WESTERN COUNTRY CLUBS, INC.
1996 STOCK OPTION AND STOCK COMPENSATION PLAN
1. Purposes of and Benefits Under the Plan. This 1996 Stock Option and
Stock Compensation Plan (the "Plan") is intended to encourage stock
ownership by employees and officers (whether or not they are employees) of
and consultants to Western Country Clubs Inc. (the "Corporation"), so that
they may acquire or increase their proprietary interest in the Corporation,
and is intended to facilitate the Corporation's efforts to (i) induce
qualified persons to become employees or officers of or consultants to th
i) encourage such persons to remain in the employ of or associated with the
Corporation and to put forth maximum efforts for the success of the
Corporation. The Plan also provides the Corporation the opportunity to
compensate such persons through the issuance of shares of its Common Stock,
in lieu of cash, therefore allowing the Corporation to preserve its cash for
2. Definitions. As used in this Plan, the following words and phrases shall
have the meanings indicated:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Committee" shall mean the Compensation Committee appointed by the
Board, if one has been appointed. If no Committee has been appointed, the
term "Committee" shall mean the Board.
(c) "Common Stock" shall mean the Corporation's $.01 par value common
(d) "Employee" means any person or entity that renders bona fide
services to the Corporation, including, without limitation: (i) a person
employed by the Company; (ii) an officer or director of the Company,
(iii) a person or company engaged by the Company as a consultant or
advisor; (iv) a lawyer, law firm, accountant or accounting firm, engaged by
the Company; or (v) any other person defined as an "employee" herein.
(e) "Recipient" means any person granted an Option or awarded a Award
(a) The Plan shall be administered by the Committee. The Committee shall
have the authority in its discretion, subject to and not inconsistent with
the express provisions of the Plan, to administer the Plan and to exercise
all the powers and authorities either specifically conferred under the Plan
or necessary or advisable in the administration of the Plan, including the
authority: to grant Options and Awards; to determine the vesting schedule
and other restrictions, if any, relating to Options and Awards; to determine
the purchase price of the shares of Common Stock covered by each Option (the
"Option Price"); to determine the persons to whom, and the time or times at
which, Options and Awards shall be granted; to determine the number of
shares to be covered by each Option or Award; to interpret the Plan; to
prescribe, amend and rescind rules and regulations relating to the Plan; to
determine the terms and provisions of the Option agreements (which need not
be identical) entered into in connection with Options granted under the
Plan; and to make all other determinations deemed necessary or advisable
for the admisistration of the Plan. The Committee may delegate to one or
more of its members or to one or more agents such administrative duties as
it may deem advisable, and the Committee or any person to whom it has
delegated duties as aforesaid may employ one or more persons to render
advice with respect to any responsibility the Committee or such person may
have under the Plan.
(b) Options and Awards granted under the Plan shall be evidenced by duly
adopted resolutions of the Committee included in the minutes of the meeting
at which they are adopted or in a unanimous written consent.
(c) The Committee shall endeavor to administer the Plan and grant Options
and Awards hereunder in a manner that is compatible with the obligations of
persons subject to Section 16 of the U.S. Securities Exchange Act of 1934
(the "1934 Act"), although compliance with Section 16 is the obligation of
the Recipient, not the Corporation. Neither the Committee, the Board nor
the Corporation can assume any legal responsibility for a Recipient's
compliance with his obligations under Section 16 of the 1934 Act.
(d) No member of the Committee or the Board shall be liable for any
action taken or determination made in good faith with respect to the Plan
or any Option or Award granted hereunder.
(a) Subject to certain limitations hereinafter set forth, Options and
Awards may be granted to employees and officers (whether or not they are
employees) of and consultants to the Corporation. In determining the
persons to whom Options or Awards shall be granted and the number of shares
to be covered by each Option or Award, the Committee shall take into
account the duties of the respective persons, their present and potential
contributions to the success of the Corporation, and such other factors as
the Committee shall deem relevant to accomplish the purposes of the Plan.
(b) A Recipient shall be eligible to receive more than one grant of an
Option or Award during the term of the Plan, on the terms and subject to
the restrictions herein set forth.
5. Stock Reserved.
(a) The stock subject to Options or Awards hereunder shall be shares of
Common Stock. Such shares, in whole or in part, may be authorized but
unissued shares or shares that shall have been or that may be reacquired by
the Corporation. The aggregate number of shares of Common Stock as to
which Options and Awards may be granted from time to time under the Plan
shall not exceed 250,000, subject to adjustment as provided in Section 6(f)
(b) If any Option outstanding under the Plan for any reason expires or is
terminated without having been exercised in full, or if any Award granted
is forfeited because of vesting or other restrictions imposed at the time
of grant, the shares of Common Stock allocable to the unexercised portion
of such Option or the forfeited portion of the Award shall become available
for subsequent grants of Options and Awards under the Plan.
