STOCK OPTIONS§18.257
August 199818-223D
1993 STOCK OPTION PLAN
OF
CUCOS INC.
(As Amended and Restated Effective September 26, 1996)
1. Purpose
This 1993 Stock Option Plan (“the Plan”) is intended to provide a means whereby Cucos
Inc. (the “Company”) may, through the grant of incentive stock options and nonqualified stock
options (collectively, “Options”) to purchase common shares of the Company to (i) officers and
other employees of the Company and/or of a Related Corporation (as defined below) (“ Key
Employees”), (ii) independent consultants or advisors hired by the Company to render bona fide
services to the Company or a Related Corporation, other than services in connecti on with the offer
or sale of securities in a capital raising transaction (“Consultants”), and (iii) directors who are not
officers or employees (“Outside Directors”), attract and retain capable Key Employees, C onsultants
and Outside Directors and motivate such persons to exercise their best efforts on behalf of the
Company and of any Related Corporation.
For purposes of the Plan, a Related Corporation of the Company shall mean either a
corporate subsidiary of the Company, as defined in section 424(f) of the Internal Revenue Code of
1986, as amended (the “Code”), or the corporate parent of the Company, as defined in sect ion
424(e) of the Code. Further, as used in the Plan, (i) the term “incentive stock option” (“ISO” ) shall
mean an option which, at the time such option is granted under the Plan, qualifie s as an ISO within
the meaning of section 422 of the Code and is designated as an ISO in the “Option Agree ment” (as
defined in Section 9); and (ii) the term “nonqualified stock option” (“NQSO”) shall mea n an option
which, at the time such option is granted, does not qualify as an ISO, and is designated a s an NQSO
in the Option Agreement.
2. Administration
The Plan shall be administered by the Company's Board of Directors (the “Board”).
The Board shall have full authority, subject to the terms of the Plan, to select the
Discretionary Grantees (as defined in Section 4 of the Plan) to be granted ISOs and/or NQSOs
under the Plan, to grant Options on behalf of the Company and to set the date of grant and the other
terms of such Options.
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The Board also shall have the authority to establish such rules and regulations, not
inconsistent with the provisions of the Plan, for the proper administration of the Plan, and to amend,
modify, or rescind any such rules and regulations, and to make such determinations, and
interpretations under, or in connection with, the Plan, as it deems necessary or advisable. All such
rules, regulations, determinations, and interpretations shall be binding and conclusive upon the
Company, its stockholders and all employees, and upon their respective legal representa tives,
beneficiaries, successors, and assigns and upon all other persons claiming under or through any of
them.
No member of the Board shall be liable for any action or determination made in good faith
with respect to the Plan or any Option granted under it.
3. Stock
Options may be granted under the Plan covering up to a maximum of Five Hundred Nine
Thousand Two Hundred (509,200) shares of the Company's common shares, no par value (the
“Common Stock”), subject to adjustment as hereinafter provided. Shares issuable under the Pla n
may be authorized but unissued shares or reacquired shares, and the Company may purchase shares
required for this purpose, from time to time, if it deems such purchase to be advisable.
If any Option granted under the Plan expires or otherwise terminates for any reason
whatsoever (including, without limitation, the surrender thereof by the Optionee (as defined in
Section 4)) without having been exercised, the shares subject to the unexercised portion of the
Option shall continue to be available for the granting of Options under the Plan as fully a s if the
shares had never been subject to an Option.
4. Eligibility For Grants Of Options
(a) In General.
Options granted to Key Employees may be NQSOs or ISOs. Options granted to Consultants
and Outside Directors shall be NQSOs, not ISOs. Key Employees, Consultants and Outside
Directors who have been granted an Option under the Plan shall be referred to as “Optione es.” More
than one Option may be granted to an Optionee under the Plan.
(b) Outside Directors.
Outside Directors shall be eligible to receive NQSOs (but not ISOs) pursuant to Section 5 of
the Plan 6.
(c) Discretionary Grantees.
Consultants and Key Employees and Outside Directors shall hereinafter be collectively
referred to as “Discretionary Grantees.” Discretionary Grantees shall be eligible to receive Options
pursuant to Section 5 of the Plan; provided, however, that Consultants and Outside Directors shall
not be eligible to receive ISOs.
