1998 Stock-Based Incentive Compensation Plan - California Pizza Kitchen Inc.
CALIFORNIA PIZZA KITCHEN, INC.
1998 STOCK-BASED INCENTIVE COMPENSATION PLAN
Date Adopted: February 5, 1998
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CALIFORNIA PIZZA KITCHEN, INC.
1998 STOCK-BASED INCENTIVE COMPENSATION PLAN
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1. Purpose of the Plan
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The purpose of the Plan is to assist the Company (as defined below) in
rewarding, attracting and retaining valued employees, directors and independent
contractors by offering them a greater stake in the Company's success and a
closer identity with it, and to encourage ownership of the Company's stock by
such employees, directors and independent contractors.
2. Definitions
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2.1 "Award" means an award of Options under the Plan.
2.2 "Board" means the Board of Directors of the Company.
2.3 "Code" means the Internal Revenue Code of 1986, as
amended.
2.4 "Committee" means the Compensation Committee of the
Board as constituted by the Board. After the Company becomes Publicly Traded,
the Committee shall have at least two members and each member of the Committee
shall be a non-employee director within the meaning of Rule 16b-3 under the
Exchange Act and, to the extent necessary to cause Awards under the Plan to
qualify as "qualified performance-based compensation" within the meaning of
Treas. Reg. (S)1.162-27(e), an outside director within the meaning of Section
162(m) of the Code and the regulations thereunder.
2.5 "Common Stock" means the Class A Common Stock of the
Company, par value $.01 per share, or such other class or kind of shares or
other securities resulting from the application of Section 7.
2.6 "Company" means California Pizza Kitchen, Inc., a
California corporation, or any successor corporation.
2.7 "Director" means a member of the Board.
2.8 "Disability" shall, with respect to any Holder who is an
Employee or a Director, have the meaning set forth in the Holder's Option
Agreement or, if not defined therein, shall mean the inability of such Holder to
perform a major part of the duties performed by him or her as an employee or
Director of the Company
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immediately prior to inception of the disability, because of illness, accident
or injury, for a period of 13 consecutive weeks or for a cumulative period of 20
weeks in any 12 month period.
2.9 "Employee" means an officer or other employee of the Company
or a majority-owned subsidiary of the Company, including a director who is such
an employee.
2.10 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
2.11 "Fair Market Value" means, on any given date, the fair
market value per share of Common Stock, as determined by the Committee in good
faith, but in any event, after December 31, 1998, within the range of the fair
market value per share of Common Stock as determined by the most recent annual
appraisal of the fair market value of the Common Stock conducted by an
independent third party appraiser selected by the Board. In determining the
Option Price for an Incentive Stock Option, the Fair Market Value per share of
Common Stock shall be determined in accordance with Section 422 of the Code and
the regulations thereunder. Notwithstanding the foregoing, after the Company
becomes Publicly Traded, the Fair Market Value shall mean the last sales price
regular way, or, in the case no such sale takes place on such day, the average
of the closing bid and asked prices regular way, in either case on the New York
Stock Exchange or, if the shares of Common Stock are not listed or admitted to
trading on such exchange, on the principal national or international securities
exchange on which the shares of Common Stock are listed or admitted to trading,
or, if the shares of Common Stock are not listed or admitted to trading on any
national or international securities exchange but are designated as national
market system securities by the National Association of Securities Dealers, Inc.
("NASD"), the last sale price, or, in case no such sale takes place on such day,
the average of the closing bid and asked prices, in either case as reported on
the NASD Automated Quotation National Market System, or if the shares of Common
Stock are not so designated as national market system securities, the average of
the highest reported bid and lowest reported asked prices as furnished by the
NASD or similar organization if the NASD is no longer reporting such
information.
2.12 "Holder" means an Employee, Director or Independent
Contractor to whom an Award is made.
2.13 "Incentive Stock Option" means an Option intended to meet
the requirements of an incentive stock option as defined in Section 422 of the
Code and designated as an Incentive Stock Option in the applicable Option
Agreement.
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2.14 "Independent Contractor" means an individual other than an
Employee who performs services for the Company or a Director who performs
services for the Company.
2.15 "Non-Qualified Stock Option" means an Option not intended
to be an Incentive Stock Option and designated as a Non-Qualified Stock Option
in the applicable Option Agreement.
2.16 "Option" means any stock option granted from time to time
under Section 6 of the Plan.
2.17 "Option Agreement" has the meaning set forth in Section 6.1
of the Plan.
2.18 "Option Price" means the per share price at which a share
of Common Stock may be purchased upon exercise of an Option in accordance with
Section 6.2 of the Plan, as it may be adjusted pursuant to Section 7 of the
Plan.
2.19 "Option Share" mean any share of Common Stock purchased
upon the exercise of an Option.
2.20 "Plan" means the California Pizza Kitchen, Inc. 1998
Stock-Based Incentive Compensation Plan herein set forth, as amended from time
to time.
2.21 "Publicly Traded" means the Company is required to register
shares of any class of common equity under Section 12 of the Exchange Act.
2.22 "Retirement" means retirement from the active employment of
the Company pursuant to the normal retirement policies of the Company.
2.23 "Ten Percent Shareholder" means a person who on any given
date owns, either directly or indirectly (taking into account the attribution
rules contained in Section 424(d) of the Code), stock possessing more than 10%
of the total combined voting power of all classes of stock of the Company or
any subsidiary of which the Company has a 50% or greater, direct or indirect,
ownership.
3. Eligibility
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Any Employee, Director or Independent Contractor is eligible to
receive an Award; provided, however, only an Employee is eligible to receive an
Incentive Stock Option.
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4. Administration and Implementation of Plan
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4.1 The Plan shall be administered by the Committee, which shall
have full power to interpret and administer the Plan and full authority to act
in selecting the Employees, Directors and Independent Contractors to whom Awards
will be granted, to make such grants, and to determine the type and amount of
Awards to be granted to each such Employee, Director or Independent Contractor,
the time of such Awards, the terms and conditions of such Awards and the terms
of the Option Agreements which will be entered into with Holders (which shall
not be inconsistent with the terms of this Plan). The Committee shall have full
and final authority in its sole discretion to interpret the provisions of the
Plan and to decide all questions of fact arising in its application and to make
all other determinations necessary or advisable for the administration of the
Plan.
