As filed with the Securities and Exchange Commission on October __, 1998.
Registration No. 333-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------
HARVEST RESTAURANT GROUP, INC.
(Exact name of Registrant as specified in its charter)
-----------
Texas 76-0406417
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
-----------
1250 N.E. Loop 410, Suite 335, San Antonio, TX 78209
(Address of principal executive offices) (Zip Code)
1994 Stock Compensation Plan
(Full title of the plan)
William J. Gallagher Chairman
1250 N.E. Loop 410, Suite 335
San Antonio, TX 78209
(210) 824-2496
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale to public: From time to
time after the Registration Statement becomes effective.
--------------------------------
Exhibit Index Begins at Page II-6
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CALCULATION OF REGISTRATION FEE
================================================================================
Title of Amount to be Proposed Proposed Amount of
Securities Registered(1) Maximum Maximum Registration
to be Offering Aggregate Fee
Registered Price Per Offering
Security(2) Price(2)
- --------------------------------------------------------------------------------
Common Stock, 483,000 Shares $ .21 $101,430 $30
$.01 par value
================================================================================
(1) This Registration Statement, pursuant to Rule 416, covers any
additional shares of no par value Common Stock ("shares") which become issuable
under the 1994 Stock Compensation Plan ("Plan") set forth herein by reason of
any stock dividend, stock split, recapitalization or any other similar
transaction without receipt of consideration which results in an increase in the
number of shares outstanding.
(2) Estimated solely for the purpose of computing the amount of the
Registration fee under Rule 457 of the Securities Act of 1933, as amended. A
total of 483,000 shares have been issued under the Plan at an offering price per
share based upon the closing price of the Common Stock on the Electronic
Bulletin Board on October 9, 1998 of $.18 per share.
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HARVEST RESTAURANT GROUP, INC.
PART I
Cross Reference Sheet Required by Item 501
Item in Form S-8 Caption In Prospectus
---------------- ---------------------
1. General Plan Information....... Cover Page; Issuer and Participating
Employees; Description of the Plan; Tax
Consequences
2. Registrant Information and
Employee Plan Annual
Information.................... Available Information
3. Incorporation of Documents
by Reference................... Incorporation of Documents by Reference
4. Description of Securities...... Description of Common Stock
5. Interests of Named Experts
and Counsel.................... Counsel
6. Indemnification of
Directors and Officers......... SEC Position Regarding Indemnification
7. Exemption from Registration
Claimed........................ Not Applicable
8. Exhibits....................... Not Applicable (See Part II, Item 8)
9. Undertakings................... Not Applicable (See Part II, Item 9)
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Pursuant to the requirements of the Note to Part I of Form S-8 and Rule
428(b)(1) of the Rules under the Securities Act of 1933, as amended, the
information required by Part I of Form S-8 is included in the Reoffer Prospectus
which follows. The Reoffer Prospectus together with the documents incorporated
by reference pursuant to Item 3 of Part II of this Registration Statement
constitute the Section 10(a) Prospectus.
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REOFFER PROSPECTUS
The material which follows, up to but not including the page beginning Part
II of this Registration Statement, constitutes a prospectus, prepared on Form
S-3, in accordance with General Instruction C to Form S-8, to be used in
connection with resales of securities acquired under the Registrant's 1994 Stock
Compensation Plan by directors of the Registrant, as defined in Rule 405 under
the Securities Act of 1933, as amended.
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483,000 SHARES
COMMON STOCK
HARVEST RESTAURANT GROUP, INC.
---------------
1994 STOCK COMPENSATION PLAN
---------------
This Reoffer Prospectus ("Prospectus") relates to the offering by Harvest
Restaurant Group, Inc. (the "Company") and the Company's employees, officers,
directors and consultants of up to 483,000 shares (subject to adjustment in
certain circumstances) of the Company's $.01 par value Common Stock (the "Common
Stock" or "Shares"), purchasable by such employees, officers, directors and
consultants pursuant to Common Stock options ("options") under the Company's
1994 Stock Compensation Plan (the "Plan").
---------------
This Prospectus will be used by non-affiliates of the Company as well as
persons who are "affiliates" (as that term is defined under the Securities Act
of 1933) to effect resales of the Common Stock. See "Selling Stockholders." The
Company will receive no part of the proceeds of any such sales although it will
receive the exercise price of the options.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
---------------
No person is authorized to give any information or to make any
representation not contained in this Prospectus in connection with the offer
made hereby, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company. The delivery of this
Prospectus at any time does not imply that the information herein is correct as
of the time subsequent to the date hereof.
----------------
The date of this Prospectus is October __, 1998.
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AVAILABLE INFORMATION
---------------------
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, including Sections 14(a) and 14(c) relating to
proxy and information statements, and in accordance therewith files reports and
other information with the Securities and Exchange Commission ("Commission").
Reports and other information filed by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; 7 World Trade Center, New York, New York 10048; and
5670 Wilshire Boulevard, Los Angeles, California 90036. Copies of such material
can be obtained from the Public Reference Section of the Commission, 450 Fifth
Street N.W., Washington, D.C. 20549 at prescribed rates. The Company's Common
Stock is traded on the Electronic Bulletin Board of the NASD under the symbol
"ROTI." Reports, proxy and information statements may also be inspected on the
Commission's WebSite at www.sec.gov.
The Company furnishes annual reports to its shareholders which include
audited financial statements. The Company may furnish such other reports as may
be authorized, from time to time, by its Board of Directors.
INCORPORATION BY REFERENCE
Certain documents have been incorporated by reference into this Prospectus,
either in whole or in part. The Company will provide without charge (i) to each
person to whom a Prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the information that has been incorporated by
reference (not including exhibits to the information unless such exhibits are
specifically incorporated by reference into the information), and (ii) documents
and information required to be delivered to the Company's directors pursuant to
Rule 428(b). Requests for such information shall be addressed to the Company at
1250 NE Loop 410, Suite 335, San Antonio, TX 78209, (210) 824-2496.
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TABLE OF CONTENTS
-----------------
INTRODUCTION................................................................ 4
SELLING STOCKHOLDERS......................................................... 6
METHOD OF SALE............................................................... 6
SEC POSITION REGARDING INDEMNIFICATION....................................... 7
DESCRIPTION OF THE PLAN...................................................... 7
APPLICABLE SECURITIES LAW RESTRICTIONS....................................... 8
TAX CONSEQUENCES............................................................. 9
LEGAL MATTERS............................................................... 10
EXPERTS ................................................................... 10
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INTRODUCTION
Except for the historical information contained herein, the matters set
forth in this Prospectus include "forward-looking statements" which can be
identified by the use of forward-looking terminology such as "believes",
"expects", "may", "should", or "anticipates" and similar terminology, or by
discussions of strategy, future operating results or events. These
forward-looking statements are subject to risks and uncertainties that may cause
actual results, performance or achievements of the Company to differ materially
from those discussed in the forward-looking statements. These risks and
uncertainties include, among others: significant working capital deficits,
substantial losses, regulatory scrutiny, possible NASDAQ delisting, competition,
ongoing operating costs, adverse publicity, availability of capital, and acts of
third parties as well as other factors as detailed in the Company's reports
filed with the Securities and Exchange Commission. The forward- looking
statements included in the Prospectus speak only of the date hereof, and no
assurance can be given that the future results covered by the forward-looking
statements will be achieved.
The Company
The Company was incorporated in Texas in June 1993 under the name Clucker's
Tex-Mex Venture, Inc. and changed its name to CluckCorp International, Inc. in
April 1995. In October 1997, the Company changed its name to Harvest Restaurant
Group, Inc. Prior to November 1994, the Company was an area developer for
Cluckers Wood Roasted Chicken, Inc. ("CWRC"), the developer and franchisor of
the "Cluckers" restaurant concept. In November 1994, the Company exchanged its
Cluckers area development agreement with CWRC for systems, franchising materials
and the exclusive right to use the Cluckers name in Texas. During 1996 the
Company completed the evolution to the Harvest Rotisserie concept and began to
concentrate on the development, operation and franchising of Harvest Rotisserie
restaurants, which the Company believed to be an improvement over the original
Cluckers concept. Accordingly in 1996, the Company converted its one Cluckers
restaurant in San Antonio to a Harvest Rotisserie.
During 1996 and 1997, the Company owned, operated and franchised quick
service restaurants under the name "Harvest Rotisserie". At the end of 1997, the
Company had 14 Harvest Rotisserie restaurants in operation, four of which were
Company-owned restaurants in Texas and ten operated as franchised stores in
Florida, Indiana, North Carolina, and Northern California. The Company also had
executed leases for five additional restaurant properties in Texas for future
development as Harvest Rotisserie restaurants.
During 1997, the Company also began the conceptual development of a
multi-branded restaurant featuring Harvest Rotisserie along with two or more
additional branded restaurants in one building (referred to as "Harvest Food
4
<PAGE>
Court"). In January 1998, the Company decided to concentrate its future
expansion efforts on the development, operation and franchising of its Harvest
Food Court restaurants in Texas due to the Company's limited capital and the
lower per unit development and operating costs for a Harvest Food Court as
opposed to a Harvest Rotisserie.
To facilitate the Company's expansion of the Harvest Food Court restaurants
in Texas, the Company entered into an agreement in principle to acquire an 80%
interest in the intangible property rights of Red Line, Inc. for a nominal cash
payment. Red Line was the franchisor of 25 Red Line Burger restaurants in South
Texas prior to filing for protection from its creditors under Chapter 11 of the
U.S. Bankruptcy Code in 1995. The Company subsequently canceled the agreement to
acquire an interest in Red Line, Inc. due to the Company's decision to focus its
resources on the development of Rick Tanner's Original Grill restaurants.
In the first quarter of 1998, three area developers that operated nine
franchised Harvest Rotisserie restaurants in Florida, Indiana and North Carolina
closed all nine of these restaurants. The closures were the result of restaurant
operating losses caused in part by an industry wide decline in consumer
acceptance of the market segment in which the Harvest concept was positioned and
the Company's decision not to provide the area developers with additional
financing. By July 1998, the Company had closed all of its Company owned
restaurants and the one remaining franchise restaurant in Northern California
was closed in August, 1998.
In July 1998 the Company entered into an agreement (the "Share Exchange
Agreement" or "Merger") with TRC Acquisition Corporation ("TRC"), the operator
of a 13-unit chain of Rick Tanner's Original Grill restaurants ("Tanner's"),
pursuant to which the Company agreed, subject to shareholder approval, to issue
18,000,000 shares of its Common Stock and 722,500 shares of its Preferred Stock
for all of the outstanding securities of TRC. Completion of the Merger is
subject to shareholder approval and certain other contingencies, including the
Company obtaining satisfactory settlement agreements for all of its obligations
in excess of $10,000.
In connection with the Merger, the Company obtained a financing commitment
for $6,000,000 to be used primarily for the expansion of Tanner's restaurants,
$2,000,000 of which has been applied by the Company. The Company intends to
focus all its available resources on the development of Tanner's restaurants
(through Hartan, Inc., a wholly-owned subsidiary, as well as directly) and will
no longer pursue the development of Harvest Food Courts.
The principal executive offices of the Company are located at 1250 NE Loop
410, Suite 335, San Antonio, Texas 78209 and its telephone number is (210)
824-2496.
