As filed with the Securities and Exchange Commission on October 12, 2018
Registration No. 333-_____
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
ARK RESTAURANTS CORP.
(Exact name of registrant as specified in its charter)
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New York
(State or other jurisdiction of incorporation or organization) |
13-3156768
(I.R.S. Employer Identification No.) |
85 Fifth Avenue, New York, New York 10003
(Address of Principal Executive Offices) (Zip Code)
2018 Stock Option Plan
(Full title of the plan)
Sonal Shah
General Counsel
Ark Restaurants Corp.
85 Fifth Avenue, New York, NY 10003
(Name and address of agent for service)
212-206-8800
(Telephone number, including area code, of agent for service)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
(Check one):
| Large accelerated filer o | Accelerated filer o |
| Non-accelerated filer o | Smaller reporting company x |
(Do not check if a smaller reporting company)
A copy of all communications, including
communications sent to the agent for service
should be sent to:
Elliot H. Lutzker, Esq.
Davidoff Hutcher & Citron LLP
605 3 rd Avenue, 34 th Floor
New York, New York 10158
(212) 557-7200
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CALCULATION OF REGISTRATION FEE
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Title
Of Each
Class Of Securities To Be Registered |
Amount
To Be
Registered |
Proposed
Maximum Offering Price Per Shares |
Proposed
Maximum Aggregate Offering Price |
Amount
Of
Registration Fee |
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| Common Stock, $.01 par value | 500,000 (1)(2) | $23.15 (4) | $11,575,000 | $1,402.89 | ||||
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| (1) | Represents an aggregate of 500,000 shares of common stock issuable upon exercise of stock options to be granted pursuant to the Ark Restaurants Corp. 2016 Stock Option Plan (the “2016 Plan”). |
| (2) | Pursuant to Rule 416, includes an indeterminable number of shares of Common Stock which may become issuable pursuant to the anti-dilution provisions of the 2016 Plan. |
| (3) | Any shares of Common Stock covered by an option granted under the Plan that is forfeited, canceled or expires (whether voluntarily or involuntarily) will be deemed not to have been issued for purposes of determining the maximum aggregate number of shares of Common Stock that may be issued under the Plan. |
| (4) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(h)(1) and Rule 457(c) based upon the last sale price of the Registrant’s Common Stock, as reported on the Nasdaq Global Market on October 9, 2018. |
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EXPLANATORY NOTE
This registration statement on Form S-8 is being filed by Ark Restaurants Corp. (the “Company”) to register 500,000 shares of common stock under the Company’s 2016 Plan.
This Registration Statement contains two parts. The first part contains information required in the registration statement pursuant to Part I of Form S-8 with respect to shares of our common stock issuable upon the exercise of stock options made under the Plan subsequent to the date hereof. The second part contains a “reoffer” prospectus prepared in accordance with the requirements of Part I of Form S-3, which, pursuant to General Instruction C of Form S-8, may be used by certain persons, including officers and directors of the Company who are deemed to be affiliates of the Company, as that term is defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), as well as by non-affiliate assignees holding restricted securities, as that term is defined in Rule 144 under the Securities Act, in connection with the reoffer and resale of shares of common stock of the Company received by such persons pursuant to the exercise of options granted under the 2016 Plan, which 500,000 shares are being registered herein. Options to purchase an aggregate of 5,000 shares of common stock have been granted to date under the Plan.
This Prospectus omits certain of the information contained in the Registration Statement in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). Reference is hereby made to the Registration Statement and related exhibits for further information with respect to the Company and the Shares. Statements contained herein concerning the provisions of any documents are not necessarily complete and, in each instance, reference is made to the copy of such document filed as an exhibit to the Registration Statement or otherwise filed with the SEC. Each such statement is qualified in its entirety by such reference.
We prepared this Registration Statement in accordance with the requirements of Form S-8 under the Securities Act. We are registering 500,000 Shares pursuant to our 2016 Plan. The purpose of our 2016 Plan is to advance the interests of the Company and its stockholders by providing a means of attracting and retaining employees, corporate officers and directors employed or retained by the Company and its subsidiaries and affiliates.
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
The document containing the information specified in this Part I of this Form S-8 registration statement has been or will be sent or given to participants in the 2016 Stock Option Plan (the “2016 Plan”), as specified by Rule 428(b)(1) promulgated by the SEC under the Securities Act. Such document(s) are not being filed with the SEC, but constitute (along with the documents incorporated by reference into the registration statement pursuant to Item 3 of Part II hereof) a prospectus that meets the requirements of Section 10(a) of the Securities Act.
This registration statement relates to a maximum of 500,000 shares of our common stock issuable pursuant to our 2016 Plan (the “Shares”).
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Item 2. Registrant Information and Employee Plan Annual Information
The documents incorporated by reference into this prospectus pursuant to Item 3 of Part II hereof are available without charge, upon written or oral request. The documents containing the information specified in this Item 2 will be sent or given to employees, officers or directors upon written or oral request, as specified by Rule 428(b) under the Securities Act. All requests shall be directed to Corporate Secretary, Ark Restaurants Corp., 85 Fifth Avenue, New York, NY 10003; (tel) 212-206-8800. In accordance with the rules and regulations of the SEC and the instructions to Form S-8, such documents are not being filed either as part of this registration statement or as prospectuses or prospectus supplements pursuant to Rule 424 under the Securities Act.
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REOFFER PROSPECTUS
ARK RESTAURANTS CORP.
500,000 SHARES OF COMMON STOCK
This prospectus relates to the reoffer and resale of 500,000 shares of common stock, par value $0.01 per share, of Ark Restaurants Corp., a New York corporation (“Ark,” the “Company,” “we,” “us,” or “our”), that have been or will be acquired by certain persons (collectively referred to as the “selling securityholders”), including our officers and directors who are deemed to be our affiliates, as that term is defined in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”), holding restricted securities, as that term is defined in Rule 144 under the Securities Act, in connection with the reoffer and resale of shares of common stock of the Company received by such persons pursuant to the exercise of options to be granted under our 2016 Stock Option Plan (the “2016 Plan”).
The shares offered herby consist of 500,000 shares issuable under the 2016 Plan.
Our common stock is quoted on the Nasdaq Global Market under the symbol “ARKR.” On October 11, 2018, the last reported sale price of our common stock on the NASDAQ Global Market was $22.75 per share.
The shares covered by this prospectus may be offered and sold from time to time directly by the selling securityholders of shares issued upon the exercise of the options granted pursuant to the 2016 Plan or through brokers on the Nasdaq Global Market, or otherwise, at the prices prevailing at the time of such sales. The net proceeds to the selling securityholders will be the proceeds received by them upon such sales, less brokerage commissions, if any. We will pay all expenses of preparing and reproducing this prospectus, but will not receive any of the proceeds from sales by any of the selling securityholders, but we will receive the exercise price upon exercise of the stock options. The selling securityholders and any broker-dealers, agents, or underwriters through whom the shares are sold, may be deemed “underwriters” within the meaning of the Securities Act with respect to securities offered by them, and any profits realized or commissions received by them may be deemed underwriting compensation. See “Plan of Distribution.”
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SHARES OFFERED HEREBY INVOLVE A SUBSTANTIAL DEGREE OF RISK. SEE “RISK FACTORS” beginning on page 6 of this prospectus.
The date of this prospectus is October 12, 2018
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No person is authorized to give any information or to make any representations other than those contained in this prospectus in connection with any offer to sell or sale of the securities to which this prospectus relates, and if given or made, such information or representations must not be relied upon as having been authorized. Neither the deliver of this prospectus nor any sale made hereunder shall, under any circumstances, imply that there has been no change in the facts herein set forth since the date hereof. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
TABLE OF CONTENTS
Page
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You should rely only on the information contained or incorporated by reference in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it.
This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this Prospectus, as well as information we have previously filed with the SEC and incorporated by reference, is accurate only as of the date on the front of those documents.
We file annual, quarterly and current reports and proxy statements and other information with the Securities and Exchange Commission (“SEC”). You may read and copy any such reports, statements or other information that we file with the SEC at the SEC’s Public Reference Room located at 100 F Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information about the operation of the Public Reference Room. Our public filings are also available from commercial document retrieval services and the Internet web site maintained by the SEC at http://www.sec.gov. In addition, our common stock is quoted on the Nasdaq Global Market. Accordingly, our reports, statements and other information may be inspected at the offices of Nasdaq, One Liberty Plaza, 165 Broadway, New York, New York 10006.
The SEC allows us to “incorporate by reference” information into this prospectus, which means that we can disclose important information to investors by referring them to another document filed separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information contained directly in this document. This prospectus incorporates by reference the documents set forth below that we have previously filed with the SEC. These documents contain important information about us and our financial condition.
INCORPORATION OF documents BY REFERENCE
The following documents filed with the SEC are incorporated by reference in this prospectus:
| (1) | Ark’s Definitive Proxy Statement, as amended, filed with the SEC on February 9, 2018 |
| (2) | Ark’s Annual Report on Form 10-K for the year ended September 30, 2017, filed with the SEC on December 29, 2017. |
| (3) | Ark’s Quarterly Report on Form 10-Q for the period ended December 30, 2017 filed with the SEC on February 13, 2018. |
| (4) | Ark’s Quarterly Report on Form 10-Q for the period ended March 31, 2018 filed with the SEC on May 15, 2018. |
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| (5) | Ark’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, filed with the SEC on August 14, 2018. |
| (6) | The description of our common stock contained in Ark’s Registration Statement on Form S-18 (No. 33-00964) |
All documents subsequently filed by us pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold shall be deemed to be incorporated by reference in this prospectus and to be a part of this prospectus from the date of filing of such documents. Any statement contained in a previously filed document incorporated by reference in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement in this prospectus modifies or supersedes such previous statement and any statement contained in this prospectus shall be deemed to be modified or superseded to the extent that a statement in any document subsequently filed, which is incorporated by reference in this prospectus, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
A copy of any and all of the information included in the documents that have been incorporated by reference in this prospectus (excluding exhibits thereto, unless such exhibits have been specifically incorporated by reference into the information which this prospectus incorporates) but which are not delivered with this prospectus will be provided by us without charge to any person to whom this prospectus is delivered, upon the oral or written request of such person. Written requests should be directed to Ark Restaurants Corp., 85 Fifth Avenue, New York, New York 10003-3019, Attention: Corporate Secretary. Oral requests may be directed to the Secretary at 212-206-8800.
Nothing in this prospectus shall be deemed to incorporate information furnished to, but not filed with the SEC pursuant to Item 2.02 or Item 7.01 of Form 8-K.
Certain statements included or incorporated by reference into this prospectus constitute “forward-looking statements” within the meaning of such term in Section 27A of the Securities Act and Section 21E of the Exchange Act. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual financial or operating results to be materially different from the historical results or from any future results expressed or implied by such forward-looking statements. Such forward looking statements are based on our best estimates of future results, performance or achievements, based on current conditions and our most recent results. In addition to statements which explicitly describe such risks and uncertainties, readers are urged to consider statements labeled with the terms “may”, “will”, potential”, “opportunity”, “believes”, “belief”, “expects”, “intends”, “estimates”, “anticipates” or “plans” to be uncertain and forward-looking. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in our reports and registration statements filed with the SEC.
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The following summary is qualified in its entirety by reference to the more detailed information appearing elsewhere in this prospectus or incorporated herein by reference. Each prospective investor is urged to read this prospectus and the documents incorporated herein by reference in their entirety. Investment in the securities offered hereby involves a high degree of risk. See “Risk Factors.”
Ark Restaurants owns and operates 20 restaurants and bars, 19 fast food concepts and catering operations primarily in New York City, Florida, Washington, D.C., Las Vegas, NV and the Gulf Coast of Alabama. Five restaurants are located in New York City, two are located in Washington, D.C., five are located in Las Vegas, Nevada, three are located in Atlantic City, New Jersey, one is located in Boston, Massachusetts, two are located on the east coast of Florida and two are located on the Gulf Coast of Alabama. The Las Vegas operations include four restaurants within the New York-New York Hotel & Casino Resort and operation of the hotel’s room service, banquet facilities, employee dining room and six food court concepts; and one restaurant within the Planet Hollywood Resort and Casino. In Atlantic City, New Jersey, the Company operates a restaurant and a bar in the Resorts Atlantic City Hotel and Casino and a restaurant in the Tropicana Hotel and Casino. The operations at the Foxwoods Resort Casino consist of one fast food concept. In Boston, Massachusetts, the Company operates a restaurant in the Faneuil Hall Marketplace. The Florida operations include the Rustic Inn in Dania Beach, Florida and Shuckers, located in Jensen Beach and the operation of five fast food facilities in Tampa, Florida and seven fast food facilities in Hollywood, Florida, each at a Hard Rock Hotel and Casino operated by the Seminole Indian Tribe at these locations. In Alabama, the Company operates two Original Oyster Houses, one in Gulf Shores, Alabama and one in Spanish Fort, Alabama.
The names and themes of each of our restaurants are different except for our two Gallagher’s Steakhouse restaurants. The menus in our restaurants are extensive, offering a wide variety of high-quality foods at generally moderate prices. The atmosphere at many of the restaurants is lively and extremely casual. Most of the restaurants have separate bar areas, are open seven days a week and most serve lunch as well as dinner. A majority of our net sales are derived from dinner as opposed to lunch service.
While decor differs from restaurant to restaurant, interiors are marked by distinctive architectural and design elements which often incorporate dramatic interior open spaces and extensive glass exteriors. The wall treatments, lighting and decorations are typically vivid, unusual and, in some cases, highly theatrical.
In this prospectus we refer to Ark Restaurants Corp. as “Ark”, the “Company”, “we”, “us” or “our”. Our executive offices are located at 85 Fifth Avenue, New York, New York 10003 and our telephone number is (212)-206-8800. The information on our website does not constitute part of this prospectus.
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This reoffer prospectus relates to the reoffer and resale of an aggregate of 500,000 shares of our common stock, par value $0.01 per share, by certain selling securityholders, including our officers and directors, who are deemed to be affiliates of the Company, that are issuable upon the exercise of options to be granted pursuant to our 2016 Plan. We will not receive any proceeds from the sale of the shares sold by the selling securityholders, but we will receive the exercise price upon exercise of the stock options, other than for any cashless exercise of options.
If subsequent to the date of this reoffer prospectus, we grant any awards under the 2016 Plan to any persons who are affiliates of the Company, we would supplement this reoffer prospectus with the names of such affiliates and the amount(s) of shares to be reoffered by them as selling securityholders.
This prospectus contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Actual results could differ materially from those projected in the forward-looking statements as a result of certain uncertainties set forth below and elsewhere in this prospectus. An investment in the shares is highly speculative and involves a high degree of risk. Prospective investors, prior to making an investment decision, should carefully consider the following risk factors, in addition to the other information set forth in this prospectus, in connection with an investment in the shares offered hereby.
Risks Related To Our Business
We are dependent upon key personnel and may not be able to attract qualified personnel in the future.