4.2 The Committee's powers shall include, but not be limited to,
the power to determine whether, to what extent and under what circumstances an
Option may be exchanged for cash; to what extent and under what circumstances an
Award is made; and to determine the effect, if any, of a change in control of
the Company upon outstanding Awards (subject to any applicable provisions of
Section 6.10); and to grant Awards (other than Incentive Stock Options) that are
transferable by the Holder.
4.3 The Committee shall have the power to adopt regulations for
carrying out the Plan and to make changes in such regulations as it shall, from
time to time, deem advisable. The Committee shall have the power unilaterally
and without approval of a Holder to amend an existing Award in order to carry
out the purposes of the Plan so long as such an amendment does not take away any
benefit granted to a Holder by the Award and as long as the amended Award
comports with the terms of the Plan. Any interpretation by the Committee of the
terms and provisions of the Plan and the administration thereof, and all action
taken by the Committee, shall be final and binding on Holders.
5. Shares of Stock Subject to the Plan
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5.1 Subject to adjustment as provided in Section 7, the total
number of shares of Common Stock available for Awards under the Plan shall be
1,100,000 shares. After the Company becomes Publicly Traded, no individual may
receive Awards with respect to more than 600,000 shares of Common Stock in any
year under the Plan.
5.2 Any shares issued by the Company through the assumption or
substitution of outstanding grants from an acquired company shall not reduce the
shares available for Awards under the Plan. Any shares issued hereunder may
consist, in whole or in part, of authorized and unissued shares or treasury
shares. If any shares subject to any Award granted hereunder are forfeited or
such Award otherwise terminates without the issuance of such shares or the
payment of other consideration in lieu of such shares,
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the shares subject to such Award, to the extent of any such forfeiture or
termination, shall again be available for Awards under the Plan.
6. Options
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Options give an Employee, a Director or an Independent Contractor the
right to purchase a specified number of shares of Common Stock from the Company
for a specified time period at a specified price. The grant of Options shall be
subject to the following terms and conditions:
6.1 Option Grants: Options shall be granted to an Employee,
Director or Independent Contractor at the time and in the amount determined by
the Committee. Options shall be evidenced by written Option Agreements ("Option
Agreements"). Such agreements shall conform to the requirements of the Plan, and
may contain such other provisions as the Committee shall deem advisable.
6.2 Option Price: The price per share at which Common Stock may
be purchased upon exercise of an Option shall be determined by the Committee. In
the case of any Incentive Stock Option, the Option Price shall not be less than
100% of the Fair Market Value of a share of Common Stock on the date of grant
(110% in the case of an Incentive Stock Option granted to a Ten Percent
Shareholder).
6.3 Term of Options: The Option Agreements shall specify when an
Option may be exercisable and the terms and conditions applicable thereto. The
term of an Option shall in no event be greater than ten years (five years in the
case of an Incentive Stock Option granted to a Ten Percent Shareholder).
6.3.1 Vesting. At the discretion of the Committee, Options
granted under the Plan may be subject to a vesting schedule set forth in the
Option Agreement, under which such Options cannot be exercised until they are
vested. The restrictions or conditions with respect to the time and method of
vesting of Options and which Awards shall be subject to vesting shall be as
prescribed by the Committee.
6.4 Incentive Stock Options: Each provision of the Plan and each
Option Agreement relating to an Incentive Stock Option shall be construed so
that each Incentive Stock Option shall be an incentive stock option as defined
in Section 422 of the Code, and any provisions of the Option Agreement thereof
that cannot be so construed shall be disregarded. In no event may a Holder be
granted an Incentive Stock Option which does not comply with such grant and the
limitations under Section 422(d) of the Code. Without limiting the foregoing,
the aggregate fair market value (determined as of the time the Option is
granted) of the Common Stock with respect to which an Incentive Stock Option may
first become exercisable by an Optionee in any one calendar year under the Plan
shall not exceed $100,000.
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6.5 Restrictions on Transferability: Except as expressly
provided otherwise in an Option Agreement for any Option granted under this
Plan, no Holder shall sell, assign, transfer, give, donate, pledge, hypothecate
or dispose of all or any part of an Option or Option Shares, or any right or
interest therein; provided, however, that, except as provided in the following
sentence, (a) a Holder may sell Options or Option Shares pursuant to an Approved
Sale in accordance with Section 6.10, if applicable, (b) a Holder may sell
Option Shares to the Company or its designee on terms set forth in the Option
Agreement, if applicable, (c) upon the death of the Holder, a Holder may
transfer Options or Option Shares by will or laws of descent and distribution,
and (d) a Holder may sell or otherwise transfer Options or Option Shares in any
other manner expressly provided for in the Holder's Option Agreement (and
subject to the terms thereof) or as determined by the Committee. Notwithstanding
the foregoing, no Incentive Stock Option shall be transferable otherwise than by
will or the laws of descent and distribution and, during the lifetime of the
Holder, shall be exercisable only by the Holder. Any transferee of an Option or
Option Shares shall, in all cases, be subject to the provisions of the Option
Agreement between the Company and the Holder, as well as the provisions of this
Plan. Upon the death of a Holder, the person to whom the rights have passed by
will or by the laws of descent and distribution may exercise an Incentive Stock
Option only in accordance with this Section 6. In the event any Option Shares
become subject to any involuntary sale or transfer process or proceedings, the
Holder shall give prompt written notice thereof to the Company.
6.6 Payment of Option Price and Taxes: (a) The Option Price, or,
where applicable, a portion thereof, shall be paid in full in cash or by
certified or bank cashier's check payable to the Company, or, subject to the
approval of the Committee and where provided in the applicable Option Agreement:
(i) by surrendering shares of the Company's Common Stock that have been owned by
the Holder for at least six months and that have an aggregate Fair Market Value
equal to the aggregate Option Price, (ii) delivery of an irrevocable undertaking
by a broker to deliver promptly to the Company sufficient funds to pay the
aggregate Option Price or delivery of irrevocable instructions to a broker to
deliver promptly to the Company sufficient funds to pay the aggregate Option
Price, (iii) payment of such other lawful consideration as the Committee may
determine, or (iv) any combination of the foregoing.