TRC
TRC owns and operates eleven restaurants located in Georgia and franchises
two restaurants, one in Macon, Georgia and one in Montgomery, Alabama. The
restaurants operate under the Tanner's name. Tanner's restaurants are intended
5
<PAGE>
to appeal to traditional casual dining customers by offering high quality food
and large portions at moderate prices and are positioned between the fast food
chicken, home meal replacement restaurants and the full bar casual restaurants
who have less portable foods. Tanner's restaurants offer a varied menu of
American fare made from original recipes. The menu features over 40 different
entrees and 15 different appetizers including pot roast, meatloaf, rotisserie
chicken, steaks, slow roasted barbecue pork ribs, cheesy chicken lips, "Texas"
chili, sandwiches, made-from-scratch soups and salads, and family value packs
ideal for take home service. All entrees are prepared using aged beef and fresh
chicken and seafood, are cooked to order and are served with a choice of two out
of 15 different freshly prepared vegetables.
SELLING STOCKHOLDERS
This Prospectus covers possible sales by officers and directors of the
Company of shares they acquire through exercise of options granted under the
Plan. The names of such officers and directors who may be Selling Stockholders
from time to time are listed below, along with the number of shares of Common
Stock currently owned by them and the number of shares offered for sale hereby.
The address of each individual is in care of the Company. The number of shares
offered for sale by such individuals may be updated in supplements to this
Prospectus, which will be filed with the Securities and Exchange Commission in
accordance with Rule 424(b) under the Securities Act of 1933, as amended. All
shares offered for sale are per share resulted from two prior downward
repricings of the options, from $6.00 per share to $2.25 per share and finally,
to $1.00 per share.
Number of
Name and Address of Shareholdings Shares Offered
Selling Stockholder Number(1) Percent For Sale(2)
- ------------------- --------- ------- -----------
William J. Gallagher (1)(2) 186,667 6.6% 140,000
Joseph Fazzone (3) 80,000 2.9% 80,000
Theodore M. Heesch (4) 30,000 1.1% 30,000
Michael M. Hogan (4) 30,000 1.1% 30,000
- ---------
(1) Mr. Gallagher may be deemed to be a "promoter" and "founder" of the Company
as those terms are defined under the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
(2) Includes 140,000 shares that Mr. Gallagher may purchase pursuant to
options.
(3) Includes 50,000 shares that Mr. Fazzone may purchase pursuant to options.
(4) Represents 30,000 shares that Mr. Hogan and Mr. Heesch may purchase
pursuant to options.
METHOD OF SALE
Sales of the shares offered by this Prospectus will be made on the
Electronic Bulletin Board, where the Company's Common Stock is listed for
trading, in other markets where the Company's Common Stock may be traded or in
negotiated transactions. Sales will be at prices current when the sales take
place and will generally involve payment of customary brokers' commissions.
There is no present plan of distribution.
6
<PAGE>
SEC POSITION REGARDING INDEMNIFICATION
The Company's Article of Incorporation and Bylaws provide for
indemnification of officers and directors, among other things, in instances in
which they acted in good faith and in a manner they reasonably believed to be
in, or not opposed to, the best interests of the Company and in which, with
respect to criminal proceedings, they had no reasonable cause to believe their
conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling the Company under the provisions described above, the Company has
been informed that in the opinion of the Securities and Exchange Commission that
indemnification is against public policy as expressed in that Act and is
therefore unenforceable.
DESCRIPTION OF THE PLAN
In July 1994, the Company's Board of Directors approved the Plan for the
benefit of employees, officers, directors and consultants of the Company. The
Company believes that the Plan provides an incentive to individuals to act as
employees, officers, directors and consultants of the Company and to maintain a
continued interest in the operations and future of the Company. All options were
issued under Section 422A of the Internal Revenue Code, and include qualified
and non-qualified stock options.
The terms of the Plan provide that the Company is authorized to grant
options to purchase shares of Common Stock ("options" or "option shares") to
employees, officers, directors and consultants of the Company upon the majority
consent of the Compensation Committee of the Company's Board of Directors. Any
employee, officer, director or consultant of the Company is eligible to receive
options under the Plan. The option price to be paid by optionees for shares
under qualified stock options must not be less than the fair market value of the
options shares as reported by the NASDAQ SmallCap Market on the date of the
grant. The option price for nonqualified stock options will not be less than 85%
of such fair market value. Options may be exercised after one year from the
grant and within 10 years thereafter, and the optionee must exercise options
during service to the Company unless extended by the Compensation Committee for
up to 90 days from the termination date of such service (15 months in the event
of the employee's death on disability). The Compensation Committee may extend
the termination date of an option granted under the Plan. All options may be
immediately exercised following a change in control of the Company such as is
contemplated by the Surf City and SGI acquisitions.
A total of 500,000 shares of the Company's authorized but unissued Common
Stock have been reserved for issuance pursuant to the Plan of which 483,000
options are currently outstanding at an exercise price of $1.00 per share. In
the event of a change in control of the Company (as defined in the Plan), all
outstanding options become immediately exercisable.
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Options under the Plan may not be transferred, except by will or by the
laws of intestate succession. The number of shares and price per share of the
options under the Plan will be proportionately adjusted to reflect forward and
reverse stock splits. The holder of an option under the Plan has none of the
rights of a shareholder until shares are issued.
The Plan is administered by the Compensation Committee (consisting of not
less than two disinterested directors) which has the power to interpret the
Plan, determine which persons are to be granted options and the amount of such
options.
The provisions of the Federal Employee Retirement Income Security Act of
1974 do not apply to the Plan. Shares issuable upon exercise of options will not
be purchased in open market transactions but will be issued by the Company from
authorized shares.
Payment for shares must be made by optionees in cash from their own funds.
No payroll deductions or other installment plans have been established. No
reports will be made to optionees under the Plan except in the form of updated
information for the Prospectus.
There are no assets administered under the Plan, and, accordingly, no
investment information is furnished herewith.
Shares issuable under the Plan may be sold in the open market, without
restrictions, as free trading securities. No options may be assigned,
transferred, hypothecated or pledged by the option holder. No person may create
a lien on any securities under the Plan, except by operation of law. However,
there are no restrictions on the resale of the shares underlying the options.
The Plan will remain in effect until July 2004 but may be terminated or
extended by the Company's Board of Directors. Additional information concerning
the Plan and its administrators may be obtained from the Company at the address
and telephone number indicated under "Incorporation by Reference" above.
APPLICABLE SECURITIES LAW RESTRICTIONS
If the optionee is deemed to be an "affiliate" (as that term is defined
under the Securities Act of 1933, as amended), the resale of the shares
purchased upon exercise of options covered hereby will be subject to certain
restrictions and requirements. The Company's legal counsel may be called upon to
discuss these applicable restrictions and requirements with any optionee who may
be deemed to be an affiliate, prior to exercising an option.
8
<PAGE>
In addition to the requirements imposed by the Securities Act of 1933, the
antifraud provisions of the Securities Exchange Act of 1934 and the rules
thereunder (including Rule 10b-5) are applicable to any sale of shares acquired
pursuant to options.
Up to 500,000 shares may be issued under the Plan. The Company has
authorized 20,000,000 shares, of which 3,852,661 shares were outstanding as of
September 30, 1998. Common shares outstanding and those to be issued upon
exercise of options are fully paid and nonassessable, and each share of stock is
entitled to one vote at all shareholders' meetings. All shares are equal to each
other with respect to lien rights, liquidation rights and dividend rights. There
are no preemptive rights to purchase additional shares by virtue of the fact
that a person is a shareholder of the Company. Shareholders do not have the
right to cumulate their votes for the election of directors.
Directors must comply with certain reporting requirements and resale
restrictions pursuant to Sections 16(a) and 16(b) of the Securities Exchange Act
of 1934 and the rules thereunder upon the receipt or disposition of any options.
TAX CONSEQUENCES
If an option is exercised and if the optionee does not dispose of the
shares acquired pursuant to the exercise within two years of the date of the
granting of the option nor within one year from the transfer of the shares
pursuant to exercise of the options, then there will not be any federal income
tax consequences to the Company from either the exercise of the option or the
receipt of the proceeds with respect to the exercise of the option. In such
circumstances, the optionee would not be required to recognize any taxable
income upon the exercise of the option.
Furthermore, the sale of the shares received pursuant to the exercise of
the option would result in long-term capital gain or long-term capital loss to
the optionee based on the difference between the amount received with respect to
such sale and the amount paid upon the exercise of the option.
If an optionee exercised an option and sold the shares acquired pursuant to
such exercise either within two years from the date of the granting of the
option or within one year from the date of the transfer of such shares to him
pursuant to his exercise of the option, then in general the Company would be
entitled to a deduction for federal income tax purposes equal to lessor of: (1)
the fair market value of the stock on the date of exercise over the option price
of the stock; or (2) the amount realized on disposition over the adjusted basis
of the stock. The optionee would recognize income equal to the amount of the
Company's deduction. The Company's deduction would be allowed, and the
optionee's income would be taxable, in the year the optionee disposed of the
shares. However, if the disposition occurs within two years of the date of the
grant and the disposition is a sale or exchange with respect to which a loss, if
sustained, would be recognized (generally any disposition other than to a
related party), then the optionee's income and the Company's deduction would not
exceed the excess (if any) of the amount realized on such sale or exchange over
the adjusted basis of such shares. The Company expects that optionees will be
required to exercise their options within five years from the date of grant
although optionees may hold the shares issuable upon exercise of the options
indefinitely.
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For options exercised after 1987, an individual generally must include in
alternative minimum taxable income the amount by which the option price paid is
exceeded by the fair market value at the time the individual's rights to the
shares are freely transferable or are not subject to a substantial risk of
forfeiture. The alternative minimum tax is payable only if the alternative
minimum tax exceeds the regular income tax liability.
The provision of Section 401(a) of the Code, relating to "qualified"
pension, profit sharing and stock bonus plans, do not apply to the options or
underlying shares covered hereby.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed on
for the Company by Gary A. Agron, 5445 DTC Parkway, Suite 520, Englewood,
Colorado 80111.
EXPERTS
The financial statements of the Company incorporated by reference in the
Company's Annual Report on Forms 10KSB for the years ended December 28, 1997 and
December 29, 1996, were audited by Akin, Doherty, Klein & Feuge, P.C.,
independent public accountants, as indicated in their report with respect
thereto, and are incorporated herein by reference.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents by Reference
The Registrant hereby incorporates by reference in this Registration
Statement the following documents previously filed with the Securities and
Exchange Commission:
(a) The Registrant's Annual Report on Form 10KSB for the year ended
December 28, 1997, filed pursuant to Section 13(a) of the Securities
Exchange Act of 1934 (the "Exchange Act");
(b) The Registrant's Quarterly Reports on Form 10-QSB for the quarters
ended April 19, 1998, July 12, 1998, and October 5, 1997, filed pursuant to
Section 13(a) of the Exchange Act; and
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form SB-2 under the Securities Act
of 1933, as amended (Registration No. 33-95796), including any amendments
or reports filed for the purpose of updating such description.
(d) All other reports and subsequent reports filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended.