We are dependent upon the continued services of Michael Weinstein, the Chairman of the Board and Chief Executive Officer, and a number of key management and other team members who have significant influence over the Company’s business strategy and managerial decisions. In particular, the Company’s President and Chief Financial Officer. The Company does not have an employment agreement with Mr. Weinstein. The loss of Mr. Weinstein’s services or other key personnel, or limitations on their involvement with the Company, could have a material adverse effect on our business or operating results. We do not maintain key person life insurance on any officers of the Company.
Failure of our existing or new restaurants to achieve expected results could have a negative impact on our revenues and performance results.
Performance results currently achieved by our restaurants may not be indicative of longer term performance or the potential market acceptance of restaurants in new locations. We cannot be assured that new restaurants that we open will have similar operating results as existing restaurants. New restaurants take several months or longer to reach expected operating levels due to inefficiencies typically associated with new restaurants, including lack of market
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awareness, inability to hire sufficient staff and other factors. The failure of our existing or new restaurants to perform as predicted could negatively impact our revenues and results of operations.
Our unfamiliarity with new markets may present risks, which could have a material adverse effect on our future growth and profitability.
Due to higher operating costs caused by temporary inefficiencies typically associated with expanding into new regions and opening new restaurants, such as lack of market awareness and acceptance and limited availability of experienced staff, continued expansion may result in an increase in our operating costs. New markets may have different competitive conditions, consumer tastes and discretionary spending patterns than our existing markets, which may cause our restaurants in these new markets to be less successful than our restaurants in our existing markets. We cannot assure you that restaurants in new markets will be successful.
Factors beyond our control could adversely affect our ability to open new restaurants efficiently, which could cause our operations and financial condition to suffer. These factors include, but are not limited to:
– Selection and availability of suitable restaurant sites;
– Negotiation of acceptable lease or purchase terms for such sites;
– Negotiation of reasonable construction contracts and adequate supervision of construction;
– Our ability to secure required governmental permits and approvals for both construction and operation;
– Availability of adequate capital;
– General economic conditions; and
– Adverse weather conditions.
We may not be successful in addressing these factors, which could adversely affect our ability to open new restaurants on a timely basis, or at all. Delays in opening or failures to open new restaurants could cause our business, results of operations and financial condition to suffer.
Increases in the minimum wage may have a material adverse effect on our business and financial results.
Many of our employees are subject to various minimum wage requirements. Many of our restaurants are located in states where the minimum wage was recently increased and in other states in which increases are scheduled or are being considered. In addition, increases in the minimum wage to $15 per hour may result in further increases in wages to all restaurant workers. Accordingly, there likely will be additional increases implemented in jurisdictions in
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which we operate or seek to operate. These minimum wage increases may cause us to raise our prices which, in turn, could have a material adverse effect on our business, financial condition, results of operations and/or cash flows.
Mandatory paid leave and unpaid leave may have a material adverse effect on our business and financial results.
Starting January 1, 2018, most workers are able to take up to eight (8) weeks (increasing in New York and other areas to twelve (12) weeks in 2021) of job provided paid leave for childbirth, care for a seriously ill family member or needs related to a family member’s military deployment. These additional expenses may cause us to raise our prices. In certain geographic areas which cannot absorb such increases, this could have a material adverse effect on our business, financial condition; results of operations and/or cash flows.
Ark provides unpaid leave for employees for covered family and medical reasons, including childbirth, to the extent required by the Family and Medical Leave Act of 1933, as amended, and applicable state laws. To the extent we need to hire additional employees or pay overtime for such employees on leave, this would be an added expense which could adversely affect our results of operations.
Our ability to compete with non-tipping restaurants may be adversely affected.
Certain restaurants in areas in which we operate have eliminated tipping and more restaurants may decide to follow suit. We have not implemented such a policy and cannot estimate the effect such change may have on our operations. In the event we are forced to compete and raise our prices to provide for gratuities, this may have a material adverse effect on our business, financial conditions, results of operations or cash flows.
Disruptions in the overall economy may adversely impact our business.
Our ability to generate revenue depends significantly on discretionary consumer spending. Any weakness in discretionary consumer spending could have a material adverse effect on our revenues, results of operations and financial condition.
The restaurant industry has been affected by economic factors, including the deterioration of national, regional and local economic conditions, and shifts in consumer spending patterns. Disruptions in the overall economy have reduced, and may continue to reduce, consumer confidence in the economy, negatively affecting consumer restaurant spending, which could be harmful to our financial position and results of operations. As a result, decreased cash flow generated from our business may adversely affect our financial position and our ability to fund our operations.
Future changes in financial accounting standards may cause adverse unexpected operating results and affect our reported results of operations.
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Changes in accounting standards can have a significant effect on our reported results and may affect our reporting of transactions completed before the change is effective. New pronouncements and varying interpretations of pronouncements have occurred and may occur in the future. See Note 1 to the Consolidated Financial Statements related to recently adopted accounting standards.
Changes to existing rules or differing interpretations with respect to our current practices may adversely affect our reported financial results.
Our profitability is dependent in large measure on food, beverage and supply costs which are not within our control.
Our profitability is dependent in large measure on our ability to anticipate and react to changes in food, beverage and supply costs. Various factors beyond our control, including climate changes and government regulations, may affect food and beverage costs. Specifically, our dependence on frequent, timely deliveries of fresh beef, poultry, seafood and produce subjects us to the risks of possible shortages or interruptions in supply caused by adverse weather, food contamination and related recalls or other conditions, which could adversely affect the availability and cost of any such items. We cannot assure you that we will be able to anticipate or react to increasing food and supply costs in the future. The failure to react to these increases could materially and adversely affect our business, results of operations and financial condition.
Rising insurance costs could negatively impact profitability.
The cost of insurance (workers compensation insurance, general liability insurance, property insurance, health insurance and directors and officers liability insurance) has risen significantly over the past few years and is expected to continue to increase. These increases, as well as potential state legislation requirements for employers to provide health insurance to employees, could have a negative impact on our profitability if we are not able to negate the effect of such increases with plan modifications and cost control measures or by continuing to improve our operating efficiencies.
Adverse weather conditions and natural disasters could adversely affect our restaurant sales.
Adverse weather conditions can impact guest traffic at our restaurants, cause the temporary underutilization of outdoor patio seating and, in more severe cases such as hurricanes, tornadoes or other natural disasters, cause temporary closures, sometimes for prolonged periods, which would negatively impact our restaurant sales. Our restaurants have previously been adversely affected by the flooding caused from Hurricane Sandy, as well as other adverse weather conditions. Several of our newest restaurants are located on the East Coast of Florida and on the Gulf Coast of Alabama in low lying areas prone to flooding. Changes in weather could result in construction delays, interruptions to the availability of utilities, and shortages or interruptions in the supply of food items and other supplies, which could increase our costs. Some climatologists predict that the long-term effects of climate change and global warming may result in more severe, volatile weather or extended droughts, which could increase the frequency and duration of weather impacts on our operations.
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Compliance with existing and new regulations of corporate governance and public disclosure may result in additional expenses.
Compliance with changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, the Dodd-Frank Act, new SEC regulations and NASDAQ Stock Market rules, has required an increased amount of management attention and external resources. We are committed to maintaining high standards of corporate governance and public disclosure. This investment, required to comply with these changing regulations, may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.
Intense competition in the restaurant industry could prevent us from increasing or sustaining our revenues and profitability.
The restaurant industry is intensely competitive with respect to food quality, price-value relationships, ambiance, service and location, and many restaurants compete with us at each of our locations. There are a number of well-established competitors with substantially greater financial, marketing, personnel and other resources than ours, and many of our competitors are well established in the markets where we have restaurants, or in which we intend to locate restaurants. Additionally, other companies may develop restaurants that operate with similar concepts.
Any inability to successfully compete with the other restaurants in our markets will prevent us from increasing or sustaining our revenues and profitability and result in a material adverse effect on our business, financial condition, results of operations and/or cash flows. We may also need to modify or refine elements of our restaurant system to evolve our concepts in order to compete with popular new restaurant formats or concepts that may develop in the future. We cannot assure you that we will be successful in implementing these modifications or that these modifications will not reduce our profitability.
Many of our operations are located in casinos and our success is dependent on the success of those casinos.
The success of the business of our restaurants located in Las Vegas, Nevada, Atlantic City, New Jersey, Tampa and Hollywood, Florida, and Ledyard, Connecticut is substantially dependent on the success of the casinos in which the Company operates in these locations to attract customers for themselves and for our restaurants. In particular, casinos in Atlantic City have experienced a significant decline in revenues in recent years as a result of the economic downturn, Hurricane Sandy in 2012, and the fact that numerous casinos have opened in other locations in the Eastern United States. Three of the twelve casinos in Atlantic City have closed. Although the Company did not operate any restaurants in the casinos that closed and the Company’s restaurants in Atlantic City actually experienced an increase in sales of
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approximately 7.9% from fiscal 2016 to fiscal 2017, the downturn affecting Atlantic City casinos and tourism in general could have a material adverse effect on our restaurants in the city.
As more states approve casino gambling, our business in casinos in existing geographic regions may continue to decline. The successful operation of the casinos in these locations is subject to various risks and uncertainties including, but not limited to:
– The risk associated with governmental approvals of gaming;
– The risk of a change in laws regulating gaming operations;
– Operating in a limited market;
– Competitive risks relating to casino operations; and
– Risks of terrorism and war.
There can be no assurance casino gambling will ever be approved at New Meadowlands Racetrack.
The Company has invested an aggregate of approximately $5,108,000 in the New Meadowlands Racetrack (“NMR”) through its investment in Meadowlands Newmark, LLC, an existing member of NMR to which it has also loaned $1,700,000. The Company has the exclusive right to operate the food and beverage concessions in a casino at NMR if casino gambling is approved. A November 2016 referendum to approve two new casinos in Northern New Jersey was defeated. The issue cannot be voted upon for the following two years, but it will not be on the ballot in November 2018, if ever. As a result, the Company expects it may be subject to additional capital calls in the future that it can either participate in or have its interest diluted. Although sports betting has commenced at NMR, there can be no assurance that a casino will be approved at NMR with Meadowlands Newmark LLC being granted the right to conduct gambling at such a casino at any time in the future.
The restaurant industry is affected by changes in consumer preferences and discretionary spending patterns that could result in a reduction in our revenues.
We continuously need to monitor and to modify our restaurants’ menus, for changes in consumer preferences. These changes may cause us to lose customers, who are less satisfied with such modified menu, and we may not be able to attract a new customer base to generate the necessary revenues to maintain our income from restaurant operations. A change in our menus may also result in us having different competitors. We may not be able to successfully compete against established competitors in the general restaurant market. Our success also depends on various factors affecting discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. Adverse changes in these factors could reduce our customer base and spending patterns, either of which could reduce our revenues and results of operations.
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Our geographic concentrations could have a material adverse effect on our business, results of operations and financial condition.
We currently operate in eight regions, New York City, Washington, D.C., Las Vegas, Nevada, Florida, Atlantic City, New Jersey, Ledyard, Connecticut, Gulf Shores, Alabama and Boston, Massachusetts. As a result, we are particularly susceptible to adverse trends and economic conditions in these markets, including its labor market, which could have a negative impact on our profitability as a whole. In addition, given our geographic concentration, negative publicity regarding any of our restaurants could have a material adverse effect on our business, results of operations and financial condition, as could other regional occurrences such as acts of terrorism, local strikes, natural disasters or changes in laws or regulations.
Our operating results may fluctuate significantly due to seasonality and other factors beyond our control.
Our business is subject to seasonal fluctuations, which may vary greatly depending upon the region of the United States in which a particular restaurant is located. In addition to seasonality, our quarterly and annual operating results and comparable unit sales may fluctuate significantly as a result of a variety of factors, including, but not limited to:
– The amount of sales contributed by new and existing restaurants;
– The timing of new openings and closings;
– Increases in the cost of key food or beverage products;
– Labor costs for our personnel;
– Our ability to achieve and sustain profitability on a quarterly or annual basis;
– Adverse weather;
– Consumer confidence and changes in consumer preferences;
– Health concerns, including adverse publicity concerning food-related illnesses;
– The level of competition from existing or new competitors;
– Economic conditions generally and in each of the markets in which we are located; and
– Acceptance of a new or modified concept in each of the new markets in which we could be located.
These fluctuations make it difficult for us to predict and address in a timely manner factors that may have a negative impact on our business, results of operations, financial condition and/or cash flows.
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Our expansion may strain our infrastructure, which could slow restaurant development.
The Company has expanded its operations in recent years in the States of Florida and Alabama, where we have not previously done business. This and any further expansion may place a strain on our management systems, financial controls, and information systems. To manage growth effectively, we must maintain the high level of quality and service at our existing and future restaurants. We must also continue to enhance our operational, information, financial and management systems and locate, hire, train and retain qualified personnel, particularly restaurant managers. We cannot predict whether we will be able to respond on a timely basis to all of the changing demands that any expansion will impose on management and those systems and controls. If we are not able to effectively manage any one or more of these or other aspects of expansion, our business, results of operations and financial condition could be materially adversely affected.
Our inability to retain key personnel could negatively impact our business.
Our success will continue to be highly dependent on our key operating officers and employees. We must continue to attract, retain and motivate a sufficient number of qualified management and operating personnel, including general managers and chefs. The ability of these key personnel to maintain consistency in the quality and atmosphere of our restaurants is a critical factor in our success. Any failure to do so may harm our reputation and result in a loss of business.
We could face labor shortages, increased labor costs and other adverse effects of varying labor conditions.
The development and success of our restaurants depend, in large part, on the efforts, abilities, experience and reputations of the general managers and chefs at such restaurants. In addition, our success depends, in part, upon our ability to attract, motivate and retain a sufficient number of qualified employees, including restaurant managers, kitchen staff and wait staff. Qualified individuals needed to fill these positions are in short supply and the inability to recruit and retain such individuals may delay the planned openings of new restaurants or result in high employee turnover in existing restaurants. A significant delay in finding qualified employees or high turnover of existing employees could materially and adversely affect our business, results of operations and financial condition. Also, competition for qualified employees could require us to pay higher wages to attract sufficient qualified employees, which could result in higher, labor costs. In addition, increases in the minimum hourly wage, employment tax rates and levies, related benefits costs, including health insurance, and similar matters over which we have no control may increase our operating costs.
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Unanticipated costs or delays in the development or construction of future restaurants could prevent our timely and cost-effective opening of new restaurants.
We depend on contractors and real estate developers to construct our restaurants. Many factors may adversely affect the cost and time associated with the development and construction of our restaurants, including, but not limited to:
– Labor disputes;
– Shortages of materials or skilled labor;
– Adverse weather conditions;
– Unforeseen engineering problems;
– Environmental problems;
– Construction or zoning problems;
– Local government regulations;
– Modifications in design; and
– Other unanticipated increases in costs.
Any of these factors could give rise to delays or cost overruns, which may prevent us from developing additional restaurants within our anticipated budgets or time periods or at all. Any such failure could cause our business, results of operations and financial condition to suffer.
We may not be able to obtain and maintain necessary federal, state and local permits which could delay or prevent the opening of future restaurants.