(b) Any taxes required to be withheld by the Company upon
exercise of an Option shall be paid in full in cash or by certified or bank
cashier's check payable to the Company, or, subject to the approval of the
Committee (and subject to such rules as the Committee may adopt, including as to
the amount to be withheld) and where provided in the applicable Option
Agreement, by having the Company retain the number of Option Shares whose
aggregate Fair Market Value equals the amount to be withheld in satisfaction of
the applicable withholding taxes.
6.7 Termination by Death: If a Holder dies, any Option granted
to such Holder may thereafter be exercised (to the extent such Option was
exercisable at
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the time of death or an such accelerated basis as the Committee may determine at
or after grant) by, where appropriate, the Holder's transferee or by the
Holder's legal representative for (a) a period of three months from the date of
death, (b) until the expiration of the stated term of the Option, or (c) in the
event of death following termination, until the expiration of the period
provided for under Section 6.8, whichever period is shortest.
6.8 Termination by Reason of Retirement or Disability: If a
Holder's employment by the Company terminates by reason of Disability or
Retirement, any unexercised Option granted to the Holder may thereafter be
exercised by the Holder (or, where appropriate, the Holder's transferee or legal
representative), to the extent it was exercisable at the time of termination or
on such accelerated basis as the Committee may determine at or after grant, for
a period of two months from the date of such termination or until the expiration
of the stated term of the Option, whichever period is shorter. This Section 6.8
shall not apply to any Option held by an Independent Contractor.
6.9 Other Termination: Unexercisable Options: Unless provided
otherwise in the applicable Option Agreement or determined otherwise by the
Committee, if a Holder's employment by the Company terminates for any reason
other than death, Disability or Retirement (including if a Holder is terminated
with cause), all unexercised Options, to the extent they were exercisable at the
time of termination, shall immediately terminate on the date of,the Holders'
termination. Unless provided otherwise in the applicable Option Agreement or
determined otherwise by the Committee, all unexercised Options that are
unexercisable at the time of the Holder's termination shall immediately
terminate on the date of the Holder's termination. This Section 6.9 shall not
apply to any Option held by an Independent Contractor.
6.10 Approved Sale of the Company:
Except as expressly provided otherwise in an Option
Agreement for any Option granted under this Plan, the following provisions
dealing with the applicable Holder's obligations with respect to both Options
and Option Shares shall apply when there is an Approved Sale, as defined below:
If Bruckmann, Rosser, Sherrill & Co., L.P. ("BRS") (so long
as BRS and its affiliates, officers, directors and employees beneficially
own (as determined.under Rule 13d-3 of the Exchange Act) in the aggregate
at least 40% of the outstanding common stock of the Company) approves the
sale of the Company (whether by merger, consolidation, sale of all or
substantially all of the assets or outstanding shares of capital stock or
otherwise (an "Approved Sale")) to an unaffiliated person or entity, each
Holder shall consent to, vote for and raise no objections to, and waive any
dissenters' or appraisal rights with respect to, the Approved Sale, and if
the Approved Sale is structured as a sale of stock, shall
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agree to sell or, at BRS's option, exchange (i) all shares of capital stock
of the Company held by such Holder, including Option Shares, and (ii) any
securities convertible into or exchangeable for, or options, warrants or
rights to purchase, such capital stock, including Options, on the terms and
conditions approved by BRS. Each Holder shall take all action which is
necessary or in the judgment of BRS advisable to facilitate or consummate
an Approved Sale. The obligations of a Holder with respect to an Approved
Sale of the Company are subject to the satisfaction of the following: (i)
upon the consummation of the Approved Sale, either all of the holders of a
given class of equity security will receive the same form and amount of
consideration per share of such security, or if any such holder is given an
option as to the form and amount of consideration to be received, each
Holder will be given the same option, and (ii) the terms of sale shall not
include any indemnification, guaranty or a similar undertaking of a Holder
(other than undertakings in respect of continued employment) that is not
made or given pro rata with other Holders on the basis of share ownership.
Each Holder hereby agrees to vote his or her shares of capital stock of the
Company that are entitled to vote to effectuate the provisions and
intentions of this Section 6.10.
6.11 Repurchase Rights of Company: The Committee shall have the
authority to include provisions in any Option Agreement permitting the Company
to repurchase Option Shares from any person holding such shares upon or as a
result of the termination of the Holder's employment with the Company on such
terms as the Committee shall deem appropriate.
7. Adjustments upon Changes in Capitalization.
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Subject to Section 6.10, if applicable, in the event of a
reorganization, recapitalization, stock split, spin-off, split-off, split-up,
stock dividend, issuance of stock rights, combination of shares, merger,
consolidation or any other change in the corporate structure of the Company
affecting Common Stock, or any distribution to shareholders other than a cash
dividend, the Committee shall make appropriate adjustment in the number and kind
of shares available for Awards under the Plan and any adjustments to an
outstanding Award, including without limitation the number of shares subject to
and the Option Price for the Award, as it determines appropriate.
8. Effective Date, Termination and Amendment.
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The Plan shall become effective on February 5, 1998, subject to the
Company's shareholders approving the Plan within 12 months of the Board's
adoption of the Plan in accordance with Section 422 of the Code. The Plan shall
remain in full force and effect until the earlier of 10 years from the date of
its adoption by the Board, or the date it is terminated by the Board. The Board
shall have the power to amend, suspend or terminate the Plan at any time,
subject to applicable law and regulation.
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Termination of the Plan pursuant to this Section 8 shall not affect
Awards outstanding under the Plan at the time of termination.
9. General Provisions
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9.1 Nothing contained in the Plan, or any Award granted pursuant
to the Plan, shall confer upon any Employee any right with respect to
continuance of employment by the Company, nor interfere in any way with the
right of the Company to terminate the employment of any Employee at any time.