All reports and definitive proxy or information statements filed by the
Registrant pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Registration Statement and prior to the filing of a
post-effective amendment which indicates that all securities offered hereby have
been sold or which deregisters all securities then remaining unsold at the time
of such amendment will be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
II-1
<PAGE>
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
Article Eleven of the Registrant's Restated Articles of Incorporation
provides as follows:
"Limitation of Liability
------------------------
"Section 1. Mandatory Indemnification and Advancement of Expenses. Each
person who was or is made a party or is threatened to be made a party to or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative, arbitrative or investigative, any
appeal in such action, suit or proceeding, and any inquiry or investigation that
could lead to such an action, suit or proceeding ("Proceeding"), by reason of
the fact that he is or was a Director or Officer of the Corporation, or who,
while a Director or Officer of the Corporation, is or was serving at the request
of the corporation as a director, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary of another corporation,
partnership, joint venture, sole proprietorship, trust, employee benefit plan or
other enterprise, shall be indemnified and held harmless by the Corporation to
the fullest extent permitted by the Act against all judgments, penalties
(including excise and similar taxes), fines, settlements, and reasonable
expenses (including attorneys' fees) actually incurred by such person in
connection with such Proceeding. Such right shall be a contract right and shall
include the right to acquire in defending any such Proceeding in advance of its
final disposition; provided, however, that the payment of such expenses in
advance of the final disposition of such Proceeding shall be made by the
Corporation only upon delivery to the Corporation of a written affirmation by
such person of his good faith and belief that he has met the standard of conduct
necessary for indemnification under the Act and a written understanding, by or
on behalf of such person, to repay all amounts so advanced if it should be
ultimately determined that such person has not satisfied such requirements.
Section 2. Nature of Indemnification. The indemnification and advancement
of expenses provided for herein shall not be deemed exclusive of any other
rights permitted by law to which a person seeking indemnification may be
entitled under the Bylaws, agreement, vote of Shareholders or disinterested
Directors or otherwise, and shall continue as to a person who has ceased to be a
Director or Officer of the Corporation and shall inure to the benefit of the
heirs, executors and administrators of such a person.
Section 3. Insurance. The Corporation shall have power to purchase and
maintain insurance or other arrangements on behalf of any person who 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, partner, venturer,
proprietor, trustee, employee, agent, or similar functionary of another
corporation, partnership, joint venture, sole proprietorship, trust, employee
II-2
<PAGE>
benefit plan or other enterprise against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this Article Eleven or the Act."
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
The following is a list of Exhibits filed as part of the Registration
Statement:
4. 1994 Stock Compensation Plan
4.1 Form of 1994 Stock Compensation Agreement under the 1994 Stock
Compensation Plan
5.01 Opinion of Gary A. Agron
24. Consent of Akin, Doherty, Klein & Feuge, P.C., independent certified
public accountants
Item 9. Undertakings
The 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 prospectus required by Section 10(a)(3) of the
Securities Act of 1933; (2) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
Registration Statement; (3) that, for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof; and (4) 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 Plan.
The Registrant hereby undertakes to deliver or cause to be delivered with
the prospectus to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
II-3
<PAGE>
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than 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 against the
Registrant 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 Act and will be governed by the
final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Antonio, State of Texas, on this 14th day of
October, 1998.
HARVEST RESTAURANT GROUP, INC.
By: /s/ William J. Gallagher
--------------------------------
William J. Gallagher
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Chairman of the Board of Directors October 14, 1998
- ---------------------- and Chief Executive Officer
William J. Gallagher
Chief Financial Officer and October 14, 1998
- ---------------------- Principal Accounting Officer
Joseph Fazzone
Director October 14, 1998
- ----------------------
Michael M. Hogan
Director October 14, 1998
- ----------------------
Theodore M. Heesch
II-5
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Exhibit
- ----------- -------
4. 1994 Stock Compensation Plan
4.1 Form of 1994 Stock Compensation Agreement
under the 1994 Stock Compensation Plan
5.01 Opinion of Gary A. Agron
23.01 Consent of Akin, Doherty, Klein & Feuge, P,.C.,
independent certified public accountants
II-6
TABLE OF CONTENTS
* * *
1994 STOCK COMPENSATION PLAN
of
CLUCKCORP INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
SECTION SUBJECT PAGE
------- ------- ----
1. Purpose of Plan 3
2. Stock Subject to the Plan 3
3. Administration of the Plan 3
(a) General 3
(b) Changes in Law Applicable 4
4. Types of Awards Under the Plan 4
5. Persons to Options Shall Be Granted 4
(a) Nonqualified Options 4
(b) Incentive Options 5
6. Factors to Be Considered in Granting Options 5
7. Time of Granting Option 5
8. Terms and Conditions of Options 5
(a) Number of Shares 5
(b) Type of Option 5
(c) Option Period 5
(1) General 5
(2) Termination of Employment 5
(3) Cessation of Service as Director or Advisor 6
(4) Disability 6
(5) Death 6
(6) Acceleration and Exercise Upon Change of Control 6
(d) Option Prices 7
(e) Exercise of Options 7
(f) Non-transferability of Options 8
(g) Limitations on 10% Shareholders 8
(h) Limits on Vesting of Incentive Options 8
(i) Compliance with Securities Laws 8
(j) Additional Provisions 9
9. Medium and Time of Payment 9
1
<PAGE>
SECTION SUBJECT PAGE
------- ------- ----
10. Alternate Stock Appreciation Rights 10
(a) Award of Alternate Stock Rights 10
(b) Alternate Rights Stock Agreements 10
(c) Exercise 10
(d) Amount of Payment 10
(e) Form of Payment 10
(f) Termination of SAR 10
(g) Effect of Exercise on SAR 11
(h) Effect of Exercise of Related Options 11
(i) Non-transferability of SAR 11
11. Rights as a Shareholder 11
12. Optionee's Agreement to Serve 11
13. Adjustments on Changes in Capitalization 11
(a) Changes in Capitalization 11
(b) Reorganization, Dissolution or Liquidation 12
(c) Change in Par Value 12
(d) Notice of Adjustments 12
(e) Effect Upon Holder of Option 12
(f) Right of Company to Make Adjustments 13
14. Investment Purpose 13
15. No Obligation to Exercise Option 13
16. Modification, Extension, and Renewal of Options 13
17. Effective Date of the Plan 13
18. Termination of the Plan 14
19. Amendment of the Plan 14
20. Withholding 14
21. Indemnification of Committee 14
22. Application of Funds 14
2
<PAGE>
1994 STOCK COMPENSATION PLAN
OF
CLUCKCORP INTERNATIONAL, INC.
1. Purpose of Plan. This 1994 Stock Compensation Plan ("Plan") is intended
to encourage ownership of the common stock of CLUCKCORP INTERNATIONAL, INC.
("Company") by certain officers, directors, employees and advisors of the
Company or any Subsidiary or Subsidiaries of the Company (as hereinafter
defined) in order to provide additional incentive for such persons to promote
the success and the business of the Company or its Subsidiaries and to encourage
them to remain in the employ of the Company or its Subsidiaries by providing
such persons an opportunity to benefit from any appreciation of the common stock
of the Company through the issuance of stock options and related stock
appreciation rights to such persons in accordance with the terms of the Plan. It
is further intended that options granted pursuant to this Plan shall constitute
either incentive stock options ("Incentive Options") within the meaning of
Section 422 (formerly Section 422A) of the Internal Revenue Code of 1986, as
amended ("Code"), or options which do not constitute Incentive Options
("Non-qualified Options") as determined by the Committee (as hereinafter
defined) at the time of issuance of such options. Incentive Options and
Non-qualified Options are herein sometimes referred to collectively as
"Options". As used herein, the term Subsidiary or Subsidiaries shall mean a
corporation of which capital stock possessing fifty percent (50%) or more of
total combined voting power of all classes of its outstanding capital stock
entitled to vote generally in the election of directors is owned in the
aggregate by the Company directly or indirectly through one or more
Subsidiaries.
2. Stock Subject to the Plan. Subject to adjustment as provided in Section
13 hereof, there will be reserved for the use upon the exercise of options to be
granted from time to time under the Plan, an aggregate of 250,000 shares of
common stock, $ .01 par value ("Common Stock"), of the Company, which shares in
whole or in part shall be authorized, but unissued, shares of the Common Stock
or issued shares of Common Stock which shall have been re-acquired by the
Company as determined from time to time by the Board of Directors. To determine
the number of shares of Common Stock available at any time for the granting of
Options under the Plan, there shall be deducted from the total number of
reserved shares of Common Stock, the number of shares of Common Stock in respect
of which Options have been granted pursuant to the Plan which remain outstanding
or which have been exercised. If an Option ceases to be exercisable in whole or
in part, the shares representing such Option shall continue to be available
under the Plan for purposes of granting Options with respect thereto.
The Company shall not be required upon the exercise of any Option to issue
or deliver any shares of stock prior to the completion of such registration or
other qualification of such shares under any State or Federal law, rule or
regulation as the Company shall determine to be necessary or desirable.
3. Administration of the Plan.
(a) General. The Plan shall be administered by a Compensation
Committee ("Committee") appointed by the Board of Directors of the Company,
which committee shall consist of not less than two (2) members of the Board of
Directors who are not eligible to participate in the Plan, and have not, for a
period of at least one (1) year prior thereto been eligible to participate in
the Plan, except that if at any time there shall be less than two (2) directors
who are qualified to serve on the Committee, then the Plan shall be administered
by the full Board of Directors. All references in this Plan to the Committee
shall be deemed to refer instead to the full Board of Directors at any time
3
<PAGE>
there is not a committee of two (2) members qualified to act hereunder. The
Board of Directors may from time to time appoint members of the Committee in
substitution for or in addition to members previously appointed and may fill
vacancies, however caused, in the Committee. If the Board of Directors does not
designate a Chairman of the Committee, the Committee shall select one of its
members as its Chairman and shall hold its meetings at such times and places as
it shall deem advisable. A majority of its members shall constitute a quorum.
All action of the Committee shall be taken by a majority vote of its members.
Any action may be taken by a written instrument signed by all of the members,
and any action so taken shall be deemed fully as effective as if it had been
taken by a vote of the members present in person at the meeting duly called and
held. The Committee may appoint a Secretary, shall keep minutes of its meetings,
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
The Committee shall have the sole authority and power, subject to the
express provisions and limitations of the Plan, to construe the Plan and option
agreements granted hereunder, and to adopt, prescribe, amend, and rescind rules
and regulations relating to the Plan, and to make all determinations necessary
or advisable for administering the Plan, including, but not limited to, (i) who
shall be granted Options under the Plan, (ii) the term of each Option, (iii) the
number of shares covered by such Option, (iv) whether the Option shall
constitute an Incentive Option or a Non-qualified Option, (v) the exercise price
for the purchase of the shares of the Common Stock covered by the Option, (vi)
the period during which the Option may be exercised, (vii) whether the right to
purchase the number of shares covered by the Option shall be fully vested on
issuance of the Option so that such shares may be purchased in full at one time
or whether the right to purchase such shares shall become vested over a period
of time so that such shares may only be purchased in installments, an d (viii)
the time or times at which Options shall be granted. The Committee's
determinations under the Plan, including the above enumerated determinations,
need not be uniform and may be made by it selectively among the persons who
receive, or are eligible to receive, Options under the Plan, whether or not such
persons are similarly situated.
The interpretation by the Committee of any provision of the Plan or of
any Option agreement entered into hereunder with respect to any Incentive Option
shall be in accordance with Section 422 of the Code and the regulations issued
thereunder, as such section or regulations may be amended from time to time, in
order that the rights granted hereunder and under said Option agreements shall
constitute "Incentive Stock Options" within the meaning of such section. The
interpretation and construction by the Committee if any provision of the Plan or
of any Option granted hereunder shall be final and conclusive, unless otherwise
determined by the Board of Directors. No member of the Board of Directors or the
Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it. Upon issuing an Option
under the Plan, the Committee shall report to the Board of Directors the name of
the person granted the Option, whether the Option is an Incentive Option or a
Non-qualified Option, the number of shares of Common Stock covered by the
Option, and the terms and conditions of such Option.
(b) Changes in Law Applicable. If the laws relating to Incentive
Options or Non-qualified Options are changed, altered or amended during the term
of the Plan, the Board of Directors shall have full authority and power to alter
or amend the Plan with respect to Incentive Options or Non-qualified Options,
respectively, to conform to such changes in the law without the necessity of
obtaining further shareholder approval, unless the changes require such
approval.