STOCK OPTIONS§18.257
August 199818-223F
5. Granting of Options to Discretionary Grantees
From time to time until the expiration or earlier suspension or discontinuance of the Plan,
the Board may, on behalf of the Company, grant to Discretionary Grantees under the Plan such
Options as it determines are warranted; provided, however, that grants of ISOs and NQSOs shall be
separate and not in tandem; and further provided, that Consultants and Outside Directors shall not
be eligible to receive ISOs. In making any determination as to whether a Discreti onary Grantee
shall be granted an Option and as to the number of shares to be covered by such Option, the Board
shall take into account the duties of the Discretionary Grantee, his present and pot ential
contributions to the success of the Company or a Related Corporation, and such other fact ors as the
Board shall deem relevant in accomplishing the purposes of the Plan. Moreover, the Board may
provide in the Option that said Option may be exercised only if certain conditions, as determined by
the Board , are fulfilled.
6. [RESERVED]
7. Annual Limit
(a) ISOs.
The aggregate fair market value (determined as of the time the ISO is granted) of the
Common Stock with respect to which ISOs are exercisable for the first time by a Disc retionary
Grantee during any calendar year (under this Plan and any other ISO plan of the Company or a
Related Corporation) shall not exceed $100,000.
(b) NOSOs.
The annual limits set forth above for ISOs shall not apply to NQSOs.
8. Terms and Conditions of Options
The Options granted to Discretionary Grantees other than Consultants and Outside
Directors pursuant to the Plan shall expressly specify whether they are ISOs or NQSOs. The
Options granted to Consultants and Outside Directors pursuant to the Plan shall expressly speci fy
that they are NQSOs. The Options granted to Optionees pursuant to the Plan shall include
expressly or by reference the following terms and conditions, as well as such other provisions not
inconsistent with the provisions of this Plan and, for ISOs granted under this Plan, the provisions of
section 422(b) of the Code, as the Board shall deem desirable:
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(a) Number of Shares.
A statement of the number of shares to which the Option pertains.
(b) Price.
A statement of the Option price. With respect to Options granted to Discretionary Grante es
other than Outside Directors , the Option price (subject to paragraph (j) below) shall be
determined and fixed by the Board in its discretion but shall not be less than 100 percent of the fair
market value of the optioned shares of Common Stock on the date the Option is granted. Wi th
respect to Options granted to Outside Directors, the Option price shall be 100 percent of the fair
market value of the optioned shares of Common Stock on the date the Option is granted.
The fair market value of the optioned shares of Common Stock shall be —
(1) if there are sales of Common Stock on a registered securities exchange or on an over-
the-counter market on the date of grant, then the mean between the highest and lowest quoted
selling price on the date of grant; or
(2) if there are no sales of Common Stock on the date of grant but there are sales on da tes
within a reasonable period both before and after the date of grant, then the weighted ave rage of the
means between the highest and lowest selling price on the nearest date before and t he nearest date
after the date of grant.
(c) Term.
(1) ISOs.
Subject to paragraph (j) below and to earlier termination as provided in paragraphs (e), (f),
and (g) below and in Section 10, the term of each ISO shall be not more than ten years from the date
of grant.
(2) NQSOs.
Subject to earlier termination as provided in paragraphs (e), (f) and (g) below and in Sec tion
10, the term of each NQSO awarded to a Discretionary Grantee shall be not more than t en years
from the date of grant.
(d) Exercise.
(1) Options Granted to Discretionary Grantees.
Except as set forth in Section 8(d)(2) , granted to Discretionary Grantees shall be
exercisable in such installments and on such dates, not less than six months from the date of grant as
the Board may specify, provided that the Board may accelerate the exercise date of any
outstanding Options, in its discretion, if it deems such acceleration to be desirable.
(2) Options Granted to Outside Directors.
Options granted to Outside Directors shall be exercisable commencing one (1) year after the
date of grant.
STOCK OPTIONS§18.257
August 199818-223H
(3) In General.
Any Option shares, the right to the purchase of which has accrued, may be purchased at any
time up to the expiration or termination of the Option. Exercisable Options may be e xercised, in
whole or in part, from time to time by giving written notice of exercise to the Com pany at its
principal office, specifying the number of shares to be purchased and accompanied by payme nt in
full of the aggregate Option price for such shares. Only full shares shall be issued under the Plan.
The Option price shall be payable in cash or its equivalent.
(e) Termination of Employment, Consulting Services or Board Membership.