9.2 Holders shall be responsible to make appropriate provision
for all taxes required to be withheld in connection with any Award, the exercise
thereof and the transfer of shares of Common Stock pursuant to this Plan. Such
responsibility shall extend to all applicable federal, state, local or foreign
withholding taxes. The Committee shall have the authority to cause the Company
to make whole a Holder for all or any portion of the federal, state, local or
foreign taxes required to be paid in connection with the exercise of an Option;
provided, however, that any such reimbursement obligation shall be expressly
stated in the Option Agreement.
9.3 To the extent that federal laws do not otherwise control, the
Plan and all determinations made and actions taken pursuant hereto shall be
governed by the substantive laws of the State of California (or such other state
law as may correspond to the Company's state of incorporation) and construed
accordingly.
9.4 Only whole shares of Common Stock shall be issuable upon
exercise of the Options. An Option may be exercised only for a whole number of
Option Shares unless the Option is exercised in its entirety and such entirety
includes a fractional Option Share. Any right to a fractional Option Share shall
be satisfied in cash. Upon receipt of payment of the Option Price and any
withholding taxes payable to the Company pursuant to Section 6.6(b), the
Company shall deliver a certificate for the number of whole Option Shares and a
check for the Fair Market Value on the date of exercise of the fractional Option
Share to which the Holder exercising the Option is entitled. The Option Shares
shall be subject to restrictions on transfer pursuant to applicable securities
laws and shall bear a legend subjecting the Option Shares to those restrictions
on transfer in accordance with the Option Agreements. The certificates shall
also bear a legend referring to any restrictions on transfer arising hereunder
or under the applicable Option Agreement or any other applicable law, regulation
or agreement.
9.5 The Company shall not be obligated to deliver any
certificates for Option Shares until such Option Shares have been listed (or
authorized for listing upon official notice of issuance) upon each stock
exchange upon which outstanding shares of such class at the time are listed or
until there has been compliance with such laws or regulations as the Company may
deem applicable. The Company shall use its reasonable efforts to effect such
compliance and, if necessary, such listing.
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9.6 The Plan and each Award under the Plan shall be subject to
the requirement that if at any time the Committee shall determine that (i) the
listing, registration or qualification of the Option Shares upon any securities
exchange or under any state or federal law, (ii) the consent or approval of any
government regulatory body, or (iii) an agreement by the recipient of an Award
with respect to the disposition of the Option Shares is necessary or desirable
as a condition of, or in connection with, the Plan or the granting of such Award
or the issue or purchase of the Option Shares thereunder, the Award may not be
consummated in whole or in part until such listing, registration, qualification,
consent, approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.
9.7 The Holder shall have no rights as a shareholder with respect
to an Award unless and until legended certificates for the Option Shares are
issued.
9.8 The Committee may amend any outstanding Awards to the extent
it deems appropriate. Such amendment may be made by the Committee without the
consent of the Holder, except in the case of amendments adverse to the Holder,
in which case the Holder's consent is required to any such amendment.
9.9 This Plan shall be unfunded. The Company shall not be
required to establish any special or separate fund or to make any other
segregation of assets to assure the payment of any Award under this Plan.
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FIRST AMENDMENT
TO CALIFORNIA PIZZA KITCHEN, INC.
1998 STOCK-BASED INCENTIVE COMPENSATION PLAN
WHEREAS, California Pizza Kitchen, Inc., a California corporation (the
"Company"), has, by action of the Board of Directors of the Company, adopted the
1998 Stock-Based Incentive Compensation Plan (the "Plan"); and
WHEREAS, pursuant to the Plan, the Board of Directors of the Company
has the authority to amend the terms and provisions of the Plan, subject to
applicable law and regulation; and
WHEREAS, the Board of Directors has approved an amendment to the Plan
to increase the number of shares of Common Stock (as defined in the Plan) that
are available for awards under the Plan, all as more fully set forth below;
THEREFORE, the terms of the Plan are hereby amended as follows:
1. Amendment to Plan. (a) Subsection 5.1 of the Plan is hereby
deleted in its entirety and replaced with the following:
Subject to adjustment as provided in Section 7, the total number
of shares of Common Stock available for Awards under the Plan shall be
1,500,000 shares. After the Company becomes Publicly Traded, no
individual may receive Awards with respect to more than 600,000 shares
of Common Stock in any year under the Plan.
(b) All other terms and provisions of the Plan shall remain in
full force and effect following the effective date of this Amendment.
2. Effective Date of Amendment. The effective date of this Amendment
shall be June 30, 1998.
Date Adopted: July 21, 1998
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SECOND AMENDMENT
TO CALIFORNIA PIZZA KITCHEN, INC.
1998 STOCK-BASED INCENTIVE COMPENSATION PLAN
This SECOND AMENDMENT dated as of November 2, 1999 (this "Amendment")
amends the California Pizza Kitchen, Inc., (the "Corporation") 1998 Stock-Based
Incentive Compensation Plan (the "Plan") and is made with reference to the
following facts (all capitalized terms not otherwise defined herein have the
meanings set forth in the Plan).
WHEREAS, on July 21, 1998, the Board adopted the First Amendment to the
Plan which increased the number of available shares of Common Stock available
for Awards to 1,500,000;
WHEREAS, in November 1998, the Corporation effected a two-for-one stock
split and, pursuant to Section 7 of the Plan, the Board determined that in order
to prevent any dilution or an enlargement of the benefits intended to be made
available under the Plan, an appropriate adjustment would be made to double the
number of shares available for under the Plan and to double the number of shares
subject to each outstanding Award;
WHEREAS, on November 2, 1999, the Board adopted and approved by resolution
a further increase in the number of shares of Common Stock available for Awards
under the Plan by another One Million (1,000,000) shares, thereby making the
aggregate number of shares reserved for such issuance Four Million (4,000,000);
and
WHEREAS, on November 2, 1999, a majority of the shareholders of the
Corporation ratified, confirmed and approved such increase in all respects.
NOW, THEREFORE, the terms of the Plan are hereby amended as follows:
1. Amendment to the Plan. (a) Subsection 5.1 of the Plan is hereby
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deleted in its entirety and replaced with the following:
Subject to adjustment as provided in Section 7, the total number of
shares of Common Stock available for Awards under the Plan shall be
1,500,000 shares. After the Company becomes Publicly Traded, no
individual may receive Awards with respect to more than 600,000 shares
of Common Stock in any year under the Plan
(b) Except as expressly amended herein, the Plan shall continue
in full force and effect in accordance with its terms.
