle, subject to such terms and conditions
and in such form as may be prescribed by the Committee.
9.7 Termination of Employment. If a Participant ceases to be a
Employee before the end of a Performance Cycle by reason of his death,
permanent disability or retirement as provided in Section 7.2(d)(ii),
the Performance Cycle for such Participant for the purpose of
determining the amount of the Award payable shall end at the end of
the calendar quarter immediately preceding the date on which such
Participant ceased to be an Employee. The amount of an Award payable
to a Participant to whom the preceding sentence is applicable shall be
paid at the end of the Performance Cycle and shall be that fraction of
the Award computed pursuant to the preceding sentence the numerator of
which is the number of calendar quarters during the Performance Cycle
during all of which said Participant was an Employee and the
denominator of which is the number of full calendar quarters in the
Performance Cycle. Upon any other termination of employment of a
Participant during a Performance Cycle, participation in the Plan
shall cease and all outstanding Awards of Performance Shares or
Performance Units to such Participant shall be cancelled.
SECTION 10
CHANGE IN CONTROL
10.1 Options, Restricted Stock. In the event of a change in
control of the Company as defined in Section 10.3, then the
Compensation Committee may, in its sole discretion, without obtaining
stockholder approval, to the extent permitted in Section 14, take any
or all of the following actions: (a) accelerate the exercise dates of
any outstanding Options or make all such Options fully vested and
exercisable; (b) grant a cash bonus award to any Option Holder in an
amount necessary to pay the Option Price of all or any portion of the
Options then held by such Option Holder; (c) pay cash to any or all
Option Holders in exchange for the cancellation of their outstanding
Options in an amount equal to the difference between (x) the Option
Price of such Options and (y) the greater of (i) the purchase or
tender offer price for the underlying Stock or (ii) the Fair Market
Value of the Stock on the date of the cancellation of the Options; (d)
make any other adjustments or amendments to the outstanding Options
and (e) eliminate all restrictions with respect to Restricted Stock
and deliver Shares free of restrictive legends to any Participant.
10.2 Performance Shares and Performance Units. Under the
circumstances described in Section 10.1, the Compensation Committee
may, in its sole discretion, and without obtaining stockholder
approval, to the extent permitted in Section 14, provide for payment
of outstanding Performance Shares and Performance Units at the maximum
award level or any percentage thereof.
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10.3 Definition. For purposes of the Plan, a "change in control"
shall be deemed to have occurred if (a) any "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the 1934 Act),
other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or Mr. Frank B. Day is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, of more than 33-1/3 of the then outstanding
voting stock of the Company; or (b) at any time during any period of
three consecutive years (not including any period prior to the
Effective Date), individuals who at the beginning of such period
constitute the Board (and any new director whose election by the Board
or whose nomination for election by the Company's stockholders was
approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority thereof; or (c) the
stockholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 80% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation, or
the stockholders approve a plan of complete liquidation of the Company
or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
SECTION 11
RIGHTS OF EMPLOYEES; PARTICIPANTS
11.1 Employment. Nothing contained in the Plan or in any Award
granted under the Plan shall confer upon any Participant any right
with respect to the continuation of his or her employment by the
Company, or interfere in any way with the right of the Company,
subject to the terms of any separate employment agreement to the
contrary, at any time to terminate such employment or to increase or
decrease the compensation of the Participant from the rate in
existence at the time of the grant of an Award. Whether an authorized
leave of absence, or absence in military or government service, shall
constitute a termination of employment shall be determined by the
Compensation Committee at the time.
11.2 Nontransferability. No right or interest of any Participant
in an Award granted pursuant to the Plan shall be assignable or
transferable during the lifetime of the Participant, either
voluntarily or involuntarily, or be subjected to any lien, directly or
indirectly, by operation of law, or otherwise, including execution,
levy, garnishment, attachment, pledge or bankruptcy. In the event or
a Participant's death, a Participant's rights and interests in Options
shall, to the extent provided in Section 7, be transferable by
testamentary will or the laws of descent and distribution, and payment
of any amounts due under the Plan shall be made to, and exercise of
any Options may be made by, the Participant's legal representatives,
heirs or legatees. If in the opinion of the Compensation Committee a
person entitled to payments or to exercise rights with respect to the
Plan is disabled from caring for
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<PAGE>
his affairs because of mental condition, physical condition or age,
payment due such person may be made to, and such rights shall be
exercised by, such person's guardian, conservator or other legal
personal representative upon furnishing the Compensation Committee
with evidence satisfactory to the Compensation Committee of such
status.