If a Key Employee's employment by the Company (and Related Corporations), a
Consultant's engagement by the Company (and Related Corporations), or an Outside Director's
membership on the Board terminates prior to the expiration date fixed for his Option for a ny reason
other than death or disability, such Option may be exercised, to the extent of the numbe r of shares
with respect to which the Optionee could have exercised it on the date of such te rmination, or, with
respect to Discretionary Grantees other than Outside Directors, to any greater extent permitted by
the Board , by the Optionee at any time prior to the earlier of (i) the expiration date spe cified in such
Option, (ii) with respect to Options granted to Outside Directors on and after March 23, 1994, one
year after such termination of membership on the Board, or (iii) with respect to other Discretionary
Grantees, an accelerated termination date determined by the Board in its discretion, except that,
subject to Section 10, such accelerated termination date shall not be earli er than the date of a Key
Employee's termination of employment or a Consultant's cessation of consulting services and in
the case of ISOs, such accelerated termination date shall not be later tha n three months after such
termination of employment.
(f) Exercise upon Disability of Optionee.
If an Optionee shall become disabled (within the meaning of section 22(e)(3) of the Code)
during his employment, his provision of consulting services to the Company (and Related
Corporations), or his membership on the Board and, prior to the expiration date fixed for his Opti on,
his employment, consulting arrangement, or membership on the Board is terminated as a
consequence of such disability, such Option may be exercised, to the extent of the number of shares
with respect to which the Optionee could have exercised it on the date of such te rmination, or, with
respect to Discretionary Grantees other than Outside Directors, to any greater extent permitted by
the Board , by the Optionee at any time prior to the earlier of (i) the expiration date spe cified in such
Option, (ii) with respect to Options granted to Outside Directors on and after March 23, 1994, one
year after such termination of membership on the Board, or (iii) with respect to Disc retionary
Grantees other than Outside Directors , an accelerated termination date determined by the Board,
in its discretion, except that, subject to Section 10, such accelerated termi nation date shall not be
earlier than the date of a Key Employee's termination of employment or Consultant's cessation of
consulting services by reason of disability, and in the case of ISOs, such date shall not be later than
one year after such termination of employment. In the event of the Optionee's lega l disability, such
Option may be so exercised by the Optionee's legal representative.
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(g) Exercise upon Death of Optionee.
If an Optionee shall die during his employment, his provision of consulting services to the
Company (or a Related Corporation) or his membership on the Board, and prior to the expirat ion
date fixed for his Option, or if an Optionee whose employment, consulting arrangement or
membership on the Board is terminated for any reason, shall die following his termination of
employment, cessation of consulting services or membership on the Board but prior to the earl iest
of (i) the expiration date fixed for his Option or (ii) the expiration of the period dete rmined under
paragraphs (e) and (f) above, or (iii) in the case of an ISO, three months following termination of
employment; such Option may be exercised, to the extent of the number of shares with re spect to
which the Optionee could have exercised it on the date of his death, or, with respect to
Discretionary Grantees other than Outside Directors , to any greater extent permitted by the
Board , by the Optionee's estate, personal representative or beneficiary who acquired the right to
exercise such Option by bequest or inheritance or by reason of the death of the Optionee, at any
time prior to the earlier of (i) the expiration date specified in such Option, (ii) one year after the date
of the Optionee's death, or (iii) with respect to Discretionary Grantees other than Outside
Directors , an accelerated termination date determined by the Board, in its discretion except that,
subject to Section 10, such accelerated termination date shall not be lat er than one year after the
date of death.
(h) Non-Transferability.
No Option shall be assignable or transferable by the Optionee otherwise than by will or by
the laws of descent and distribution.
(i) Rights as a Stockholder.
An Optionee shall have no rights as a stockholder with respect to any shares covered by his
Option until the issuance of a stock certificate to him for such shares.
(j) Ten Percent Stockholder.
If a Key Employee owns more than ten percent of the total combined voting power of all
shares of stock of the Company or of a Related Corporation at the time an ISO is gra nted to him, the
Option price for the ISO shall not be less than 110 percent of the fair market value of the optioned
shares of Common Stock on the date the ISO is granted, and such ISO, by its terms, shall not be
exercisable after the expiration of five years from the date the ISO is granted. The conditions set
forth in this paragraph (j) shall not apply to NQSOs.
(k) Listing and Registration of Shares.