Our business is subject to extensive federal, state and local government regulations, including regulations relating to:
– Alcoholic beverage control;
– The purchase, preparation and sale of food;
– Public health and safety;
– Sanitation, building, zoning and fire codes; and
– Employment and related tax matters.
All of these regulations impact not only our current operations, but also our ability to open future restaurants. We will be required to comply with applicable state and local regulations in
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new locations into which we expand. Any difficulties, delays or failures in obtaining licenses, permits or approvals in such new locations could delay or prevent the opening of a restaurant in a particular area or reduce operations at an existing location, either of which could materially and adversely affect our business, results of operations and financial condition.
We are dependent on information technology and any material failure in the operation or security of that technology or our ability to execute a comprehensive business continuity plan could impair our ability to efficiently operate our business.
We rely on information systems across our operations, including, for example, point-of-sale processing in our restaurants, management of our supply chain, collection of cash, payment of obligations and various other processes and procedures. Our ability to efficiently manage our business depends significantly on the reliability and capacity of these systems. The failure of these systems to operate effectively, problems with maintenance, upgrading or transitioning to replacement systems, or a breach in security of these systems could cause delays in customer service and reduce efficiency in our operations. A security breach or cyber-attack could include theft of credit card data or other personal information as well as our intellectual property. Significant capital investments might be required to remediate any problems.
Additionally, our corporate systems and processes and corporate support for our restaurant operations are handled primarily at our corporate office in New York. We have disaster recovery procedures and business continuity plans in place to address most events of a crisis nature and back up and offsite locations for recovery of electronic and other forms of data and information. However, if we are unable to fully implement our disaster recovery plans, we may experience delays in recovery of data, inability to perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support restaurant operations and other breakdowns in normal communication and operating procedures that could have a material adverse effect on our financial condition, results of operation and exposure to administrative and other legal claims.
Failure to protect the integrity and security of individually identifiable data of our guests and employees and confidential and proprietary information of the Company could damage our reputation and expose us to loss of revenues and litigation.
We receive and maintain certain personal information about our guests and employees in our information technology systems, such as point-of-sale, web and mobile platforms. Additionally our systems contain proprietary and confidential information related to our business. Use of this information is regulated at the federal and state levels, as well as by certain third party contracts. If our or our business associates’ information systems are compromised as a result of a cyber-attack or other external or internal method, or we fail to comply with applicable laws and regulations, it could result in a violation of the laws and regulations, and an adverse and material impact on our reputation, operations, results of operations and financial condition. Such security breaches could also result in litigation or governmental investigation against us or the imposition of penalties. These impacts could also occur if we are perceived either to
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have had an attack, failure or to have failed to properly respond to an incident. Like many other retail companies, we experience frequent attempts to compromise our systems but none have resulted in a material breach. As privacy and information security laws and regulations change or cyber risks evolve pertaining to data, we may incur additional costs in technology, third party services and personnel to remain in compliance and maintain systems designed to anticipate and prevent cyber-attacks. Our security frameworks prevent breaches of our systems and data loss, but these measures cannot provide assurance that we will be successful in preventing such breaches or data loss.
The restaurant industry is affected by litigation and publicity concerning food quality, health and other issues, which can cause guests to avoid our restaurants and result in liabilities.
Health concerns, including adverse publicity concerning food-related illness, although not specifically related to our restaurants, could cause guests to avoid restaurants in general, which would have a negative impact on our sales. We may also be the subject of complaints or litigation from guests alleging food-related illness, injuries suffered on the premises or other food quality, health or operational concerns. A lawsuit or claim could result in an adverse decision against us that could have a material adverse effect on our business and results of operations. We may also be subject to litigation which, regardless of the outcome, could result in adverse publicity. Adverse publicity resulting from such allegations may materially adversely affect us and our restaurants, regardless of whether such allegations are true or whether we are ultimately held liable. Such litigation, adverse publicity or damages could have a material adverse effect on our competitive position, business, results of operations and financial condition and results of operations.
Violations of the Company’s prohibition on harassment, sexual or otherwise, could result in liabilities and/or litigation.
We prohibit harassment or discrimination in the workplace, in sexual on in any other form. This policy applies to all aspects of employment. Notwithstanding our taking disciplinary action against alleged violations, we may encounter additional costs from claims made and/or legal proceedings brought against the Company.
Uncertain Effect of Tax Reform Bills on an Investment in the Company.
The Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contains several key tax provisions that affect us. The Tax Act is expected to have a favorable impact on the Company’s effective tax rate and net income as reported under generally accepted accounting principles both in the first fiscal quarter of 2018 and subsequent reporting periods to which the Act is effective. However, the Company is assessing the impact of the Act and there can be no assurances that it will have a favorable impact. The Company’s accounting for impact of the Tax Act was incomplete as of June 30, 2018. Investors should consult with their tax advisors with respect to the effect of the Act and any other regulatory or administrative developments and proposals and their potential effect on your investment in the Company.
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Risks Related To Our Common Stock
The fact that a relatively small number of investors hold our publicly traded common stock could cause our stock price to fluctuate.
The market price of our common stock could fluctuate as a result of sales by our existing stockholders of a large number of shares of our common stock in the market or the perception that such sales could occur. A large number of shares of our common stock is concentrated in the hands of a small number of individual and institutional investors and is thinly traded. An attempt to sell by a large holder could adversely affect the price of our stock.
Ownership of a substantial majority of our outstanding common stock by a limited number of stockholders will limit your ability to influence corporate matters.
A substantial majority of our capital stock is held by a limited number of stockholders. Almost 50% of our common stock is beneficially owned by officers and directors of the Company. Accordingly, management and a few other stockholders have a strong influence on major decisions of corporate policy, and the outcome of any major transaction or other matters submitted to our stockholders, including, but not limited to, potential mergers, acquisitions and/or sale of substantially all assets or other corporate transactions, and amendments to our Amended and Restated Certificate of Incorporation. Stockholders other than these principal stockholders are therefore likely to have little influence on decisions regarding such matters.
The price of our common stock may fluctuate significantly.
The price at which our common stock trades may fluctuate significantly. A large number of shares of our common stock is concentrated in the hands of a small number of individuals and institutional investors and is thinly traded. An attempt to sell by a large holder could adversely affect the price of our stock.
The stock market has from time to time experienced significant price and volume fluctuations. The trading price of our common stock could be subject to wide fluctuations in response to a number of factors, including, but not limited to:
– Fluctuations in quarterly or annual results of operations;
– Changes in published earnings estimates by analysts and whether our actual earnings meet or exceed such estimates;
– Additions or departures of key personnel;
– Our ability to execute our business plan and open new restaurants;
– Changes in the restaurant industry;
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– Competitive pricing pressures;
– Regulatory developments; and
– Changes in overall stock market conditions, including the stock prices of other restaurant companies.
In addition, our principal stockholders’ ownership may discourage a potential acquirer from making a tender offer or otherwise attempt to obtain control of the Company, which, in time, could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.
In the past, companies that have experienced extreme fluctuations in the market price of their stock have been the subject of securities class action litigation. If we were to be subject to such litigation, it could result in substantial costs and a diversion of our management’s attention and resources, which may have a material adverse effect on our business, results of operations, and financial condition.
We will not receive any proceeds from the sale of the shares of common stock by the selling securityholders. All such proceeds will be received by the selling securityholders. However, we expect to use the proceeds from the exercise of the options for working capital and other general corporate purposes.
The shares offered by this prospectus are being registered for reoffers and resales by the selling securityholders, who may acquire such shares pursuant to the exercise of options granted under the 2016 Plan. All of the shares of our common stock registered for sale under this reoffer prospectus will be owned, prior to the offer and sale of such shares, by certain of our employees, directors, and executive officers listed below (the “selling securityholders”). We are registering the shares of our common stock covered by this reoffer prospectus for the selling securityholders. As used in this reoffer prospectus, “selling securityholders” includes the pledges, donees, transferees or others who may later hold the selling securityholders’ interests. The selling securityholders named below may resell all, a portion or none of such shares from time to time. In addition, certain non-affiliates of the Company, not named in the following table, who hold less than the lesser of 1,000 shares or 1% of the shares issuable under a Plan may also use this prospectus to sell up to that amount of shares acquired by them pursuant to the exercise of options or other stock awards granted to them under the 2016 Plan.
The following table sets forth, with respect to each selling securityholder, based upon information available to us as of October 4, 2018, the number of shares of common stock beneficially owned before and after the sale of the shares offered by this prospectus; the maximum number of shares to be sold; and the percent of the outstanding shares of common stock owned before and after the sale of the common stock offered by this prospectus.
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| Selling Securityholder |
Shares Owned
Prior to the Sale (1) |
Percentage
of Shares Owned Prior to the Sale |
Shares
Registered |
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| Michael Weinstein, Chairman of the Board and CEO | 966,603(2) | 27.68% | -0- | |||
| Vincent Pascal, Senior Vice President | 77,983(3) | 2.22% | -0- | |||
| Paul Gordon, Senior Vice President | 40,875(3) | 1.16% | -0- | |||
| Robert Stewart | 62,675(4) | 1.78% | -0- | |||
| Bruce R. Lewin, Director | 297,681(5)(6) | 8.57% | -0- | |||
| Steven Shulman, Director | 20,300(7) | Less than 1% | -0- | |||
| Marcia Allen, Director | 13,500(7) | Less than 1% | -0- | |||
| Arthur Stainman, Director | 71,950(6)(8) | 2.07% | -0- | |||
| Steven Novick, Director | 13,500(7) | Less than 1% | -0- | |||
| All directors and exclusive officers as a group (nine persons) | 1,564,967(9) | 42.48% | -0- | |||
| Sonal Shah, General Counsel | 5,000 | Less than 1% | 5,000(10) |
| (1) | Based on 3,470,181 shares of common stock issued and outstanding as of October 4, 2018. Except to the extent otherwise indicated, to the best of the Company’s knowledge, each of the indicated persons exercises sole voting and investment power with respect to all shares beneficially owned by him. |
| (2) | Includes a 50% interest (113,500) shares held by Michael Weinstein in a limited liability company account maintained by his adult children; 4,200 shares held by The Weinstein Foundation for which Mr. Weinstein acts as trustee and has shared investment and voting power; and 21,375 shares issuable to Mr. Weinstein pursuant to stock options, all of which options are currently exercisable. |
| (3) | Includes 40,875 shares issuable pursuant to stock options exercisable by the estate of Robert Stewart within 60 days after the date of this Prospectus. |
| (4) | Includes 60,375 shares issuable pursuant to stock options exercisable within 60 days after the date of this Prospectus. |
| (5) | Includes 1,500 shares owned by Mr. Lewin in his Individual Retirement Account (“IRA”). |
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| (6) | Includes 5,000 shares issuable pursuant to stock options exercisable within 60 days after the date of this Prospectus. |
| (7) | Includes 13,500 shares issuable pursuant to stock options exercisable within 60 days after the date of this Prospectus. |
| (8) | Includes 31,150 shares owned by Mr. Stainman’s spouse and 9,200 shares held by investment advisory clients of First Manhattan Co. (“FMC”), as to which FMC and Mr. Stainman, in his capacity as Managing Member of First Manhattan LLC, the sole general partner of FMC, share dispositive and voting power. |
| (9) | Includes 243,000 shares issuable pursuant to stock options exercisable within 60 days after the date of this Proxy Statement. |
| (10) | One-half (2,500 shares) of these options are vested and one-half (2,500 shares) shall vest and become exercisable on August 18, 2019. |
We are registering the shares on behalf of the selling securityholders to permit the resale of these shares by these stockholders from time to time after the date of this prospectus.
The selling securityholders and any of their pledges, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or quoted or in private transactions. These sales may be at fixed or negotiated prices. The selling securityholders may use any one or more of the following methods when selling shares:
| · | Ordinary brokerage transactions and transactions in which the broker-dealer solicits investors; |
| · | Block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| · | Purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| · | An exchange distribution in accordance with the rules of the applicable exchange; |
| · | Privately negotiated transactions; |
| · | To cover short sales made after the date that this registration statement is declared effective by the SEC; |
| · | Broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share; |
| · | A combination of any such methods of sale; and |
| · | Any other method permitted pursuant to applicable law. |
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Broker-dealers engaged by the selling securityholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling securityholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling securityholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved.
The selling securityholders may from time to time pledge or grant a security interest in some or all of the shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of common stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provisions of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling securityholders under this prospectus.
Upon our being notified by a selling securityholder that any material arrangement has been entered into with a broker or dealer for the sale of shares through a secondary distribution, or a purchase by a broker or dealer, we will file a prospectus supplement, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (a) the name of each of such selling securityholder and the participating broker-dealers, (b) the number of shares involved, (c) the price at which such shares are being sold, (d) the commissions paid or the discounts or concessions allowed to such broker-dealers, (e) where applicable, that such broker-dealers did not conduct any investigation to verify the information set out or incorporated by reference in the prospectus, as supplemented, and (f) other facts material to the transaction.
In addition to any such number of shares sold hereunder, a selling stockholder may, at the same time, sell any share of common stock, including the shares offered by this prospectus, owned by such person in compliance with all of the requirements of Rule 144 under the Securities Act, regardless of whether such shares are covered by this prospectus.
There is no assurance that any of the selling stockholders will sell any or all of the shares offered by this prospectus.
In addition, upon us being notified in writing by a selling securityholders that a donee or pledgee intends to sell more than 500 shares of common stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law.
The selling securityholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.
The selling securityholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions,
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commissions and similar selling expenses, if any, that can be attributed to the sale of securities will be paid by the selling stockholder and/or the purchasers. Each selling securityholder has represented and warranted to us that it acquired the securities subject to this registration statement in the ordinary course of such selling securityholder’s business and, at the time of its purchase of such securities such selling securityholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.
We have advised each selling securityholder that it may not use shares registered on this registration statement to cover short sales of common stock made prior to the date on which this registration statement shall have been declared effective by the SEC. If a selling securityholder uses this prospectus for any sale of the common stock, it will be subject to the prospectus delivery requirements of the Securities Act. The selling securityholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such selling securityholders in connection with resales of their respective shares under this registration statement.
We are required to pay all fees and expenses incident to the registration of the shares, other than commissions and discounts of underwriters, dealers or agents, but we will not receive any proceeds from the sale of the common stock. We have agreed to indemnify the selling securityholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.
There is no assurance that any of the selling securityholders will sell any or all of the shares offered by this prospectus.
DESCRIPTION OF SECURITIES TO BE REGISTERED
The following summary of the terms of our capital stock does not purport to be complete and is qualified in its entirety by reference to the applicable provisions of New York law, our Certificate of Incorporation and our By-Laws.
As set forth in our Certificate of Incorporation, as amended, our authorized capital stock consists of 10,000,000 shares of common stock, par value $0.01 per share.