4. Types of Awards Under the Plan.Awards under the Plan may be in the form
of either Options or alternate stock appreciation rights.
5. Persons to Whom Options Shall be Granted.
(a) Non-qualified Options shall be granted only to officers,
directors) other than "Outside Directors" of the Company or a Subsidiary [ as
hereinafter defined]), employees and advisors of the Company or a Subsidiary
who, in the judgment of the Committee, are responsible for the management or
success of the Company or a Subsidiary and who, at the time of the granting of
the Non-qualified Options, are either officers, directors (other than Outside
Directors), employees or advisors of the Company or a Subsidiary. As used
herein, the term "Outside Director" shall mean any director of the Company or a
Subsidiary who is not an employee of the Company or a Subsidiary.
4
<PAGE>
(b) Incentive Options. Incentive Options shall be granted only to
employees of the Company or a Subsidiary who, in the judgment of the Committee,
are responsible for the management or success of the Company or a Subsidiary and
who, at the time of the granting of the Incentive Option are either an employee
of the Company or Subsidiary. Subject to the provisions of Section 8(g) hereof,
no individual shall be granted an Incentive Option who, immediately before such
Incentive Option was granted, would own more than ten percent (10%) of the total
combined voting power or value of all classes of stock of the Company.
6. Factors to Be Considered in Granting Options. In making any
determination as to persons to whom Options shall be granted and as to the
number of shares to be covered by such Options, the Committee shall take into
account the duties and responsibilities of the respective officers, directors,
employees, or advisors, their current and potential contributions to the success
of the Company or a Subsidiary, and such other factors as the Committee shall
deem relevant in connection with accomplishing the purpose of the Plan.
7. Time of Granting Options. Neither anything contained in the Plan or any
resolution adopted or to be adopted by the Board of Directors or the
Shareholders of the Company or a Subsidiary nor any action taken by the
Committee shall constitute the granting of any Option. The granting of an Option
shall be effected only when a written Option agreement acceptable in form and
substance to the Committee, subject to the terms and conditions hereof including
those set forth in Section 8 hereof, shall have been duly executed and delivered
by or on behalf of the Company and the person to whom such Option shall be
granted. No person shall have any rights under the Plan until such time, if any,
as a written Option Agreement shall have been duly executed and delivered as set
forth in this Section y.
8. Terms and Conditions of Options. All Options granted pursuant to this
Plan must be granted within ten (10) years from the date the Plan is adopted by
the Board of Directors of the Company. Each Option Agreement governing an Option
granted hereunder shall be subject to at least the following terms and
conditions, and shall contain such other terms and conditions, not inconsistent
therewith, that the Committee shall deem appropriate:
(a) Number of Shares. Each Option shall state the number of shares of
Common Stock which it represents.
(b) Type of Option. Each Option shall state whether it is intended to
be an Incentive Option or a Non-qualified Option.
(c) Option Period.
(1) General. Each Option shall state the date upon which it is
granted. Each Option shall be exercisable in whole or in part during such period
as is provided under the terms of the Option subject to any vesting period set
forth in the Option, but in no event shall an Option be exercisable either in
whole or in part after the expiration of ten (10) years from the date of grant;
provided, however, if an Incentive Option is granted to an individual who would,
immediately before the grant thereof, directly or indirectly own more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company, such Incentive Option shall not be exercisable more than five (5) years
from the date of grant thereof.
(2) Termination of Employment. Except as otherwise provided in
case of Disability (as hereinafter defined), death or Change of Control (as
hereinafter defined), no Option shall be exercisable after an optionee who is an
employee of the Company or a Subsidiary ceases to be employed by the Company or
a Subsidiary as an employee; provided, however, that the Committee shall have
the right in its sole discretion, but not the obligation, to extend the exercise
period for not more than ninety (90) days following the date of termination of
such optionsee's employment; provided further, however, that no Option shall be
exercisable after the expiration of ten (10) years from the date it is granted.
5
<PAGE>
(3) Cessation of Service as Director or Advisor. Except as
otherwise provided in case of Disability, death or Change of Control, no Option
shall be exercisable after an optionee who was a director or advisor of the
Company or a Subsidiary ceases to be a director or advisor of the Company or a
Subsidiary; provided, however, that the Committee shall have the right in its
sole discretion, but not the obligation, to extend the exercise period for not
more than ninety (90) days following the date such optionee ceases to be a
director or advisor of the Company or a Subisidiary.
(4) Disability. If an optionee's employment is terminated by
reason of the permanent and total Disability (as hereinafter defined) of such
optionee or if an optionee who is a director or advisor of the Company or a
Subsidiary ceases to serve as a director or advisor by reason of the permanent
and total Disability of such optionee, the Committee shall have the right in its
sole discretion, but not the obligation, to extend the exercise period not more
than one (1) year in the case of a Non-qualified Option and for not more than
ninety (90) days in the case of an Incentive Option following the date of
termination of the optionee's employment or the date such optionee ceases to be
director or advisor of the Company or a Subsidiary, as the case may be, subject
to the condition that no Option shall be exercisable after the expiration of ten
(10) years from the date it is granted. For purposes of this Plan, the term
"Disability" shall mean the inability of the optionee to fulfill such optionee's
obligations to the Company or a Subsidiary by reason of any physical or mentla
impairment which can be expected to result in death or which has endured or can
be expected to endure for a continuous period of not less than twelve (12)
months as determined by a physician acceptable to the Committee in its sole
discretion.
(5) Death. If an optionee dies while in the employ of the Company
or a Subsidiary, or while serving as a director or advisor of the Company or a
Subisidary, and shall not have fully exercised Options granted pursuant to the
Plan, such Options may be exercised in whole or in part at any time within
ninety (90) days after the optionee's death, by the executors or administrators
of the optionee's estate or by any person or persons who shall have acquired the
Options directly from the optionee by bequest or inheritance, but only to the
extent that the optionee was entitled to exercise such Option at the date of
such optionee's death, subject to the condition that no Option shall be
exercisable after the expiration of ten (10) years from the date it is granted.
(6) Acceleration and Exercise Upon Change of Control.
Notwithstanding the preceding provisions of this Section 8(c), if any Option
granted under the Plan provides for either (a) an incremental vesting period
whereby such Option may only be exercised in installments as such incremental
vesting period is satisfied or (b) a delayed vesting period whereby such Option
may only be exercised after the lapse of a specified period of time, such as
after the expiration of one (1) year, such vesting period shall be accelerated
upon the occurrence of a Change of Control (as hereinafter defined) of the
Company, or a threatened Change of Control of the Company as determined by the
Committee, so that such Option shall thereupon become exercisable immediately in
part or its entirety by the holder thereof, as such holder shall elect, subject
to the condition that no Option shall be exercisable after the expiration of ten
(10) years from the date it is granted. For the purposes of this Plan, a "Change
of Control" shall be deemed to have occurred if:
(i) Any "person", including a "group" as determined in accordance
with Section 13(d) (3) of the Securities Exchange Act of 1934
("Exchange Act") and the Rules and Regulations promulgated thereunder,
is or becomes, through one or a series of related transactions or
through one or more intermediaries, the beneficial owner, directly or
indirectly, or securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding
securities, other than a person who is such a beneficial owner on the
effective date of the Plan and any affiliate of such person;
6
<PAGE>
(ii) As a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination, sale of assets
or contested election, or any combination of the foregoing
transactions ("Transaction"), the persons who were Directors of the
Company before the Transaction shall cease to constitute a majority of
the Board of Directors of the Company or any successor to the Company;
(iii) Following the effective date of the Plan, the Company is
merged or consolidated with another corporation and as a result of
such merger or consolidation less than 40% of the outstanding voting
securities of the surviving or resulting corporation shall then be
owned in the aggregate by the former stockholders of the Company,
other than (x) any party to such merger or consolidation, or (y) any
affiliates of such party;
(iv) A tender offer or exchange offer is made and consummated for
the ownership of securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding voting
securities; or
(v) The Company transfers more than 50% of its assets, or the
last of a series of transfers result in the transfer of more than 50%
of the assets of the Company, to another corporation that is not a
wholly-owned corporation of the Company. For purposes of this
subsection 8(c) (6) (v), the determination of what constitutes more
than 50% of the assets of the Company shall be determined based on the
sum of the values attributed to (i) the Company's real property as
determined by an independent appraisal thereof, and (ii) the net book
value of all other assets of the Company, each taken as of the date of
the Transaction involved. In addition, upon a Change of Control, any
Options previously granted under the Plan to the extent not already
exercised may be exercised in whole or in part either immediately or
at any time during the term of the Option as such holder shall elect.
(d) Option Prices. The purchase price or prices of the shares of the
Common Stock of the Company which shall be offered to any person under the Plan
and covered by each Option shall be one hundred percent (100%) of the fair
market value of the Common Stock at the time of granting the Option or such
higher purchase price as may be determined by the Committee at the time of
granting the Option; provided, however, if an Incentive Option is granted to an
individual who would, immediately before the grant thereof, directly or
indirectly own more than ten percent (10%) of the total combined voting power of
all classes of Stock of the Company, the purchase price of the Shares of the
Common Stock of the Company covered by such Incentive Option may not be less
than one hundred ten percent (110%) of the fair market value of such shares on
the day the Incentive Option is granted. During such time as the Common Stock of
the Company is not listed upon an established stock exchange, the fair market
value per share shall be deemed to be the closing sales price of the Common
Stock on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") on the day the Option is granted, as reported by NASDAQ, if
the Common Stock is so quoted, and if not so quoted, the mean between dealer
"bid" and "ask", prices of the Common Stock in the New York over-the-counter
market on the day the Option is granted, as reported by the National Association
of Securities Dealers, Inc. If the Common Stock is listed upon an established
stock exchange or exchanges, such fair market value shall be deemed to be the
highest closing price of the Common Stock on such stock exchange or exchanges on
the day the Option is granted or, if no sale of the Common Stock of the Company
shall have been made on established stock exchange on such day, on the next
preceding day on which there was a sale of such stock. If there is no market
price for the Common Stock, then the Board of Directors and the Committee may,
after taking all relevant facts into consideration, determine the fair market
value of the Common Stock.
(e) Exercise of Options. To the extent that a holder of an Option has
a current right to exercise, the Option may be exercised from time to time by
written notice to the Company at its principal place of business. Such notice
shall state the election to exercise the Option, the number of shares in respect
of which it is being exercised, shall be signed by the person or persons so
exercising the Option, and shall contain any investment representation required
7
<PAGE>
by Section 14 hereof. Such notice shall be accompanied by payment of the full
purchase price of such shares and by the Option Agreement evidencing the Option.
In addition, if the Option shall be exercised, pursuant to Section 8(c) (4) or
Section 8 (c) (5) hereof, by any person or persons other than the optionee, such
notice shall also be accompanied by appropriate proof of the righ tof such
person or persons to exercise the Option. The Company shall deliver a
certificate or Certificates representing such shares as soon as practicable
after the aforesaid notice and payment of such shares shall be received. The
certificate or certificates for the shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option. In the event the Option shall not be exercised in full,
the Secretary of the Company shall endorse or cause to be endorsed on the Option
the number of shares which has been exercised thereunder and the number of
shares that remain exercisable under the Option and return such Option Agreement
to the holder thereof.
