-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N/veiI/eZUk3UDeU7GYx9zMVLp7yvQe2gpBNIJiGxSaWpA6Y+72pq/e2FzkHJgS5 BqXhIC2GJb2CVkbkLW07CA== 0000912057-99-001478.txt : 19991020 0000912057-99-001478.hdr.sgml : 19991020 ACCESSION NUMBER: 0000912057-99-001478 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 19991019 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: MORTONS RESTAURANT GROUP INC CENTRAL INDEX KEY: 0000883981 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 133490149 STATE OF INCORPORATION: DE FISCAL YEAR END: 0103 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-42940 FILM NUMBER: 99730280 BUSINESS ADDRESS: STREET 1: 3333 NEW HYDE PK RD STE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 BUSINESS PHONE: 5166271515 MAIL ADDRESS: STREET 1: 3333 NEW HYDE PARK ROAD STREET 2: SUITE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 FORMER COMPANY: FORMER CONFORMED NAME: QUANTUM RESTAURANTS GROUP INC DATE OF NAME CHANGE: 19950315 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BERNSTEIN ALLEN J CENTRAL INDEX KEY: 0000939248 STANDARD INDUSTRIAL CLASSIFICATION: [] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 3333 NEW HYDE PARK RD STREET 2: STE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 BUSINESS PHONE: 5166271515 MAIL ADDRESS: STREET 1: 3333 NEW HYDE PARK RD STREET 2: STE 210 CITY: NEW HYDE PARK STATE: NY ZIP: 11042 SC 13D/A 1 SCHEDULE 13D/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------- SCHEDULE 13D/A (Amendment No. 1) Under the Securities Exchange Act of 1934* Morton's Restaurant Group, Inc. (Name of Issuer) Common Stock, $.01 par value (Title of Class of Securities) 74763T 10 8 (CUSIP Number) Allen J. Bernstein 3333 New Hyde Park Road, Suite 210 New Hyde Park, New York 11042 (516) 627-1515 (authorized to receive notices and communications) May 12, 1999 (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ] *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required in the remainder of this cover page shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 (Act) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 13D CUSIP No. 74763T 10 8 - ------------------------------------------------------------------------------- (1) NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Allen J. Bernstein - ------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) / / (b) / / - ------------------------------------------------------------------------------- (3) SEC USE ONLY - ------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** PF - ------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) / / - ------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION United States - ------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER 408,705 SHARES ---------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER -0- OWNED BY ---------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER 408,705 REPORTING ---------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER -0- - ------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 408,705 - ------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** / / - ------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.7% - ------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** IN - ------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! The Schedule 13D, initially filed on December 12, 1992 (the "Schedule 13D"), by Allen J. Bernstein, relating to the Common Stock, par value $0.01 per share (the "Common Stock"), of Morton's Restaurant Group, Inc., a Delaware corporation (the "Company"), is hereby amended and restated by this Amendment No. 1 to the Schedule 13D. Item 1. Security and Issuer. The security to which this Amendment No. 1 to the Schedule 13D relates is the Common Stock. The principal executive offices of the Company are at 3333 New Hyde Park Road, Suite 210, New Hyde Park, New York 11042. Item 2. Identity and Background. Item 2 is hereby amended and restated in its entirety as follows: (a) This statement is filed by Allen J. Bernstein. (b)-(c) Mr. Bernstein is Chief Executive Officer, President and Chairman of the Board of Directors of the Company, a restaurant holding company located at the address set forth in Item 1 hereof. (d) Mr. Bernstein has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) during the last five years. (e) Mr. Bernstein has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Bernstein is a citizen of the United States. Item 3. Source and Amount of Funds and Other Consideration. Item 3 is hereby amended and restated in its entirety as follows: As of the date hereof, Mr. Bernstein owns 271,205 shares of Common Stock, 190,000 shares of which he purchased prior to August 1989 for an aggregate purchase price of $57,000 ($.30 per share) and 81,205 shares which were acquired upon the exercise of stock options on March 11, 1999 for an aggregate purchase price of $5,684 ($.07 per share). All of these purchases were provided by Mr. Bernstein's personal funds. The Company has granted to Mr. Bernstein options to purchase 330,000 shares of Common Stock at exercise prices ranging from $10.75 to $19.4375 per share. Pursuant to such options, Mr. Bernstein currently has, or within 60 days of the date of this Amendment No. 1 will have, the ability to acquire up to 137,500 at exercise prices ranging from $10.75 to $15.125 per share. Item 4. Purpose of the Transaction. Item 4 is hereby restated in its entirety as follows: Mr. Bernstein acquired the Common Stock for investment purposes only. Mr. Bernstein will continue to evaluate his ownership and voting position in the Company and may consider the following future courses of action: (i) continuing to hold the Common Stock for investment; (ii) disposing of all or a portion of the Common Stock in open market sales or in privately-negotiated transactions; (iii) acquiring additional shares of the Common Stock in the open market or in privately-negotiated transactions; or (iv) hedging transactions (other than short sales ) with respect to the Common Stock. Mr. Bernstein has not as yet determined which of the courses of action specified in this paragraph he may ultimately take. Mr. Bernstein's future actions with regard to this investment are dependent on his evaluation of a variety of circumstances affecting the Company in the future, including the market price of the Company's Common Stock, the company's prospects and Mr. Bernstein's portfolio. Except as set forth above, Mr. Bernstein has no present intent or proposals that relate to or would result in: (i) the acquisition by any person of additional securities of the Company, or the disposition of securities of the Company; (ii) an extraordinary corporate transaction, such as merger reorganization or liquidation, involving the Company or any of its subsidiaries; (ii) a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; (iv) any change in the present Board of Directors or management of the Company, including any plans or proposals to change the number or term of Directors or to fill any vacancies on the Board; (v) any material change in the present capitalization or dividend policy of the Company; (vi) any other material change in the Company's business or corporate structure; (vii) changes in the Company's charter, bylaws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; (viii) causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) a class of equity securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or (x) any action similar to those enumerated above. However, such plans or proposals may have been considered, and may from time to time hereafter be considered, by Mr. Bernstein in his capacity as a director of the Company. In addition, Mr. Bernstein may, in the future, acquire or transfer (by gift or otherwise) additional securities of the Company for family financial planning, charitable and other purposes. Mr. Bernstein reserves the right to determine in the future whether to change the purpose or purposes described above or whether to adopt plans or proposals of the type specified above. Item 5. Interest in Securities of the Issuer. Item 5 is hereby amended and restated in its entirety as follows: (a) As of the date hereof, Mr. Bernstein owns directly 271,205 shares of Common Stock, constituting approximately 4.4% of the shares outstanding. By reason of the provisions of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, Mr. Bernstein may be deemed to own beneficially the 137,500 shares of Common Stock which may be purchased by Mr. Bernstein under the options referred to in Item 3 hereof, constituting approximately 2.2% of the shares outstanding, and, together with the 271,205 shares which Mr. Bernstein owns directly, 6.7% of the shares outstanding or 408,705 shares. The percentages used herein are based upon 6,137,035 shares of Common Stock issued and outstanding at the close of business on May 12, 1999, which number includes (i) the 5,999,535 shares stated to be issued and outstanding plus (ii) 137,500 shares which may be purchased by Mr. Bernstein under the options referred to in Item 3 hereof. (b) Mr. Bernstein has the power to vote and to dispose of the shares of Common Stock owned by him. (c) None. (d) No person other than Mr. Bernstein has the right to receive or the power to direct the receipt of dividends from or the proceeds of sale of such shares of Common Stock. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Item 6 is hereby restated in its entirety as follows: The Company has issued options to Mr. Bernstein, as referred to in Item 3 hereof. Such options are evidenced by various Incentive and Non-qualified Stock Option Agreements dated as of July 14, 1992, May 12, 1994, January 30, 1996, May 1, 1997, January 22, 1998 and October 15, 1998, each of which is filed as an exhibit hereto and incorporated by reference. Except as described above, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between Mr. Bernstein and any person with respect to any securities of the Company, including but not limited to transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions or profits or loss, or the giving or withholding of proxies. Item 7. Materials to be Filed as Exhibits. Item 7 is hereby restated in its entirety as follows: 1. There is filed herewith as Exhibit 1 an Option Agreement dated as of March 30, 1992, between the Company and Mr. Bernstein. 2. There is filed herewith as Exhibit 2 an Incentive Stock Option Agreement dated as of July 14, 1992, between the Company and Mr. Bernstein. 3. There is filed herewith as Exhibit 3 a Nonqualified Stock Option Agreement dated as of July 14, 1992, between the Company and Mr. Bernstein. 4. There is filed herewith as Exhibit 4 an Incentive Stock Option Agreement dated as of May 12, 1994, between the Company and Mr. Bernstein. 5. There is filed herewith as Exhibit 5 an Incentive Stock Option Agreement dated as of January 30, 1996, between the Company and Mr. Bernstein. 6. There is filed herewith as Exhibit 6 a Non-Qualified Stock Option Agreement dated as of January 30, 1996, between the Company and Mr. Bernstein. 7. There is filed herewith as Exhibit 7 an Incentive Stock Option Agreement dated as of May 1, 1997, between the Company and Mr. Bernstein. 8. There is filed herewith as Exhibit 8 a Non-Qualified Stock Option Agreement dated as of May 1, 1997, between the Company and Mr. Bernstein. 9. There is filed herewith as Exhibit 9 an Incentive Stock Option Agreement dated as of January 22, 1998, between the Company and Mr. Bernstein. 10. There is filed herewith as Exhibit 10 a Non-Qualified Stock Option Agreement dated as of January 22, 1998, between the Company and Mr. Bernstein. 11. There is filed herewith as Exhibit 11 a Non-Qualified Stock Option Agreement dated as of October 15, 1998, between the Company and Mr. Bernstein. SIGNATURES After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. /s/ Allen J. Bernstein -------------------------------------------- Allen J. Bernstein DATED: October 15, 1999 Exhibit Index -------------
Exhibit Description Number of Document Exhibit Location - ------ ----------- ---------------- 1 Option Agreement dated as of March Filed with the 30, 1992, between the Company and Schedule 13D Allen J. Bernstein on December 12, 1992 2 Incentive Stock Option Agreement Filed with the dated as of July 14, 1992, between Schedule 13D the Company and Allen J. Bernstein on December 12, 1992 3 Nonqualified Stock Option Agreement Filed with the dated as of July 14, 1992, between Schedule 13D the Company and Allen J. Bernstein on December 12, 1992 4 Incentive Stock Option Agreement Exhibit 4 dated as of May 12, 1994, between the Company and Mr. Bernstein. 5. Incentive Stock Option Agreement Exhibit 5 dated as of January 30, 1996, between the Company and Mr. Bernstein. 6. Non-Qualified Stock Option Agreement Exhibit 6 dated as of January 30, 1996, between the Company and Mr. Bernstein. 7. Incentive Stock Option Agreement Exhibit 7 dated as of May 1, 1997, between the Company and Mr. Bernstein. 8. Non-Qualified Stock Option Agreement Exhibit 8 dated as of May 1, 1997, between the Company and Mr. Bernstein. 9. Incentive Stock Option Agreement Exhibit 9 dated as of January 22, 1998, between the Company and Mr. Bernstein. 10. Non-Qualified Stock Option Agreement Exhibit 10 dated as of January 22, 1998, between the Company and Mr. Bernstein. 11. Non-Qualified Stock Option Agreement Exhibit 11 dated as of October 15, 1998, between the Company and Mr. Bernstein.