6. Terms and Conditions of Options. Each Option granted pursuant to the
Plan shall be evidenced by a written Option agreement between the
Corporation and the Recipient, which agreement shall be substantially in
the form of Exhibit A hereto as modified from time to time by the Committee
in its discretion, and which shall comply with and be subject to the
following terms and conditions:
(a) Number of Shares. Each Option agreement shall state the number of
shares of Common Stock covered by the Option.
(b) Option Price. Each Option agreement shall state the Option Price,
which shall be determined by the Committee subject only to the following
(1) The Option Price shall be subject to adjustment as provided in
Section 6(f) hereof.
(2) The date on which the Committee adopts a resolution expressly
granting an Option shall be considered the day on which such option is
granted, unless a future date is specified in the resolution.
(c) Term of Option. Each Option agreement shall state the period during
and times at which the Option shall be exercisable, in accordance with the
(1) The date on which the Committee adopts a resolution expressly
granting an Option shall be considered the day on which such Option is
granted, although such grant shall not be effective until the Recipient has
executed an Option agreement with respect to such Option.
(2) The exercise period of any Option shall not exceed five years from
the date of grant of the Option.
(3) The Committee shall have the authority to accelerate or extend the
exercisability of any outstanding Option at such time and under such
circumstances as it, in its sole discretion, deems appropriate. No
exercise period may be so extended to increase the term of the Option
beyond five years from the date of the grant.
(d) Method of Exercise and Medium and Time of Payment.
(1) An Option may be exercised as to any or all whole shares of Common
Stock as to which it then is exercisable, provided, however, that no Option
may be exercised as to less than 100 shares (or such number of shares as to
which the Option is then exercisable if such number of shares is less than
(2) Each exercise of an Option granted hereunder, whether in whole or in
part, shall be effected by written notice to the Secretary of the
Corporation designating the number of shares as to which the Option is
being exercised, and shall be accompanied by payment in full of the Option
Price for the number of shares so designated, together with any written
statements required by, or deemed by the Corporation's counsel to be
advisable pursuant to, any applicable securities laws.
(3) The Option Price shall be paid in cash, or in shares of Common Stock
having a fair market value equal to such Option Price, or in property or in
a combination of cash, shares and property and, subject to approval of the
Committee, may be effected in whole or in part with funds received from the
Corporation at the time of exercise as a compensatory cash payment.
(4) The Committee shall have the sole and absolute discretion to
determine whether or not property other than cash or Common Stock may be
used to purchase the shares of Common Stock hereunder and, if so, to
determine the value of the property received.
(5) The Recipient shall make provision for the withholding of taxes as
required by Paragraph 8 hereof.
(e) Transferability Restriction.
(1)(A) As a condition to the transfer of any shares of Common Stock
issued upon exercise of an Option granted under this Plan, the Corporation
may require an opinion of counsel, satisfactory to the Corporation, to the
effect that such transfer will not be in violation of the Securities Act of
1933, as amended (the "1933 Act") or any other applicable securities laws
or that such transfer has been registered under federal and all applicable
state securities laws. (B) Further, the Corporation shall be authorized
to refrain from delivering or transferring shares of Common Stock issued
under this Plan until the Committee determines that such delivery or
transfer will not violate applicable securities laws and the Recipient has
tendered to the Corporation any federal, state or local tax owed by the
Recipient as a result of exercising the Option or disposing of any Common
Stock when the Corporation has a legal liability to satisfy such tax.
(C) The Corporation shall not be liable for damages due to delay in the
delivery or issuance of any stock certificate for any reason whatsoever,
including, but not limited to, a delay caused by listing requirements of
any securities exchange or any registration requirements under the 1933
Act, the 1943 Act, or under any other state, federal or provincial law,
rule or regulation. (D) The Corporation is under no obligation to take
any action or incur any expense in order to register or qualify the
delivery or transfer of shares of Common Stock under applicable securities
laws or to perfect any exemption from such registration or qualification
unless otherwise provided in a separate written agreement. (E) Further
more, the Corporation will not be liable to any Recipient for failure to
deliver or transfer shares of Common Stock if such failure is based upon
the provisions of this paragraph.