(f) Non-transferability of Options. An Option granted pursuant to the
Plan shall be exercisable only by the optionee or the optionee's court appointed
guardian as set forth in the Section 8 (c) (4) hereof during the optionee's
lifetime and shall not be assignable or transferable by the optionee otherwise
than by Will or the laws of descent and distribution. An Option granted pursuant
to the Plan shall not be assigned, pledged or hypothecated in any way (whether
by operation of law or otherwise other than by Will or the laws of descent and
distribution) and shall not be subject to execution, attachment, or similar
process. Any attempted transfer, assignment, pledge, hypothecation, or other
disposition of any Option or of any rights granted thereunder contrary to the
foregoing provisions of this Section 8(f), or the levy of any attachment or
similar process upon an Option or such rights, shall be null and void.
(g) Limitations on 10% Shareholders. No Incentive Option may be
granted under the Plan to any individual who would, immediately before the grant
of such Incentive Option, directly or indirectly, own more than ten percent
(105) of the total combined voting power of all classes of stock of the Company
unless (i) such Incentive Option is granted at an option price not less than one
hundred ten percent (110%) of the fair market value of the shares on the day the
Incentive Option is granted and (ii) such Incentive Option expires on a date not
later than five (5) years from the date the Incentive Option is granted.
(h) Limits on Vesting of Incentive Options. An individual may be
granted one or more Incentive Options, provided that the aggregate fair market
value (as determined at the time such Incentive Option is granted) of the stock
with respect to which Incentive Options are exercisable for the first time by
such individual during any calendar year shall not exceed $100,000. To the
extent the $100,000 limitation in the preceding sentence is exceeded, such
option shall be treated as an option which is not an Incentive Option.
(i) Compliance with Securities Laws. At the time of exercise of any
Option, the Company may require the optionee to execute any documents or take
any action which may be then necessary to comply with the Securities Act of
1933, as amended ("Securities Act"), and the rules and regulations promulgated
thereunder, or any other applicable federal or state laws regulating the sale
and issuance of securities, and the Company may, if it deems necessary, include
provisions in the stock option agreements to assure such compliance. The Company
may, from time to time, change its requirements with respect to enforcing
compliance with federal and state securities laws, including the request for and
enforcement of letters of investment intent, such requirements to be determined
by the Company in its judgment as necessary to assure compliance with said laws.
Such changes may be made with respect to any particular Option or Stock issued
upon exercise thereof. Without limiting the generality of the foregoing, if the
Common Stock issuable upon exercise of an Option is granted under the Plan is
not registered under the Securities Act, the Company at the time of exercise
will require that the registered owner execute and deliver an investment
representation agreement to the Company in form acceptable to the Company and
its counsel, and the Company will place a legend on the certificate evidencing
such Common Stock restricting the transfer thereof, which legend shall be
substantially as follows:
8
<PAGE>
THE SHARES OF COMMON STOCK REPRESENTED
BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY APPLICABLE
STATE SECURITIES LAW BUT HAVE BEEN
ACQUIRED FOR THE PRIVATE INVESTMENT OF
THE HOLDER HEREOF AND MAY NOT BE
OFFERED, SOLD OR TRANSFERRED UNTIL
EITHER (i) A REGISTRATION STATEMENT
UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH THE REGARD
THERETO, OR (ii) THE COMPANY SHALL HAVE
RECEIVED AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY AND ITS
COUNSEL THAT RESISTRATION UNDER SUCH
SECURITIES ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED IN
CONNECTION WITH SUCH PROPOSED OFFER,
SALE OR TRANSER.
(j) Additional Provisions. The Option Agreements authorized under the
Plan shall contain such other provisions as the Committee shall deem advisable,
including without limitation, restrictions upon the exercise of the Option. Any
such Option Agreement with respect to an Incentive Option shall contain such
limitations and restrictions upon the exercise of the Option as shall be
necessary in order that the option will be an "Incentive Stock Option" as
defined in Section 422 of the Code.
9. Medium and Time of Payment. The purchase price of the shares of the
Common Stock as to which the Option shall be exercised shall be paid in full
either (i) in cash a the time of the exercise of the Option, (ii) by tendering
to the Company shares of the Company's Common Stock having a fair market value
(as of the date of receipt of such shares by the Company) equal to the purchase
price for the number of shares of Common Stock purchased, or (iii) partly in
cash and partly in shares of the Company's Common Stock valued at fair market
value as of the date of receipt of such shares by the Company. Cash payment for
the shares of the Common stock purchased upon exercise of the Option shall be in
the form of either a cashier's check, certified check or money order. Personal
checks may be submitted, but will not be considered as payment for the shares of
the Common Stock purchased and no certificate for such shares will be issued
until the personal check clears in normal banking channels. If a personal check
is not paid upon presentment by the Company, then the attempted exercise of the
Option will be null and void. In the event the optionee tenders shares of the
Company's Common Stock in full or partial payment for the shares being purchased
pursuant to the Option, the shares of Common Stock so tendered shall be
accompanied by fully executed stock powers endorsed in favor of the Company with
the signature on such stock power being guaranteed. If an optionee tenders
shares, such optionee assumes sole and full responsibility for the tax
consequences, if any, to such optionee arising therefrom, including the possible
application of Code Section 424( c ), or tis successor Code sections, which
negates any non-recognition of income rule with respect to such transferred
shares, if such transferred shares have not been held for the minimum statutory
holding period to receive preferential tax treatment.
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<PAGE>
10. Alternate Stock Appreciation Rights.
(a) Award of Alternate Stock Rights. Concurrently with or subsequent
to the award of any Option to purchase one or more shares of Common Stock, the
Committee may in its sole discretion, subject to the provisions of the Plan and
such other terms and conditions as the Committee may prescribe, award to the
optionee with respect to each share of Common Stock covered by an Option
("Related Option"), a related alternate stock appreciation right ("SAR"),
permitting the optionee to be paid the appreciation on the Related Option in
lieu of exercising the Related Option. A SAR granted with respect to an
Incentive Option must be granted together with the Related Option. A SAR granted
with respect to a Non-qualified Option may be granted together with or
subsequent to the grant of such Related Option.
(b) Alternate Stock Rights Agreement. Each SAR shall be on such terms
and conditions not inconsistent with this Plan as the Committee may determine
and shall be evidenced by a written agreement executed by the Company and the
optionee receiving the Related Option.
(c) Exercise. An SAR may be exercised only if and to the extent that
its Related Option is eligible to the exercised on the date of exercise of the
SAR. To the extent that a holder of a SAR has a current right to exercise, the
SAR may be exercised from time to time by written notice to the Company at its
principal place of business. Such notice shall state the election to exercise
the SAR, the number of shares in respect of which it is being exercised, shall
be signed by the person so exercising the SAR and shall be accompanied by the
agreement evidencing the SAR and the Related Option. In the event the SAR shall
not be exercised in full, the Secretary of the Company shall endorse or cause to
be endorsed on the SAR and the Related Option the number of shares which have
been exercised thereunder and the number of shares that remain exercisable under
the SAR and the Related Option and return such SAR and Related Option to the
holder thereof.
(d) Amount of Payment. The amount of payment to which an optionee
shall be entitled upon the exercise of each SAR shall be equal to 100% of the
amount, if any, by which the fair market value of a share of Common Stock on the
exercise date exceeds the fair market value of a share of Common Stock on the
date the Option related to said SAR was granted or became effective, as the case
may be; provided, however, the Company, in its sole discretion, withhold such
cash payment any amount necessary to satisfy the Company's obligation for
withholding taxes with respect to such payment. For this purpose, the fair
market value of a share of Common Stock shall be determined as set forth in
Section 8(d) hereof.
(e) For m of Payment . The amount payable by the Company to an
optionee upon exercise of a SAR may be paid in shares of Common Stock, cash or a
combination thereof. The number of shares of Common Stock to be paid to an
optionee upon such optionee's exercise of SAR shall be determined by dividing
the amount of payment determined pursuant to Section 10(d) hereof by the fair
market value of a share of Common Stock on the exercise date of such SAR. For
purpose of this Plan, the exercise date of a SAR shall be on the date the
Company receives written notification from the optionee of the exercise of the
SAR in accordance with the provisions of section 10(c) hereof. As soon as
practicable after exercise, the Company shall either deliver to the optionee the
amount of cash due such optionee or a certificate or certificates for such
shares of Common Stock. All such shares shall be issued with the rights and
restrictions specified herein.
(f) Termination of SAR. Except as otherwise provided in case of
Disability (as defined in Section 8(c) (4) hereof) or death, no SAR shall be
exercisable after an optionee ceases to be an employee, director or advisor of
the Company or Subsidiary; provided, however, that the Committee shall have the
right in its sole discretion, but not the obligation, to extend the exercise
period for not more than ninety (90) days following the date such optionee
ceases to be an employee, director or advisor of the Company or a Subsidiary;
provided further, that the Committee may not extend the period during which an
optionee may exercise a SAR for a period greater than the period during which an
optionee may exercise the Related Option, if an optionee's position as an
employee, director or advisor of the Company is terminated due to the Disability
or death of such optionee, the Committee shall have the right, in its sole
discretion, but not the obligation, to extend the exercise period applicable to
the SAR for a period not to exceed the period in which the optionee may exercise
the Option related to said SAR as set forth in Section 8 (c) (4) and 8(c) (5)
hereof, repectively.
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<PAGE>
(g) Effect of Exercise of SAR. The exercise of any SAR shall cancel and
terminate the right to purchase an equal number of shares covered by the Related
Option.
(h) Effect of Exercise of Related Option. Upon the exercise or
termination of Related Option, the SAR with respect to such Related Option shall
terminate to the extent of the number of shares of Common Stock as to which the
Related Option was exercised or terminated.
(i) Non-transferability of SAR. A SAR granted pursuant to this Plan
shall be exercisable only by the optionee or the optionee's court appointed
guardian as set forth in Section 8(c) (4) hereof during the optionee's lifetime
and, subject to the provisions of Section 10(f) hereof, shall not be assignable
or transferable by the optionee. A SAR granted pursuant to the Plan shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment, or similar
process. Any attempted transfer, assignment, pledge, hypothecation, or other
disposition of any SAR or of any rights granted thereunder contrary to the
foregoing provisions of this Section 10(i), or the levy of any attachment or
similar process upon a SAR or such rights, shall be null and void.
11. Rights as a Shareholder. The holder of an Option or a SAR shall have no
rights as a shareholder with respect to the shares covered by the Option or SAR
until the due exercise of the Option, Related Option, or SAR and the date of
issuance of one or more stock certificates to such holder for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 13 hereof.
12. Optionee's Agreement to Serve. Each employee receiving an Option shall,
as one of the terms of the Option Agreement agree that such employee will remain
in the employ of the Company or Subsidiary for a period of at least one (1) year
from the date on which the Option shall be granted to such employee; and that
such employee will, during such employment, devote such employee's entire time,
energy, and skill to service of the Company or a Subsidiary as may be required
by the management thereof subject to vacations, sick leaves, and military
absences. Such employment, subject to the provisions of any contract between the
Company or a Subsidiary and such employee, shall be at the pleasure of the Board
of Directors of the Company or a Subsidiary, and at such compensation as the
Company or a Subsidiary shall reasonably determine. Any termination of such
employee's employment during the period which the employee has agreed pursuant
to the foregoing provisions of this Section 12 to remain in employment that is
either for cause or voluntary on the part of the employee shall be deemed a
violation by the employee of such employee's agreement. In the event of such
violation, any Option or Options held by such employee, to the extent not
theretofore exercised, shall forthwith terminate, unless otherwise determined by
the Committee. Notwithstanding the preceding, neither the action of the Company
in establishing the Plan nor any action taken by the Company, a Subsidiary or
the Committee under the provisions hereof shall be construed as granting the
optionee the right to be retained in the employ of the Company or a Subsidiary,
or to limit or restrict the right of the Company or a Subsidiary, as applicable,
to terminate the employment of any employee of the Company or a Subsidiary, with
or without cause.