2. Effective Date of Amendment. The effective date of this Amendment
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shall be November 2, 1999.
Dated Adopted: November 2, 1999
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CALIFORNIA PIZZA KITCHEN, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
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This is a Non-Qualified Stock Option Agreement, dated as of
_______ (the "Agreement"), between California Pizza Kitchen, Inc., a California
corporation (the "Company"), and the undersigned individual ("Holder").
1. Definitions. As used herein:
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1.1 "Board" means the Board of Directors of the Company.
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1.2 "Code" means the Internal Revenue Code of 1986, as amended.
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1.3 "Committee" has the meaning set forth in the Plan.
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1.4 "Common Stock" has the meaning set forth in the Plan.
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1.5 "Date of Award" means _______, the date on which the Company
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awarded the Option.
1.6 "Date of Exercise" means the date on which the notice
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required by Section 6 hereof is received by the Company.
1.7 "Expiration Date" means the earliest of the following:
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(a) If Holder ceases to be employed on a full-time basis by
the Company by reason of (i) termination without Cause, (ii) death, (iii)
Disability or (iv) Retirement (as such capitalized terms are defined below), the
date two months after the date such employment terminates; or
(b) If Holder ceases to be employed by the Company for any
reason other than those listed in Section 1.7(a), the date such employment
terminates; or
(c) The date which is five years after the date of
consummation of an Initial Public Offering by the Company; or
(d) The tenth anniversary of the Date of Award.
As used herein, "Cause" means (i) Holder's commission of a felony or other crime
involving moral turpitude; (ii) Holder's willful misconduct in connection with
the performance of Holder's duties for the Company that materially adversely
affects Holder's ability to perform Holder's duties for the Company or
materially adversely affects the Company, (iii) the willful failure of Holder
(otherwise than because Holder's Disability) to follow the lawful instructions
of Holder's immediate supervisor after Holder having received at least seven
days written notice of such instructions, which failure results in demonstrable
material injury to the Company; or (iv)
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Holder's breach of his fiduciary duty to the Company for personal profit;
"Disability" means the inability of Holder to perform a major part of the duties
to be performed by Holder as an employee of the Company immediately prior to the
inception of the disability, because of illness, accident or injury, for a
period of 26 consecutive weeks or for a cumulative period of 30 weeks in any 12
month period; and "Retirement" means retirement from full-time employment by the
Company in accordance with the normal retirement policies of the Company.
1.8 "Fair Market Value" means the fair market value of an Option
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Share, as determined pursuant to the Plan.
1.9 "Initial Public Offering" means a firm commitment underwritten
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public offering pursuant to an effective registration statement under the
Securities Act (other than (i) a Special Registration Statement or (ii) a
registration statement relating to a Unit Offering) in respect of the offer and
sale of shares of Common Stock for the account of the Company resulting in
aggregate net proceeds to the Company and any stockholder selling shares of
Common Stock in such offering of not less than $20,000,000.
1.10 "Option" means the option to purchase Common Stock hereby
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granted.
1.11 "Option Price" means _______per Option Share, provided that such
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amount may be adjusted pursuant to Section 7 of the Plan (it being understood,
however, that such amount presently reflects the stock split approved by the
Board on _______, and no further adjustment thereto shall be made by reason of
such stock split).
1.12 "Option Shares" means the _______shares of Common Stock which
-------------
are the subject of the Option hereby granted (it being understood, however, that
such amount presently reflects the stock split approved by the Board on _______,
and no further adjustment thereto shall be made by reason of such stock split).
1.13 "Plan" means the California Pizza Kitchen, Inc. 1998 Stock-Based
----
Incentive Compensation Plan attached hereto as Exhibit A and incorporated herein
by reference.
1.14 "Sale of the Company" means the sale of the Company, whether by
-------------------
merger, consolidation, sale of all or substantially all of the assets or
outstanding shares of capital stock.
1.15 "Special Registration Statement" means a registration statement
------------------------------
on Forms S-8 or S-4 or any similar or successor form or any other registration
statement relating to an exchange offer or an offering of securities solely to
the Company's employees or security holders or used in connection with the
acquisition of the business of another person or entity.
1.16 "Unit Offering" shall mean a public offering of a combination of
-------------
debt and equity securities of the Company in which (i) not more than 10% of the
gross proceeds received
2
<PAGE>
from the sale of such securities is attributed to such equity securities, and
(ii) after giving effect to such offering, the Company does not have a class of
equity securities required to be registered under the Securities Exchange Act of
1934, as amended.
2. Grant of Option. Subject to the terms and conditions set forth
---------------
herein and in the Plan, the Company hereby grants to Holder the option to
purchase any or all of the Option Shares.
3. Time of Exercise. The Option will become exercisable in the
----------------
amounts and on the dates set forth below:
Number of Option
Date Shares Exercisable
---- ------------------
On or after _______________ ______
On or after _______________ ______
On or after _______________ ______
On or after _______________ ______
The Option (or any portion thereof) shall remain exercisable (after the dates
set forth above) until the Expiration Date, when the right to exercise any or
all of the Option shall terminate absolutely. Notwithstanding the foregoing and
anything to the contrary in this Agreement, unless otherwise determined by the
Committee, in no event shall the Option (or any portion thereof) become
exercisable following the effective date of Holder's termination of employment
(it being understood, however, that the Option, to the extent exercisable on
such termination date, may remain outstanding and be exercised thereafter when
permitted by, and subject to the terms of, Section 1.7(a)).
4. Accelerated Time of Exercise. Notwithstanding the foregoing, the
----------------------------
Option shall be exercisable prior to the dates described in Section 3 upon the
date ten days prior to the closing of a Sale of the Company.