(f) Effect of Certain Changes.
(1) If there is any change in the number of shares of outstanding Common
Stock through the declaration of stock dividends, or through a recapital-
ization resulting in stock splits or combinations or exchanges of such
shares, the number of shares of Common Stock available for Options and the
number of such shares covered by outstanding Options, and the exercise
price per share of the outstanding Options, shall be proportionately
adjusted by the Committee to reflect any increase or decrease in the number
of issued shares of Common Stock; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated.
(2) In the event of the proposed dissolution or liquidation of the
Corporation, or any corporate separation or division, including, but not
limited to, split-up, split-off or spin-off, or a merger or consolidation
of the Corporation with another corporation, the Committee may provide that
the holder of each Option then exercisable shall have the right to exercise
such Option (at its then current Option Price) solely for the kind and
amount of shares of stock and other securities, property, cash or any
combination therof receivable upon such dissolution, liquidation,
corporate separation or division , or merger or consolidationb by a
holder of the number of shares of Common Stock for which such Option might
have been exercised immediately prior to such dissolution, liquidation,
corporate separation or division, or merger or consolidation; or, in the
alternative the Committee may provide that each Option granted under the
Plan shall terminate as of a date fixed by the Committee; provided, however,
that not less than 30 days' written notice of the date so fixed shall be
given to each Recipient, who shall have the right, during the period of
30 days preceding such termination, to exercise the Option as to all or
any part of the shares of Common Stock covered thereby, including shares
as to which such Option would not otherwise be exercisable.
(3) Paragraph (2) of this Section 6(f) shall not apply to a merger or
consolidation in which the Corporation is the surviving corporation and
shares of Common Stock are not converted into or exchanged for stock,
securities of any other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any consolidation or
merger of another corporation into the Corporation in which the Corporation
is the surviving corporation and in which there is a reclassification or
change (including a change to the right to receive cash or other property)
of the shares of Common Stock (excluding a change in par value, or from no
par value to par value, or any change as a result of a subdivision or
combination, but including any change in such shares into two or more
classes or series of shares), the Committee may provide that the holder
of each Option then exercisable shall have the right to exercise such
Option solely for the kind and amount of shares of stock and other
securities (including those of any new direct or indirect parent of the
Corporation), property, cash or any combination thereof receivable upon
such reclassification, change, consolidation or merger by the holder of the
number of shares of Common Stock for which such Option might have been
(4) To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Committee, whose determination in that respect shall be final, binding and
(5) Except as expressly provided in this Section 6(f) the Recipient 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 Corporation
of shares of stock of any class, or securities convertible into shares of
stock of any class, shall not affect, and no adjustment by thereof shall be
made with respect to, the number or price of shares of Common Stock subject
to an Option. The grant of an Option pursuant to the Plan shall not affect
in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structures, or to merge or consolidate, or to dissolve, liquidate, or sell
or transfer all or any part of its business or assets.
(g) No Rights as Shareholder - Non-Distributive Intent.
(1) Neither a Recipient of an Option nor such Recipient's legal
representative, heir, legatee or distributee, shall be deemed to be the
holder of, or to have any rights of a holder with respect to, any shares
subject to such Option until after the Option is exercised and the shares
(2) 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 6(f) hereof.
(3) Upon exercise of an Option at a time when there is no registration
statement in effect under the 1933 Act relating to the shares issuable upon
exercise, shares may be issued to the Recipient only if the Recipient
represents and warrants in writing to the Corporation that the shares
purchased are being acquired for investment and not with a view to the
distribution thereof and provides the Corporation with sufficient
information to establish an exemption from the registration requirements
of the 1933 Act.
(4) No shares shall be issued upon the exercise of an Option unless and
until there shall have been compliance with any then applicable requirements
of the U.S. Securities and Exchange Commission or any other regulatory
agencies having jurisdiction over the Corporation.
(h) Other Provisions. Option Agreements authorized under the Plan may
contain such other provisions as the Committee shall deem advisable,
including, without limitation, the imposition of restrictions upon the
vesting and exercise of an Option.
7. Grant of Stock Awards. In addition to, or in lieu of, the grant of an
Option, the Committee may grant Awards.
(a) At the time of grant of a Award, the Committee may impose a vesting
period of up to five years, and such other restrictions which it deems
appropriate. Unless otherwise directed by the Committee at the time of
grant of a Award, the Recipient shall be considered a shareholder of the
Corporation as to the Award shares which have vested in the grantee at any
time regardless of any forfeiture provisions which have not yet arisen.