13. Adjustments on Changes in Capitalization.
(a) Changes in Capitalization. Subject to any required action taken by
the Shareholders of the Company, the number of shares of Common Stock covered by
the Plan, the number of shares of Common Stock covered by each outstanding
Option, and the exercise price per share thereof specified in each such Option,
shall be proportionately adjusted for any increase or decrease in the number of
11
<PAGE>
issued shares of Common Stock of the Company resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such shares
effected without receipt of a consideration by the Company after the date the
Option is graned, so that upon exercise of the Option, the optionee shall
receive the same number of shares the optionee would have received had the
optionee been the holder of all shares subject to such optionee's outstanding
Option immediately before the effective date of such change in the number of
issued shares of the Common Stock of the Company.
(b) Reorganization, Dissolution or Liquidation. Subject to any
required action by the Shareholders of the Company, if the Company shall be the
surviving corporation in any merger or consolidation, each outstanding Option
shall pertain to and apply to the securities to which a holder of the number of
shares of Common Stock subject to the Option would have been entitled. A
dissolution or liquidation of the Company or a merger or a consolidation in
which the Company is not the surviving corporation, shall cause each outstanding
Option to terminate as of a date to be fixed by the Committee (which date shall
be as of a prior to the effective date of any such dissolution or liquidation or
merger or consolidation); provided, that not less than thirty (30) days written
notice of the date so fixed as such termination date shall be given to each
optionee, and each optionee shall, in such event, have the right, during the
said period of thirty (30) days preceding such termination date, to exercise
such optionee's Option in whole or in part in the manner herein set forth.
(c) Change in Par Value. In the event of a change in the Common Stock
of the Company as presently constituted, which change is limited to a change of
all of its authorized shares with par value into the same number of shares with
a different par value or without par value, the shares resulting from any change
shall be deemed to be the Common Stock within the meaning of the Plan.
(d) Notice of Adjustments. To the extent that the adjustments set
forth in the foregoing paragraphs of this Section 13 relate to stock or
securities of the Company, such adjustments, if any, shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive, provided that each Incentive Option granted pursuant to this Plan
shall not be adjusted in a manner that causes the Incentive Option to fail to
continue to qualify as an "Incentive Stock Option" within the meaning of Section
422 of the Code. The Company shall give timely notice of any adjustments made to
each holder of an Option under this Plan and such adjustments shall be effective
and binding on the optionee.
(e) Effect Upon Holder of Option. Except as hereinbefore expressly
provided in this Section 13, the holder of an Option shall have no rights by
reason of any subdivision or consolidation of shares of stock of any class or
the payment of any stock dividend or any other increase or decrease in the
number of shares of stock of any class by reason of any dissolution,
liquidation, merger, reorganization, or consolidation, or spin-off of assets or
stock of another corporation, and any issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to the Option. Without
limiting the generality of the foregoing, no adjustment shall be made with
respect to the number or price of shares subject to any Option granted hereunder
upon the occurrence of any of the following events:
(1) The grant or exercise of any other options which may be granted or
exercised under any qualified or non-qualified stock option plan or under
any other employee benefit plan of the Company whether or not such options
were outstanding on the date of grant of the Option or thereafter granted;
(2) The sale of any shares of Common Stock in the Company's initial or
subsequent public offering, including, without limitation, shares sold upon
the exercise of any over all allotment option granted to the underwriter in
connection with such offering;
(3) The issuance, sale or exercise of any warrants to purchase shares
of Common Stock whether or not such warrants were outstanding on the date
of grant of the Option or thereafter issued;
12
<PAGE>
(4) The issuance or sale of rights, promissory notes or other
securities convertible into shares of Common Stock in accordance with the
terms of such securities ("Convertible Securities") whether or not such
Convertible Securities were outstanding on the date of grant of the Option
or were thereafter issued or sold;
(5) The issuance or sale of Common Stock upon conversion or exchange
of any Convertible Securities, whether or not any adjustment in the
purchase price was made or required to be made upon the issuance or sale of
such Convertible Securities and whether or not such Convertible Securities
were outstanding on the date of grant of the Option or were thereafter
issued or sold; or
(6) Upon any amendment to or change in the terms of any rights or
warrants to subscribe for or purchase, or options for the purchase of,
Common Stock or Convertible Securities or in the terms of any Convertible
Securities, including, but not limited to, any extension of any expiration
date of any such right, warrant or option, any change in any exercise or
purchase price provided for any such right, warrant or option, any
extension of any date through which any Convertible Securities are
convertible into or exchangeable for Common Stock or any change in the rate
at which any Convertible Securities are convertible into or exchangeable
for Common Stock.
(f) Right of Company to Make Adjustments. The grant of an Option
pursuant to the plan shall not affect in any way the right or power of the
Company to make adjustments, reclassification, reorganizations, or changes of
its capital or business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or assets.
14. Investment Purpose. Each Option under the Plan shall be granted on the
condition that the purchase of the shares of stock thereunder shall be for
investment purposes, and not with a view to resale or distribution; provided,
however, that in the event the shares of stock subject to such Option are
registered under the Securities Act or in the event a resale of such shares of
stock without such registration would otherwise be permissible, such condition
shall be inoperative if in the opinion of counsel for the Company such condition
is not required under the Securities Act or any other applicable law,
regulation, or rule of any governmental agency.
15. No Obligation to Exercise Option or SAR. The granting of an Option or
SAR shall impose no obligation upon the optionee to exercise such Option or SAR.
16. Modification, Extension, and Renewal of Options. Subject to the terms
and conditions and within the limitations of the Plan, the Committee and the
Board of Directors may modify, extend or renew outstanding Options granted under
the Plan, or accept the surrender of outstanding Options (to the extent not
theretofore exercised). Neither the Committee nor the Board of Directors shall,
however, modify any outstanding Options so as to specify a lower price or accept
the surrender of outstanding Options and authorize the granting of new Options
in substitution therefor specifying a lower price. Notwithstanding the
foregoing, however, no modification of an Option shall, without the consent of
the optionee, alter or impair any rights or obligations under any Option
theretofore granted under the Plan.
17. Effective Date of the Plan. The Plan shall become effective on such
date s the Board of Directors of the Company shall determine, but only after the
Shareholders of the Company shall have approved the Plan by the requisite vote
of the Shareholders ("Effective Date").
13
<PAGE>
18. Termination of the Plan. This Plan shall terminate as of the expiration
of ten (10) years from the date of execution hereof, which date of execution is
the date the Plan was approved and adopted by the Board of Directors of the
Company. Options may be granted under this Plan at any time and from time to
time prior to its termination. Any Option outstanding under the Plan at the time
of its termination shall remain in effect until the Option shall have been
exercised or shall have expired.
19. Amendment of the Plan. The Plan may be terminated at any time by the
Board of Directors of the Company. The Board of Directors may at any time and
from time to time without obtaining the approval of the Shareholders of the
Company or a Subsidiary, modify or amend the Plan (including such form of Option
Agreement as hereinabove mentioned) in such respects as it shall deem advisable
in order that the Incentive Options granted under the Plan shall be "Incentive
Stock Options" as defined in Section 422 of the Code or to conform to any change
in the law, or in any other respect which shall not change: (a) the maximum
number of shares for which Options may be granted under the Plan, except as
provided in Section 13 hereof; or (b) the option prices other than to change the
manner of determining the fair market value of the Common Stock for the purpose
of Section 8(d) hereof to conform with any then applicable provisions of the
Code or regulations thereunder; or (c) the periods during which Options may be
granted or exercised; or (d) the provisions relating to the determination or
persons to whom Options shall be granted and the number of shares to be covered
by such Options; or (e) the provisions relating to adjustments to be made upon
changes in capitalization. The termination or any modification or amendment of
the Plan shall not, without the consent of the person to whom any Option shall
theretofore have been granted, affect that person's rights under an Option
theretofore granted to such person. With the consent of the person to whom such
Option was granted, an outstanding Option may be modified or amended by the
Committee in such manner as it may deem appropriate and consistent with the
requirements of this Plan applicable to the grant of a new Option on the date of
modification or amendment.
20. Withholding. Whenever an optionee shall recognize compensation income
as a result of the exercise of any Option or SAR granted under the Plan, the
optionee shall remit in cash to the Company or Subsidiary the minimum amount of
federal income and employment tax withholding which the Company or Subsidiary is
required to remit to the Internal Revenue Service in accordance with the then
current provisions of the Code. The full amount of such withholding shall be
paid by the optionee simultaneously with the award or exercise of an Option or
SAR, as applicable.
21. Indemnification of Committee. In addition to such other rights of
indemnification as they may have as Directors or as members of the Committee,
the members of the committee shall be indemnified by the Company against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in connection with the defense of any action, suit or proceedings, or in
connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted thereunder, and against all amounts paid by them in
settlement thereof (provided such settlements is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgement
in any such action, suit or proceeding, except in relation to matters as to
which it shall be adjudged in such action, suit or proceeding that such
Committee member is liable for negligence or misconduct in the performance of
his duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the Company
the opportunity, at its own expense, to pursue and defend the same.
22. Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to Options granted hereunder will be used for
general corporate purposes.
14
<PAGE>
EXECUTED this ________ day of July, 1994; effective, however, as of the
Effective Date.
CLUCKCORP INTERNATIONAL, INC.
By:_________________________________
William J. Gallagher
Chairman of the Board
ATTEST:
By:_________________________________
Steves Rosser
Secretary
15
<PAGE>
ATTACHMENT TO THE 1994 STOCK COMPENSATION
PLAN OF CLUCKCORP INTERNATIONAL, INC.
WHEREAS, on July 29, 1994, the Board of Directors and Shareholders of the
Company previously approved and adopted the 1994 Stock Compensation Plan of the
Company ("Plan") which authorized the reservation of 250,000 shares of common
stock, $ .01 par value, of the Company ("Common Stock") for issuance to
qualified individuals in accordance with the terms of the Plan;
WHEREAS, Section 13 of the Plan authorizes the proportionate adjustment of
the number of shares reserved for issuance under the Plan upon a reverse stock
split of the Company's outstanding shares of Common Stock, and Section 19 of the
Plan authorizes the Board of Directors of the Company to amend the Plan, without
obtaining the approval of the Shareholders of the Company, except in certain
limited situations not applicable hereto;
WHEREAS, on July 17, 1995 the Board of Directors and Shareholders of the
Company approved and adopted a five for two reverse stock split of the Company's
outstanding shares of Common Stock ("Reverse Stock Split") whereby two shares of
the Company's Common Stock will be issued in exchange for every five shares of
the Company's Common Stock currently outstanding;
WHEREAS, as a result of the Reverse Stock Split the Company desires not to
amend Section 2 of the Plan and to provide for no change in the number of shares
of the Company's Common Stock reserved for issuance upon exercise of Options
under the Plan from 250,000 shares;
NOW THEREFORE, BE IT RESOLVED, that Section 2 of the Plan which provides
for an aggregate of 250,000 shares of Common Stock, $ .01 par value, shall not
be amended as a result of the five for two reverse stock split effective July
17, 1995.
EXECUTED and effective this 17th day of July, 1995.
CLUCKCORP INTERNATIONAL, INC.
By:_________________________________
William J. Gallagher
Chairman of the Board
ATTEST:
By:________________________
Steves Rosser
Secretary
16
HARVEST RESTAURANT GROUP, INC.