5. Payment for Option Shares. Full payment for Option Shares purchased
-------------------------
upon the exercise of the Option, or any portion thereof, shall be made in cash
or by certified or bank cashiers check payable to the Company, or, subject to
the approval of the Committee: (a) by surrendering shares of the Company's
Common Stock that have been owned by the Holder for at least six months and that
have an aggregate Fair Market Value equal to the aggregate Option Price, (b)
delivery of an irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the aggregate Option Price or delivery of
irrevocable instructions to a broker to deliver promptly to the Company
sufficient funds to pay the aggregate Option Price, (c) payment of such other
lawful consideration as the Committee may determine, or (d) any combination of
the foregoing.
3
<PAGE>
6. Manner of Exercise. The Option shall be exercised by giving written
------------------
notice of exercise to the Committee, in care of the Company's Secretary, at the
Company's main office in Los Angeles, California. Such notice of exercise must
include a statement of preference as to the manner in which payment to the
Company shall be made. Such notice shall be deemed to have been given when
hand-delivered, telecopied or mailed, first class postage prepaid, and shall be
irrevocable once given.
7. Restrictions on Transfer. (a) Holder acknowledges and agrees that
------------------------
the Option and Option Shares, and any right or interest therein, may not be
sold, transferred, gifted, donated, pledged, hypothecated, disposed of or
assigned by Holder, except as provided in clauses (a) - (c) of Section 6.5 of
the Plan.
(b) Without limiting the foregoing, Holder also agrees that, in the
event of an underwritten public offering of equity securities of the Company,
Holder will execute and agree to be bound by a customary "hold-back" or "lock-
up" agreement with the managing underwriter for such offering pursuant to which
Holder will agree not to effect any distribution or sale of equity securities of
the Company (except as part of the underwritten offering) for a period not to
exceed 180 days following consummation of such offering.
8. Securities Laws. The Committee may from time to time impose any
---------------
conditions on the exercise of the Option as it deems necessary or advisable to
ensure that all rights granted under the Plan satisfy the requirements of Rule
16b-3 under the Securities Exchange Act of 1934, as amended, or any successor
rule. Such conditions may include, without limitation, the partial or complete
suspension of the right to exercise the Option.
9. Issuance of Certificates; Legend.
--------------------------------
(a) As promptly as is feasible after the exercise of the Option, a
certificate for the Option Shares issuable on the exercise of the Option shall
be delivered to Holder or to Holder's personal representative, heir or legatee;
provided, however, that no certificates for Option Shares will be so delivered
until (i) appropriate arrangements have been made with the Company for the
withholding of any taxes which may be due with respect to such Option Shares;
(ii) the Option Price has been paid in full; (iii) in the opinion of the
Company's counsel, all applicable federal and state laws and regulations have
been complied with, and (iv) if the Common Stock is at the time listed on any
stock exchange, until the Option Shares to be delivered have been listed or
authorized to be listed on such exchange upon official notice of issuance. The
Company may condition delivery of certificates for Option Shares upon the prior
receipt from Holder of any undertakings which it may determine are required to
assure that the certificates are being issued in compliance with federal and
state securities laws.
(b) Any certificates for Option Shares issuable upon exercise of the
Option shall have imprinted thereon or otherwise affixed thereto an appropriate
legend setting forth the restrictions on transfer pursuant to Section 7 (in
addition to any other legend required by
4
<PAGE>
law).
10. Rights Prior to Exercise. Neither Holder nor Holder's personal
------------------------
representative, heir or legatee shall have any of the rights of a shareholder
with respect to any Option Shares until the date of the issuance to Holder of a
certificate for such Option Shares as provided in Section 9 hereof.
11. Taxes. Holder shall be responsible to make appropriate provision for
-----
all taxes required to be withheld in connection with any Option, the exercise
thereof and the transfer of the Option Shares. The responsibility of Holder for
taxes shall extend to all applicable federal, state, local or foreign
withholding taxes. In the case of exercise of the Option, the Company shall, at
the election of Holder and with the consent of the Committee (and subject to
such rules as it may prescribe, including as to the amount to be withheld) have
the right to retain the number of Option Shares whose aggregate Fair Market
Value equals the amount to be withheld in satisfaction of the applicable
withholding taxes.
12. Status of Option; Interpretation. The Option hereby granted is
--------------------------------
a non-qualified stock option. The Committee shall have sole power to resolve
any dispute or disagreement arising out of this Agreement. The interpretation
and construction of any provision of this Agreement or the Plan made by the
Committee shall be final and conclusive and, insofar as possible, shall be
consistent with the requirements of a non-qualified stock option. However, a
Holder who is a member of the Committee shall take no part in rendering any
decision regarding any dispute or disagreement arising out of an Agreement under
which such member is the Holder.
13. Option Not to Affect Employment. The Option granted hereunder shall
-------------------------------
not confer upon Holder any right to continue in the employment of the Company.
14. Miscellaneous.
-------------
14.1 The address for Holder to which notice, demands and other
communications to be given or delivered under or by reason of the provisions
hereof shall be the address set forth below under Holder's signature.
14.2 This Agreement may be exercised in one or more counterparts,
all of which taken together will constitute one and the same instrument.
14.3 The validity, performance, construction and effect of this
Agreement shall be governed by the laws of the State of California without
giving effect to principles of conflicts of law thereof.
15. Entire Agreement. This Agreement, together with the Plan, is
----------------
intended by the parties as a final expression of their agreement and intended to
be a complete and exclusive
5
<PAGE>
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement, together with the Plan,
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
CALIFORNIA PIZZA KITCHEN, INC.
By ___________________________
Name:
Title:
______________________________
Address:
______________________________
______________________________
7
<PAGE>
CALIFORNIA PIZZA KITCHEN, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
------------------------------------
This is a Non-Qualified Stock Option Agreement, dated as of
______________ (the "Agreement"), between California Pizza Kitchen, Inc., a
California corporation (the "Company"), and the undersigned individual
("Holder").
1. Definitions. As used herein:
-----------
1.1 "Board" means the Board of Directors of the Company.
-----
1.2 "Code" means the Internal Revenue Code of 1986, as amended.
----
1.3 "Committee" has the meaning set forth in the Plan.
---------
1.4 "Common Stock" has the meaning set forth in the Plan.
------------
1.5 "Date of Award" means ____________, the date on which the
-------------
Company awarded the Option.