Each Option shall be subject to the requirement that, if at any time the Board shall
determine, in its discretion, that the listing, registration, or qualification of the shares covered
thereby 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 connect ion
with, the granting of such Option or the purchase of shares thereunder, or that action by the
Company or by the Optionee should be taken in order to obtain an exemption from any such
requirement, no such Option may be granted or exercised, in whole or in part, unless and unti l such
listing, registration, qualification, consent, approval, or action shall have been effecte d, obtained, or
taken under conditions acceptable to the Board. Without limiting the generality of the foregoing,
each Optionee or his legal representative or beneficiary may also be required to give satisfactory
assurance that shares purchased upon exercise of an Option are being purchased for investment and
STOCK OPTIONS§18.257
August 1998 18-225
not with a view to distribution, and certificates representing such shares may be legended
accordingly.
(1) Withholding.
The obligation of the Company to deliver shares of Common Stock upon the exercise of any
Option shall be subject to applicable federal, state and local tax withholding requirements.
9. Option Instruments — Other Provisions
Options granted under the Plan shall be evidenced by written documents (“Option
Agreements”) in such form as the Board shall, from time to time, approve, which Option
Agreements shall contain such provisions, not inconsistent with the provisions of the Plan for
NQSOs granted pursuant to the Plan, and such conditions, not inconsistent with section 422(b) of
the Code for ISOs granted pursuant to the Plan, as the Board shall deem advisable, and which
Option Agreements shall specify whether the Option is an ISO or NQSO. Each Optionee shall ent er
into, and be bound by, such Option Agreements, as soon as practicable after the grant of an Option.
10. Capital Adjustments
The number of shares which may be issued under the Plan, as stated in Section 3, and the
number of shares issuable upon exercise of outstanding Options under the Plan (as well as the
Option price per share under such outstanding. Options), shall, in accordance with the provisions of
section 424(a) of the Code, be adjusted to reflect any stock dividend, stock split, share com bination,
or similar change in the capitalization of the Company. In the event any suc h change in
capitalization cannot be reflected in a straight mathematical adjustme nt of the number of shares
issuable upon the exercise of outstanding Options (and a straight mathematical adjustme nt of the
exercise price thereof), the Board shall make such adjustments as are appropriate to reflect most
nearly such straight mathematical adjustment. Such adjustments shall be made only as necessary to
maintain the proportionate interests of Optionees and preserve, without exceeding, the value of
Options.
In the event of a corporate transaction (as that term is described in section 424(a) of the
Code and the Treasury Regulations issued thereunder as, for example, a merger, consolidation,
acquisition of property or stock, separation, reorganization, or liquidation), each outstanding Option
shall be assumed by the surviving or successor corporation; provided, however, that, in the event of
a proposed corporate transaction, the Board may terminate all or a portion of the outstanding
Options (except for those awarded to Outside Directors, which shall not be terminable) if it
determines that such termination is in the best interests of the Company. If the Board decides to
terminate such outstanding Options the Board shall give each Optionee holding such an Option to
be terminated not less than seven days' notice prior to any such termination by reason of such a
corporate transaction, and any such Option which is to be so terminated may be exe rcised (if and
only to the extent that it is then exercisable) up to, and including the date i mmediately preceding
such termination. Further, as provided in Section 8(d)(i) with respect to Discretionary Grantee s, the
Board , in its discretion, may accelerate, in whole or in part, the date on which any or all Options
become exercisable.
The Board also may, in its discretion, change the terms of any outstanding Option to reflect
any such corporate transaction, provided that, in the case of ISOs, such change is excluded from
the definition of a “modification” under section 424(h) of the Code.
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18-226 © 1998 Jefren Publishing Company, Inc.
11. Amendment or Discontinuance of the Plan
(a) In General.
The Board from time to time may suspend or discontinue the Plan or amend it in any respect
whatsoever, except that, without the approval of the stockholders (given in the manner set forth in
paragraph (b) below): (i) the class of employees eligible to receive Options shall not be changed, (ii)
the maximum number of shares of Common Stock with respect to which Options may be grante d
under the Plan shall not be increased except as permitted under Section 10, and (ii i) the duration of
the Plan under Section 17 shall not be extended; and further provided, that no such suspension,
discontinuance, or amendment shall materially impair the rights of any holder of an out standing
Option without the consent of such holder.
(b) Manner of Stockholder Approval.
(1) The approval of stockholders must be by a majority of the outstanding shares of
Common Stock present, or represented, and entitled to vote at a meeting duly held in accordance
with the applicable laws of the State of Louisiana; and
(2) The approval of stockholders must comply with all applicable provisions of the
corporate charter, bylaws, and applicable state law prescribing the method and degree of
stockholder approval required for the issuance of corporate stock or options. If the applicable stat e
law does not prescribe a method and degree of stockholder approval in such case, the approval of
stockholders must occur:
(A) By a method and in a degree that would be treated as adequate under applicabl e state
law in the case of an action requiring stockholder approval (i.e., an action on which stoc kholders
would be entitled to vote if the action were taken at a duly held stockholders' meeting); or
(B) By a majority of the votes cast at a duly held stockholders' meeting at whic h a
quorum representing a majority of all outstanding voting stock is, either in person or by proxy,
present and voting on the plan.