------------------------------
INCENTIVE STOCK OPTION AGREEMENT
(Issued Under 1994 Stock Compensation Plan)
-------------------------------------------
INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") made this the___ day of
_________ , 199_ (the "Date of Grant"), by and between HARVEST RESTAURANT GROUP,
INC., a Texas corporation (the "Company"), and the undersigned employee of the
Company or a subsidiary thereof (the "Employee").
W I T N E S E T H:
------------------
WHEREAS, the Company desires, by affording the Employee an opportunity to
purchase shares of its common stock, par value one cent ($.01) per share (the
"Common Stock"), to carry out the purposes of the Company's 1994 Stock
Compensation Plan, (the "Plan"), which has been duly approved and adopted by its
Board of Directors and Shareholders:
NOW, THEREFORE, in consideration of the mutual covenants and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by each party, the parties hereto have agreed, and do hereby agree,
as follows:
1. Grant of Incentive Option. The Company grants to the Employee the right
and option to purchase all or any part of an aggregate of shares of the Common
Stock (such number being subject to adjustment as provided in Section 15)
pursuant to the terms and conditions set forth herein (the "Incentive Option").
2. Purchase Price. The purchase price of the shares of the Common Stock
covered by the Incentive Option shall be $1.00 per share, said purchase price
being one hundred percent (100%) of the fair market value per share of such
shares on the Date of Grant of this Incentive Option, subject to adjustment as
provided in Section 15.
3. Term of Incentive Option. The term of the Incentive Option shall be for
a period of five (5) years from the date hereof, subject to earlier termination
as provided in Section 12.
4. Time of Exercise of Incentive Option. Except as otherwise stated herein,
the Incentive Option may be exercised, at any time during the period as
specified in attachment (A) to the Incentive Option and terminating five (5)
years after the Date of Grant, as to any part or all of the number of shares of
the common stock covered by the Incentive Option, subject to adjustment as
provided in Section 15; provided that, except as otherwise provided in Sections
5, 13 or 14, the Incentive Option may not be exercisable at any time by the
Employee unless the Employee shall have been in continuous employ of the Company
or a Subsidiary (as hereinafter defined) from the date hereof to the date of the
exercise of the Incentive Option. For purposes of this Agreement, the term
"Subsidiary" shall mean a corporation of which capital stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of its
outstanding capital stock entitled to vote generally in the election of
directors is owned in the aggregate by the Company directly or indirectly
through one or more Subsidiaries.
INCENTIVE STOCK OPTION AGREEMENT - Page 1
<PAGE>
5. Acceleration and Exercise Upon Change of Control. Notwithstanding the
provisions of Section 4 hereof, the exercise period set forth in Section 4
hereof shall be accelerated upon the occurrence of a Change of Control (as
hereinafter defined) of the Company, or a threatened Change of Control of the
Company, so that the Incentive Option shall thereupon become exercisable
immediately in part or in its entirety by the Employee, as the Employee shall
elect, subject to the condition that no Incentive Option shall be exercisable
after the expiration of the term of the Incentive Option. For the purposes of
this Agreement, a "Change of Control" shall be deemed to have occurred if:
(a) Any "person", including a "group" as determined in accordance with
Section 13(d)(3) of the Securities Exchange Act of 1934 and the Rules and
Regulations promulgated thereunder, is or becomes, through one or a series
of related transactions or through one or more intermediaries, the
beneficial owner, directly or indirectly, of securities of the Company
representing 25 % or more of the combined voting power of the Company's
then outstanding securities, other than a person who is such a beneficial
owner on the effective date of the Plan and any affiliate of such person;
(b) As a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were Directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors
of the Company or any successor to the Company;
(c) Following the Date of Grant, the Company is merged or consolidated
with another corporation and as a result of such merger or consolidation
less than 40% of the outstanding voting securities of the surviving or
resulting corporation shall then be owned in the aggregate by the former
shareholders of the Company, other than (i) any party to such merger or
consolidation, or (ii) any affiliates of any such party;
(d) A tender offer or exchange offer is made and consummated for the
ownership of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding voting securities;
or
(e) The Company transfers more than 50% of its assets, or the last of
a series of transfers result in the transfer of more than 50% of the assets
of the Company, to another corporation that is not a wholly-owned
corporation of the Company. For purposes of this subsection 5(e), the
determination of what constitutes more than 50% of the assets of the
Company shall be determined based on the sum of the values attributed to
(i) the Company's real properties as determined by an independent appraisal
thereof and (ii) the net book value of all other assets of the Company,
each taken as of the date of the Transaction involved.
In addition, upon a Change of Control, any Incentive Options previously granted
under the Plan to the Employee to the extent not already exercised may be
exercised in whole or in part either immediately or at any time during, the term
of the Incentive Option as the Employee shall elect.
INCENTIVE STOCK OPTION AGREEMENT - Page 2
<PAGE>
6. Method of Exercising Incentive Option. Subject to the terms and
conditions of this Agreement and the Plan, the Incentive Option may be exercised
by written notice to the Company at its principal place of business. Such notice
shall state the election to exercise the Incentive Option, the number of full
shares in respect of which it is being exercised, shall be signed by the person
or persons so exercising the Incentive Option, and shall contain the warranty,
if any, required by Section 7(b) hereof. Such notice shall be accompanied by
payment of the fall purchase price of such shares and by this Agreement. The
Company shall deliver a certificate or certificates representing such shares as
soon as practicable after the aforesaid notice and payment of such shares shall
be received, except as otherwise provided in Section 7(d) hereof. The
certificate or certificates for the shares as to which the Incentive Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising, the Incentive Option, or, if the Incentive Option shall
be exercised by the Employee and if the Employee shall so request in the notice
exercising the Incentive Option, shall be registered in the name of the Employee
and another person jointly with right of survivorship, and shall be delivered as
provided above to or upon the written order of the person or persons exercising
the Incentive Option. In the event the Incentive Option shall be exercised,
pursuant to Section 13 or Section 14 hereof, by any person or persons other than
the Employee, such notice shall be accompanied by appropriate proof of the right
of such person or persons to exercise the Incentive Option. All shares that
shall be purchased upon the exercise of the Incentive Option as provided herein
shall be fully paid and non-assessable, In the event the Incentive Option shall
not be exercised in full, the Secretary of the Company shall endorse or cause
to. be endorsed on this Agreement the number of shares which has been exercised
hereunder, the number of shares that remain exercisable hereunder, and return
this Agreement to the holder hereof.
7. Limitation on Exercise of Incentive Option and Compliance with
Securities Laws.
(a) Limitation on Exercise. The Incentive Option is subject to the
requirement that, if at any time the Board of Directors of the Company
shall determine, in its sole discretion, that the listing, registration, or
qualification of the shares of Common Stock subject to the Incentive Option
upon any securities exchange or under any state or Federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the granting of the
Incentive Option or the issue or purchase of shares under the Incentive
Option, the Incentive Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to the
Board of Directors of the Company. The Company agrees that it will use its
best efforts to effect or obtain promptly any such listing, registration,
qualification, consent or approval. The Committee shall have the right to
impose such restrictions and limitations as it may deem advisable upon the
exercise of this Incentive Option in order to satisfy any such regulatory
requirements.
(b) Investment Representation. Without limiting the generality of the
provisions of Section 7(a) hereof, if and to the extent that the issuance
of the shares of Common Stock pursuant to the exercise of the Incentive
Option is deemed by the Board of Directors of the Company to be subject to
the Securities Act of 1933, as amended (the "Securities Act"), or any
applicable state securities or "blue sky" laws, unless the shares of Common
Stock to be issued upon the exercise of the Incentive Option shall have
been effectively registered under the Securities Act, the Company shall be
INCENTIVE STOCK OPTION AGREEMENT - Page 3
<PAGE>
under no obligation to issue the shares of Common Stock covered by the
exercise of the Incentive Option unless and until the Company receives an
investment representation agreement in form acceptable to the Company and
its counsel, which investment representation agreement shall have been duly
executed by the Employee and which shall contain the following
representations and warranties of the Employee: (i) the Employee is
acquiring the shares of Common Stock covered by the exercise of the
Incentive Option for investment purposes only, for the Employee's own
account and not with a view toward resale or other distribution thereof,
(ii) the Employee is financially able to bear the economic risks of an
investment in the Company, (iii) the Employee has received no solicitation
whatever regarding investment in the Company, (iv) the Employee is
knowledgeable and experienced with respect to stock investments in general
and with respect to investments of a nature similar to an investment in the
Company, and by reason of such knowledge and experience is capable of
evaluating the merits and risks of, and making an informed business
decision with regard to, an investment in the Company, (v) the Employee,
prior to exercising the Incentive Option, has received all the information
that the Employee deemed necessary to make an informed investment decision
with respect to an investment in the Company, and (vi) the Employee
understands that the shares of Common Stock issued upon exercise of the
Incentive Option must be. held indefinitely unless such shares are
registered under the Securities Act or an exemption from such registration
is available.
(c) Restrictive Legend on Stock Certificate. The Employee,
acknowledges that, unless the shares of Common Stock issuable upon exercise
of the Incentive Option have been registered under the Securities Act, the
Company will place a legend on the certificate evidencing such Common Stock
restricting the transfer thereof, which legend shall be substantially as
follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AIMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN ACQUIRED FOR THE PRIVATE
INVESTMENT OF THE HOLDER HEREOF AND MAY INOT BE OFFERED, SOLD OR
TRANSFERRED UNTIL EITHER (i) A REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) THE COMPANY SHALL HAVE
RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY AND ITS
COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH APPLICABLE
STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED
OFFER, SALE OR TRANSFER.
(d) Delay in Issuance of Shares. The Company shall have no obligation
to issue a certificate to the Employ-,-, evidencing ownership of the shares
of Common Stock covered by the exercise of the Incentive Option until such
time as the Employee has complied with or satisfied all of the applicable
provisions of this Agreement and the Plan, and the Company may delay the
issuance of a certificate to the Employee evidencing such shares without
liability to the Employee until the Employee has complied with or satisfied
all of the applicable provisions of this Agreement and the Plan.
INCENTIVE STOCK OPTION AGREEMENT - Page 4
<PAGE>
8. Medium and Time of Pa3mLent. The purchase price of the shares as to
which the Incentive Option shall be exercised shall be paid in full, at the time
of exercise, either (i) in cash to the Company, (ii) by tendering to the Company
shares of the Company's Common Stock having a fair market value (as of the date
of receipt of such shares by the Company) equal to the purchase price for the
number of shares of Common Stock purchased, or (iii) partly 'in cash and partly
in shares of the Company's Common Stock valued at fair market value as of the
date of receipt of such shares by the Company.
9. Rights as a Shareholder. The holder of the Incentive Option shall have
no rights as a shareholder of the Company with respect to the shares covered by
the Incentive Option until the due exercise of the Incentive Option and the date
of the issuance of one or more stock certificates to the holder for such shares.
No adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 15 hereof.
10. Non-transferability. The Incentive Option shall not be transferable
otherwise than by Will or the laws of descent and distribution, and the
Incentive Option may be exercised, during the lifetime of the Employee, only by
the Employee or by the Employee's court appointed guardian as set forth in
Section 14 hereof. More particularly (but without limiting, the generality of
the foregoing), the Incentive Option may not be assigned, transferred (except as
provided above), pledged, or hypothecated in any way, shall not be assignable by
operation of law and shall not be subject to execution attachment, or similar
process. Any attempted assignment, transfer, pledge, hypothecation, or other
disposition of the Incentive Option contrary to the provisions hereof, and the
levy of any execution, attachment, or similar process upon the Incentive Option,
shall be null and void and without effect and shall teammate the Incentive
Option.