The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. The holders of our common stock are entitled to receive ratably such dividends as are declared by our board of directors out of funds legally available therefor. In the event of our liquidation, dissolution or winding up, holders of our common stock have the right to a ratable portion of assets remaining after payment of liabilities. The holders of our common stock have no preemptive rights or rights to convert their common stock into any other securities and are not subject to future calls or assessments by Ark. All issued and outstanding shares of our common stock are fully paid and non-assessable.
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INTEREST OF NAMED EXPERTS AND COUNSEL.
There are no interests of named experts and counsel.
DISCLOSURE OF
COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Company, the SEC has expressed its opinion that such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Company of expenses incurred or paid by a director, officer or controlling person of the Company in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the shares being registered, the Company will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and we will be governed by the final adjudication of such issue.
EXEMPTION FROM REGISTRATION CLAIMED
No restricted shares of Common Stock have been issued under the 2016 Plan.
There have been no material changes in the Company’s affairs since the end of the latest fiscal year that have not been disclosed in a previously filed report.
The validity of the shares of our common stock being offered for sale pursuant to this Prospectus has been passed upon for us by Davidoff Hutcher & Citron LLP, 605 Third Avenue, 34 th Floor, New York, New York 10158.
Our consolidated financial statements for the two fiscal years ended September 30, 2017 and October 1, 2016 have been incorporated by reference in this Prospectus and in this Registration Statement in reliance upon the report of CohnReznick LLP, independent registered public accounting firm, on their audit of our financial statements given on authority of this firm as an expert in accounting and auditing.
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH DIFFERENT OR ADDITIONAL INFORMATION. THIS
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PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT SEEKING AN OFFER TO BUY IN ANY JURISDICTION WHERE SUCH OFFER, OR SALE IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR ANY SALE OF THESE SHARES.
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PART II
INFORMATION REQUIRED IN THE
REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed with the Securities and Exchange Commission (the “SEC”) by Ark Restaurants Corp., a New York corporation (the “Registrant”), pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are incorporated by reference in this registration statement:
| (1) | Registrant’s Definitive Proxy Statement, as amended, filed with the SEC on February 9, 2018. |
| (2) | Registrant’s Annual Report on Form 10-K for the year ended September 30, 2017, filed with the SEC on December 29, 2017. |
| (3) | Ark’s Quarterly Report on Form 10-Q for the period ended December 30, 2017 filed with the SEC on February 13, 2018. |
| (4) | Ark’s Quarterly Report on Form 10-Q for the period ended March 31, 2018 filed with the SEC on May 15, 2018 |
| (5) | Ark’s Quarterly Report on Form 10-Q for the period ended June 30, 2018, filed with the SEC on August 14, 2018. |
| (6) | The description of our Common Stock contained in Registrant’s Registration Statement on Form S-18 (No. 33-00964). |
All documents subsequently filed by the Registrant after the date of this prospectus pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act shall be deemed to be incorporated by reference in this prospectus and to be a part of this prospectus from the date of filing of such documents. Any statement contained in a previously filed document incorporated by reference in this prospectus shall be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement in this prospectus modifies or supersedes such previous statement and any statement contained in this prospectus shall be deemed to be modified or superseded to the extent that a statement in any document subsequently filed, which is incorporated by reference in this prospectus, modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus.
You may read and copy any reports, statements or other information we have filed at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the Public Reference Rooms. Our filings are also available on the Internet at the SEC’s website at http:\\www.sec.gov.
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Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
(A) The registrant’s authority to indemnify its officers and directors is governed by the provisions of Sections 721 through 726 of the Business Corporation Law of the State of New York (the “BCL”), by the Certificate of Incorporation of the registrant, and by the registrant’s By-laws.
(B) The Certificate of Incorporation of the registrant provides as follows:
The personal liability of the directors of the Corporation to the Corporation or its shareholders for damages for any breach of duty as a director is hereby eliminated to the fullest extent permitted by the Business Corporation Law of the State of New York as the same may be amended and supplemented. The Corporation shall, to the fullest extent permitted by the New York Business Corporation Law, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power to indemnify under said law from and against any and all of the expenses, liabilities or other matters referred to in or covered by said law, and the indemnification provided for herein shall not be deemed exclusive of any other rights to which any indemnified person may be entitled under any by-laws, agreement, vote of shareholders or directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of heirs, executors and administrators of such person.
(C) Article V, Section 4 of the registrant’s By-Laws provides as follows:
The Corporation shall, to the fullest extent permitted by the New York Business Corporation Law as amended or supplemented, indemnify any and all persons whom it shall have power to indemnify under said law from and against any and all of the expenses, liabilities or other matters referred to in or covered by said law.
The Corporation may enter into indemnification agreements with any officers, directors or other persons whom it shall have power to indemnify, when and as determined by the Board of Directors.
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(D) The Board of Directors of the registrant authorized the registrant to enter into indemnity agreements with officers and directors of the registrant when and as determined by the Board of Directors. Pursuant to the foregoing authority, the registrant has entered into indemnity agreements with each of its directors and certain of its officers.
The indemnity agreements obligate the registrant to provide the maximum protection allowed under the BCL. The indemnity agreements supplement and increase the protection afforded to officers and directors under the Certificate of Incorporation in the following respects:
1. The indemnity agreements establish the presumption that the officer or director has met the standard of conduct required for indemnification, as prescribed under the BCL. Indemnification will be made unless the Board of Directors, independent legal counsel or the stockholders of the registrant determines that the applicable standard of conduct has not been met.
2. The indemnity agreements provide that litigation expenses shall be paid promptly by the registrant as they are incurred or shall be advanced on behalf of the officer or director as may be appropriate against delivery of invoices therefor in advance of indemnification, provided that if it is ultimately determined that such officer or director is not entitled to indemnification for such expenses he or she shall promptly repay such amounts to the registrant.
3. In the event of a determination by the Board of Directors, independent legal counsel or the stockholders of the registrant that an officer or director did not meet the standard of conduct required for indemnification, the indemnity agreements allow such officer or director to contest this determination by petitioning a court to make an independent determination of whether such officer or director is entitled to indemnification under the indemnity agreements.
4. The indemnity agreements explicitly provide for partial indemnification of costs and expenses in the event that an officer or director is not entitled to full indemnification under the terms of the indemnity agreements.
5. The indemnity agreements cannot be unilaterally modified or amended by the registrant, the Board of Directors or the stockholders of the registrant.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to officers and directors pursuant to the provisions described above or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
Item 7. Exemption from Registration Claimed.
Not applicable.
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Item 8. Exhibits
| Exhibit Number | Description | |
| 4.1 | 2016 Stock Option Plan | |
| 4.2 | Form of Incentive Stock Option Agreement | |
| 4.3 | Form of Non-Statutory Stock Option Agreement | |
| 4.4 | Amendment to Ark Restaurants Corp. 2010 Stock Option Plan | |
| 5.1 | Opinion of Davidoff Hutcher & Citron LLP | |
| 23.1 | Consent of Davidoff Hutcher & Citron LLP | |
| 23.2 | Consent of CohnReznick LLP | |
| 24.1 | Power of attorney of officers and directors of the Registrant (included in page II-7) |
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
| (i) | To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; |
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| (iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
provided, however, that paragraphs (a)1(i) and (a)(1)(ii) of above do not apply if the registration statement is on Form S-8, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(5) For determining liability of the undersigned registrant under the Securities Act to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be file( pursuant to Rule 424 (§230.424 of this chapter);
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
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(b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
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Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York, on October 12, 2018.
| ARK RESTAURANTS CORP. | |||
| By: | /s/ Michael Weinstein | ||
| By: | Michael Weinstein | ||
| Title: | Chairman of the Board and Chief | ||
| Executive Officer | |||
KNOW ALL MEN BY THESE PRESENTS , that each person whose signature appears below constitutes and appoints Michael Weinstein and Sonal Shah, and each of them, his true and lawful attorney-in-fact and agent, with full power of substitution and revocation, for him and in his name, place and stead, in any and all capacities (until revoked in writing), to sign any and all amendments (including post-effective amendments) to this registration statement and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully for all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. This power-of-attorney does not revoke any earlier powers-of-attorney.
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated.
| SIGNATURE | TITLE | DATE |
| /s/ Michael Weinstein | Chairman of the Board and Chief | |
| Michael Weinstein | Executive Officer | October 12, 2018 |
| /s/Anthony J. Sirica | Chief Financial Officer | |
| Anthony J. Sirica | October 12, 2018 | |
| /s/ Vincent Pascal | Senior Vice President, Chief Operating | |
| Vincent Pascal | Officer and Director | October 12, 2018 |
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| /s/ Paul Gordon | Senior Vice President and Director | October 12, 2018 |
| Paul Gordon | ||
| /s/ Marcia Allen | Director | October 12, 2018 |
| Marcia Allen | ||
| /s/ Steven Shulman | Director | October 12, 2018 |
| Steven Shulman | ||
| /s/ Bruce R. Lewin | Director | October 12, 2018 |
| Bruce R. Lewin | ||
| /s/ Arthur Stainman | Director | October 12, 2018 |
| Arthur Stainman | ||
| /s/ Stephen Novick | Director | October 12, 2018 |
| Stephen Novick |
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ARK RESTAURANTS CORP.
REGISTRATION STATEMENT ON FORM S-8,
EXHIBIT INDEX
EXHIBIT 4.1
2016 STOCK OPTION PLAN
| 1. | Establishment, Purpose And Term Of Plan . |
| 1.1. | Establishment . The Ark Restaurants Corp. 2016 Stock Option Plan (the “ Plan ”) is hereby established effective as of January 29, 2016. |
| 1.2. | Purpose . The purpose of the Plan is to advance the interests of the Participating Company Group and its stockholders by providing an incentive to attract, retain and reward persons performing services for the Participating Company Group and by motivating such persons to contribute to the growth and profitability of the Participating Company Group. |
| 1.3. | Term of Plan . The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all of the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. However, all Options shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company. |
| 2. | Definitions and Construction . |
| 2.1. | Definitions . Whenever used herein, the following terms shall have their respective meanings set forth below: |
| (a) | “ Board ” means the Board of Directors of the Company. If one or more Committees have been appointed by the Board to administer the Plan, “Board” also means such Committee(s). |
| (b) | “ Code ” means the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder. |
| (c) | “ Committee ” means the Stock Option Committee or other committee of the Board duly appointed to administer the Plan and having such powers as shall be specified by the Board. Unless the powers of the Committee have been specifically limited, the Committee shall have all of the powers of the Board granted herein, including, without limitation, the power to amend or terminate the Plan at any time, subject to the terms of the Plan and any applicable limitations imposed by law. The members of the Committee must be outside directors. |
| (d) | “ Company ” means Ark Restaurants Corp., a New York corporation, or any successor corporation thereto. |
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| (e) | “ Director ” means a member of the Board or of the board of directors of any other Participating Company. |
| (f) | “ Disability ” means the inability of the Optionee, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Optionee’s position with the Participating Company Group because of the sickness or injury of the Optionee. |
| (g) | “ Employee ” means any person treated as an employee (including an Officer or a Director who is also treated as an employee) in the records of Participating Company and, with respect to any Incentive Stock Option granted to such person, who is an employee for purposes of Section 422 of the Code; provided, however, that neither service as a Director nor payment of a director’s fee shall be sufficient to constitute employment for purposes of the Plan. The Company shall exercise its discretion as to whether an individual has become or has ceased to be an Employee and the effective date of such individual’s employment or termination of employment, as the case may be. For purposes of an individual’s rights, if any, under the Plan as of the time of the Company’s determination, all such determinations by the Company shall be final, binding and conclusive, notwithstanding that the Company or any court of law or governmental agency subsequently makes a contrary determination. |
| (h) | “ Exchange Act ” means the Securities Exchange Act of 1934, as amended. |
| (i) | “ Fair Market Value ” means, as of any date, the value of a share of Stock or other property as determined by the Board, in its discretion, or by the Company, in its discretion, if such determination is expressly allocated to the Company herein, subject to the following: |
| (i) | If, on such date, the Stock is listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be the closing price of a share of Stock (or the mean of the closing bid and asked prices of a share of Stock if the Stock is so quoted instead) as quoted on The Nasdaq Global Market, The Nasdaq Capital Market or such other national or regional securities exchange or market system constituting the primary market for the Stock, as reported in The Wall Street Journal or such other source as the Company deems reliable. If the Stock is not listed or admitted to trade on a national securities exchange, the Fair Market Value shall be the mean between the closing bid and asked price for the Stock on such date, as furnished by the the OTC Markets Group, Inc. (the “OTC”) or similar organization. If the relevant date does not fall on a day on which the Stock has traded on such securities exchange or market system, the date on which the Fair Market Value shall be established shall be the last day on which the Stock was so traded prior to the relevant date, or such other appropriate day as shall be determined by the Board, in its discretion. |
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| (ii) | If, on such date, the Stock is not listed on a national or regional securities exchange or market system, the Fair Market Value of a share of Stock shall be as determined by the Board consistent with Treasury Regulation Section 1.409A-1(b)(5)(iv) (or successor provision) in good faith without regard to any restriction other than a restriction which, by its terms, will never lapse. |
| (j) | “ Incentive Stock Option ” means an Option intended to be (as set forth in the Option Agreement) and which qualifies as an incentive stock option within the meaning of Section 422(b) of the Code. |
| (k) | “ Insider ” means an Officer, a Director of the Company or other person whose transactions in Stock are subject to Section 16 of the Exchange Act. |
| (l) | “ Nonstatutory Stock Option ” means an Option not intended to be (as set forth in the Option Agreement) or which does not qualify as an Incentive Stock Option. |
| (m) | “ Officer ” means any person designated by the Board as an officer of the Company. |
| (n) | “ Option ” means a right to purchase Stock pursuant to the terms and conditions of the Plan. An Option may be either an Incentive Stock Option or a Nonstatutory Stock Option. |
| (o) | “ Option Agreement ” means a written agreement between the Company and an Optionee setting forth the terms, conditions and restriction of the Option granted to the Optionee and any shares acquired upon the exercise thereof. |
| (p) | “ Optionee ” means a person who has been granted one or more Options. |
| (q) | “ Parent Corporation ” means any present or future “parent corporation” of the Company, as defined in Section 424(e) of the Code. |
| (r) | “ Participating Company ” means the Company or any Parent Corporation or Subsidiary Corporation. |
| (s) | “ Participating Company Group ” means, at any point in time, all corporations collectively which are then Participating Companies. |
| (t) | “ Rule 16b-3 ” means Rule 16b-3 under the Exchange Act, as amended from time to time, or any successor rule or regulation. |
| (u) | “ Securities Act ” means the Securities Act of 1933, as amended. |
| (v) | “ Service ” means an Optionee’s employment or service with the Participating Company Group, whether in the capacity of an Employee or a Director. An Optionee’s Service shall not be deemed to have terminated merely because of a change in the capacity in which the Optionee renders Service to the Participating Company Group or a change in the Participating Company for which the Optionee renders such Service, provided that there is no interruption or termination of the |
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Optionee’s Service. Furthermore, an Optionee’s Service with the Participating Company Group shall not be deemed to have terminated if the Optionee takes any military leave, sick leave, or other bona fide leave of absence approved in advance in writing by the Company; provided, however, that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day of such leave the Optionee’s Service shall be deemed to have terminated unless the Optionee’s right to return to Service with the Participating Company Group is guaranteed by statute or contract. Notwithstanding the foregoing, unless otherwise designated by the Company or required by law, a leave of absence shall not be treated as Service for purposes of determining vesting under the Optionee’s Option Agreement. The Optionee’s Service shall be deemed to have terminated either upon an actual termination of Service or upon the corporation for which the Optionee performs Service ceasing to be a Participating Company. Subject to the foregoing, the Company, in its discretion, shall determine whether the Optionee’s Service has terminated and the effective date of such termination.