EX-4 2 EXHIBIT 4 Exhibit 4 QUANTUM RESTAURANT GROUP, INC. INCENTIVE STOCK OPTION AGREEMENT THIS INCENTIVE STOCK OPTION AGREEMENT, made as of the 12th day of May, 1994, by and between Quantum Restaurant Group, Inc. (the "Corporation"), a Delaware corporation, and Allen J. Bernstein (the "Participant"). WHEREAS, the Participant owns, at the time the Option is granted hereunder, no more than ten percent (10%) of total combined voting power of all classes of stock of the Corporation, or its parent or subsidiary corporation. WHEREAS, the Corporation desires to give the Participant an opportunity to participate in the long-term growth of the Corporation by granting to the Participant options to purchase the Corporation's Common Stock pursuant to the terms and conditions of the Quantum Restaurant Group, Inc. 1991 Amended and Restated Stock Option Plan and this Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows: 1. DEFINITIONS. "Administrator" means a committee of the Board comprised of two or more disinterested directors, within the meaning of Securities and Exchange Commission Rule 16b-3, duly appointed to administer the Plan. "Board" means the Board of Directors of the Corporation. "Cause" means a finding by the Administrator based upon reasonable evidence presented in writing to the Participant that the Participant engaged in a criminal act or willful misconduct inconsistent with his employment responsibilities or contractual relationship with the Corporation or any subsidiary corporation. "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means Common Stock ($.01 par value) of the Corporation. "Corporation" means Quantum Restaurant Group, Inc. "Disability" means the inability, in the opinion of a physician chosen by the Administrator, of the Participant by reason of any physical or mental ailment to perform the duties of the position in which he was employed by the Corporation or any subsidiary corporation when such disability commenced. "Effective Date" means the date specified in Section 15 of the Plan as being the effective date thereof. "Employment" means the Participant's employment with the Corporation, a parent or subsidiary corporation of the Corporation, or such other corporation as provided in section 422 of the Code. "Fair Market Value" means, on any day, with respect to Common Stock which is (i) listed on a United States securities exchange, the last sales price of such stock on such day on the largest United States securities exchange on which such stock shall have traded on such day, or if such day is not a day on which a United States securities exchange is open for trading, on the immediately preceding day on which such securities exchange was so open, (ii) not listed on a United States securities exchange but is included in the NASDAQ National Market System, the last sales price of such stock on such day, or if such day is not a trading day, on the immediately preceding trading day, or (iii) neither listed on a United States securities exchange nor included in the NASDAQ National Market System, the fair market value of such stock as determined from time to time by the Board in its sole discretion. "Option" means the incentive stock option granted to the Participant under this Agreement and pursuant to the Plan. "Plan" means the Quantum Restaurant Group, Inc. 1991 Amended and Restated Stock Option Plan, as amended from time to time. 2. GRANT OF OPTION. The Corporation hereby grants to the Participant an Option to purchase 50,000 shares of Common Stock at an option price of $9.875 per share, which is not less than the Fair Market Value of the Common Stock at the time the Option is granted hereunder, subject to the terms hereof (the "Option Price"). The Option granted hereby is intended to be an "incentive stock option" within the meaning of section 422 of the Code and the Agreement shall be construed and interpreted in accordance with such intention. 3. OPTION TERMS. (a) The Option shall become exercisable in accordance with the following Schedule:
Years from Date of Grant Amount Exercisable -------- ------------------ One 0% Two 25% Three 50% Four 75% Five 100%
(b) Notwithstanding the provisions of paragraph (a) of this Section 3, the Option shall not be exercisable after the expiration of ten (10) years from the date the Option is granted hereunder. Further, in the event the Participant's Employment terminates for any reason whatsoever, whether because of his death, Disability, termination with or without Cause, voluntary termination or otherwise, the Option, (i) to the extent it has not theretofore become exercisable, shall terminate as of the date such Employment terminates, and (ii) to the extent it has become exercisable but has not been exercised, shall terminate three (3) months after the date such Employment terminates. 4. NON-ASSIGNABILITY. The Option granted hereby and any right arising thereunder shall not be transferable other than by will or by the laws of descent and distribution. During the lifetime of the Participant, the Option shall be exercisable only by him. Any Option or portion thereof exercisable at the Participant's death that is transferred by will or by the laws of descent and distribution, shall be exercisable in accordance with the terms of this Agreement by the executor or administrator, as the case may be, of the Participant's estate for a period of three (3) months after the date of the Participant's death and shall then terminate. If the Option is not exercisable at the date of the Participant's death it shall terminate as of such date. 5. TRANSFER RESTRICTIONS. The Participant understands that the Common Stock issuable upon the exercise of this Option will not be registered under the Securities Act of 1933, as amended (the "Act"). The Participant acknowledges that the Common Stock will be purchased for investment only, and that it may not be sold or transferred in the absence of either an effective registration statement under the Act or an opinion of experienced securities counsel, acceptable in form and content to the Corporation in its sole discretion, which states that registration is not required under the Act. By executing this Agreement, the Participant agrees to refrain from re-offering, reselling, or otherwise disposing of any of the Common Stock acquired upon the exercise of the Option in any manner which would violate the Act or any other federal or state securities law. The Participant further understands that in the event the Common Stock issuable upon the exercise of the Option is not covered by an effective registration statement under the Act, the Corporation may imprint on the certificate representing said Common Stock the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Act or the securities laws of any State: "The shares of Quantum Restaurant Group, Inc. Common Stock represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended. Such shares may not be sold, transferred, pledged or hypothecated unless the registration provisions of said act have been complied with or unless Quantum Restaurant Group, Inc. has received an opinion of counsel satisfactory to Quantum Restaurant Group, Inc. that such registration is not required." 6. MODE OF EXERCISE. The Option shall be exercised by the Participant giving to the Corporation written notice stating (i) the number of shares with respect to which the Option is being exercised, (ii) the exercise price for such shares, and (iii) the method of payment. At the option of the Participant, the Option Price may be paid (i) in cash, (ii) by delivery of Common Stock already owned by the Participant for a period of not less than six (6) months and having a Fair Market Value on the date of such delivery equal to the Option Price, or (iii) by delivery of a combination of cash and such Common Stock having a total Fair Market Value on the date of such delivery equal to the Option Price. 7. OPTION SUBJECT TO SECURITIES AND OTHER REGULATIONS. The Option granted hereunder and the obligation of the Corporation to sell and deliver shares under such Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any exercise of the Option until completion of any stock exchange listing, or other qualification of such shares under any state or federal law, rule or regulation as the Corporation may consider appropriate, and may require the Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations. Upon demand by the Administrator, the Participant shall deliver to the Administrator at the time of any exercise of the Option a written representation that the shares to be acquired upon the exercise of the Option are being acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of the Option shall be a condition precedent to the right of the Participant to purchase any shares. 8. ANTIDILUTION ADJUSTMENTS. In the event of any change in the Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares subject to the Option and the purchase price per share thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Participant. 9. PLAN CONTROLLING. This Agreement is irrevocable and is intended to conform in all respects with the Plan. Inconsistencies between this Agreement and the Plan shall be resolved according to the terms of the Plan. The Participant acknowledges receipt of a copy of the Plan. 10. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have any rights as a stockholder with respect to any shares subject to the Option prior to the date on which he is recorded as the holder of such shares on the records of the Corporation. 11. TAXES. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to the Option including, but not limited to (i) reducing the number of shares of Common Stock otherwise deliverable, based upon their Fair Market Value on the date of exercise, to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under this Agreement, (ii) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to the Participant, or (iii) requiring the Participant, beneficiary or legal representative to pay to the Corporation the amount required to be withheld or to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock. 12. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board or the Administrator nor for any mistake of judgment made in good faith. 13. GOVERNING LAW. This Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State. THE PLAN AND THIS AGREEMENT SHALL NOT BE CONSTRUED AS GIVING THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION, NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE CORPORATION TO TERMINATE THE PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE. Executed as of the day and year first above written. QUANTUM RESTAURANT GROUP, INC. By: /s/ Thomas J. Baldwin ----------------------------- PARTICIPANT /s/ Allen J. Bernstein ----------------------------- Allen J. Bernstein EX-5 3 EXHIBIT 5 Exhibit 5 QUANTUM RESTAURANT GROUP, INC. INCENTIVE STOCK OPTION AGREEMENT THIS INCENTIVE STOCK OPTION AGREEMENT, made as of the 30th day of January, 1996, by and between Quantum Restaurant Group, Inc. (the "Corporation"), a Delaware corporation, and Allen J. Bernstein (the "Participant"). WHEREAS, the Participant owns, at the time the Option is granted hereunder, no more than ten percent (10%) of total combined voting power of all classes of stock of the Corporation, or its parent or subsidiary corporation. WHEREAS, the Corporation desires to give the Participant an opportunity to participate in the long-term growth of the Corporation by granting to the Participant options to purchase the Corporation's Common Stock pursuant to the terms and conditions of the Quantum Restaurant Group, Inc. Stock Option Plan and this Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows: 1. DEFINITIONS. "Administrator" means a committee of the Board comprised of two or more disinterested directors, within the meaning of Securities and Exchange Commission Rule 16b-3, duly appointed to administer the Plan. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control a corporation if such person possesses, directly or indirectly, the power to (i) vote 15% or more of the securities having ordinary voting power for the election of directors of such corporation, or (ii) direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Board" means the Board of Directors of the Corporation. "Cause" means a finding by the Administrator based upon reasonable evidence presented in writing to the Participant that the Participant engaged in a criminal act or willful misconduct inconsistent with his employment responsibilities or contractual relationship with the Corporation or any subsidiary corporation. "Change in Control" means any of the following events: (a) the acquisition by any Person who was not an Affiliate of the Corporation as of December 15, 1994 of beneficial ownership, directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Corporation, except pursuant to a public offering of securities of the Corporation; (b) the sale or other transfer of all or substantially all of the assets of the Corporation to a Person who was not an Affiliate of the Corporation as of December 15, 1994; (c) a merger, consolidation or other reorganization of the Corporation with a Person who was not an Affiliate of the Corporation as of December 15, 1994 and in which the Corporation is not the surviving entity; or (d) individuals who, as of December 15, 1994, made up the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a director after December 15, 1994 whose election, or nomination for election by the Corporation's stockholders was approved by a vote or written consent of at least two-thirds of the directors then comprising the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation (as such terms are used in Rule 14a-11 under the Securities Exchange Act of 1934, as amended). "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means Common Stock ($.01 par value) of the Corporation. "Corporation" means Quantum Restaurant Group, Inc. "Disability" means the inability, in the opinion of a physician chosen by the Administrator, of the Participant by reason of any physical or mental ailment to perform the duties of the position in which he was employed by the Corporation or any subsidiary corporation when such disability commenced. "Effective Date" means the date specified in Section 15 of the Plan as being the effective date thereof. "Employment" means the Participant's employment with the Corporation, a parent or subsidiary corporation of the Corporation, or such other corporation as provided in section 422 of the Code. "Fair Market Value" means, on any day, with respect to Common Stock which is (i) listed on a United States securities exchange, the last sales price of such stock on such day on the largest United States securities exchange on which such stock shall have traded on such day, or if such day is not a day on which a United States securities exchange is open for trading, on the immediately preceding day on which such securities exchange was so open, (ii) not listed on a United States securities exchange but is included in the NASDAQ National Market System, the last sales price of such stock on such day, or if such day is not a trading day, on the immediately preceding trading day, or (iii) neither listed on a United States securities exchange nor included in the NASDAQ National Market System, the fair market value of such stock as determined from time to time by the Board in its sole discretion. "Option" means the incentive stock option granted to the Participant under this Agreement and pursuant to the Plan. "Person" means any individual, partnership, firm, trust, corporation or similar entity. When two or more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of the Corporation, such partnership, limited partnership, syndicate or group shall be deemed a "Person." "Plan" means the Quantum Restaurant Group, Inc. Stock Option Plan, as amended from time to time. 2. GRANT OF OPTION. The Corporation hereby grants to the Participant an Option to purchase 33,333 shares of Common Stock at an option price of $12.00 per share, which is not less than the Fair Market Value of the Common Stock at the time the Option is granted hereunder, subject to the terms hereof (the "Option Price"). The Option granted hereby is intended to be an "incentive stock option" within the meaning of section 422 of the Code and the Agreement shall be construed and interpreted in accordance with such intention. 3. OPTION TERMS. (a) The Option shall become exercisable in accordance with the following Schedule:
Years From Date of Grant Amount Exercisable ------------------------ ------------------ One 0% Two 25% Three 50% Four 75% Five 100%
(b) Notwithstanding the provisions of paragraph (a) of this Section 3, the Option shall not be exercisable after the expiration of ten (10) years from the date the Option is granted hereunder. Further, in the event the Participant's Employment terminates for any reason whatsoever, whether because of his death, Disability, termination with or without Cause, voluntary termination or otherwise, the Option, (i) to the extent it has not theretofore become exercisable, shall terminate as of the date such Employment terminates, and (ii) to the extent it has become exercisable but has not been exercised, shall terminate three (3) months after the date such Employment terminates. 4. NON-ASSIGNABILITY. The Option granted hereby and any right arising thereunder shall not be transferable other than by will or by the laws of descent and distribution. During the lifetime of the Participant, the Option shall be exercisable only by him. Any Option or portion thereof exercisable at the Participant's death that is transferred by will or by the laws of descent and distribution, shall be exercisable in accordance with the terms of this Agreement by the executor or administrator, as the case may be, of the Participant's estate for a period of three (3) months after the date of the Participant's death and shall then terminate. If the Option is not exercisable at the date of the Participant's death it shall terminate as of such date. 5. EFFECT OF A CHANGE OF CONTROL. Notwithstanding the provisions of Section 3 hereof, if there should be a Change of Control of the Corporation, the Corporation shall give the Participant written notice of such Change of Control as promptly as practicable (and, if possible, prior to the effective date thereof) and the Option, to the extent not currently exercisable, shall become immediately exercisable as of the effective date of such Change of Control. 6. TRANSFER RESTRICTIONS. The Participant understands that the Common Stock issuable upon the exercise of this Option will not be registered under the Securities Act of 1933, as amended (the "Act"). The Participant acknowledges that the Common Stock will be purchased for investment only, and that it may not be sold or transferred in the absence of either an effective registration statement under the Act or an opinion of experienced securities counsel, acceptable in form and content to the Corporation in its sole discretion, which states that registration is not required under the Act. By executing this Agreement, the Participant agrees to refrain from re-offering, reselling, or otherwise disposing of any of the Common Stock acquired upon the exercise of the Option in any manner which would violate the Act or any other federal or state securities law. The Participant further understands that in the event the Common Stock issuable upon the exercise of the Option is not covered by an effective registration statement under the Act, the Corporation may imprint on the certificate representing said Common Stock the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Act or the securities laws of any State: "The shares of Quantum Restaurant Group, Inc. Common Stock represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended. Such shares may not be sold, transferred, pledged or hypothecated unless the registration provisions of said act have been complied with or unless Quantum Restaurant Group, Inc. has received an opinion of counsel satisfactory to Quantum Restaurant Group, Inc. that such registration is not required." 7. MODE OF EXERCISE. The Option shall be exercised by the Participant giving to the Corporation written notice stating (i) the number of shares with respect to which the Option is being exercised, (ii) the exercise price for such shares, and (iii) the method of payment. At the option of the Participant, the Option Price may be paid (i) in cash, (ii) by delivery of Common Stock already owned by the Participant for a period of not less than six (6) months and having a Fair Market Value on the date of such delivery equal to the Option Price, or (iii) by delivery of a combination of cash and such Common Stock having a total Fair Market Value on the date of such delivery equal to the Option Price. 8. OPTION SUBJECT TO SECURITIES AND OTHER REGULATIONS. The Option granted hereunder and the obligation of the Corporation to sell and deliver shares under such Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any exercise of the Option until completion of any stock exchange listing, or other qualification of such shares under any state or federal law, rule or regulation as the Corporation may consider appropriate, and may require the Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations. Upon demand by the Administrator, the Participant shall deliver to the Administrator at the time of any exercise of the Option a written representation that the shares to be acquired upon the exercise of the Option are being acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of the Option shall be a condition precedent to the right of the Participant to purchase any shares. 9. ANTIDILUTION ADJUSTMENTS. In the event of any change in the Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares subject to the Option and the purchase price per share thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Participant. 10. PLAN CONTROLLING. This Agreement is irrevocable and is intended to conform in all respects with the Plan. Inconsistencies between this Agreement and the Plan shall be resolved according to the terms of the Plan. The Participant acknowledges receipt of a copy of the Plan. 11. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have any rights as a stockholder with respect to any shares subject to the Option prior to the date on which he is recorded as the holder of such shares on the records of the Corporation. 12. TAXES. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to the Option including, but not limited to (i) reducing the number of shares of Common Stock otherwise deliverable, based upon their Fair Market Value on the date of exercise, to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under this Agreement, (ii) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to the Participant, or (iii) requiring the Participant, beneficiary or legal representative to pay to the Corporation the amount required to be withheld or to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock. 13. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board or the Administrator nor for any mistake of judgment made in good faith. 14. GOVERNING LAW. This Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State. THE PLAN AND THIS AGREEMENT SHALL NOT BE CONSTRUED AS GIVING THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION, NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE CORPORATION TO TERMINATE THE PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE. Executed as of the day and year first above written. QUANTUM RESTAURANT GROUP, INC. By: /s/ Thomas J. Baldwin --------------------------- PARTICIPANT /s/ Allen J. Bernstein --------------------------- Allen J. Bernstein EX-6 4 EXHIBIT 6 Exhibit 6 QUANTUM RESTAURANT GROUP, INC. NONQUALIFIED STOCK OPTION AGREEMENT THIS NONQUALIFIED STOCK OPTION AGREEMENT, made as of the 30th day of January, 1996, by and between Quantum Restaurant Group, Inc. (the "Corporation"), a Delaware corporation, and Allen J. Bernstein. WHEREAS, the Participant owns, at the time the Option is granted hereunder, no more than ten percent (10%) of total combined voting power of all classes of stock of the Corporation, or its parent or subsidiary corporation. WHEREAS, the Corporation desires to give the Participant an opportunity to participate in the long-term growth of the Corporation by granting to the Participant options to purchase the Corporation's Common Stock pursuant to the terms and conditions of the Quantum Restaurant Group, Inc. Stock Option Plan and this Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows: 1. DEFINITIONS. "Administrator" means a committee of the Board comprised of two or more disinterested directors, within the meaning of Securities and Exchange Commission Rule 16b-3, duly appointed to administer the Plan. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control a corporation if such person possesses, directly or indirectly, the power to (i) vote 15% or more of the securities having ordinary voting power for the election of directors of such corporation, or (ii) direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Board" means the Board of Directors of the Corporation. "Cause" means a finding by the Administrator based upon reasonable evidence presented in writing to the Participant that the Participant engaged in a criminal act or willful misconduct inconsistent with his employment responsibilities or contractual relationship with the Corporation or any subsidiary corporation. "Change in Control" means any of the following events: (a) the acquisition by any Person who was not an Affiliate of the Corporation as of December 15, 1994 of beneficial ownership, directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Corporation, except pursuant to a public offering of securities of the Corporation; (b) the sale or other transfer of all or substantially all of the assets of the Corporation to a Person who was not an Affiliate of the Corporation as of December 15, 1994; (c) a merger, consolidation or other reorganization of the Corporation with a Person who was not an Affiliate of the Corporation as of December 15, 1994 and in which the Corporation is not the surviving entity; or (d) individuals who, as of December 15, 1994, made up the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a director after December 15, 1994 whose election, or nomination for election by the Corporation's stockholders was approved by a vote or written consent of at least two-thirds of the directors then comprising the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation (as such terms are used in Rule 14a-11 under the Securities Exchange Act of 1934, as amended). "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means Common Stock ($.01 par value) of the Corporation. "Corporation" means Quantum Restaurant Group, Inc. "Disability" means the inability, in the opinion of a physician chosen by the Administrator, of the Participant by reason of any physical or mental ailment to perform the duties of the position in which he was employed by the Corporation or any subsidiary corporation when such disability commenced. "Effective Date" means the date specified in Section 15 of the Plan as being the effective date thereof. "Employment" means the Participant's employment with the Corporation, a parent or subsidiary corporation of the Corporation, or such other corporation as provided in section 422 of the Code. "Fair Market Value" means, on any day, with respect to Common Stock which is (i) listed on a United States securities exchange, the last sales price of such stock on such day on the largest United States securities exchange on which such stock shall have traded on such day, or if such day is not a day on which a United States securities exchange is open for trading, on the immediately preceding day on which such securities exchange was so open, (ii) not listed on a United States securities exchange but is included in the NASDAQ National Market System, the last sales price of such stock on such day, or if such day is not a trading day, on the immediately preceding trading day, or (iii) neither listed on a United States securities exchange nor included in the NASDAQ National Market System, the fair market value of such stock as determined from time to time by the Board in its sole discretion. "Option" means the nonqualified stock option granted to the Participant under this Agreement and pursuant to the Plan. "Person" means any individual, partnership, firm, trust, corporation or similar entity. When two or more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of the Corporation, such partnership, limited partnership, syndicate or group shall be deemed a "Person." "Plan" means the Quantum Restaurant Group, Inc. Stock Option Plan, as amended from time to time. 2. GRANT OF OPTION. The Corporation hereby grants to the Participant an Option to purchase 16,667 shares of Common Stock at an option price of $12.00 per share, subject to the terms hereof (the "Option Price"). The Option granted hereby is not intended to be an "incentive stock option" within the meaning of section 422 of the Code and the Agreement shall be construed and interpreted in accordance with such intention. 3. OPTION TERMS. (a) The Option shall become exercisable in accordance with the following Schedule:
Years From Date of Grant Amount Exercisable ------------------------ ------------------ One 0% Two 25% Three 50% Four 75% Five 100%
(b) Notwithstanding the provisions of paragraph (a) of this Section 3, the Option shall not be exercisable after the expiration of ten (10) years from the date the Option is granted hereunder. Further, in the event the Participant's Employment terminates for any reason whatsoever, whether because of his death, Disability, termination with or without Cause, voluntary termination or otherwise, the Option, (i) to the extent it has not theretofore become exercisable, shall terminate as of the date such Employment terminates, and (ii) to the extent it has become exercisable but has not been exercised, shall terminate three (3) months after the date such Employment terminates. 4. NON-ASSIGNABILITY. The Option granted hereby and any right arising thereunder shall not be transferable other than by will or by the laws of descent and distribution. During the lifetime of the Participant, the Option shall be exercisable only by him. Any Option or portion thereof exercisable at the Participant's death that is transferred by will or by the laws of descent and distribution, shall be exercisable in accordance with the terms of this Agreement by the executor or administrator, as the case may be, of the Participant's estate for a period of three (3) months after the date of the Participant's death and shall then terminate. If the Option is not exercisable at the date of the Participant's death it shall terminate as of such date. 5. EFFECT OF A CHANGE OF CONTROL. Notwithstanding the provisions of Section 3 hereof, if there should be a Change of Control of the Corporation, the Corporation shall give the Participant written notice of such Change of Control as promptly as practicable (and, if possible, prior to the effective date thereof) and the Option, to the extent not currently exercisable, shall become immediately exercisable as of the effective date of such Change of Control. 6. TRANSFER RESTRICTIONS. The Participant understands that the Common Stock issuable upon the exercise of this Option will not be registered under the Securities Act of 1933, as amended (the "Act"). The Participant acknowledges that the Common Stock will be purchased for investment only, and that it may not be sold or transferred in the absence of either an effective registration statement under the Act or an opinion of experienced securities counsel, acceptable in form and content to the Corporation in its sole discretion, which states that registration is not required under the Act. By executing this Agreement, the Participant agrees to refrain from re-offering, reselling, or otherwise disposing of any of the Common Stock acquired upon the exercise of the Option in any manner which would violate the Act or any other federal or state securities law. The Participant further understands that in the event the Common Stock issuable upon the exercise of the Option is not covered by an effective registration statement under the Act, the Corporation may imprint on the certificate representing said Common Stock the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Act or the securities laws of any State: "The shares of Quantum Restaurant Group, Inc. Common Stock represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended. Such shares may not be sold, transferred, pledged or hypothecated unless the registration provisions of said act have been complied with or unless Quantum Restaurant Group, Inc. has received an opinion of counsel satisfactory to Quantum Restaurant Group, Inc. that such registration is not required." 7. MODE OF EXERCISE. The Option shall be exercised by the Participant giving to the Corporation written notice stating (i) the number of shares with respect to which the Option is being exercised, (ii) the exercise price for such shares, and (iii) the method of payment. At the option of the Participant, the Option Price may be paid (i) in cash, (ii) by delivery of Common Stock already owned by the Participant for a period of not less than six (6) months and having a Fair Market Value on the date of such delivery equal to the Option Price, or (iii) by delivery of a combination of cash and such Common Stock having a total Fair Market Value on the date of such delivery equal to the Option Price. 8. OPTION SUBJECT TO SECURITIES AND OTHER REGULATIONS. The Option granted hereunder and the obligation of the Corporation to sell and deliver shares under such Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any exercise of the Option until completion of any stock exchange listing, or other qualification of such shares under any state or federal law, rule or regulation as the Corporation may consider appropriate, and may require the Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations. Upon demand by the Administrator, the Participant shall deliver to the Administrator at the time of any exercise of the Option a written representation that the shares to be acquired upon the exercise of the Option are being acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of the Option shall be a condition precedent to the right of the Participant to purchase any shares. 9. ANTIDILUTION ADJUSTMENTS. In the event of any change in the Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares subject to the Option and the purchase price per share thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Participant. 10. PLAN CONTROLLING. This Agreement is irrevocable and is intended to conform in all respects with the Plan. Inconsistencies between this Agreement and the Plan shall be resolved according to the terms of the Plan. The Participant acknowledges receipt of a copy of the Plan. 11. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have any rights as a stockholder with respect to any shares subject to the Option prior to the date on which he is recorded as the holder of such shares on the records of the Corporation. 12. TAXES. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to the Option including, but not limited to (i) reducing the number of shares of Common Stock otherwise deliverable, based upon their Fair Market Value on the date of exercise, to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under this Agreement, (ii) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to the Participant, or (iii) requiring the Participant, beneficiary or legal representative to pay to the Corporation the amount required to be withheld or to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock. 13. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board or the Administrator nor for any mistake of judgment made in good faith. 14. GOVERNING LAW. This Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State. THE PLAN AND THIS AGREEMENT SHALL NOT BE CONSTRUED AS GIVING THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION, NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE CORPORATION TO TERMINATE THE PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE. Executed as of the day and year first above written. QUANTUM RESTAURANT GROUP, INC. By: /s/ Thomas J. Baldwin --------------------------- PARTICIPANT /s/ Allen J. Bernstein --------------------------- Allen J. Bernstein EX-7 5 EXHIBIT 7 Exhibit 7 MORTON'S RESTAURANT GROUP, INC. INCENTIVE STOCK OPTION AGREEMENT THIS INCENTIVE STOCK OPTION AGREEMENT, made as of the 1st day of May, 1997, by and between Morton's Restaurant Group, Inc. (the "Corporation"), a Delaware corporation, and Allen J. Bernstein (the "Participant"). WHEREAS, the Participant owns, at the time the Option is granted hereunder, no more than ten percent (10%) of total combined voting power of all classes of stock of the Corporation, or its parent or subsidiary corporation. WHEREAS, the Corporation desires to give the Participant an opportunity to participate in the long-term growth of the Corporation by granting to the Participant options to purchase the Corporation's Common Stock pursuant to the terms and conditions of the Morton's Restaurant Group, Inc. Stock Option Plan and this Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows: 1. DEFINITIONS. "Administrator" means a committee of the Board comprised of two or more disinterested directors, within the meaning of Securities and Exchange Commission Rule 16b-3, duly appointed to administer the Plan. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control a corporation if such person possesses, directly or indirectly, the power to (i) vote 15% or more of the securities having ordinary voting power for the election of directors of such corporation, or (ii) direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Board" means the Board of Directors of the Corporation. "Cause" means a finding by the Administrator based upon reasonable evidence presented in writing to the Participant that the Participant engaged in a criminal act or willful misconduct inconsistent with his employment responsibilities or contractual relationship with the Corporation or any subsidiary corporation. "Change in Control" means any of the following events: (a) the acquisition by any Person who was not an Affiliate of the Corporation as of December 15, 1994 of beneficial ownership, directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Corporation, except pursuant to a public offering of securities of the Corporation; (b) the sale or other transfer of all or substantially all of the assets of the Corporation to a Person who was not an Affiliate of the Corporation as of December 15, 1994; (c) a merger, consolidation or other reorganization of the Corporation with a Person who was not an Affiliate of the Corporation as of December 15, 1994 and in which the Corporation is not the surviving entity; or (d) individuals who, as of December 15, 1994, made up the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a director after December 15, 1994 whose election, or nomination for election by the Corporation's stockholders was approved by a vote or written consent of at least two-thirds of the directors then comprising the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation (as such terms are used in Rule 14a-11 under the Securities Exchange Act of 1934, as amended). "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means Common Stock ($.01 par value) of the Corporation. "Corporation" means Morton's Restaurant Group, Inc. "Disability" means the inability, in the opinion of a physician chosen by the Administrator, of the Participant by reason of any physical or mental ailment to perform the duties of the position in which he was employed by the Corporation or any subsidiary corporation when such disability commenced. "Employment" means the Participant's employment with the Corporation, a parent or subsidiary corporation of the Corporation, or such other corporation as provided in section 422 of the Code. "Fair Market Value" means, on any day, with respect to Common Stock which is (i) listed on a United States securities exchange, the last sales price of such stock on such day on the largest United States securities exchange on which such stock shall have traded on such day, or if such day is not a day on which a United States securities exchange is open for trading, on the immediately preceding day on which such securities exchange was so open, (ii) not listed on a United States securities exchange but is included in the NASDAQ National Market System, the last sales price of such stock on such day, or if such day is not a trading day, on the immediately preceding trading day, or (iii) neither listed on a United States securities exchange nor included in the NASDAQ National Market System, the fair market value of such stock as determined from time to time by the Board in its sole discretion. "Option" means the incentive stock option granted to the Participant under this Agreement and pursuant to the Plan. "Person" means any individual, partnership, firm, trust, corporation or similar entity. When two or more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of the Corporation, such partnership, limited partnership, syndicate or group shall be deemed a "Person." "Plan" means the Morton's Restaurant Group, Inc. Stock Option Plan (formerly known as the Quantum Restaurant Group, Inc. Stock Option Plan), as amended from time to time. 2. GRANT OF OPTION. The Corporation hereby grants to the Participant an Option to purchase 26,000 shares of Common Stock at an option price of $15.125 per share, which is not less than the Fair Market Value of the Common Stock at the time the Option is granted hereunder, subject to the terms hereof (the "Option Price"). The Option granted hereby is intended to be an "incentive stock option" within the meaning of section 422 of the Code and the Agreement shall be construed and interpreted in accordance with such intention. 3. OPTION TERMS. (a) The Option shall become exercisable in accordance with the following Schedule:
Years From Date of Grant Amount Exercisable ------------------------ ------------------ One 0% Two 25% Three 50% Four 75% Five 100%