SECTION 12
GENERAL RESTRICTIONS
12.1 Investment Representations. The Company may require any
person to whom an Option or other Award is granted, as a condition of
exercising such Option or receiving Stock under the Award, to give
written assurances in substance and form satisfactory to the Company
and its counsel to the effect that such person is acquiring the Stock
subject to the Option or the Award for his own account for investment
and not with any present intention or selling or otherwise
distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and
applicable state securities laws. Legends evidencing such
restrictions may be placed on the certificates evidencing the Stock.
12.2 Compliance with Securities Laws. Each Award shall be
subject to the requirement that, if at any time counsel to the Company
shall determine that the listing, registration or qualification of the
Shares subject to such Award upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental
or regulatory body, is necessary as a condition of, or in connection
with, the issuance or purchase of Shares thereunder, such Award may
not be accepted or exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been
effected or obtained on conditions acceptable to the Compensation
Committee. Nothing herein shall be deemed to require the Company to
apply for or to obtain such listing, registration or qualification.
12.3 Stock Restriction Agreement. The Committee may provide that
shares of Stock issuable upon the exercise of an Option shall, under
certain conditions, be subject to restrictions whereby the Company has
a right of first refusal with respect to such shares or a right or
obligation to repurchase all or a portion of such shares, which
restrictions may survive a Participant's term of employment with the
Company. The acceleration of time or times at which an Option becomes
exercisable may be conditioned upon the Participant's agreement to
such restrictions.
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SECTION 13
OTHER EMPLOYEE BENEFITS
The amount of any compensation deemed to be received by a
Participant as a result of the exercise of an Option or the grant or
vesting of any other Award shall not constitute "earnings" with
respect to which any other employee benefits of such employee are
determined, including without limitation benefits under any pension,
profit sharing, life insurance or salary continuation plan.
SECTION 14
PLAN AMENDMENT, MODIFICATION AND TERMINATION
The Board may at any time terminate, and from time-to-time may
amend or modify, the Plan provided, however, that no amendment or
modification may become effective without approval of the amendment or
modification by the stockholders if stockholder approval is required
to enable the Plan to satisfy any applicable statutory or regulatory
requirements, or if the Company, on the advice of counsel, determines
that stockholder approval is otherwise necessary or desirable.
No amendment, modification or termination of the Plan shall in
any manner adversely affect any Awards theretofore granted under the
Plan, without the consent of the Participant holding such Awards.
SECTION 15
WITHHOLDING
15.1 Withholding Requirement. The Company's obligations to
deliver Shares upon the exercise of an Option, or upon the vesting of
any other Award, shall be subject to the Participant's satisfaction of
all applicable federal, state and local income and other tax
withholding requirements.
15.2 Withholding With Stock. At the time the Committee grants an
Award, it may, in its sole discretion, grant the Participant an
election to pay all such amounts of tax withholding, or any part
thereof, by electing to transfer to the Company, or to have the
Company withhold from Shares otherwise issuable to the Participant,
Shares having a value equal to the amount required to be withheld or
such lesser amount as may be elected by the Participant. All
elections shall be subject to the approval or disapproval of the
Committee. The value of Shares to be withheld shall be based on the
Fair Market Value of the Stock on the date that the amount of tax to
be withheld is to be determined (the "Tax Date"). Any such elections
by Participants to have Shares withheld for this purpose will be
subject to the following restrictions:
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(a) All elections must be made prior to the Tax Date.
(b) All elections shall be irrevocable.
(c) If the Participant is an officer or director of the
Company within the meaning of Section 16 of the 1934 Act ("Section
16"), the Participant must satisfy the requirements of such Section 16
and any applicable rules thereunder with respect to the use of Stock
to satisfy such tax withholding obligation.