| (w) | “ Stock ” means the common stock of the Company, as adjusted from time to time in accordance with Section 4.2. |
| (x) | “ Subsidiary Corporation ” means any present or future “subsidiary corporation” of the Company, as defined in Section 424(f) of the Code, which would constitute an “eligible issuer of service recipient stock” under Treasury Regulation Section 1.409A-1(b)(5)(iii)(E) (or successor provision). |
| (y) | “ Ten Percent Owner Optionee ” means an Optionee who, at the time an Option is granted to the Optionee, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of a Participating Company within the meaning of Section 422(b)(6) of the Code. |
| 2.2. | Construction . Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly requires otherwise. |
| 3. | Administration . |
| 3.1. | Administration by the Board . The Plan shall be administered by the Board through the Committee. All questions of interpretation of the Plan or of any Option shall be determined by the Committee, and such determinations shall be final and binding upon all persons having an interest in the Plan or such Option. Any power of the Committee may also be exercised by the Board of Directors, except to the extent that the grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing profit recovery provisions of Section 16 of the Exchange Act, or violate the listing requirements of NASDAQ or such other exchange on which the Shares are traded. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control. |
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| 3.2. | Authority of Officers . Any Officer shall have the authority to act on behalf of the Company with respect to any matter, right, obligation, determination or election which is the responsibility of or which is allocated to the Company herein, provided the Officer has apparent authority with respect to such matter, right, obligation, determination or election. |
| 3.3. | Powers of the Committee . In addition to any other powers set forth in the Plan and subject to the provisions of the Plan, the Committee shall have the full and final power and authority, in its discretion: |
| (a) | to determine the persons to whom, and the time or times at which, Options shall be granted and the number of shares of Stock to be subject to each Option; |
| (b) | to designate Options as Incentive Stock Options or Nonstatutory Stock Options; |
| (c) | to determine the Fair Market Value of shares of Stock or other property; |
| (d) | to determine the terms, conditions and restrictions applicable to each Option (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the Option, (ii) the method of payment for shares purchased upon the exercise of the Option, (iii) the method for satisfaction of any tax withholding obligation arising in connection with the Option or such shares, including by the withholding obligation arising in connection with the Option or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms and conditions of the exercisability of the Option or the vesting, forfeiture or waiver of any shares acquired upon the exercise thereof, (v) the time of the expiration of the Option, (vi) the effect of the Optionee’s termination of Service with the Participating Company Group on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to the Option or such shares not inconsistent with the terms of the Plan; |
| (e) | to approve one or more forms of Option Agreement; |
| (f) | to amend, modify, adjust, extend, cancel or renew any Option or to waive any restrictions or conditions applicable to any Option or any shares acquired upon the exercise thereof; |
| (g) | to accelerate, continue, extend or defer the exercisability of any Option or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following an Optionee’s termination of Service with the Participating Company Group; |
| (h) | to prescribe, amend or rescind rules, guidelines and policies relating to the Plan, or to adopt supplements to, or alternative versions of, the Plan, including, without |
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limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted Options;
| (i) | to correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Option Agreement and to make all other determinations and take such other actions with respect to the Plan or any Option as the Board may deem advisable to the extent not inconsistent with the provisions of the Plan or applicable law; and |
| (j) | provided , however , that the Committee shall not have such power to the extent that the mere possession (as opposed to the exercise) of such power would result in adverse tax consequences to any participant under Code Section 409A. In making such determinations, the Committee may take into account such factors as the Committee, in its absolute discretion, shall deem relevant. Subject to the express provisions of the Plan, the Committee shall also have the authority to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to it, to determine the terms and provisions of the respective option instruments or agreements (which need not be identical) and to make all other determinations and take all other actions necessary or advisable for the administration of the Plan. The Committee’s determinations on the matters referred to in this Section 3.3 shall be conclusive. Any determination by a majority of the members of the Committee shall be deemed to have been made by the whole Committee. |
| 3.4. | Administration with Respect to Insiders . With respect to participation by Insiders in the Plan, at any time that any class of equity security of the Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall be administered in compliance with the requirements, if any, of Rule 16b-3. |
| 3.5. | Indemnification . In addition to such other rights of indemnification as they may have as members of the Board or officers or employees of the Participating Company Group, members of the Board and any officers or employees of the Participating Company Group to whom authority to act for the Board or the Company is delegated shall be indemnified by the Company against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any right granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any such action, suit or proceeding, except in relation to matter as to which it shall be adjudged in such action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct in duties; provided, however, that within sixty (60) days after the institution of such action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at its own expense to handle and defend the same. |
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| 4. | Shares Subject To Plan . |
| 4.1. | Maximum Number of Shares Issuable . Subject to adjustment as provided in Section 4.2, the maximum aggregate number of shares of Stock that may be issued under the plan shall be Five Hundred Thousand (500,000) and shall consist of authorized but unissued or reacquired shares of Stock or any combination thereof. If an outstanding Option for any reason expires or is terminated or canceled or if shares of Stock are acquired upon the exercise of an Option subject to a Company repurchase option and are repurchased by the Company at the Optionee’s exercise price, the shares of Stock allocable to the unexercised portion of such Option or such repurchased shares of Stock shall again be available for issuance under the Plan. However, except as adjusted pursuant to Section 4.2, in no event shall more than Five Hundred Thousand (500,000) shares of Stock be available in the aggregate or Five Hundred Thousand (500,000) in any one calendar year for issuance pursuant to the exercise of Incentive Stock Options (the “ ISO Share Issuance Limit ”). Notwithstanding the foregoing, at any such time as the offer and sale of securities pursuant to the Plan is subject to compliance with Section 260.140.45 of Title 10 of the California Code of Regulations (“ Section 260.140.45 ”), the total number of shares of Stock issuable upon the exercise of all outstanding Options (together with options outstanding under any other stock option plan of the Company) and the total number of shares provided for under any stock bonus or similar plan of the Company shall not exceed thirty percent (30%) (or such other higher percentage limitation s may be approved by the stockholders of the Company pursuant to Section 260.140.45) of the then outstanding shares of the Company as calculated in accordance with the conditions and exclusions of Section 260.140.45. |
| 4.2. | Adjustments for Changes in Capital Structure . In the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification or similar change in the capital structure of the Company, appropriate adjustments shall be made in the number and class of shares subject to the Plan and to any outstanding Options, in the ISO Share Issuance Limit set forth in Section 4.1, and in the exercise price per share of any outstanding Options. If a majority of the shares which are of the same class as the shares that are subject to outstanding Options are exchanged for, converted into, or otherwise become (whether or not pursuant to an Ownership Change Event, as defined in Section 8.1) shares of another corporation (the “ New Shares ”), the Board may unilaterally amend the outstanding Options to provide that such Options are exercisable for New Shares. In the event of any such amendment, the number of shares subject to, and the exercise price per share of, the outstanding Options shall be adjusted in a fair and equitable manner as determined by the Board, in its discretion. Notwithstanding the foregoing, any fractional share resulting from an adjustment pursuant to this Section 4.2 shall be rounded down to the nearest whole number, and in no event may the exercise price of any Option be decreased to an amount less than the par value, if any, of the stock subject to the Option. The adjustments determined by the Board pursuant to this Section 4.2 shall be final, binding and conclusive. Notwithstanding the foregoing, any adjustments made pursuant to this Section 4.2 shall be made in such a manner as to ensure that, after such adjustment, the affected Options either continue not to be subject to Section 409A of the Code or else comply with the requirements of Section 409A of |
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the Code. Neither the Committee nor the Board shall have the authority to make any adjustments pursuant to this Section 4.2 to the extent the existence of such authority would cause an Option that is not intended to be subject to Section 409A of the Code at the time such Option is granted to be subject thereto.
| 5. | Eligibility and Option Limitations . |
| 5.1. | Persons Eligible for Options . Options may be granted only to Employees and Directors. For purposes of the foregoing sentence, “Employees” and “Directors” shall include prospective Employees and prospective Directors to whom Options are granted in connection with written offers of an employment or other service relationship with the Participating Company Group in accordance with Section 5.2. Eligible persons may be granted more than one (1) Option. However, eligibility in accordance with this Section shall not entitle any person to be granted an Option, or, having been granted an Option, to be granted an additional Option. |
| 5.2. | Option Grant Restrictions . Any person who is not an Employee on the effective date of the grant of an Option to such person may be granted only a Nonstatutory Stock Option. An Incentive Stock Option granted to a prospective Employee upon the condition that such person become an Employee shall be deemed granted effective on the date such person commences Service with a Participating Company, with an exercise price determined as of such date in accordance with Section 6.2. |
| 5.3. | Fair Market Value Limitation . To the extent that options designated as Incentive Stock Options (granted under all stock option plans of the Participating Company Group, including the Plan) become exercisable by an Optionee for the first time during any calendar year for stock having a Fair Market Value greater than One Hundred Thousand Dollars ($100,000), the portions of such options which exceed such amount shall be treated as Nonstatutory Stock Options. For purposes of this Section 5.3, options designated as Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of stock shall be determined as of the time the option with respect to such stock is granted. If the Code is amended to provide for a different limitation from that set forth in this Section 5.3, such different limitation shall be deemed incorporated herein effective as of the date and with respect to such Options as required or permitted by such amendment to the Code. If an Option is treated as an Incentive Stock Option in part and as a Nonstatutory Stock Option in part by reason of the limitation set forth in this Section 5.3, the Optionee may designate which portion of such Option the Optionee is exercising. In the absence of such designation, the Optionee shall be deemed to have exercised the Incentive Stock Option portion of the Option first. Separate certificates representing each such portion shall be issued upon the exercise of the Option. |
| 6. | Terms and Conditions of Options . |
| 6.1. | General . Options shall be evidenced by Option Agreements specifying the number of shares of Stock covered thereby, in such form as the Board shall from time to time establish. No Option or purported Option shall be a valid and binding obligation of the |
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Company unless evidenced by a fully executed Option Agreement. Option Agreements may incorporate all or any of the terms of the Plan by reference and shall comply with and be subject to the terms and conditions set forth in this Section 6.
| 6.2. | Exercise Price . The exercise price for each Option shall be established in the discretion of the Board; provided, however, that (a) the exercise price per share for an Option shall not be less than the Fair Market Value of a share of Stock on the effective date of grant of the Option determined in good faith by the Committee, with the approval of the Board, in accordance with the Plan and in accordance with the requirements of Code Sections 409A and 422, and (b) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall have an exercise price per share less than one hundred ten percent (110%) of the Fair Market Value of a share of Stock on the effective date of grant of the Option. Notwithstanding the foregoing, an Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be granted with an exercise price lower than the minimum exercise price set forth above if such Option is granted pursuant to an assumption or substitution for another option in a manner qualifying under the provisions of Section 424(a) of the Code. |
| 6.3. | Exercisability and Term of Options . Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, and (c) no Option granted to a prospective Employee or prospective Director may become exercisable prior to the date on which such person commences Service with a Participating Company. Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall terminate no later than ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions. |
| 6.4. | Payment of Exercise Price . |
| (a) | Forms of Consideration Authorized . Except as otherwise provided below, payment of the exercise price for the number of shares of Stock being purchased pursuant to any Option shall be made: |
| (i) | in cash, by check or cash equivalent, |
| (ii) | by tender to the Company, or attestation to the ownership, of shares of Stock owned by the Optionee having a Fair Market Value not less than the exercise price, |
| (iii) | by delivery of a properly executed notice together with irrevocable instructions to a broker providing for the assignment to the Company of the proceeds of a sale or loan with respect to some or all of the shares being acquired upon the |
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exercise of the Option (including, without limitation, through an exercise complying with the provisions of Regulation T as promulgated from time to time by the Board of Governors of the Federal Reserve System) (a “ Cashless Exercise ”),
| (iv) | net issue exercise, whereby the Optionee surrenders an Option at the principal office of the Company (or such other office or agency as the Company may designate) together with a properly completed and executed exercise notice reflecting such election, in which event the Company will issue to the Optionee that number of shares of Stock computed using the following formula: |
| X= | Y(A-B) | |
| A |
Where:
| X = | the number of shares of Stock to be issued to the Optionee; |
| Y = | the number of shares of Stock subject to the Option or, if only a portion of the Option is being exercised, the portion of the Option being cancelled (at the date of such calculation); |
| A = | the Fair Market Value of one share of Stock (at the date of such calculation); |
| B = | the exercise price per share for the Option (as adjusted to the date of the calculation); |
| (v) | by such other consideration as may be approved by the Board from time to time to the extent permitted by applicable law, |
| (vi) | by any combination of the foregoing methods. |
The Board may at any time or from time to time, by approval of or by amendment to the standard forms of Option Agreement described in Section 7, or by other means, grant Options which do not permit all of the foregoing forms of consideration to be used in payment of the exercise price or which otherwise restrict one or more forms of consideration.
| (b) | Limitations on Forms of Consideration . |
| (i) | Tender of Stock . Notwithstanding the foregoing, an Option may not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock to the extent such tender or attestation would constitute a violation of the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock. Unless otherwise provided by the Board, an Option may |
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not be exercised by tender to the Company, or attestation to the ownership, of shares of Stock unless such shares either have been owned by the Optionee for more than six (6) months (and not used for another Option exercise by attestation during such period) or were not acquired, directly or indirectly, from the Company.