1.6 "Date of Exercise" means the date on which the notice
----------------
required by Section 6 hereof is received by the Company.
1.7 "Expiration Date" means the earliest of the following:
---------------
(a) If Holder ceases to be employed on a full-time basis by
the Company by reason of (i) termination without Cause, (ii) death, (iii)
Disability or (iv) Retirement (as such capitalized terms are defined below), the
date two months after the date such employment terminates; or
(b) If Holder ceases to be employed by the Company for any
reason other than those listed in Section 1.7(a), the date such employment
terminates; or
(c) The date which is five years after the date of consummation of
an Initial Public Offering by the Company; or
(d) The tenth anniversary of the Date of Award.
As used herein, "Cause" means (i) Holder's commission of a felony or other crime
involving moral turpitude; (ii) Holder's willful misconduct in connection with
the performance of Holder's duties for the Company that materially adversely
affects Holder's ability to perform Holder's duties for the Company or
materially adversely affects the Company, (iii) the willful failure of Holder
(otherwise than because Holder's Disability) to follow the lawful instructions
of Holder's immediate supervisor after Holder having received at least seven
days written notice of such instructions; or (iv) Holder's breach of his
fiduciary duty to the Company for personal profit;
<PAGE>
"Disability" means the inability of Holder to perform a major part of the duties
to be performed by Holder as an employee of the Company immediately prior to the
inception of the disability, because of illness, accident or injury, for a
period of 26 consecutive weeks or for a cumulative period of 30 weeks in any 12
month period; and "Retirement" means retirement from full-time employment by the
Company in accordance with the normal retirement policies of the Company.
1.8 "Fair Market Value" means the fair market value of an Option
-----------------
Share, as determined pursuant to the Plan.
1.9 "Initial Public Offering" means a firm commitment underwritten
-----------------------
public offering pursuant to an effective registration statement under the
Securities Act (other than (i) a Special Registration Statement or (ii) a
registration statement relating to a Unit Offering) in respect of the offer and
sale of shares of Common Stock for the account of the Company resulting in
aggregate net proceeds to the Company and any stockholder selling shares of
Common Stock in such offering of not less than $20,000,000.
1.10 "Option" means the option to purchase Common Stock hereby
------
granted.
1.11 "Option Price" means $_____ per Option Share, provided that such
------------
amount may be adjusted pursuant to Section 7 of the Plan (it being understood,
however, that such amount presently reflects the stock split approved by the
Board on ____________, and no further adjustment thereto shall be made by reason
of such stock split).
1.12 "Option Shares" means the ________ shares of Common Stock which
-------------
are the subject of the Option hereby granted (it being understood, however, that
such amount presently reflects the stock split approved by the Board on
__________, and no further adjustment thereto shall be made by reason of such
stock split).
1.13 "Plan" means the California Pizza Kitchen, Inc. 1998 Stock-Based
----
Incentive Compensation Plan attached hereto as Exhibit A and incorporated herein
by reference.
1.14 "Sale of the Company" means the sale of the Company, whether by
-------------------
merger, consolidation, sale of all or substantially all of the assets or
outstanding shares of capital stock.
1.15 "Special Registration Statement" means a registration statement
------------------------------
on Forms S-8 or S-4 or any similar or successor form or any other registration
statement relating to an exchange offer or an offering of securities solely to
the Company's employees or security holders or used in connection with the
acquisition of the business of another person or entity.
1.16 "Unit Offering" shall mean a public offering of a combination of
-------------
debt and equity securities of the Company in which (i) not more than 10% of the
gross proceeds received from the sale of such securities is attributed to such
equity securities, and (ii) after giving effect
2
<PAGE>
to such offering, the Company does not have a class of equity securities
required to be registered under the Securities Exchange Act of 1934, as amended.
2. Grant of Option. Subject to the terms and conditions set forth
---------------
herein and in the Plan, the Company hereby grants to Holder the option to
purchase any or all of the Option Shares.
3. Time of Exercise. (a) The Option (or any portion thereof) will
----------------
not be exercisable until the date of consummation of an Initial Public Offering.
(i) In the event an Initial Public Offering is consummated
on or prior to the date that is 12 months after the Date of Award, the Option
will become exercisable in the amounts and on the dates set forth below:
<TABLE>
<CAPTION>
Number of Option
Date Shares Exercisable
---- ------------------
<S> <C>
On or after _____________ ______
On or after _____________ ______
On or after _____________ ______
On or after _____________ ______
</TABLE>
(ii) In the event an Initial Public Offering is consummated
after the date that is 12 months after the Date of Award but on or prior to the
date that is 24 months after the Date of Award, the Option will become
exercisable in the amounts and on the dates set forth below:
<TABLE>
<CAPTION>
Date Shares Exercisable
---- ------------------
<S> <C>
Consummation of Initial
Public Offering ______
On or after _____________ ______
On or after _____________ ______
On or after _____________ ______
</TABLE>
(iii) In the event an Initial Public Offering is consummated
after the date that is 24 months after the Date of Award but on or prior to the
date that is 36 months after the Date of Award, the Option will become
exercisable in the amounts and on the dates set forth below:
3
<PAGE>
<TABLE>
<CAPTION>
Date Shares Exercisable
---- ------------------
<S> <C>
Consummation of Initial
Public Offering _______
On or after _____________ _______
On or after _____________ _______
</TABLE>
(iv) In the event an Initial Public Offering is consummated
after the date that is 36 months after the Date of Award but on or prior to the
date that is 48 months after the Date of Award, the Option will become
exercisable in the amounts and on the dates set forth below:
<TABLE>
<CAPTION>
Date Shares Exercisable
---- ------------------
<S> <C>
Consummation of Initial
Public Offering _______
On or after _____________ _______
</TABLE>
(v) In the event an Initial Public Offering is consummated
after the date that is 48 months after the Date of Award, the entire Option will
become exercisable on the date of consummation of an Initial Public Offering.