12. Rights
Neither the adoption of the Plan nor any action of the Board shall be deemed to give any
individual any right to be granted an Option, or any other right hereunder, unless and until the
Board shall have granted such individual an Option, and then his rights shall be only such as are
provided by the Option Agreement.
Any Option under the Plan shall not entitle the holder thereof to any rights as a stockhol der
of the Company prior to the exercise of such Option and the issuance of the shares pursuant thereto.
Further, notwithstanding any provisions of the Plan or the Option
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18-228 © 1998 Jefren Publishing Company, Inc.
18. Governing Law
The Plan shall be governed by the applicable Code provisions to the maximum extent
possible. Otherwise, the laws of the State of Louisiana shall govern the operation of, and t he
rights of Optionees under, the Plan, and Options granted thereunder.
Cucos Inc. 9/30/96
§18.258 To amend a Stock Option Plan to limit the maximum option grant which may be made to an employee in any calendar year to 200,000 shares in order to enable the Plan to
satisfy a requirement of Section 162(m) of the Internal Revenue Code of 1986 relating to
performance-based compensation which is not subject to a $1,000,000 deductibility limit
(with a copy of the amended Stock Option Plan)
PROPOSAL 2
AMENDMENT TO THE 1995 STOCK PLAN
In April 1997, the Board of Directors of the Company, subject to stockholder approval,
adopted an amendment to the 1995 Stock Plan of the Company to limit the maximum option
grant which may be made to an employee in any calendar year to 200,000 shares (subject to
adjustment for capital changes). Such amendment is to enable the 1995 Stock Plan t o satisfy a
requirement of Section 162(m) of the Internal Revenue Code of 1986 (“Section 162(m)”)
relating to performance-based compensation which is not subject to a $1,000,000 deductibility
limit.
Section 162(m) limits to $1,000,000 the deduction that a publicly-held corporation, may
take for federal income tax purposes for compensation paid in any year to each of its fi ve highest
paid officers. Regulations promulgated in 1995 designate certain compensation expenses which
are exempt from this $1,000,000 deductibility limitation, including certain employee st ock
options and certain performance-based compensation meeting the requirements of Section
162(m).
The amendment to the 1995 Stock Plan is being proposed in response to the definitive
regulations adopted by the Internal Revenue Service with respect to Section 162(m), incl uding
the transition rule which expires with this upcoming meeting of the stockholders of the
Company. Stockholder approval of the amendment will preserve the tax deductibility under
Section 162(m) of compensation paid upon the exercise of certain options granted under the
1995 Stock Plan if total compensation for one of the five highest paid named individuals exceeds
$1,000,000. All compensation paid to all other employees is not subject to Section 162(m) and
stockholder approval is not necessary to continue tax deductibility of such expenses. Should
stockholders fail to approve the proposed amendment to the 1995 Stock Plan, the 1995 Stock
Plan would remain in full force and effect, but all options under the 1995 Stock Plan of the
named individuals would be subject to the annual deductibility limitation of Section 162(m).
The complete text of the 1995 Stock Plan is attached as Exhibit A hereto and t he
following description is qualified in its entirety by the full text of the 1995 Stock Plan.
Description of the 1995 Stock Plan. The purpose of the 1995 Stock Plan is to provide
incentives to officers, directors, employees and consultants of the Company. Under the 1995
Stock Plan, officers and employees of the Company and any present or future parent or
subsidiary (collectively, “Related Corporations”) are provided with the opportunity to purchase
shares of Common Stock of the Company pursuant to options which may qualify as “incentive
stock options” (“ISOs”), as defined in Section 422(b) of the Internal Revenue Code of 1986, as
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amended (the “Code”), or which do not qualify as ISOs (“Non-Qualified Options”) and, in
addition, such persons may be granted awards of stock in the Company (“Awards”) and
opportunities to make direct purchases of stock in the Company (“Purchases”). Both ISOs and
Non-Qualified Options are referred to hereafter individually as an “Option” and collectively as
“Options.” Options, Awards and Purchases are referred to hereafter collectively as “Stock
Rights.”