| (ii) | Cashless Exercise . The Company reserves, at any and all times, the right, in the Company’s sole and absolute discretion, to establish, decline to approve or terminate any program or procedures for the exercise of Options by means of a Cashless Exercise. |
| (iii) | Compliance with Law . No form of consideration to be used in payment of the exercise price shall be permitted if the exercise of an Option using such form of consideration would be a violation of any law. |
| 6.5. | Tax Withholding . The Company shall have the right, but not the obligation, to deduct from the shares of Stock issuable upon the exercise of an Option, or to accept from the Optionee the tender of, a number of whole shares of Stock having a Fair Market Value, as determined by the Company, equal to all or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld by the Participating Company Group with respect to such Option or the shares acquired upon the exercise thereof. Alternatively or in addition, in its discretion, the Company shall have the right to require the Optionee, through payroll withholding, cash payment or otherwise, including by means of a Cashless Exercise, to make adequate provision for any such tax withholding obligations of the Participating Company Group arising in connection with the Option or the shares acquired upon the exercise thereof. The Fair Market Value of any shares of Stock withheld or tendered to satisfy any such tax withholding obligations shall not exceed the amount determined by the applicable minimum statutory withholding rates. The Company shall have no obligation to deliver shares of Stock or to release shares of Stock from an escrow established pursuant to the Option Agreement until the Participating Company Group’s tax withholding obligations have been satisfied by the Optionee. |
| 6.6. | Repurchase Rights; Potential Repayment of Awards . |
| (a) | Repurchase Rights . Shares issued under the Plan may be subject to a right of first refusal, one or more repurchase options, or other conditions and restrictions as determined by the Board in its discretion at the time the Option is granted. The Company shall have the right to assign at any time any right of first refusal or repurchase right it may have, whether or not such right is then exercisable, to one or more persons as may be selected by the Company. Notwithstanding the foregoing, no such right, condition or restriction shall be imposed which may constitute a deferral of compensation or cause the Stock to fail to be “service recipient stock” under Treasury Regulation Section 1.409A-1(b)(5) (or successor provision). Upon request by the Company, each Optionee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares of Stock hereunder and shall promptly present to the Company any and all certificates representing shares of Stock acquired hereunder for the placement on such certificates of appropriate legends evidencing any such transfer restrictions. |
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| (b) | Potential Repayment of Awards . The Board shall have the authority from time to time, in its discretion, to provide that the Optionee shall be required to repay the economic benefit (plus interest) of any previously exercised Options granted under the Plan in the event that the Optionee violates any separation agreement, non-compete agreement or any other agreement between the Optionee and any Participating Company. |
| 6.7. | Effect of Termination of Service . |
| (a) | Option Exercisability . Subject to earlier termination of the Option as otherwise provided herein and unless otherwise provided by the Board in the grant of an Option and set forth in the Option Agreement, an Option shall be exercisable after an Optionee’s termination of Service only during the applicable time period determined in accordance with this Section 6.7 and thereafter shall terminate: |
| (i) | Disability . If the Optionee’s Service terminates because of the Disability of the Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee (or the Optionee’s guardian or legal representative) at any time prior to the expiration of twelve (12) months (or such longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the date of expiration of the Option’s term as set forth in the Option Agreement evidencing such Option (the “ Option Expiration Date ”). |
| (ii) | Death . If the Optionee’s Service terminates because of the death of the Optionee, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee’s legal representative or other person who acquired the right to exercise the Option by reason of the Optionee’s death at any time prior to the expiration of twelve (12) months (or such longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date. |
| (iii) | Retirement . If the Optionee’s Service terminates because of retirement pursuant to any applicable retirement plan of any Participating Company, the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, may be exercised by the Optionee (or the Optionee’s guardian or legal representative) at any time prior to the expiration of thirty-six (36) months (or such longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date. |
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| (iv) | Voluntary Termination; Termination for Cause. If the Optionee’s Service terminates because either (1) the Optionee voluntarily terminates the Optionee’s Service (“ Voluntary Termination ”) or (2) the Optionee’s Service is terminated for cause (as hereinafter defined) by any Participating Company (“ Termination for Cause ”), the Option, to the extent unexercised and exercisable on the date on which the Optionee’s Service terminated, shall terminate immediately upon the termination of Optionee’s Service (unless otherwise determined by the Board, in its discretion). For the purposes hereof, termination “for cause” shall mean termination as a result of or caused by Optionee’s theft, embezzlement or fraud involving any Participating Company, the violation of a material term or condition of Optionee’s employment, substantial failure on the part of Optionee to perform Optionee’s job duties, the disclosure by Optionee of confidential information of any Participating Company, the Optionee’s stealing trade secrets or intellectual property owned by any Participating Company, willful misconduct or dishonesty or conviction of or failure to contest prosecution for a felony or a crime of moral turpitude, excessive absenteeism unrelated to illness, any act by Optionee in competition with any Participating Company, or any other act, activity or conduct of Optionee which in the opinion of the Board is adverse to the best interests of any Participating Company. |
| (v) | Other Termination of Service . If the Optionee’s Service terminates for any reason, except Disability or death, the Option, to the extent unexercised and exercisable by the Optionee on the date on which the Optionee’s Service terminated, may be exercised by the Optionee at any time prior to the expiration of three (3) months (or such longer period of time as determined by the Board, in its discretion) after the date on which the Optionee’s Service terminated, but in any event no later than the Option Expiration Date. |
| (b) | Extension if Optionee Subject to Section 16(b) . Notwithstanding the foregoing, if a sale within the applicable time periods set forth in Section 6.7(a) of shares acquired upon the exercise of the Option would subject the Optionee to suit under Section 16(b) of the Exchange Act, the Option shall remain exercisable until the earliest to occur of (i) the tenth (10th) day following the date on which a sale of such shares by the Optionee would no longer be subject to such suit, (ii) the one hundred and ninetieth (190th) day after the Optionee’s termination of Service, or (iii) the Option Expiration Date. |
| (c) | Deferral of Option Shares . The Committee may from time to time establish procedures pursuant to which an Optionee may elect to defer, until a time or times later than the exercise of an Option, receipt of all or a portion of the shares of Stock subject to such Option and/or to receive cash at such later time or times in lieu of such deferred shares, all on such terms and conditions as the Committee shall determine. If any such deferrals are permitted, then notwithstanding Sections 6.3 and 6.4. above, an Optionee who elects such deferral shall not have any rights as a stockholder with respect to such deferred shares unless and until shares are actually |
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delivered to the participant with respect thereto, except to the extent otherwise determined by the Committee. Notwithstanding anything herein to the contrary, in no event will any deferral of the delivery of shares of Stock or any other payment with respect to any Option be allowed if the Committee determines, in its sole discretion, that the deferral would result in the imposition of additional tax under Code Section 409A(a)(1)(B).
| 6.8. | Non-Transferability of Options . During the lifetime of the Optionee, an Option shall be exercisable only by the Optionee or the Optionee’s guardian or legal representative. No Option shall be assignable or transferable by the Optionee, except by will or by the laws of descent and distribution. Notwithstanding the foregoing, to the extent permitted by the Board, in its discretion, and set forth in the Option Agreement evidencing such Option, a Nonstatutory Stock Option shall be assignable or transferable subject to the applicable limitations, if any, described in Section 260.140.41 of Title 10 of the California Code of Regulations, Rule 701 under the Securities Act, and the General Instructions to Form S-8 Registration Statement under the Securities Act. The Board, in its discretion, may permit the transfer of an Option for estate-planning purposes by an Optionee to his or her spouse, biological or adopted children or grandchildren or to a trust exclusively for the benefit of such Optionee, spouse, children, and/or grandchildren; provided, however, that notwithstanding such transfer, the Optionee making such transfer shall be deemed to continue to be the owner of such Options for purposes of the Plan. |
| 6.9. | No Rights as Stockholder . Until the shares of Stock are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the shares of Stock subject to an Option, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such shares of Stock promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the shares of Stock are issued, except as provided in Section 4.2 of the Plan. |
| 7. | Standard Forms of Option Agreement . |
| 7.1. | Option Agreement . Unless otherwise provided by the Board at the time the Option is granted, an Option shall comply with and be subject to the terms and conditions set forth in the form of Option Agreement approved by the Board concurrently with its adoption of the Plan and as amended from time to time. |
| 7.2. | Authority to Vary Terms . The Board shall have the authority from time to time to vary the terms of any standard form of Option Agreement described in this Section 7 either in connection with the grant or amendment of an individual Option or in connection with the authorization of a new standard form or forms provided, however, that the terms and conditions of any such new, revised or amended standard form or forms of Option Agreement are not inconsistent with the terms of the Plan. |
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| 8. | Change In Control . |
| 8.1. | Definitions . |
| (a) | An “ Ownership Change Event ” shall be deemed to have occurred if any of the following occurs with respect to the Company: (i) the direct or indirect sale or exchange in a single or series of related transactions by the stockholders of the Company of more than fifty percent (50%) of the voting stock of the Company; (ii) a merger or consolidation in which the Company is a party; (iii) the sale, exchange, or transfer of all or substantially all of the assets of the Company; or (iv) a liquidation or dissolution of the Company. |
| (b) | A “ Change in Control ” shall mean an Ownership Change Event or a series of related Ownership Change Events (collectively, a “ Transaction ”) wherein the stockholders of the Company immediately before the Transaction do not retain immediately after the Transaction, in substantially the same proportions as their ownership of shares of the Company’s voting stock immediately before the Transaction, direct or indirect beneficial ownership of more than fifty percent (50%) of the total combined voting power of the outstanding voting securities of the Company or, in the case of a Transaction described in Section 8.1(a)(iii), the corporation or other business entity to which the assets of the Company were transferred (the “ Transferee ”), as the case may be. |
| 8.2. | Effect of Change in Control on Options . In the event of a Change in Control, the surviving, continuing, successor, or purchasing corporation or other business entity or parent thereof, as the case may be (the “ Acquiring Corporation ”), may, without the consent of any Optionee, either assume the Company’s rights and obligations under outstanding Options or substitute for outstanding Options substantially equivalent options for the Acquiring Corporation’s stock. In the event the Acquiring Corporation elects not to assume or substitute for outstanding Options in connection with a Change in Control, then the vesting of each such outstanding Option and any shares acquired upon the exercise thereof held by Optionees whose Service has not terminated prior to such Change in Control shall be accelerated to the extent unexercised, effective as of the date ten (10) days prior to the date of the Change in Control, unless otherwise determined by the Board, in its discretion, and set forth in the Option Agreement evidencing such Option. With respect to any specific Optionee, if such Optionee’s Service is terminated within 90 days following such Change in Control for any reason other than a Voluntary Termination or Termination For Cause, then the vesting of each outstanding Option and any shares acquired upon the exercise thereof held by such Optionee shall be accelerated to the extent unexercised, effective as of the date ten (10) days prior to the date of the Change in Control, unless otherwise determined by the Board, in its discretion, and set forth in the Option Agreement evidencing such Option. The vesting of any Option thereof that was permissible solely by reason of this Section 8.2 and the provisions of such Option Agreement shall be conditioned upon the consummation of the Change in Control. Any Options which are neither assumed or substituted for by the Acquiring Corporation in connection with the Change in Control nor exercised as of the date of the Change in Control shall terminate and cease to be outstanding effective as of the date of |
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the Change in Control. Notwithstanding the foregoing, shares acquired upon exercise of an Option prior to the Change in Control and any consideration received pursuant to the Change in Control with respect to such shares shall continue to be subject to all applicable provisions of the Option Agreement evidencing such Option except as otherwise provided in such Option Agreement. Furthermore, notwithstanding the foregoing, if the corporation the stock of which is subject to the outstanding Options immediately prior to an Ownership Change Event described in Section 8.1(a) constituting a Change in Control is the surviving or continuing corporation and immediately after such Ownership Change Event less than fifty percent (50%) of the total combined voting power of its voting stock is held by another corporation or by other corporations that are members of an affiliated group within the meaning of Section 1504(a) of the Code without regard to the provisions of Section 1504(b) of the Code, the outstanding Options shall not terminate unless the Board otherwise provides in its discretion.
| 9. | Compliance With Law . |
| 9.1. | General . The grant of Options and the issuance of shares of Stock upon exercise of Options shall be subject to compliance with all applicable requirements of federal, state and foreign law with respect to such securities. Options may not be exercised if the issuance of shares of Stock upon exercise would constitute a violation of any applicable federal, state or foreign securities laws or other law or regulations or the requirements of any stock exchange or market system upon which the Stock may then be listed. In addition, no Option may be exercised unless (a) a registration statement under the Securities Act shall at the time of exercise of the Option be in effect with respect to the shares issuable upon exercise of the Option or (b) in the opinion of legal counsel of the Company, the shares issuable upon exercise of the Option may be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed by the Company’s legal counsel to be necessary to the lawful issuance and sale of any shares hereunder shall relieve the Company of any liability in respect of the failure to issue or sell such shares as to which such requisite authority shall not have been obtained. As a condition to the exercise of any Option, the Company may require the Optionee to satisfy any qualifications that may be necessary or appropriate, to evidence compliance with any applicable law or regulation and to make any representation or warranty with respect thereto as may be requested by the Company. The Company will be under no obligation to register the Shares under the Securities Act, or to effect compliance with the registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so. |
| 9.2. | Section 409A . Option awards under the Plan are intended not to provide for the deferral of compensation for purposes of Code Section 409A, and the Plan and each Option Agreement shall be interpreted and administered consistent with this intent. The Committee may amend any Option Agreement as necessary to confirm that such award |
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does not provide for a deferral of compensation for purposes of Code Section 409A. Neither the Company nor the Committee, nor any employee or officer of either, shall have any liability for any tax imposed on a Participant under Code Section 409A with respect to the Plan, and if any tax is imposed on a Participant, the Participant shall have no recourse against the Company or the Committee, or any employee or officer of either, for payment of any such tax.
| 10. | Termination Or Amendment Of Plan . |
The Board may terminate or amend the Plan at any time. However, subject to changes in applicable law, regulations or rules that would permit otherwise, without the approval of a majority vote of the Company’s stockholders eligible to vote at a meeting of the Company’s stockholders, there shall be (a) no increase in the maximum aggregate number of shares of Stock that may be issued under the Plan (except by operation of the provisions of Section 4.2), (b) no change in the class of persons eligible to receive Incentive Stock Options, (c) no reduction in the exercise price below 100% (110% in the case of an Incentive Stock Option granted to a 10% Holder) of the Fair Market Value of the shares of Stock issuable upon exercise of Options at the time of the granting thereof, other than to change the manner of determining the Fair Market Value thereof; (d) alter the maximum number of Shares available for the grant of Options in the form of Incentive Stock Options; (e) no material increase in the benefits accruing to participants under the Plan; (f) no modification of the requirements as to eligibility for participation in the Plan; (g) with respect to Options which are Incentive Stock Options, amend the Plan in any respect which would cause such Options to no longer qualify for Incentive Stock Option treatment pursuant to the Code; and (h) no other amendment of the Plan that would require approval of the Company’s stockholders under any applicable law, regulation or rule. No termination or amendment of the Plan shall affect any then outstanding Option unless expressly provided by the Board. In any event, no termination or amendment of the Plan may adversely affect any then outstanding Option without the consent of the Optionee, unless such termination or amendment is required to enable an Option designated as an Incentive Stock Option to qualify as an Incentive Stock Option or is necessary to comply with any applicable law, regulation or rule.
| 11. | Designation of Beneficiary by Participant . |
An Optionee may designate one or more beneficiaries to receive any rights and payments to which such participant may be entitled in respect of any option granted under the Plan in the event of such participant’s death. Such designation shall be on a written form acceptable to and filed with the Committee. The Committee shall have the right to review and approve beneficiary designations. An Optionee may change the Optionee’s beneficiary(ies) from time to time in the same manner as the original designation, unless such participant has made an irrevocable designation. Any designation of beneficiary under the Plan (to the extent it is valid and enforceable under applicable law) shall be controlling over any other disposition, testamentary or otherwise, as determined by the Committee. If no designated beneficiary survives the participant and is living on the date on which any right or amount becomes payable to such participant’s beneficiary(ies), such payment will be made to the legal representatives of the participant’s estate, and the
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term “beneficiary” as used in the Plan shall be deemed to include such person or persons. If there is any question as to the legal right of any beneficiary to receive a distribution under the Plan, the Committee may determine that the amount in question be paid to the legal representatives of the estate of the participant, in which event the Company, the Committee, the Board and the Committee and the members thereof will have no further liability to any person or entity with respect to such amount.
| 12. | No Obligation to Employ . |
The Plan shall not constitute a contract of employment and nothing in this Plan shall confer or be deemed to confer on any participant any right to continue in the employ of, or to continue any other relationship with, the Participating Company Group or limit in any way the right of the Participating Company Group to terminate the participant’s employment or other relationship at any time, with or without cause.
| 13. | Non-exclusivity of the Plan . |
Neither the adoption of the Plan by the Board, the submission of the Plan to the stockholders of the Company for approval, nor any provision of this Plan will be construed as creating any limitations on the power of the Board or the Committee to adopt such additional compensation arrangements as the Board may deem desirable, including, without limitation, the granting of Options otherwise than under the Plan, and such arrangements may be either generally applicable or applicable only in specific cases.
| 14. | Governing Law . |
The validity, construction, interpretation, administration and effect of the Plan, and of its rules and regulations, and rights relating to the Plan and Options granted under the Plan and any agreements in connection therewith, shall be governed by the substantive laws, but not the choice of law rules, of the State of New York.
| 15. | Stockholder Approval . |
The Plan or any increase in the maximum aggregate number of shares of Stock issuable thereunder as provided in Section 4.1 (the “ Authorized Shares ”) shall be approved by the stockholders of the Company within twelve (12) months of the date of adoption thereof by the Board. Option granted prior to stockholder approval of the Plan or in excess of the Authorized Shares previously approved by the stockholders shall become exercisable no earlier than the date of stockholder approval of the Plan or such increase in the Authorized Shares, as the case may be.