(b) Notwithstanding the provisions of paragraph (a) of this Section 3, the Option shall not be exercisable after the expiration of ten (10) years from the date the Option is granted hereunder. Further, in the event the Participant's Employment terminates for any reason whatsoever, whether because of his death, Disability, termination with or without Cause, voluntary termination or otherwise, the Option, (i) to the extent it has not theretofore become exercisable, shall terminate as of the date such Employment terminates, and (ii) to the extent it has become exercisable but has not been exercised, shall terminate three (3) months after the date such Employment terminates. 4. NON-ASSIGNABILITY. The Option granted hereby and any right arising thereunder shall not be transferable other than by will or by the laws of descent and distribution. During the lifetime of the Participant, the Option shall be exercisable only by him. Any Option or portion thereof exercisable at the Participant's death that is transferred by will or by the laws of descent and distribution, shall be exercisable in accordance with the terms of this Agreement by the executor or administrator, as the case may be, of the Participant's estate for a period of three (3) months after the date of the Participant's death and shall then terminate. If the Option is not exercisable at the date of the Participant's death it shall terminate as of such date. 5. EFFECT OF A CHANGE OF CONTROL. Notwithstanding the provisions of Section 3 hereof, if there should be a Change of Control of the Corporation, the Corporation shall give the Participant written notice of such Change of Control as promptly as practicable (and, if possible, prior to the effective date thereof) and the Option, to the extent not currently exercisable, shall become immediately exercisable as of the effective date of such Change of Control. 6. TRANSFER RESTRICTIONS. The Participant understands that the Common Stock issuable upon the exercise of this Option will not be registered under the Securities Act of 1933, as amended (the "Act"). The Participant acknowledges that the Common Stock will be purchased for investment only, and that it may not be sold or transferred in the absence of either an effective registration statement under the Act or an opinion of experienced securities counsel, acceptable in form and content to the Corporation in its sole discretion, which states that registration is not required under the Act. By executing this Agreement, the Participant agrees to refrain from re-offering, reselling, or otherwise disposing of any of the Common Stock acquired upon the exercise of the Option in any manner which would violate the Act or any other federal or state securities law. The Participant further understands that in the event the Common Stock issuable upon the exercise of the Option is not covered by an effective registration statement under the Act, the Corporation may imprint on the certificate representing said Common Stock the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Act or the securities laws of any State: "The shares of Morton's Restaurant Group, Inc. Common Stock represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended. Such shares may not be sold, transferred, pledged or hypothecated unless the registration provisions of said act have been complied with or unless Morton's Restaurant Group, Inc. has received an opinion of counsel satisfactory to Morton's Restaurant Group, Inc. that such registration is not required." 7. MODE OF EXERCISE. The Option shall be exercised by the Participant giving to the Corporation written notice stating (i) the number of shares with respect to which the Option is being exercised, (ii) the exercise price for such shares, and (iii) the method of payment. At the option of the Participant, the Option Price may be paid (i) in cash, (ii) by delivery of Common Stock already owned by the Participant for a period of not less than six (6) months and having a Fair Market Value on the date of such delivery equal to the Option Price, or (iii) by delivery of a combination of cash and such Common Stock having a total Fair Market Value on the date of such delivery equal to the Option Price. 8. OPTION SUBJECT TO SECURITIES AND OTHER REGULATIONS. The Option granted hereunder and the obligation of the Corporation to sell and deliver shares under such Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any exercise of the Option until completion of any stock exchange listing, or other qualification of such shares under any state or federal law, rule or regulation as the Corporation may consider appropriate, and may require the Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations. Upon demand by the Administrator, the Participant shall deliver to the Administrator at the time of any exercise of the Option a written representation that the shares to be acquired upon the exercise of the Option are being acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of the Option shall be a condition precedent to the right of the Participant to purchase any shares. 9. ANTIDILUTION ADJUSTMENTS. In the event of any change in the Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares subject to the Option and the purchase price per share thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Participant. 10. PLAN CONTROLLING. This Agreement is irrevocable and is intended to conform in all respects with the Plan. Inconsistencies between this Agreement and the Plan shall be resolved according to the terms of the Plan. The Participant acknowledges receipt of a copy of the Plan. 11. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have any rights as a stockholder with respect to any shares subject to the Option prior to the date on which he is recorded as the holder of such shares on the records of the Corporation. 12. TAXES. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to the Option including, but not limited to (i) reducing the number of shares of Common Stock otherwise deliverable, based upon their Fair Market Value on the date of exercise, to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under this Agreement, (ii) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to the Participant, or (iii) requiring the Participant, beneficiary or legal representative to pay to the Corporation the amount required to be withheld or to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock. 13. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board or the Administrator nor for any mistake of judgment made in good faith. 14. GOVERNING LAW. This Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State. THE PLAN AND THIS AGREEMENT SHALL NOT BE CONSTRUED AS GIVING THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION, NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE CORPORATION TO TERMINATE THE PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE. Executed as of the day and year first above written. MORTON'S RESTAURANT GROUP, INC. By: /s/ Thomas J. Baldwin --------------------------- PARTICIPANT /s/ Allen J. Bernstein --------------------------- Allen J. Bernstein EX-8 6 EXHIBIT 8 Exhibit 8 MORTON'S RESTAURANT GROUP, INC. NONQUALIFIED STOCK OPTION AGREEMENT THIS NONQUALIFIED STOCK OPTION AGREEMENT, made as of the 1st day of May, 1997, by and between Morton's Restaurant Group, Inc. (the "Corporation"), a Delaware corporation, and Allen J. Bernstein (the "Participant"). WHEREAS, the Participant owns, at the time the Option is granted hereunder, no more than ten percent (10%) of total combined voting power of all classes of stock of the Corporation, or its parent or subsidiary corporation. WHEREAS, the Corporation desires to give the Participant an opportunity to participate in the long-term growth of the Corporation by granting to the Participant options to purchase the Corporation's Common Stock pursuant to the terms and conditions of the Morton's Restaurant Group, Inc. Stock Option Plan and this Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows: 1. DEFINITIONS. "Administrator" means a committee of the Board comprised of two or more disinterested directors, within the meaning of Securities and Exchange Commission Rule 16b-3, duly appointed to administer the Plan. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control a corporation if such person possesses, directly or indirectly, the power to (i) vote 15% or more of the securities having ordinary voting power for the election of directors of such corporation, or (ii) direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Board" means the Board of Directors of the Corporation. "Cause" means a finding by the Administrator based upon reasonable evidence presented in writing to the Participant that the Participant engaged in a criminal act or willful misconduct inconsistent with his employment responsibilities or contractual relationship with the Corporation or any subsidiary corporation. "Change in Control" means any of the following events: (a) the acquisition by any Person who was not an Affiliate of the Corporation as of December 15, 1994 of beneficial ownership, directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Corporation, except pursuant to a public offering of securities of the Corporation; (b) the sale or other transfer of all or substantially all of the assets of the Corporation to a Person who was not an Affiliate of the Corporation as of December 15, 1994; (c) a merger, consolidation or other reorganization of the Corporation with a Person who was not an Affiliate of the Corporation as of December 15, 1994 and in which the Corporation is not the surviving entity; or (d) individuals who, as of December 15, 1994, made up the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a director after December 15, 1994 whose election, or nomination for election by the Corporation's stockholders was approved by a vote or written consent of at least two-thirds of the directors then comprising the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation (as such terms are used in Rule 14a-11 under the Securities Exchange Act of 1934, as amended). "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means Common Stock ($.01 par value) of the Corporation. "Corporation" means Morton's Restaurant Group, Inc. "Disability" means the inability, in the opinion of a physician chosen by the Administrator, of the Participant by reason of any physical or mental ailment to perform the duties of the position in which he was employed by the Corporation or any subsidiary corporation when such disability commenced. "Employment" means the Participant's employment with the Corporation, a parent or subsidiary corporation of the Corporation, or such other corporation as provided in section 422 of the Code. "Fair Market Value" means, on any day, with respect to Common Stock which is (i) listed on a United States securities exchange, the last sales price of such stock on such day on the largest United States securities exchange on which such stock shall have traded on such day, or if such day is not a day on which a United States securities exchange is open for trading, on the immediately preceding day on which such securities exchange was so open, (ii) not listed on a United States securities exchange but is included in the NASDAQ National Market System, the last sales price of such stock on such day, or if such day is not a trading day, on the immediately preceding trading day, or (iii) neither listed on a United States securities exchange nor included in the NASDAQ National Market System, the fair market value of such stock as determined from time to time by the Board in its sole discretion. "Option" means the nonqualified stock option granted to the Participant under this Agreement and pursuant to the Plan. "Person" means any individual, partnership, firm, trust, corporation or similar entity. When two or more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of the Corporation, such partnership, limited partnership, syndicate or group shall be deemed a "Person." "Plan" means the Morton's Restaurant Group, Inc. Stock Option Plan (formerly known as the Quantum Restaurant Group, Inc. Stock Option Plan), as amended from time to time. 2. GRANT OF OPTION. The Corporation hereby grants to the Participant an Option to purchase 24,000 shares of Common Stock at an option price of $15.125 per share, subject to the terms hereof (the "Option Price"). The Option granted hereby is not intended to be an "incentive stock option" within the meaning of section 422 of the Code and the Agreement shall be construed and interpreted in accordance with such intention. 3. OPTION TERMS. (a) The Option shall become exercisable in accordance with the following Schedule:
Years From Date of Grant Amount Exercisable ------------------------ ------------------ One 0% Two 25% Three 50% Four 75% Five 100%
(b) Notwithstanding the provisions of paragraph (a) of this Section 3, the Option shall not be exercisable after the expiration of ten (10) years from the date the Option is granted hereunder. Further, in the event the Participant's Employment terminates for any reason whatsoever, whether because of his death, Disability, termination with or without Cause, voluntary termination or otherwise, the Option, (i) to the extent it has not theretofore become exercisable, shall terminate as of the date such Employment terminates, and (ii) to the extent it has become exercisable but has not been exercised, shall terminate three (3) months after the date such Employment terminates. 4. NON-ASSIGNABILITY. The Option granted hereby and any right arising thereunder shall not be transferable other than by will or by the laws of descent and distribution. During the lifetime of the Participant, the Option shall be exercisable only by him. Any Option or portion thereof exercisable at the Participant's death that is transferred by will or by the laws of descent and distribution, shall be exercisable in accordance with the terms of this Agreement by the executor or administrator, as the case may be, of the Participant's estate for a period of three (3) months after the date of the Participant's death and shall then terminate. If the Option is not exercisable at the date of the Participant's death it shall terminate as of such date. 5. EFFECT OF A CHANGE OF CONTROL. Notwithstanding the provisions of Section 3 hereof, if there should be a Change of Control of the Corporation, the Corporation shall give the Participant written notice of such Change of Control as promptly as practicable (and, if possible, prior to the effective date thereof) and the Option, to the extent not currently exercisable, shall become immediately exercisable as of the effective date of such Change of Control. 6. TRANSFER RESTRICTIONS. The Participant understands that the Common Stock issuable upon the exercise of this Option will not be registered under the Securities Act of 1933, as amended (the "Act"). The Participant acknowledges that the Common Stock will be purchased for investment only, and that it may not be sold or transferred in the absence of either an effective registration statement under the Act or an opinion of experienced securities counsel, acceptable in form and content to the Corporation in its sole discretion, which states that registration is not required under the Act. By executing this Agreement, the Participant agrees to refrain from re-offering, reselling, or otherwise disposing of any of the Common Stock acquired upon the exercise of the Option in any manner which would violate the Act or any other federal or state securities law. The Participant further understands that in the event the Common Stock issuable upon the exercise of the Option is not covered by an effective registration statement under the Act, the Corporation may imprint on the certificate representing said Common Stock the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Act or the securities laws of any State: "The shares of Morton's Restaurant Group, Inc. Common Stock represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended. Such shares may not be sold, transferred, pledged or hypothecated unless the registration provisions of said act have been complied with or unless Morton's Restaurant Group, Inc. has received an opinion of counsel satisfactory to Morton's Restaurant Group, Inc. that such registration is not required." 