11. Service to Company or Subsidiary. In consideration of the granting, of
the Incentive Option and regardless of whether or not the Incentive Option shall
be exercised, the Employee agrees to remain 'in the employ of the Company or a
Subsidiary for a period of at least one (1) year from the date hereof and,
during such employment, the Employee shall devote such time, energy and slag to
the service of the Company or a Subsidiary as may be required by the Board of
Directors thereof, subject to vacations, sick leaves and other approved absences
and the provisions of any written employment agreement between the Company or
Subsidiary and the Employee. Such employment, subject to the provisions of any
written employment agreement between the Company or Subsidiary and the Employee,
shall be at the pleasure of the Board of Directors of the Company or Subsidiary
and at such compensation as the Board of Directors of the Company or Subsidiary,
as appropriate, shall reasonably determine. Notwithstanding the preceding,
nothing, in this Agreement shall be construed as constituting a commitment,
guarantee, arrangement or understanding of any land or nature that the Company
or a Subsidiary will continue to employ or retain the Employee in any capacity,
nor shall this Agreement affect in any way the right of the Company or a
Subsidiary to terminate the employment, association, designation or official
capacity, if any, of the Employee at any time with or without cause.
12. Termination of Employment. The Incentive Option (and any other
Incentive Option or Incentive Options, held by the Employee under the Plan to
the extent not previously exercised) shall terminate after 90 days from
termination as an employee of the Company or a Subsidiary. (otherwise than by
reason of death, disability or change of company control as defined in section
INCENTIVE STOCK OPTION AGREEMENT Page 5
<PAGE>
5). So long as the Employee shall continue to be an employee of the Company or
Subsidiary, the Incentive Option shall not be affected by any change of duties
or position.
13. Death of Employee. If the Employee shall die while employed by the
Company or Subsidiary, the Incentive Option may be exercised (to the extent that
the Employee shall have been entitled to do so at the date of the Employee's
death) by a legatee or legatees of the Employee under the Employee's duly
probated Last Will and Testament, or by the Employee's duly appointed personal
representative, at any time within ninety (90) days after the death of the
Employee, subject to the condition that no Incentive Option may be exercised
after ten (10) years from the Date of Grant.
14. Disability of Employee. If the Employee's employment by the Company or
a Subsidiary is terminated by reason of the Disability (as hereinafter defined)
of the Employee, the Incentive Option may be exercised (to the extent that the
Employee shall have been entitled to do so at the date the Employee's employment
position with the Company or a Subsidiary was terminated due to the Disability
of the Employee) by the Employee or the Employee's court appointed guardian at
any time within ninety (90) days after the Employee ceased to be an employee of
the Company or a Subsidiary, subject to the condition that no Incentive Option
may be exercised after ten (10) years from the Date of Grant. For purposes of
this Agreement, the term "Disability" shall mean the inability of the Employee
to fulfill the Employee's obligations to the Company or Subsidiary by reason of
any physical or mental impairment which can be expected to result in death or
which has endured or can be expected to endure for a continuous period of not
less than twelve (12) months as determined by a physician acceptable to the
Compensation Committee of the Board of Directors of the Company appointed and
designated to administer the Plan (the "Committee") in its sole discretion.
15. Adjustments upon Changes in Capitalization. The number of shares of
Common Stock covered by the Incentive Option, and the price per share thereof in
such Incentive Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock of the Company resulting
from a subdivision or consolidation of shares or the payment of a stock dividend
(but only on the Common Stock) or any other increase or decrease in the number
of such shares effected without receipt of consideration by the Company.
In the event the Company shall be the surviving corporation in any merger
or consolidation, the Incentive Option shall pertain to and apply to the
securities to which a holder of the number of shares of Common Stock subject to
the Incentive Option would have been entitled. A dissolution or liquidation of
the Company or a merger or consolidation in which the Company is not the
surviving corporation, shall cause the Incentive Option to terminate as of a
date to be fixed by the Committee (which date shall be as of or prior to the
effective date of any such dissolution or liquidation or merger or
consolidation); provided, that not less than thirty (30) days written notice of
the date so fixed as such termination date shall be given to the Employee, and
the Employee shall, in such event, have the right, during the said period of
thirty (30) days preceding such termination date, to exercise the Incentive
Option in whole or in part in the manner set forth in the Plan and above,
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments, if any, shall be appropriately made by the
Committee appointed and designated by the Board Of Directors of the Company, as
provided in the Plan, whose determination in that respect shall be final,
binding and conclusive. The Company shall give timely notice of any adjustments
made to the Employee.
INCENTIVE STOCK OPTION AGREEMENT - Page 6
<PAGE>
Except as hereinabove expressly provided in this Section 15, the Employee
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger, or consolidation or spin-off of assets or
stock of another corporation, and any issue by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
not affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to the Incentive Option.
Without limiting the generality of the foregoing, no adjustment shall be
made with respect to the number or price of shares subject to the Incentive
Option upon the occurrence of any of the following events:
(a) The grant or exercise of any other options which may be granted or
exercised under any qualified or nonqualified stock option plan or under
any other employee, benefit plan of the Company whether or not such options
were outstanding on the Date of Grant of the Incentive Option or thereafter
granted;
(b) The sale of any shares of Common Stock in the Company's initial or
any subsequent public offering,, including, without limitation, shares sold
upon the exercise of any over-allotment option granted to the underwriter
in connection with such offering;
(c) The issuance, sale or exercise of any warrants to purchase shares
of Common Stock whether or not such warrants were outstanding on the Date
of Grant of the Incentive Option or thereafter issued;
(d) The issuance or sale of rights, promissory notes or other
securities convertible into shares of Common Stock in accordance with the
terms of such securities ("Convertible Securities") whether or not such
Convertible Securities were outstanding on the Date of Grant of the
Incentive Option or were thereafter issued or sold;
(e) The issuance or sale of Common Stock upon conversion or exchange
of any Convertible Securities, whether or not any adjustment in the
purchase price was made or required to be made upon the issuance or sale of
such Convertible Securities and whether or not such Convertible Securities
were outstanding on the Date of Grant of the Incentive Option or were
thereafter issued or sold; or
Upon any amendment to or chance in the terms of any rights or warrants
to subscribe for or purchase, or options for the purchase of, Common Stock
or Convertible Securities or in the terms of any Convertible Securities,
including, but not limited to, any extension of any expiration date of any
INCENTIVE STOCK OPTION AGREEMENT - Page 7
<PAGE>
such right, warrant or option, any change in any exercise or purchase price
provided for in any such right, warrant or option, any extension of any
date through which any Convertible Securities are convertible into or
exchangeable for Common Stock or any change in the rate at which any
Convertible Securities are convertible into or exchangeable for Common
Stock.
16. No Obligation to Exercise. The granting of the Incentive Option hereof
shall impose no obligation upon the Employee to exercise such Incentive Option.
17. Withholding. Whenever the Employee shall recognize compensation income
as a result of the exercise of any Incentive Option granted hereunder, the
Employee shall remit in cash to the Company or Subsidiary the minimum amount of
federal income and employment tax withholding which the Company or Subsidiary is
required to remit to the Internal Revenue Service in accordance with the then
applicable provisions of the Internal Revenue Code of 1986, as amended. The full
amount of such withholding shall be paid by the Employee simultaneously with the
award or exercise of an Incentive Option.
18. Stock Appreciation Rights. In the event the Employee receives an
alternate stock appreciation right ("SAR") with respect to each share of Common
Stock covered by this Incentive Option permitting the Employee to be paid the
appreciation on the Incentive Option in lieu of exercising the Incentive Option,
the exercise of any such SAR shall cancel and terminate the right to purchase an
equal number of shares covered by this Incentive Option.
19. The Plan. Notwithstanding the terms and provisions hereof, this
Incentive Option is subject in all respects to the terms and conditions of the
Plan, reference to which Plan is hereby made for all put-poses. In the event of
any conflict between the terms of this Incentive Option and the terms of the
Plan, the terms of the Plan shall govern. By acceptance hereof, the Employee
acknowledges receipt of a copy of the Plan and recognizes and agrees that all
determinations, interpretations or other actions respecting the Plan ma be made
by the Committee, and that such determinations, interpretations or other actions
are final, conclusive and binding, upon all parties, including Employee.
20. Reservation of Stock. The Company shall at all times during, the term
of the Incentive Option reserve and keep available such number of shares of
Common Stock as will be sufficient to satisfy the requirements of this
Agreement, shall pay all original issue and transfer taxes with respect to the
issue and transfer of shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and will from time
to time use its best efforts to comply with all laws and regulations which, in
the opinion of counsel for the Company, shall be applicable.
21. General. This Agreement may not be modified, altered, amended, or
terminated except by the written agreement of all of the par-ties. If a court of
competent jurisdiction deter-mines that any provision contained in this
Agreement is void, illegal or unenforceable, the other provisions shall remain
in full force and effect and the provision held to be void, illegal or
unenforceable shall be limited so that it shall remain in effect to the extent
permissible by law. The parties agree to perform all acts and execute all
instruments necessary or appropriate to carry out the terms of this Agreement.
This Agreement is made and is performable in Bexar County, Texas, and shall be
governed by the laws of the State of Texas. This Agreement and the Plan set
forth the entire understanding of the parties with respect to the purchase and
sale of the shares of the Common Stock pursuant to a stock option and supersedes
INCENTIVE STOCK OPTION AGREEMENT - Page 8
<PAGE>
all prior representations, understandings and agreements, oral or written, made
between the parties effecting the stock of the Company to be issued pursuant to
the Plan and this Agreement (other than any Incentive Options previously issued
to the Employee pursuant to the Plan) and all such prior representations,
understandings and agreements are hereby terminated. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
CLUCKCORP INTERNATIONAL, INC.
By: ___________________________________
WILLIAM J. GALLAGHER,
Chairman of the Board
EMPLOYEE:
___________________________________
INCENTIVE STOCK OPTION AGREEMENT - Page 9
EXHIBIT 5.01
October 14, 1998
Harvest Restaurant Group, Inc.
1250 Loop 410, Suite 335
San Antonio, TX 78209
Gentlemen:
We have assisted in the preparation and filing by Harvest Restaurant Group,
Inc. (the "Company") of a Registration Statement on Form S-8 (the "Registration
Statement") with the Securities and Exchange Commission relating to 483,000
shares of $.01 par value Common Stock (the "Option Shares") of the Company
issuable upon exercise of options granted under the Company's 1994 Stock
Compensatin Plan, as amended (the "Option").
We have examined such records and documents and have made such examination
of laws as we considered necessary to form a basis for the opinions set forth
herein. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies
thereof.
Based upon and subject to the foregoing, we are of the opinion that the
Option Shares have been duly authorized and reserved for issuance and such
Option Shares, when issued in accordance with the terms of the Option against
payment therefor, will be duly and validly issued, fully paid and nonassessable.
The foregoing assumes that all requisite steps will be taken to comply with
the requirements of the Securities Act of 1933, as amended, and applicable state
laws relating to the offer and sales of securities.
We consent to the filing of a copy of this opinion in the Registration
Statement and the use of our opinion in connection therewith.
Very truly yours,
Gary A. Agron
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 of Harvest Restaurant Group, Inc. of our report dated
March 27, 1998, relating to the financial statements of Harvest Restaurant
Group, Inc. for the year ended December 28, 1997.
/s/ Akin, Doherty, Klein, & Fuege
- -----------------------------------
Akin, Doherty, Klein, & Fuege, P.C.
Certified Public Accountants
San Antonio, Texas
October 13, 1998