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EXHIBIT 4.2
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT is made as of _______, 2018, by and between Ark Restaurants Corp., a New York corporation having its principal executive offices at 85 Fifth Avenue, New York, NY 10003 (the “Grantor”), and _______________ an individual residing at [___________________________] (the “Optionee”).
WITNESSETH:
WHEREAS , the Ark Restaurants Corp. 2016 Stock Option Plan was adopted by the Board of Directors (the “Board”) and the stockholders of the Grantor to provide the Optionee with an opportunity to acquire or increase his proprietary interest in the business of the Grantor, and, through stock ownership, to possess an increased personal interest in its continued success and progress; and
WHEREAS , the Grantor desires to increase the incentive of the Optionee to exert his utmost efforts to improve the business and increase the assets of the Grantor.
NOW, THEREFORE , in consideration of the mutual covenants set forth in this Agreement and for other good and valuable consideration, the Grantor hereby grants the Optionee an option to purchase shares of common stock of the Grantor, $_____ par value per share (the “ Common Stock ”), upon the following terms and conditions:
1. Option.
Pursuant to the Ark Restaurants Corp. 2016 Stock Option Plan (the “ Plan ”), the Grantor hereby grants to the Optionee an incentive stock option (the “ Option ”), as defined in Section 422 of the Internal Revenue Code of 1986, as amended, on the terms and conditions contained in the Plan, to purchase up to an aggregate of ______ fully paid and non-assessable shares of Common Stock (the “ Shares ”).
2. Purchase Price.
The purchase price (“ Purchase Price ”) for the Option shall be $0.__ per share. The Grantor shall pay all original issue or transfer taxes on the exercise of the Option and all other fees and expenses necessarily incurred by the Grantor in connection therewith.
3. Exercise of the Option.
(a) Except as otherwise set forth herein, no Option shall be exercisable until it has vested in accordance with the provisions of subsection (b) below. Any Option which vests and thereby becomes exercisable hereunder may be exercised in whole or in part, in one hundred (100) share increments, from time to time and at any time, until the Option lapses or terminates.
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If the Optionee’s exercise of any Option would require the Grantor to issue a fractional Share, the Grantor will not be required to issue such fractional Share but it shall pay the Optionee in cash the value of such fractional Share. Except as set forth in Section 5, all unexercised Options (whether or not vested) shall lapse and forever terminate on ____________, 20__.
(b) Options for the purchase of the Shares shall vest as follows: one-third (rounded to the nearest Share), or ______ Shares, shall vest and become exercisable on the date of grant; one-third, or ___ Shares shall vest and become exercisable on the first anniversary date from the date of grant and one-third, or _____ Shares, shall vest and become exercisable on the second anniversary date from the date of grant, or ________ shares. Notwithstanding the foregoing, in the event of a an Ownership Change Event (as defined in Section 8.1(a) of the Plan) the Option shall be assumed by the surviving entity with appropriate adjustments as determined by the Board of Directors of the Company, but in any event shall accelerate and be fully vested and immediately exercisable upon completion of the Ownership Change Event.
4. Manner of Exercise.
Options that are exercisable may be exercised in whole or in part at any time during the option period by (a) giving written notice to the Grantor specifying the number of Shares to be purchased; in one hundred (100) Share increments, (b) accompanied by payment in full of the purchase price, in cash or by check and (c) the payment of any withholding tax to the Company, will be required to withhold as a result of the exercise of the Option. The Purchase Price of the shares of Stock as to which the Option is exercised shall be paid in full at the time of exercise by any approved method set forth in paragraphs (i) through (iv) of Section 6.4(a) of the Plan. The Optionee shall not have any of the rights of a shareholder with respect to the Stock covered by the Option until the date of the issuance of a stock certificate to Optionee for such shares of Stock. An Optionee shall have the right to dividends and other rights of a stockholder with respect to shares of Common Stock purchased upon exercise of an Option at such time as the Optionee has given written notice of exercise and has paid in full for such shares and has satisfied such conditions that may be imposed by the Grantor with respect to the withholding of taxes.
Subject to the terms and conditions hereof, the Options shall be exercisable by notice to the Grantor on the form provided by the Grantor, a copy of which is attached hereto. In the event that the Options are being exercised by any person or persons other than the Optionee, the notice shall be accompanied by proof, satisfactory to the Grantor, of the right of such person or persons to exercise any right under this Agreement and the Plan.
5. Termination of Employment.
(a) In the event that the employment of Optionee terminates (otherwise than by reason of his death or “total disability” (as defined in the Plan) or for Cause (as defined below), the Option may be exercised (if and to the extent that the Optionee was entitled to do so at the date of termination of his employment) at any time within three months after such termination, but in no event after the expiration of the term of the Option.
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(b) In the event that the employment of the Optionee shall terminate for cause, the Option shall be cancelled immediately. Termination “for cause” shall mean dismissal for commission of any act of a theft, embezzlement or fraud involving the Grantor or any member of the Parent Participating Group or otherwise, or a breach of fiduciary duty to the Grantor or any member of the Parent Participating Group. If the employment of the Optionee shall be suspended pending an investigation of whether or not the Optionee shall be terminated for cause, all of the Optionee’s rights under the Option granted hereunder likewise shall be suspended during the period of investigation.
(c) In the event of the death or total disability of the Optionee while an employee of Grantor or within three months after the termination of this employment with the Grantor, the Option may be exercised (if and to the extent that the deceased Optionee was entitled to do so at the date of his death or total disability) by a legatee or legatees of the Optionee under such Optionee’s last will and testament or by his personal representatives or distributees, at any time within twelve months after his death or total disability (or such longer period of time as determined by the Board in its discretion), but in no event after the expiration of the term of the Option.
6. Assignability of the Option.
Except as specifically provided herein, the Optionee may not give, grant, sell, exchange, transfer legal title, pledge, assign or otherwise encumber or dispose of the Option herein granted or any interest therein (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process, otherwise than by will or the laws of descent and distribution, and the Option herein granted shall be exercisable in whole or in part during the Optionee’s lifetime only by the Optionee or his guardian or legal representative. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Option or any right or privilege conferred by this Option contrary to the provisions of this Option or the Plan, or upon the levy of any attachment or similar process on the rights and privileges conferred by this Option shall be null and void and this Option and the rights and privileges conferred by this Option shall immediately terminate and become null and void.
7. Stock as Investment.
By accepting the Option herein granted, the Optionee agrees for himself and his heirs and legatees that, unless the Shares are sold pursuant to an effective registration statement under the Securities Act of 1933 (the “ Securities Act ”) or an exemption from registration, all Shares purchased hereunder shall be acquired for investment purposes only and not for sale or distribution, and upon the issuance of any or all of the Shares issuable under the Option, the Optionee, or his heirs or legatees receiving such Shares, shall deliver to the Grantor a representation in writing, that unless such Shares have been registered for resale they are being acquired in good faith for investment purposes only and not for sale or distribution. Grantor may place a “stop transfer” order with respect to such Shares with its transfer agent and place an appropriate restrictive legend on the stock certificate evidencing such Shares.
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8. Restriction on Issuance of Shares.
The Grantor shall not be required to issue or deliver any certificate for Shares purchased upon the exercise of the Option unless (a) the issuance of such Shares has been registered with the Securities and Exchange Commission under the Securities Act, or counsel to the Grantor shall have given an opinion that such registration is not required; (b) approval, to the extent required, shall have been obtained from any state regulatory body having jurisdiction thereof; and (c) permission for the listing of such shares shall have been given by any national securities exchange on which the Common Stock of the Grantor is at the time of issuance listed.
9. Adjustment on Changes in Capitalization.
(a) In the event of changes in the outstanding Common Stock of the Grantor by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, reorganizations or liquidations, the number of shares of Common Stock as to which the Option may be exercised shall be correspondingly adjusted by the Grantor, and the Purchase Price shall be adjusted so that the product of the Purchase Price immediately after such event multiplied by the number of options subject to this Agreement immediately after such event shall be equal to the product of the Purchase Price multiplied by the number of shares subject to this Agreement immediately prior to the occurrence of such event.
(b) In the event of any consolidation or merger of the Grantor with or into another company, or the conveyance of all or substantially all of the assets of the Grantor to another company for solely stock and/or securities, the unexercised portion of the Option granted hereunder shall upon exercise thereafter entitle the holder thereof to such number of Shares or other securities or property to which a holder of Shares would have been entitled to upon such consolidation, merger or conveyance; and in any such case appropriate adjustment, as determined by the Board (or the board of directors of a successor entity) shall be made as set forth above with respect to any future changes in the capitalization of the Grantor or its successor entity.
(c) Any adjustment in the number of Shares shall apply proportionately to only the unexercised portion of the Options granted hereunder. If fractions of a Share would result from any such adjustment, the Grantor (or successor entity) may, but is not required to, issue fractional shares in accordance with the New York Business Corporation Law.
10. Rights of Optionee .
The grant of the Option (or any other Option under this Agreement or any other agreement) in any year shall give the Optionee neither any right to similar grants in future years nor any right to be retained in the Service of the Grantor, such Service being terminable to the same extent as if the Plan and this Agreement were not in effect. The right and power of the Grantor to dismiss or discharge any employee is specifically and unqualifiedly unimpaired by this Agreement. Neither the Optionee nor any other person legally entitled to exercise any rights under this Agreement shall be entitled to any of the rights or privileges of a stockholder of the
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Grantor with respect to any Shares which may be issuable upon any exercise pursuant to this Agreement, unless and until the stock records of the Grantor reflect the issuance of such Shares.
11. Notices.
Each notice or other communication relating to this Agreement shall be in writing and delivered in person or by registered mail to the Grantor at its office, 85 Fifth Avenue, New York, NY 10003, to the attention of the Corporate Secretary. All notices to the Optionee or other person or persons then entitled to exercise any right pursuant to this Agreement shall be delivered to the Optionee or such other person or persons at the Optionee’s address specified below the Optionee’s signature to this Agreement or at such other address as the Optionee or such other person may specify in writing to the Grantor by a notice delivered in accordance with this paragraph.
12. Effect Upon Employment .
This Agreement does not give Optionee any right to continued employment by the Grantor.
13. Binding Effect.
Except as herein otherwise expressly provided, this Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors legal representatives and assigns.
14. Agreement Subject to Plan.
Notwithstanding anything contained herein to the contrary, this Agreement is subject to, and shall be construed in accordance with, the terms of the Plan, which is incorporated by reference herein and made a part of this Agreement as if fully set forth herein. The Optionee acknowledges receipt of a copy of the Plan. In the event of any inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall govern.
15. Miscellaneous.
This Agreement shall be construed under the laws of the State of New York, without application to the principles of conflicts of laws. Headings have been included herein for convenience of reference only, and shall not be deemed a part of the Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Incentive Stock Option Agreement as of the day and year first above written.
| ARK RESTAURANTS CORP. | |||||
| By: | |||||
| Name: | |||||
| Title: | |||||
| OPTIONEE | |||||
| Name: | |||||
| Optionee Address: | |||||
| Optionee Social Security No.: | |||||
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EXHIBIT A
NOTICE
OF EXERCISE OF STOCK OPTION TO PURCHASE COMMON
STOCK OF ARK RESTAURANTS CORP
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Name
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Address
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Date
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Ark Restaurants Corp.
85 Fifth Avenue
New York, NY 10003
Attention: Corporate Secretary
Re: Exercise of Stock Option
Gentlemen:
Reference is hereby made to the Ark Restaurants Corp. 2016 Stock Option Plan (the “ Plan ”) and that certain Stock Option Agreement between me and Ark Restaurants Corp., dated as of _________, 20__ (the “ Agreement ”). Capitalized terms not defined in this notice shall have the respective meanings ascribed to them in the Plan or the Agreement.
Subject to acceptance hereof in writing by the Company pursuant to the provisions of the Plan, I hereby elect to exercise options to purchase the number of shares set forth on the signature page of this notice.
(Please check one of the following):
_____ Enclosed is a check in the amount of $_________, representing the aggregate Purchase Price, payable to the order of Ark Restaurants Corp. If applicable, I have also enclosed a check payable to Ark Restaurants Corp. representing payment of applicable withholding taxes.
_____ Enclosed are shares of Stock having a Fair Market Value equal to the aggregate Purchase Price.
_____ Enclosed is a copy of irrevocable instructions I have given to my stock broker in connection with a Cashless Exercise.
_____ I hereby elect to have the Company perform a “net issue exercise” in accordance with Section 6.4(a)(iv) of the Plan.
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As soon as the Stock Certificate is registered in my name, please deliver it to me at the above address.
Unless the issuance of the Stock being purchased by me pursuant to the Agreement are subject to an effective registration statement under the Securities Act, I understand that I will be asked to execute and deliver to the Company supplemental investment representations prior to being issued any Stock.
| Very truly yours, | |||
| AGREED TO AND ACCEPTED: | |||
| ARK RESTAURANTS CORP. | |||
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By:
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Title:
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Number of Shares Exercised:
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Number of Shares Remaining:
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Date:
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EXHIBIT 4.3
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT is made as of _______, 2010, by and between Ark Restaurants Corp., a New York corporation having its principal executive offices at 85 Fifth Avenue, New York, NY 10003 (the “Grantor”), and _______________ an individual residing at [___________________________] (the “Optionee”).