7. MODE OF EXERCISE. The Option shall be exercised by the Participant giving to the Corporation written notice stating (i) the number of shares with respect to which the Option is being exercised, (ii) the exercise price for such shares, and (iii) the method of payment. At the option of the Participant, the Option Price may be paid (i) in cash, (ii) by delivery of Common Stock already owned by the Participant for a period of not less than six (6) months and having a Fair Market Value on the date of such delivery equal to the Option Price, or (iii) by delivery of a combination of cash and such Common Stock having a total Fair Market Value on the date of such delivery equal to the Option Price. 8. OPTION SUBJECT TO SECURITIES AND OTHER REGULATIONS. The Option granted hereunder and the obligation of the Corporation to sell and deliver shares under such Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any exercise of the Option until completion of any stock exchange listing, or other qualification of such shares under any state or federal law, rule or regulation as the Corporation may consider appropriate, and may require the Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations. Upon demand by the Administrator, the Participant shall deliver to the Administrator at the time of any exercise of the Option a written representation that the shares to be acquired upon the exercise of the Option are being acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of the Option shall be a condition precedent to the right of the Participant to purchase any shares. 9. ANTIDILUTION ADJUSTMENTS. In the event of any change in the Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares subject to the Option and the purchase price per share thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Participant. 10. PLAN CONTROLLING. This Agreement is irrevocable and is intended to conform in all respects with the Plan. Inconsistencies between this Agreement and the Plan shall be resolved according to the terms of the Plan. The Participant acknowledges receipt of a copy of the Plan. 11. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have any rights as a stockholder with respect to any shares subject to the Option prior to the date on which he is recorded as the holder of such shares on the records of the Corporation. 12. TAXES. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to the Option including, but not limited to (i) reducing the number of shares of Common Stock otherwise deliverable, based upon their Fair Market Value on the date of exercise, to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under this Agreement, (ii) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to the Participant, or (iii) requiring the Participant, beneficiary or legal representative to pay to the Corporation the amount required to be withheld or to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock. 13. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board or the Administrator nor for any mistake of judgment made in good faith. 14. GOVERNING LAW. This Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State. THE PLAN AND THIS AGREEMENT SHALL NOT BE CONSTRUED AS GIVING THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION, NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE CORPORATION TO TERMINATE THE PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE. Executed as of the day and year first above written. MORTON'S RESTAURANT GROUP, INC. By: /s/ Thomas J. Baldwin --------------------------- PARTICIPANT /s/ Allen J. Bernstein --------------------------- Allen J. Bernstein EX-9 7 EXHIBIT 9 Exhibit 9 MORTON'S RESTAURANT GROUP, INC. INCENTIVE STOCK OPTION AGREEMENT THIS INCENTIVE STOCK OPTION AGREEMENT, made as of the 22nd day of January, 1998, by and between Morton's Restaurant Group, Inc. (the "Corporation"), a Delaware corporation, and Allen J. Bernstein (the "Participant"). WHEREAS, the Participant owns, at the time the Option is granted hereunder, no more than ten percent (10%) of total combined voting power of all classes of stock of the Corporation, or its parent or subsidiary corporation. WHEREAS, the Corporation desires to give the Participant an opportunity to participate in the long-term growth of the Corporation by granting to the Participant options to purchase the Corporation's Common Stock pursuant to the terms and conditions of the Morton's Restaurant Group, Inc. Stock Option Plan and this Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows: 1. DEFINITIONS. "Administrator" means a committee of the Board comprised of two or more disinterested directors, within the meaning of Securities and Exchange Commission Rule 16b-3, duly appointed to administer the Plan. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control a corporation if such person possesses, directly or indirectly, the power to (i) vote 15% or more of the securities having ordinary voting power for the election of directors of such corporation, or (ii) direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Board" means the Board of Directors of the Corporation. "Cause" means a finding by the Administrator based upon reasonable evidence presented in writing to the Participant that the Participant engaged in a criminal act or willful misconduct inconsistent with his employment responsibilities or contractual relationship with the Corporation or any subsidiary corporation. "Change in Control" means any of the following events: (a) the acquisition by any Person who was not an Affiliate of the Corporation as of December 15, 1994 of beneficial ownership, directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Corporation, except pursuant to a public offering of securities of the Corporation; (b) the sale or other transfer of all or substantially all of the assets of the Corporation to a Person who was not an Affiliate of the Corporation as of December 15, 1994; (c) a merger, consolidation or other reorganization of the Corporation with a Person who was not an Affiliate of the Corporation as of December 15, 1994 and in which the Corporation is not the surviving entity; or (d) individuals who, as of December 15, 1994, made up the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a director after December 15, 1994 whose election, or nomination for election by the Corporation's stockholders was approved by a vote or written consent of at least two-thirds of the directors then comprising the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation (as such terms are used in Rule 14a-11 under the Securities Exchange Act of 1934, as amended). "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means Common Stock ($.01 par value) of the Corporation. "Corporation" means Morton's Restaurant Group, Inc. "Disability" means the inability, in the opinion of a physician chosen by the Administrator, of the Participant by reason of any physical or mental ailment to perform the duties of the position in which he was employed by the Corporation or any subsidiary corporation when such disability commenced. "Employment" means the Participant's employment with the Corporation, a parent or subsidiary corporation of the Corporation, or such other corporation as provided in section 422 of the Code. "Fair Market Value" means, on any day, with respect to Common Stock which is (i) listed on a United States securities exchange, the last sales price of such stock on such day on the largest United States securities exchange on which such stock shall have traded on such day, or if such day is not a day on which a United States securities exchange is open for trading, on the immediately preceding day on which such securities exchange was so open, (ii) not listed on a United States securities exchange but is included in the NASDAQ National Market System, the last sales price of such stock on such day, or if such day is not a trading day, on the immediately preceding trading day, or (iii) neither listed on a United States securities exchange nor included in the NASDAQ National Market System, the fair market value of such stock as determined from time to time by the Board in its sole discretion. "Option" means the incentive stock option granted to the Participant under this Agreement and pursuant to the Plan. "Person" means any individual, partnership, firm, trust, corporation or similar entity. When two or more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of the Corporation, such partnership, limited partnership, syndicate or group shall be deemed a "Person." "Plan" means the Morton's Restaurant Group, Inc. Stock Option Plan (formerly known as the Quantum Restaurant Group, Inc. Stock Option Plan), as amended from time to time. 2. GRANT OF OPTION. The Corporation hereby grants to the Participant an Option to purchase 20,500 shares of Common Stock at an option price of $19.4375 per share, which is not less than the Fair Market Value of the Common Stock at the time the Option is granted hereunder, subject to the terms hereof (the "Option Price"). The Option granted hereby is intended to be an "incentive stock option" within the meaning of section 422 of the Code and the Agreement shall be construed and interpreted in accordance with such intention. 3. OPTION TERMS. (a) The Option shall become exercisable in accordance with the following Schedule:
Years From Date of Grant Amount Exercisable ------------------------ ------------------ One 0% Two 25% Three 50% Four 75% Five 100%
(b) Notwithstanding the provisions of paragraph (a) of this Section 3, the Option shall not be exercisable after the expiration of ten (10) years from the date the Option is granted hereunder. Further, in the event the Participant's Employment terminates for any reason whatsoever, whether because of his death, Disability, termination with or without Cause, voluntary termination or otherwise, the Option, (i) to the extent it has not theretofore become exercisable, shall terminate as of the date such Employment terminates, and (ii) to the extent it has become exercisable but has not been exercised, shall terminate three (3) months after the date such Employment terminates. 4. NON-ASSIGNABILITY. The Option granted hereby and any right arising thereunder shall not be transferable other than by will or by the laws of descent and distribution. During the lifetime of the Participant, the Option shall be exercisable only by him. Any Option or portion thereof exercisable at the Participant's death that is transferred by will or by the laws of descent and distribution, shall be exercisable in accordance with the terms of this Agreement by the executor or administrator, as the case may be, of the Participant's estate for a period of three (3) months after the date of the Participant's death and shall then terminate. If the Option is not exercisable at the date of the Participant's death it shall terminate as of such date. 5. EFFECT OF A CHANGE OF CONTROL. Notwithstanding the provisions of Section 3 hereof, if there should be a Change of Control of the Corporation, the Corporation shall give the Participant written notice of such Change of Control as promptly as practicable (and, if possible, prior to the effective date thereof) and the Option, to the extent not currently exercisable, shall become immediately exercisable as of the effective date of such Change of Control. 6. TRANSFER RESTRICTIONS. The Participant understands that the Common Stock issuable upon the exercise of this Option will not be registered under the Securities Act of 1933, as amended (the "Act"). The Participant acknowledges that the Common Stock will be purchased for investment only, and that it may not be sold or transferred in the absence of either an effective registration statement under the Act or an opinion of experienced securities counsel, acceptable in form and content to the Corporation in its sole discretion, which states that registration is not required under the Act. By executing this Agreement, the Participant agrees to refrain from re-offering, reselling, or otherwise disposing of any of the Common Stock acquired upon the exercise of the Option in any manner which would violate the Act or any other federal or state securities law. The Participant further understands that in the event the Common Stock issuable upon the exercise of the Option is not covered by an effective registration statement under the Act, the Corporation may imprint on the certificate representing said Common Stock the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Act or the securities laws of any State: "The shares of Morton's Restaurant Group, Inc. Common Stock represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended. Such shares may not be sold, transferred, pledged or hypothecated unless the registration provisions of said act have been complied with or unless Morton's Restaurant Group, Inc. has received an opinion of counsel satisfactory to Morton's Restaurant Group, Inc. that such registration is not required." 7. MODE OF EXERCISE. The Option shall be exercised by the Participant giving to the Corporation written notice stating (i) the number of shares with respect to which the Option is being exercised, (ii) the exercise price for such shares, and (iii) the method of payment. At the option of the Participant, the Option Price may be paid (i) in cash, (ii) by delivery of Common Stock already owned by the Participant for a period of not less than six (6) months and having a Fair Market Value on the date of such delivery equal to the Option Price, or (iii) by delivery of a combination of cash and such Common Stock having a total Fair Market Value on the date of such delivery equal to the Option Price. 8. OPTION SUBJECT TO SECURITIES AND OTHER REGULATIONS. The Option granted hereunder and the obligation of the Corporation to sell and deliver shares under such Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any exercise of the Option until completion of any stock exchange listing, or other qualification of such shares under any state or federal law, rule or regulation as the Corporation may consider appropriate, and may require the Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations. Upon demand by the Administrator, the Participant shall deliver to the Administrator at the time of any exercise of the Option a written representation that the shares to be acquired upon the exercise of the Option are being acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of the Option shall be a condition precedent to the right of the Participant to purchase any shares. 