SECTION 16
BROKERAGE ARRANGEMENTS
The Compensation Committee, in its discretion, may cause the
Company to enter into arrangements with one or more banks, brokers or
other financial institutions to facilitate the disposition of shares
acquired upon exercise of Stock Options, including, without
limitation, arrangements for the simultaneous exercise of Stock
Options and sale of the Shares acquired upon such exercise.
SECTION 17
NONEXCLUSIVITY OF THE PLAN
Neither the adoption of the Plan by the Board nor the submission
of the Plan to stockholders of the Company for approval shall be
construed as creating any limitations on the power or authority of the
Board to adopt such other or additional incentive or other
compensation arrangements of whatever nature as the Board may deem
necessary or desirable or preclude or limit the continuation of any
other plan, practice or arrangement for the payment of compensation or
fringe benefits to employees generally, or to any class or group of
employees, which the Company or any Affiliated Corporation now has
lawfully put into effect, including, without limitation, any
retirement, pension, savings and stock purchase plan, insurance, death
and disability benefits and executive short-term incentive plans.
SECTION 18
REQUIREMENTS OF LAW
18.1 Requirements of Law. The issuance of stock and the payment
of cash pursuant to the Plan shall be subject to all applicable laws,
rules and regulations.
18.2 Federal Securities Law Requirements. If a Participant is an
officer or director of the Company within the meaning of Section 16 of
the 1934 Act, Awards granted hereunder shall be subject to all
conditions required under Rule 16b-3, or any successor rule
promulgated under the 1934 Act, to qualify the Award for any exception
from the provisions
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<PAGE>
of Section 16(b) of the 1934 Act available under that Rule. Such
conditions are hereby incorporated herein by reference and may be set
forth in the agreement with the Participant which describes the Award.
18.3 Governing Law. The Plan and all agreements hereunder shall
be construed in accordance with and governed by the laws of the State
of Delaware.
SECTION 19
DURATION OF THE PLAN
The Plan shall terminate at such time as may be determined by the
Board of Directors, and no Award shall be granted after such
termination. If not sooner terminated under the preceding sentence,
the Plan shall fully cease and expire at midnight on June 3, 2004.
Awards outstanding at the time of the Plan termination may continue to
be exercised or earned in accordance with their terms.
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EXHIBIT 5.1
April 16, 1997
Rock Bottom Restaurants, Inc.
1050 Walnut Street
Boulder, Colorado 80302
Re: Sale of Common Stock Pursuant to Registration Statement
on Form S-8
Ladies and Gentlemen:
We have acted as counsel to Rock Bottom Restaurants, Inc. (the
"Company") in connection with the registration by the Company of
600,000 shares of Common Stock, $.01 par value (the "Shares"),
described in the Registration Statement on Form S-8 of the Company
being filed with the Securities and Exchange Commission concurrently
herewith. The Shares have been or may be issued by the Company
pursuant to the Company's Equity Incentive Plan (the "Plan"), which
provides for the grant of options to acquire shares of Common Stock of
the Company. In such connection we have examined certain corporate
records and proceedings of the Company, including actions taken by the
Company's Board of Directors in respect of the authorization and
issuance of the Shares to meet the requirements of the Plan, and such
other matters as we deemed appropriate.
Based upon the foregoing, we are of the opinion that the Shares
have been, or with the passage of time following the increase in
shares issuable under the Plan on each annual anniversary of the Plan
effective date will have been, duly authorized and, when issued as
contemplated by the Plan and the Registration Statement, will be
legally issued, fully paid and non-assessable shares of capital stock
of the Company.
We hereby consent to be named in the Registration Statement and
in the Prospectus constituting a part thereof, as amended from time to
time, as the attorneys who will pass upon legal matters in connection
with the issuance of the Shares, and to the filing of this opinion as
an exhibit to the aforesaid Registration Statement.
Very truly yours,
DAVIS, GRAHAM & STUBBS LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accounts, we hereby consent to the
incorporation by reference in the Registration Statement on Form S-8
of our report dated January 31, 1997 included in Rock Bottom
Restaurants, Inc., and Subsidiaries' Form 10-K for the year ended
December 29, 1996 and to all references to our Firm included in this
Registration Statement.
Denver, Colorado
April 16, 1997 ARTHUR ANDERSEN LLP