(b) The Option (or any portion thereof) shall remain exercisable
(after the dates set forth above) until the Expiration Date, when the right to
exercise any or all of the Option shall terminate absolutely. Notwithstanding
the foregoing and anything to the contrary in this Agreement, unless otherwise
determined by the Committee, in no event shall the Option (or any portion
thereof) become exercisable following the effective date of Holder's termination
of employment (it being understood, however, that the Option, to the extent
exercisable on such termination date, may remain outstanding and be exercised
thereafter when permitted by, and subject to the terms of, Section 1.7(a)).
4. Accelerated Time of Exercise. Notwithstanding the foregoing, the
----------------------------
Option shall be exercisable prior to the dates described in Section 3 upon the
date ten days prior to the closing of a Sale of the Company.
5. Payment for Option Shares. Full payment for Option Shares purchased
-------------------------
upon the exercise of the Option, or any portion thereof, shall be made in cash
or by certified or bank cashiers check payable to the Company, or, subject to
the approval of the Committee: (a) by surrendering shares of the Company's
Common Stock that have been owned by the Holder for at least six months and that
have an aggregate Fair Market Value equal to the aggregate Option Price, (b)
delivery of an irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the aggregate Option Price or delivery of
irrevocable instructions to a
4
<PAGE>
broker to deliver promptly to the Company sufficient funds to pay the aggregate
Option Price, (c) payment of such other lawful consideration as the Committee
may determine, or (d) any combination of the foregoing.
6. Manner of Exercise. The Option shall be exercised by giving written
------------------
notice of exercise to the Committee, in care of the Company's Secretary, at the
Company's main office in Los Angeles, California. Such notice of exercise must
include a statement of preference as to the manner in which payment to the
Company shall be made. Such notice shall be deemed to have been given when
hand-delivered, telecopied or mailed, first class postage prepaid, and shall be
irrevocable once given.
7. Restrictions on Transfer. (a) Holder acknowledges and agrees that
------------------------
the Option and Option Shares, and any right or interest therein, may not be
sold, transferred, gifted, donated, pledged, hypothecated, disposed of or
assigned by Holder, except as provided in clauses (a)-(c) of Section 6.5 of
the Plan.
(b) Without limiting the foregoing, Holder also agrees that, in the
event of an underwritten public offering of equity securities of the Company,
Holder will execute and agree to be bound by a customary "hold-back" or "lock-
up" agreement with the managing underwriter for such offering pursuant to which
Holder will agree not to effect any distribution or sale of equity securities of
the Company (except as part of the underwritten offering) for a period not to
exceed 180 days following consummation of such offering.
8. Securities Laws. The Committee may from time to time impose any
---------------
conditions on the exercise of the Option as it deems necessary or advisable to
ensure that all rights granted under the Plan satisfy the requirements of Rule
16b-3 under the Securities Exchange Act of 1934, as amended, or any successor
rule. Such conditions may include, without limitation, the partial or complete
suspension of the right to exercise the Option.
9. Issuance of Certificates; Legend.
--------------------------------
(a) As promptly as is feasible after the exercise of the Option,
a certificate for the Option Shares issuable on the exercise of the Option shall
be delivered to Holder or to Holder's personal representative, heir or legatee;
provided, however, that no certificates for Option Shares will be so delivered
until (i) appropriate arrangements have been made with the Company for the
withholding of any taxes which may be due with respect to such Option Shares;
(ii) the Option Price has been paid in full; (iii) in the opinion of the
Company's counsel, all applicable federal and state laws and regulations have
been complied with, and (iv) if the Common Stock is at the time listed on any
stock exchange, until the Option Shares to be delivered have been listed or
authorized to be listed on such exchange upon official notice of issuance. The
Company may condition delivery of certificates for Option Shares upon the prior
receipt from Holder of any undertakings which it may determine are required to
assure that the certificates are being issued in compliance with federal and
state securities laws.
5
<PAGE>
(b) Any certificates for Option Shares issuable upon exercise of
the Option shall have imprinted thereon or otherwise affixed thereto an
appropriate legend setting forth the restrictions on transfer pursuant to
Section 7 (in addition to any other legend required by law).
10. Rights Prior to Exercise. Neither Holder nor Holder's personal
------------------------
representative, heir or legatee shall have any of the rights of a shareholder
with respect to any Option Shares until the date of the issuance to Holder of a
certificate for such Option Shares as provided in Section 9 hereof.
11. Taxes. Holder shall be responsible to make appropriate provision for
-----
all taxes required to be withheld in connection with any Option, the exercise
thereof and the transfer of the Option Shares. The responsibility of Holder for
taxes shall extend to all applicable federal, state, local or foreign
withholding taxes. In the case of exercise of the Option, the Company shall, at
the election of Holder and with the consent of the Committee (and subject to
such rules as it may prescribe, including as to the amount to be withheld) have
the right to retain the number of Option Shares whose aggregate Fair Market
Value equals the amount to be withheld in satisfaction of the applicable
withholding taxes.
12. Status of Option; Interpretation. The Option hereby granted is a non-
--------------------------------
qualified stock option. The Committee shall have sole power to resolve any
dispute or disagreement arising out of this Agreement. The interpretation and
construction of any provision of this Agreement or the Plan made by the
Committee shall be final and conclusive and, insofar as possible, shall be
consistent with the requirements of a non-qualified stock option. However, a
Holder who is a member of the Committee shall take no part in rendering any
decision regarding any dispute or disagreement arising out of an Agreement under
which such member is the Holder.
13. Option Not to Affect Employment. The Option granted hereunder shall
-------------------------------
not confer upon Holder any right to continue in the employment of the Company.
14. Miscellaneous.
-------------
14.1 The address for Holder to which notice, demands and other
communications to be given or delivered under or by reason of the provisions
hereof shall be the address set forth below under Holder's signature.
14.2 This Agreement may be exercised in one or more counterparts, all
of which taken together will constitute one and the same instrument.
14.3 The validity, performance, construction and effect of this
Agreement shall be governed by the laws of the State of California without
giving effect to principles of conflicts
6
<PAGE>
of law thereof.
15. Entire Agreement. This Agreement, together with the Plan, is intended
----------------
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein. This
Agreement, together with the Plan, supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
7
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
CALIFORNIA PIZZA KITCHEN, INC.
By ___________________________
Name:
Title:
______________________________
Address:
______________________________
______________________________
8