9. ANTIDILUTION ADJUSTMENTS. In the event of any change in the Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares subject to the Option and the purchase price per share thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Participant. 10. PLAN CONTROLLING. This Agreement is irrevocable and is intended to conform in all respects with the Plan. Inconsistencies between this Agreement and the Plan shall be resolved according to the terms of the Plan. The Participant acknowledges receipt of a copy of the Plan. 11. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have any rights as a stockholder with respect to any shares subject to the Option prior to the date on which he is recorded as the holder of such shares on the records of the Corporation. 12. TAXES. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to the Option including, but not limited to (i) reducing the number of shares of Common Stock otherwise deliverable, based upon their Fair Market Value on the date of exercise, to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under this Agreement, (ii) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to the Participant, or (iii) requiring the Participant, beneficiary or legal representative to pay to the Corporation the amount required to be withheld or to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock. 13. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board or the Administrator nor for any mistake of judgment made in good faith. 14. GOVERNING LAW. This Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State. THE PLAN AND THIS AGREEMENT SHALL NOT BE CONSTRUED AS GIVING THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION, NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE CORPORATION TO TERMINATE THE PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE. Executed as of the day and year first above written. MORTON'S RESTAURANT GROUP, INC. By: /s/ Thomas J. Baldwin --------------------------- PARTICIPANT /s/ Allen J. Bernstein --------------------------- Allen J. Bernstein EX-10 8 EXHIBIT 10 Exhibit 10 MORTON'S RESTAURANT GROUP, INC. NONQUALIFIED STOCK OPTION AGREEMENT THIS NONQUALIFIED STOCK OPTION AGREEMENT, made as of the 22nd day of January, 1998, by and between Morton's Restaurant Group, Inc. (the "Corporation"), a Delaware corporation, and Allen J. Bernstein (the "Participant"). WHEREAS, the Participant owns, at the time the Option is granted hereunder, no more than ten percent (10%) of total combined voting power of all classes of stock of the Corporation, or its parent or subsidiary corporation. WHEREAS, the Corporation desires to give the Participant an opportunity to participate in the long-term growth of the Corporation by granting to the Participant options to purchase the Corporation's Common Stock pursuant to the terms and conditions of the Morton's Restaurant Group, Inc. Stock Option Plan and this Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows: 1. DEFINITIONS. "Administrator" means a committee of the Board comprised of two or more disinterested directors, within the meaning of Securities and Exchange Commission Rule 16b-3, duly appointed to administer the Plan. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control a corporation if such person possesses, directly or indirectly, the power to (i) vote 15% or more of the securities having ordinary voting power for the election of directors of such corporation, or (ii) direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Board" means the Board of Directors of the Corporation. "Cause" means a finding by the Administrator based upon reasonable evidence presented in writing to the Participant that the Participant engaged in a criminal act or willful misconduct inconsistent with his employment responsibilities or contractual relationship with the Corporation or any subsidiary corporation. "Change in Control" means any of the following events: (a) the acquisition by any Person who was not an Affiliate of the Corporation as of December 15, 1994 of beneficial ownership, directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Corporation, except pursuant to a public offering of securities of the Corporation; (b) the sale or other transfer of all or substantially all of the assets of the Corporation to a Person who was not an Affiliate of the Corporation as of December 15, 1994; (c) a merger, consolidation or other reorganization of the Corporation with a Person who was not an Affiliate of the Corporation as of December 15, 1994 and in which the Corporation is not the surviving entity; or (d) individuals who, as of December 15, 1994, made up the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a director after December 15, 1994 whose election, or nomination for election by the Corporation's stockholders was approved by a vote or written consent of at least two-thirds of the directors then comprising the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation (as such terms are used in Rule 14a-11 under the Securities Exchange Act of 1934, as amended). "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means Common Stock ($.01 par value) of the Corporation. "Corporation" means Morton's Restaurant Group, Inc. "Disability" means the inability, in the opinion of a physician chosen by the Administrator, of the Participant by reason of any physical or mental ailment to perform the duties of the position in which he was employed by the Corporation or any subsidiary corporation when such disability commenced. "Employment" means the Participant's employment with the Corporation, a parent or subsidiary corporation of the Corporation, or such other corporation as provided in section 422 of the Code. "Fair Market Value" means, on any day, with respect to Common Stock which is (i) listed on a United States securities exchange, the last sales price of such stock on such day on the largest United States securities exchange on which such stock shall have traded on such day, or if such day is not a day on which a United States securities exchange is open for trading, on the immediately preceding day on which such securities exchange was so open, (ii) not listed on a United States securities exchange but is included in the NASDAQ National Market System, the last sales price of such stock on such day, or if such day is not a trading day, on the immediately preceding trading day, or (iii) neither listed on a United States securities exchange nor included in the NASDAQ National Market System, the fair market value of such stock as determined from time to time by the Board in its sole discretion. "Option" means the nonqualified stock option granted to the Participant under this Agreement and pursuant to the Plan. "Person" means any individual, partnership, firm, trust, corporation or similar entity. When two or more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of the Corporation, such partnership, limited partnership, syndicate or group shall be deemed a "Person." "Plan" means the Morton's Restaurant Group, Inc. Stock Option Plan (formerly known as the Quantum Restaurant Group, Inc. Stock Option Plan), as amended from time to time. 2. GRANT OF OPTION. The Corporation hereby grants to the Participant an Option to purchase 44,500 shares of Common Stock at an option price of $19.4375 per share, subject to the terms hereof (the "Option Price"). The Option granted hereby is not intended to be an "incentive stock option" within the meaning of section 422 of the Code and the Agreement shall be construed and interpreted in accordance with such intention. 3. OPTION TERMS. (a) The Option shall become exercisable in accordance with the following Schedule:
Years From Date of Grant Amount Exercisable ------------------------ ------------------ One 0% Two 25% Three 50% Four 75% Five 100%
(b) Notwithstanding the provisions of paragraph (a) of this Section 3, the Option shall not be exercisable after the expiration of ten (10) years from the date the Option is granted hereunder. Further, in the event the Participant's Employment terminates for any reason whatsoever, whether because of his death, Disability, termination with or without Cause, voluntary termination or otherwise, the Option, (i) to the extent it has not theretofore become exercisable, shall terminate as of the date such Employment terminates, and (ii) to the extent it has become exercisable but has not been exercised, shall terminate three (3) months after the date such Employment terminates. 4. NON-ASSIGNABILITY. The Option granted hereby and any right arising thereunder shall not be transferable other than by will or by the laws of descent and distribution. During the lifetime of the Participant, the Option shall be exercisable only by him. Any Option or portion thereof exercisable at the Participant's death that is transferred by will or by the laws of descent and distribution, shall be exercisable in accordance with the terms of this Agreement by the executor or administrator, as the case may be, of the Participant's estate for a period of three (3) months after the date of the Participant's death and shall then terminate. If the Option is not exercisable at the date of the Participant's death it shall terminate as of such date. 5. EFFECT OF A CHANGE OF CONTROL. Notwithstanding the provisions of Section 3 hereof, if there should be a Change of Control of the Corporation, the Corporation shall give the Participant written notice of such Change of Control as promptly as practicable (and, if possible, prior to the effective date thereof) and the Option, to the extent not currently exercisable, shall become immediately exercisable as of the effective date of such Change of Control. 6. TRANSFER RESTRICTIONS. The Participant understands that the Common Stock issuable upon the exercise of this Option will not be registered under the Securities Act of 1933, as amended (the "Act"). The Participant acknowledges that the Common Stock will be purchased for investment only, and that it may not be sold or transferred in the absence of either an effective registration statement under the Act or an opinion of experienced securities counsel, acceptable in form and content to the Corporation in its sole discretion, which states that registration is not required under the Act. By executing this Agreement, the Participant agrees to refrain from re-offering, reselling, or otherwise disposing of any of the Common Stock acquired upon the exercise of the Option in any manner which would violate the Act or any other federal or state securities law. The Participant further understands that in the event the Common Stock issuable upon the exercise of the Option is not covered by an effective registration statement under the Act, the Corporation may imprint on the certificate representing said Common Stock the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Act or the securities laws of any State: "The shares of Morton's Restaurant Group, Inc. Common Stock represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended. Such shares may not be sold, transferred, pledged or hypothecated unless the registration provisions of said act have been complied with or unless Morton's Restaurant Group, Inc. has received an opinion of counsel satisfactory to Morton's Restaurant Group, Inc. that such registration is not required." 7. MODE OF EXERCISE. The Option shall be exercised by the Participant giving to the Corporation written notice stating (i) the number of shares with respect to which the Option is being exercised, (ii) the exercise price for such shares, and (iii) the method of payment. At the option of the Participant, the Option Price may be paid (i) in cash, (ii) by delivery of Common Stock already owned by the Participant for a period of not less than six (6) months and having a Fair Market Value on the date of such delivery equal to the Option Price, or (iii) by delivery of a combination of cash and such Common Stock having a total Fair Market Value on the date of such delivery equal to the Option Price. 8. OPTION SUBJECT TO SECURITIES AND OTHER REGULATIONS. The Option granted hereunder and the obligation of the Corporation to sell and deliver shares under such Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any exercise of the Option until completion of any stock exchange listing, or other qualification of such shares under any state or federal law, rule or regulation as the Corporation may consider appropriate, and may require the Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations. Upon demand by the Administrator, the Participant shall deliver to the Administrator at the time of any exercise of the Option a written representation that the shares to be acquired upon the exercise of the Option are being acquired for investment and not for resale or with a view to the distribution thereof. Upon such demand, delivery of such representation prior to the delivery of any shares issued upon exercise of the Option shall be a condition precedent to the right of the Participant to purchase any shares. 9. ANTIDILUTION ADJUSTMENTS. In the event of any change in the Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares subject to the Option and the purchase price per share thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Participant. 10. PLAN CONTROLLING. This Agreement is irrevocable and is intended to conform in all respects with the Plan. Inconsistencies between this Agreement and the Plan shall be resolved according to the terms of the Plan. The Participant acknowledges receipt of a copy of the Plan. 11. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have any rights as a stockholder with respect to any shares subject to the Option prior to the date on which he is recorded as the holder of such shares on the records of the Corporation. 12. TAXES. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to the Option including, but not limited to (i) reducing the number of shares of Common Stock otherwise deliverable, based upon their Fair Market Value on the date of exercise, to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under this Agreement, (ii) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to the Participant, or (iii) requiring the Participant, beneficiary or legal representative to pay to the Corporation the amount required to be withheld or to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock. 13. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board or the Administrator nor for any mistake of judgment made in good faith. 