(b) The grant of a Award and the issuance and delivery of shares of
Common Stock pursuant thereto shall be subject to approval by the
Corporation's counsel of all legal matters in connection therewith,
including compliance with the requirements of the 1933 Act, the 1934 Act,
other applicable securities laws, rules and regulations, and the
requirements of any stock exchanges upon which the Common Stock then may be
listed. Any certificates prepared to evidence Common Stock issued pursuant
to an Award grant shall bear legends as the Corporation's counsel may seem
necessary or advisable.
8. Agreement by Recipient Regarding Withholding Taxes. Each Recipient
agrees that the Corporation, to the extent permitted or required by law,
shall deduct a sufficient number of shares due to the Recipient upon
exercise of the Option or the grant of a Award to allow the Corporation to
pay federal, provincial, state and local taxes of any kind required by law
to be withheld upon the exercise of such Option or payment of such Award
from any payment of any kind otherwise due to the Recipient. The Corpora-
tion shall not be obligated to advise any Recipient of the existence of any
tax or the amount which the Corporation will be so required to withhold.
9. Term of Plan. Options and Awards may be granted under this Plan from
time to time within a period of five years from the date the Plan is
adopted by the Board.
10. Amendment and Termination of the Plan. The Committee at any time and
from time to time may suspend, terminate, modify or amend the Plan. No
suspension, termination, modification or amendment of the Plan may adversely
affect any Option or Award previously granted, unless the written consent of
the Recipient is obtained.
11. Assumption. Subject to Section 6, the terms and conditions of any
outstanding Options granted pursuant to this Plan shall be assumed by, be
binding upon and shall inure to the benefit of any successor corporation to
the Corporation and shall, to the extent applicable, continue to be
governed by the terms and conditions of this Plan. Such successor
corporation may, but shall not be obligated to, assume this Plan.
12. Termination of Right of Action. Every right of action arising out of
or in connection with the Plan by or on behalf of the Corporation, or by
any shareholder of the Corporation against any past, present or future
member of the Board or the Committee, or against any employee, or by an
employee (past, present or future) against the Corporation, irrespective of
the place where an action may be brought and of the place of residence of
any such shareholder, director or employee, will cease and be barred by
the expiration of three years from the date of the act or omission in
respect of which such right of action is alleged to have arisen or such
shorter period as may be provided by law.
13. Tax Litigation. The Corporation shall have the right, but not the
obligation, to contest, at its expense, any tax ruling or decision,
administrative or judicial, on any issue which is related to the Plan and
which the Board believes to be important to holders of Options or Common
Stock issued pursuant to Awards granted under the Plan and to conduct any
such contest or any litigation arising therefrom to a final decision.
14. Adoption. This Plan was approved by the Board of Directors of the
Corporation effective December 8, 1995.
FORM OF STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT made as of this ___ day of _______, 199__, by and
between Western Country Clubs, Inc., a Colorado corporation (the
"Corporation"), and ________________ (the "Recipient").
In accordance with the Corporation's 1996 Stock Option and Stock Award Plan
(the "Plan"), a copy of which is attached hereto and is incorporated herein
by reference, the Corporation desires, in connection with the services of
the Recipient, to provide the Recipient with an opportunity to acquire
shares of the Corporation's $.01 par value common stock ("Common Stock") on
favorable terms and thereby increase the Recipient's proprietary interest
in the Corporation and incentive to put forth maximum efforts for the
success of the business of the Corporation. Capitalized terms used but not
defined herein are used as defined in the Plan.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein set forth and other good and valuable consideration, the
Corporation and the Recipient agree as follows:
1. Confirmation of Grant of Option. Pursuant to a determination of the
Committee or, in the absence of a Committee, by the Board of Directors
of the Corporation made on ___________, 19__ (the "Date of Grant"), the
Corporation, subject to the terms of the Plan and of this Agreement,
confirms that the Recipient has been irrevocably granted on the Date of
Grant, as a matter of separate inducement and agreement, a Stock Option
(the "Option) exercisable to purchase an aggregate of _______ shares
of Common Stock on the terms and conditions herein set forth, subject
to adjustment as provided in Paragraph 8 hereof.
2. Option Price. The Option Price of shares of Common Stock covered by
the Option will be $_____ per share (the Option Price") subject to
adjustment as provided in Paragraph 8 hereof.