14. GOVERNING LAW. This Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State. THE PLAN AND THIS AGREEMENT SHALL NOT BE CONSTRUED AS GIVING THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION, NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE CORPORATION TO TERMINATE THE PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE. Executed as of the day and year first above written. MORTON'S RESTAURANT GROUP, INC. By: /s/ Thomas J. Baldwin --------------------------- PARTICIPANT /s/ Allen J. Bernstein --------------------------- Allen J. Bernstein EX-11 9 EXHIBIT 11 Exhibit 11 MORTON'S RESTAURANT GROUP, INC. NONQUALIFIED STOCK OPTION AGREEMENT THIS NONQUALIFIED STOCK OPTION AGREEMENT, made as of the 15th day of October, 1998, by and between Morton's Restaurant Group, Inc. (the "Corporation"), a Delaware corporation, and Allen J. Bernstein (the "Participant"). WHEREAS, the Participant owns, at the time the Option is granted hereunder, no more than ten percent (10%) of total combined voting power of all classes of stock of the Corporation, or its parent or subsidiary corporation. WHEREAS, the Corporation desires to give the Participant an opportunity to participate in the long-term growth of the Corporation by granting to the Participant options to purchase the Corporation's Common Stock pursuant to the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties agree as follows: 1. DEFINITIONS. "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling (including, but not limited to, all directors and officers of such Person), controlled by, or under direct or indirect common control with, such Person. A Person shall be deemed to control a corporation if such person possesses, directly or indirectly, the power to (i) vote 15% or more of the securities having ordinary voting power for the election of directors of such corporation, or (ii) direct or cause the direction of the management and policies of such corporation, whether through the ownership of voting securities, by contract or otherwise. "Board" means the Board of Directors of the Corporation. "Cause" means a finding based upon reasonable evidence presented in writing to the Participant that the Participant engaged in a criminal act or willful misconduct inconsistent with his employment responsibilities or contractual relationship with the Corporation or any subsidiary corporation. "Change in Control" means any of the following events: (a) the acquisition by any Person who was not an Affiliate of the Corporation as of December 15, 1994 of beneficial ownership, directly or indirectly, of 50% or more of the combined voting power of the then outstanding voting securities of the Corporation, except pursuant to a public offering of securities of the Corporation; (b) the sale or other transfer of all or substantially all of the assets of the Corporation to a Person who was not an Affiliate of the Corporation as of December 15, 1994; (c) a merger, consolidation or other reorganization of the Corporation with a Person who was not an Affiliate of the Corporation as of December 15, 1994 and in which the Corporation is not the surviving entity; or (d) individuals who, as of December 15, 1994, made up the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board; provided that any individual who becomes a director after December 15, 1994 whose election, or nomination for election by the Corporation's stockholders was approved by a vote or written consent of at least two-thirds of the directors then comprising the Incumbent Directors shall be considered as though such individual were an Incumbent Director, but excluding, for this purpose, any such individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of the directors of the Corporation (as such terms are used in Rule 14a-11 under the Securities Exchange Act of 1934, as amended). "Code" means the Internal Revenue Code of 1986, as amended. "Common Stock" means Common Stock ($.01 par value) of the Corporation. "Corporation" means Morton's Restaurant Group, Inc. "Disability" means the inability of the Participant by reason of any physical or mental ailment to perform the duties of the position in which he was employed by the Corporation or any subsidiary corporation when such disability commenced. "Employment" means the Participant's employment with the Corporation, a parent or subsidiary corporation of the Corporation, or such other corporation as provided in section 422 of the Code. "Fair Market Value" means, on any day, with respect to Common Stock which is (i) listed on a United States securities exchange, the last sales price of such stock on such day on the largest United States securities exchange on which such stock shall have traded on such day, or if such day is not a day on which a United States securities exchange is open for trading, on the immediately preceding day on which such securities exchange was so open, (ii) not listed on a United States securities exchange but is included in the NASDAQ National Market System, the last sales price of such stock on such day, or if such day is not a trading day, on the immediately preceding trading day, or (iii) neither listed on a United States securities exchange nor included in the NASDAQ National Market System, the fair market value of such stock as determined from time to time by the Board in its sole discretion. "Option" means the nonqualified stock option granted to the Participant under this Agreement. "Person" means any individual, partnership, firm, trust, corporation or similar entity. When two or more Persons act as a partnership, limited partnership, syndicate or other group for the purpose of acquiring, holding or disposing of securities of the Corporation, such partnership, limited partnership, syndicate or group shall be deemed a "Person." 2. GRANT OF OPTION. The Corporation hereby grants to the Participant an Option to purchase 65,000 shares of Common Stock at an option price of $13.125 per share, subject to the terms hereof (the "Option Price"). The Option granted hereby is not intended to be an "incentive stock option" within the meaning of section 422 of the Code and the Agreement shall be construed and interpreted in accordance with such intention. 3. OPTION TERMS. (a) The Option shall become exercisable in accordance with the following Schedule:
Years From Date of Grant Amount Exercisable ------------------------ ------------------ One 0% Two 25% Three 50% Four 75% Five 100%
(b) Notwithstanding the provisions of paragraph (a) of this Section 3, the Option shall not be exercisable after the expiration of ten (10) years from the date the Option is granted hereunder. Further, in the event the Participant's Employment terminates for any reason whatsoever, whether because of his death, Disability, termination with or without Cause, voluntary termination or otherwise, the Option, (i) to the extent it has not theretofore become exercisable, shall terminate as of the date such Employment terminates, and (ii) to the extent it has become exercisable but has not been exercised, shall terminate three (3) months after the date such Employment terminates. 4. NON-ASSIGNABILITY. The Option granted hereby and any right arising thereunder shall not be transferable other than by will or by the laws of descent and distribution. During the lifetime of the Participant, the Option shall be exercisable only by him. Any Option or portion thereof exercisable at the Participant's death that is transferred by will or by the laws of descent and distribution, shall be exercisable in accordance with the terms of this Agreement by the executor or administrator, as the case may be, of the Participant's estate for a period of three (3) months after the date of the Participant's death and shall then terminate. If the Option is not exercisable at the date of the Participant's death it shall terminate as of such date. 5. EFFECT OF A CHANGE OF CONTROL. Notwithstanding the provisions of Section 3 hereof, if there should be a Change of Control of the Corporation, the Corporation shall give the Participant written notice of such Change of Control as promptly as practicable (and, if possible, prior to the effective date thereof) and the Option, to the extent not currently exercisable, shall become immediately exercisable as of the effective date of such Change of Control. 6. TRANSFER RESTRICTIONS. The Participant understands that the Common Stock issuable upon the exercise of this Option will not be registered under the Securities Act of 1933, as amended (the "Act"). The Participant acknowledges that the Common Stock will be purchased for investment only, and that it may not be sold or transferred in the absence of either an effective registration statement under the Act or an opinion of experienced securities counsel, acceptable in form and content to the Corporation in its sole discretion, which states that registration is not required under the Act. By executing this Agreement, the Participant agrees to refrain from re-offering, reselling, or otherwise disposing of any of the Common Stock acquired upon the exercise of the Option in any manner which would violate the Act or any other federal or state securities law. The Participant further understands that in the event the Common Stock issuable upon the exercise of the Option is not covered by an effective registration statement under the Act, the Corporation may imprint on the certificate representing said Common Stock the following legend or any other legend which counsel for the Corporation considers necessary or advisable to comply with the Act or the securities laws of any State: "The shares of Morton's Restaurant Group, Inc. Common Stock represented by this certificate have been acquired for investment and have not been registered under the Securities Act of 1933, as amended. Such shares may not be sold, transferred, pledged or hypothecated unless the registration provisions of said act have been complied with or unless Morton's Restaurant Group, Inc. has received an opinion of counsel satisfactory to Morton's Restaurant Group, Inc. that such registration is not required." 7. MODE OF EXERCISE. The Option shall be exercised by the Participant giving to the Corporation written notice stating (i) the number of shares with respect to which the Option is being exercised, (ii) the exercise price for such shares, and (iii) the method of payment. At the option of the Participant, the Option Price may be paid (i) in cash, (ii) by delivery of Common Stock already owned by the Participant for a period of not less than six (6) months and having a Fair Market Value on the date of such delivery equal to the Option Price, or (iii) by delivery of a combination of cash and such Common Stock having a total Fair Market Value on the date of such delivery equal to the Option Price. 8. OPTION SUBJECT TO SECURITIES AND OTHER REGULATIONS. The Option granted hereunder and the obligation of the Corporation to sell and deliver shares under such Option shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. The Corporation, in its discretion, may postpone the issuance or delivery of shares upon any exercise of the Option until completion of any stock exchange listing, or other qualification of such shares under any state or federal law, rule or regulation as the Corporation may consider appropriate, and may require the Participant, beneficiary or legal representative to make such representations and furnish such information as it may consider appropriate in connection with the issuance or delivery of the shares in compliance with applicable laws, rules and regulations. The Participant shall deliver at the time of any exercise of the Option a written representation that the shares to be acquired upon the exercise of the Option are being acquired for investment and not for resale or with a view to the distribution thereof. The delivery of such representation prior to the delivery of any shares issued upon exercise of the Option shall be a condition precedent to the right of the Participant to purchase any shares. 9. ANTIDILUTION ADJUSTMENTS. In the event of any change in the Common Stock by reason of any stock dividend, recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting the Common Stock, the number and kind of shares subject to the Option and the purchase price per share thereof shall be appropriately adjusted consistent with such change in such manner as the Board may deem equitable to prevent substantial dilution or enlargement of the rights granted to the Participant. 10. RIGHTS PRIOR TO EXERCISE OF OPTION. The Participant shall not have any rights as a stockholder with respect to any shares subject to the Option prior to the date on which he is recorded as the holder of such shares on the records of the Corporation. 11. TAXES. The Corporation may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of all federal, state, local and other taxes required by law to be withheld with respect to the Option including, but not limited to (i) reducing the number of shares of Common Stock otherwise deliverable, based upon their Fair Market Value on the date of exercise, to permit deduction of the amount of any such withholding taxes from the amount otherwise payable under this Agreement, (ii) deducting the amount of any such withholding taxes from any other amount then or thereafter payable to the Participant, or (iii) requiring the Participant, beneficiary or legal representative to pay to the Corporation the amount required to be withheld or to execute such documents as the Corporation deems necessary or desirable to enable it to satisfy its withholding obligations as a condition of releasing the Common Stock. 12. NO LIABILITY OF BOARD MEMBERS. No member of the Board shall be personally liable by reason of any contract or other instrument executed by such member or on his behalf in his capacity as a member of the Board nor for any mistake of judgment made in good faith. 13. GOVERNING LAW. This Agreement and all rights hereunder shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York applicable to contracts made and to be performed entirely within such State. THE PLAN AND THIS AGREEMENT SHALL NOT BE CONSTRUED AS GIVING THE PARTICIPANT THE RIGHT TO BE RETAINED IN THE EMPLOY OF THE CORPORATION, NOR SHALL THEY INTERFERE IN ANY WAY WITH THE RIGHT OF THE CORPORATION TO TERMINATE THE PARTICIPANT'S EMPLOYMENT AT ANY TIME WITH OR WITHOUT CAUSE. Executed as of the day and year first above written. MORTON'S RESTAURANT GROUP, INC. By: /s/ Thomas J. Baldwin --------------------------- PARTICIPANT /s/ Allen J. Bernstein --------------------------- Allen J. 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