3. Exercise of Option. Except as otherwise provided herein or in Section
6 of the Plan, the Option may be exercised in whole or in part at any
time during the term of the Option. The Option may not be exercised at
any one time as to fewer than 100 shares (or such number of shares as to
which the Opton is then exercisable if such number of shares is less than
100). The Option may be exercised by written notice to the Secretary of
the Corporation accompanied by payment in full of the Option Price as
provided in Section 6(d) of the Plan.
4. Term of Option. The term of the Option will be through __________, ____,
subject to earlier termination or cancellation as provided in this
Agreement. The holder of the Option will not have any rights to dividends
or any other rights of a shareholder with respect to any shares of Common
Stock subject to the Option until such shares shall have been issued (as
evidenced by the appropriate transfer agent of the Corporation) upon
purchase of such shares through exercise of the Option.
5. Adjustments. The Option shall be subject to adjustment upon the
occurrence of certain events as set forth in Section 6(f) of the Plan.
6. No Registration Obligation. The Recipient understands that the Option
is not registered under the 1933 Act and, unless by separate written
agreement, the Corporation has no obligation to so register the Option or
any of the shares of Common Stock subject to and issuable upon the exercise
of the Option, although it may from time to time register under the 1933
Act the shares issuable upon exercise of Options granted pursuant to the
Plan. The Recipient represents that the Option is being acquired for the
Recipient's own account and that unless registered by the Corporation, the
shares of Common Stock issued on exercise of the Option will be acquired
by the Recipient for investment. The Recipient understands that the Option
is, and the underlying securities may be, issued to the Recipient in
reliance upon exemptions from the 1933 Act, and acknowledges and agrees
that all certificates for the shares issued upon exercise of the Option
will bear the following legends unless such shares are registered under
the 1933 Act prior to their issuance:
The shares represented by this Certificate have not been registered under
the Securities Act of 1933 (the "1933 Act"), and are "restricted securities"
as that term is defined in Rule 144 under the 1933 Act. The shares may not
be offered for sale, sold or otherwise transferred except pursuant to an
effective registration statement under the 1933 Act or pursuant to an
exemption from registration under the 1933 Act, the availability of which
is to be established to the satisfaction of the Company.
The Recipient further understands and agrees that the Option may be
exercised only if at the time of such exercise the underlying shares are
registered and/or the Recipient and the Corporation are able to establish
the existence of an exemption from registration under the 1933 Act and
applicable state or other laws.
7. Notices. Each notice relating to this Agreement will be in writing and
delivered in person or by certified mail to the proper address. Notices to
the Corporation shall be addressed to the Corporation, attention: President,
at _______________________________, or at such other address as may
constitute the Corporation's principal place of business at the time, with
a copy to: ____________________, _______________________. Notices to the
Recipient or other person or persons then entitled to exercise the Option
shall be addressed to the Recipient or such other person of persons at the
Recipient's address below specified. Anyone to whom a notice may be
given under this Agreement may designate a new address by notice to that
effect given pursuant to this Paragraph 10.
8. Approval of Counsel. The exercise of the Option and the issuance and
delivery of shares of Common Stock pursuant thereto shall be subject to
approval by the Corporation's counsel of all legal matters in connection
therewith, including compliance with the requirements of the 1933 Act, the
Securities Exchange Act of 1934, as amended, applicable state and other
securities laws, the rules and regulations thereunder, and the requirements
of any national securities exchange(s) upon which the Common Stock then
may be listed.
9. Benefits of Agreement. This Agreement will inure to the benefit of and
be binding upon each successor and assignee of the Corporation. All
obligations imposed upon the Recipient and all rights granted to the
Corporation under this Agreement will be binding upon the Recipient's heirs,
legal representatives and successors.
10. Effect of Governmental and Other Regulations. The exercise of the
Option and the Corporation's obligation to sell and deliver shares upon the
exercise of the Option are subject to all applicable federal and state laws,
rules and regulations, and to such approvals by any regulatory or
governmental agency which may, in the opinion of counsel for the
Corporation, be required.
11. Incorporation of the Plan. The Plan is attached hereto and incorporated
herein by reference. In the event that any provision in this Agreement
conflicts with a provision in the Plan, the provisions of the Plan shall
Executed in the name and on behalf of the Corporation by one of its duly
authorized officers and by the Recipient all as of the date first above
WESTERN COUNTRY CLUBS, INC.
Date ______________, 19__ By_______________,
The undersigned Recipient has read and understands the terms of this Option
Agreement and the attached Plan and hereby agrees to comply therewith.
Date ______________, 19__ _______________________________
Signature of Recipient
Tax ID Number:__________________