WITNESSETH:
WHEREAS , the Ark Restaurants Corp. 2016 Stock Option Plan was adopted by the Board of Directors (the “Board”) and the stockholders of the Grantor to provide the Optionee with an opportunity to acquire or increase his proprietary interest in the business of the Grantor, and, through stock ownership, to possess an increased personal interest in its continued success and progress; and
WHEREAS , the Grantor desires to increase the incentive of the Optionee to exert his utmost efforts to improve the business and increase the assets of the Grantor.
NOW, THEREFORE , in consideration of the mutual covenants set forth in this Agreement and for other good and valuable consideration, the Grantor hereby grants the Optionee an option to purchase shares of common stock of the Grantor, $_____ par value per share (the “ Common Stock ”), upon the following terms and conditions:
1. Option.
Pursuant to the Ark Restaurants Corp. 2016 Stock Option Plan (the “ Plan ”), the Grantor hereby grants to the Optionee a Non-Statutory stock option (the “ Option ”), not intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended, on the terms and conditions contained in the Plan, to purchase up to an aggregate of ______ fully paid and non-assessable shares of Common Stock (the “ Shares ”).
2. Purchase Price.
The purchase price (“ Purchase Price ”) for the Option shall be $0.__ per share. The Grantor shall pay all original issue or transfer taxes on the exercise of the Option and all other fees and expenses necessarily incurred by the Grantor in connection therewith.
3. Exercise of the Option.
(a) Except as otherwise set forth herein, no Option shall be exercisable until it has vested in accordance with the provisions of subsection (b) below. Any Option which vests and thereby becomes exercisable hereunder may be exercised in whole or in part, in one hundred (100) share increments, from time to time and at any time, until the Option lapses or terminates. If the Optionee’s exercise of any Option would require the Grantor to issue a fractional Share,
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the Grantor will not be required to issue such fractional Share but it shall pay the Optionee in cash the value of such fractional Share. Except as set forth in Section 5, all unexercised Options (whether or not vested) shall lapse and forever terminate on ____________, 20__.
(b) Options for the purchase of the Shares shall vest as follows: one-third (rounded to the nearest Share), or ______ Shares, shall vest and become exercisable on the date of grant; one-third, or ___ Shares shall vest and become exercisable on the first anniversary date from the date of grant and one-third, or _____ Shares, shall vest and become exercisable on the second anniversary date from the date of grant, or ________ shares. Notwithstanding the foregoing, in the event of a an Ownership Change Event (as defined in Section 8.1(a) of the Plan) the Option shall be assumed by the surviving entity with appropriate adjustments as determined by the Board of Directors of the Company, but in any event shall accelerate and be fully vested and immediately exercisable upon completion of the Ownership Change Event.
4. Manner of Exercise.
Options that are exercisable may be exercised in whole or in part at any time during the option period by (a) giving written notice to the Grantor specifying the number of Shares to be purchased; in one hundred (100) Share increments, (b) accompanied by payment in full of the purchase price, in cash or by check and (c) the payment of any withholding tax to the Company, will be required to withhold as a result of the exercise of the Option. The Purchase Price of the shares of Stock as to which the Option is exercised shall be paid in full at the time of exercise by any approved method set forth in paragraphs (i) through (iv) of Section 6.4(a) of the Plan. The Optionee shall not have any of the rights of a shareholder with respect to the Stock covered by the Option until the date of the issuance of a stock certificate to Optionee for such shares of Stock. An Optionee shall have the right to dividends and other rights of a stockholder with respect to shares of Common Stock purchased upon exercise of an Option at such time as the Optionee has given written notice of exercise and has paid in full for such shares and has satisfied such conditions that may be imposed by the Grantor with respect to the withholding of taxes.
Subject to the terms and conditions hereof, the Options shall be exercisable by notice to the Grantor on the form provided by the Grantor, a copy of which is attached hereto. In the event that the Options are being exercised by any person or persons other than the Optionee, the notice shall be accompanied by proof, satisfactory to the Grantor, of the right of such person or persons to exercise any right under this Agreement and the Plan.
5. Termination of Service.
(a) In the event that the Optionee ceases to be a member of the Board (a “ Director ”) or otherwise have a relationship with the Grantor (collectively, “Service”) (otherwise than by reason of his death or “total disability” (as defined in the Plan) or for Cause (as that term is defined in the Grantor’s by-laws), the Option may be exercised (if and to the extent that the Optionee was entitled to do so at the date of cessation of Service) at any time within three months after such termination, but in no event after the expiration of the term of the Option.
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(b) In the event of the death or total disability of the Optionee while providing Service or within three months after the cessation of providing Service to the Grantor, the Option may be exercised (if and to the extent that the deceased Optionee was entitled to do so at the date of his death or total disability) by a legatee or legatees of the Optionee under such Optionee’s last will and testament or by his personal representatives or distributees, at any time within twelve months after his death or total disability (or such longer period of time as determined by the Board in its discretion), but in no event after the expiration of the term of the Option.
6. Assignability of the Option.
Except as specifically provided herein, the Optionee may not give, grant, sell, exchange, transfer legal title, pledge, assign or otherwise encumber or dispose of the Option herein granted or any interest therein (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process, otherwise than by will or the laws of descent and distribution, and the Option herein granted shall be exercisable in whole or in part during the Optionee’s lifetime only by the Optionee or his guardian or legal representative. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this Option or any right or privilege conferred by this Option contrary to the provisions of this Option or the Plan, or upon the levy of any attachment or similar process on the rights and privileges conferred by this Option shall be null and void and this Option and the rights and privileges conferred by this Option shall immediately terminate and become null and void.
7. Stock as Investment.
By accepting the Option herein granted, the Optionee agrees for himself and his heirs and legatees that, unless the Shares are sold pursuant to an effective registration statement under the Securities Act of 1933 (the “ Securities Act ”) or an exemption from registration, all Shares purchased hereunder shall be acquired for investment purposes only and not for sale or distribution, and upon the issuance of any or all of the Shares issuable under the Option, the Optionee, or his heirs or legatees receiving such Shares, shall deliver to the Grantor a representation in writing, that unless such Shares have been registered for resale they are being acquired in good faith for investment purposes only and not for sale or distribution. Grantor may place a “stop transfer” order with respect to such Shares with its transfer agent and place an appropriate restrictive legend on the stock certificate evidencing such Shares.
8. Restriction on Issuance of Shares.
The Grantor shall not be required to issue or deliver any certificate for Shares purchased upon the exercise of the Option unless (a) the issuance of such Shares has been registered with the Securities and Exchange Commission under the Securities Act, or counsel to the Grantor shall have given an opinion that such registration is not required; (b) approval, to the extent required, shall have been obtained from any state regulatory body having jurisdiction thereof; and (c) permission for the listing of such shares shall have been given by any national securities exchange on which the Common Stock of the Grantor is at the time of issuance listed.
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9. Adjustment on Changes in Capitalization.
(a) In the event of changes in the outstanding Common Stock of the Grantor by reason of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, reorganizations or liquidations, the number of shares of Common Stock as to which the Option may be exercised shall be correspondingly adjusted by the Grantor, and the Purchase Price shall be adjusted so that the product of the Purchase Price immediately after such event multiplied by the number of options subject to this Agreement immediately after such event shall be equal to the product of the Purchase Price multiplied by the number of shares subject to this Agreement immediately prior to the occurrence of such event.
(b) In the event of any consolidation or merger of the Grantor with or into another company, or the conveyance of all or substantially all of the assets of the Grantor to another company for solely stock and/or securities, the unexercised portion of the Option granted hereunder shall upon exercise thereafter entitle the holder thereof to such number of Shares or other securities or property to which a holder of Shares would have been entitled to upon such consolidation, merger or conveyance; and in any such case appropriate adjustment, as determined by the Board (or the board of directors of a successor entity) shall be made as set forth above with respect to any future changes in the capitalization of the Grantor or its successor entity.
(c) Any adjustment in the number of Shares shall apply proportionately to only the unexercised portion of the Options granted hereunder. If fractions of a Share would result from any such adjustment, the Grantor (or successor entity) may, but is not required to, issue fractional shares in accordance with the New York Business Corporation Law.
10. Rights of Optionee .
The grant of the Option (or any other Option under this Agreement or any other agreement) in any year shall give the Optionee neither any right to similar grants in future years nor any right to be retained in the Service of the Grantor, such Service being terminable to the same extent as if the Plan and this Agreement were not in effect. The right and power of the Grantor to dismiss or discharge any Optionee is specifically and unqualifiedly unimpaired by this Agreement. Neither the Optionee nor any other person legally entitled to exercise any rights under this Agreement shall be entitled to any of the rights or privileges of a stockholder of the Grantor with respect to any Shares which may be issuable upon any exercise pursuant to this Agreement, unless and until the stock records of the Grantor reflect the issuance of such Shares.
11. Notices.
Each notice or other communication relating to this Agreement shall be in writing and delivered in person or by registered mail to the Grantor at its office, 85 Fifth Avenue, New York, NY 10003, to the attention of the Corporate Secretary. All notices to the Optionee or other person or persons then entitled to exercise any right pursuant to this Agreement shall be delivered to the Optionee or such other person or persons at the Optionee’s address specified below the Optionee’s signature to this Agreement or at such other address as the Optionee or such other person may specify in writing to the Grantor by a notice delivered in accordance with this paragraph.
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12. Effect Upon Service .
This Agreement does not give Optionee any right to continued Service to the Grantor.
13. Binding Effect.
Except as herein otherwise expressly provided, this Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors legal representatives and assigns.
14. Agreement Subject to Plan.
Notwithstanding anything contained herein to the contrary, this Agreement is subject to, and shall be construed in accordance with, the terms of the Plan, which is incorporated by reference herein and made a part of this Agreement as if fully set forth herein. The Optionee acknowledges receipt of a copy of the Plan. In the event of any inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall govern.
15. Withholding.
Optionee agrees to cooperate with the Grantor to take all steps necessary or appropriate for the withholding of any applicable taxes by the Grantor under law or regulation in connection therewith. In the event the Optionee does not make the required withholding payment at the time of exercise, the Grantor may make such provisions and take such steps as it, in its sole discretion, may deem necessary or appropriate for the withholding of any taxes that the Grantor is required by any law or regulation of any governmental authority, whether federal, state or local, domestic or foreign, to withhold in connection with the exercise of any Option, including, but not limited to, (i) the withholding of payment of all or any portion of such Option until the Optionee reimburses the Grantor for the amount the Grantor is required to withhold with respect to such taxes, or (ii) the canceling of any number of shares of Common Stock issuable upon exercise of such Option in an amount sufficient to reimburse the Grantor for the amount it is required to so withhold, (iii) the selling of any property contingently credited by the Grantor for the purpose of exercising such Option, in order to withhold or reimburse the Grantor for the amount it is required to so withhold, and/or (iv) withholding the amount due from the Optionee’s wages if he is employed by the Grantor or any subsidiary thereof.
16. Miscellaneous.
This Agreement shall be construed under the laws of the State of New York, without application to the principles of conflicts of laws. Headings have been included herein for convenience of reference only, and shall not be deemed a part of the Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Non-Statutory Stock Option Agreement as of the day and year first above written.
| ARK RESTAURANTS CORP. | ||
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By:
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| Name: | ||
| Title: | ||
| OPTIONEE | ||
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| Name: | ||
| Optionee Address: | ||
| Optionee Social Security No.: | ||
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EXHIBIT A
NOTICE OF EXERCISE OF
STOCK OPTION TO PURCHASE COMMON
STOCK OF ARK RESTAURANTS CORP.
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Name
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Address
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Date
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Ark Restaurants Corp.
85 Fifth Avenue
New York, NY 10003
Attention: Corporate Secretary
Re: Exercise of Stock Option
Gentlemen:
Reference is hereby made to the Ark Restaurants Corp. 2016 Stock Option Plan (the “ Plan ”) and that certain Stock Option Agreement between me and Ark Restaurants Corp., dated as of _________, 20__ (the “ Agreement ”). Capitalized terms not defined in this notice shall have the respective meanings ascribed to them in the Plan or the Agreement.
Subject to acceptance hereof in writing by the Company pursuant to the provisions of the Plan, I hereby elect to exercise options to purchase the number of shares set forth on the signature page of this notice.
(Please check one of the following):
_____ Enclosed is a check in the amount of $_________, representing the aggregate Purchase Price, payable to the order of Ark Restaurants Corp. If applicable, I have also enclosed a check payable to Ark Restaurants Corp. representing payment of applicable withholding taxes.
_____ Enclosed are shares of Stock having a Fair Market Value equal to the aggregate Purchase Price.
_____ Enclosed is a copy of irrevocable instructions I have given to my stock broker in connection with a Cashless Exercise.
_____ I hereby elect to have the Company perform a “net issue exercise” in accordance with Section 6.4(a)(iv) of the Plan.
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As soon as the Stock Certificate is registered in my name, please deliver it to me at the above address.
Unless the issuance of the Stock being purchased by me pursuant to the Agreement are subject to an effective registration statement under the Securities Act, I understand that I will be asked to execute and deliver to the Company supplemental investment representations prior to being issued any Stock.
| Very truly yours, | ||
AGREED TO AND ACCEPTED:
ARK RESTAURANTS CORP.
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By:
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Title:
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Number of Shares Exercised:
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Number of Shares Remaining:
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Date:
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EXHIBIT 4.4
AMENDMENT TO
ARK RESTAURANTS CORP.
2010 STOCK OPTION PLAN
Amendment (this “Amendment”) to Ark Restaurants Corp. 2010 Stock Option Plan dated as of July 30, 2018 .
W I T N E S S E T H :
WHEREAS , the Ark Restaurants Corp. 2010 Stock Option Plan (the “Plan”) was established by the Board of Directors of Ark Restaurants Corp. (the “Company”) effective as of January 22, 2010;
WHEREAS , Section 1.3 of the Plan provides that “all Options shall be granted, if at all, within six (6) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company”;
WHEREAS , Section 6.3(a) of the Plan provides that “no Option shall be exercisable after the expiration of six (6) years after the effective date of grant of such Option”;
WHEREAS , the officers and directors of the Company have always acted, since the adoption of the Plan, under the mistaken belief that the Plan provided a ten (10) year Term and options granted under the Plan shall be exercisable for up to ten (10) years from the effective date of grant of the Option; and
WHEREAS , Section 10 of the Plan provides that the Board may amend the Plan at any time without shareholder approval, with certain exceptions.
NOW, THEREFORE , in consideration of the mutual promises and agreements contained herein and for other good and valuable consideration, the Plan is hereby amended, as follows:
1. Section 1.3 of the Plan currently reads, as follows:
| 1.3 | Term of Plan . The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. However, all Options shall be granted, if at all, within six (6) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company. |
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| Section 1.3 of the Plan is hereby amended to read, as follows: |
| 1.3 | Term of Plan . The Plan shall continue in effect until the earlier of its termination by the Board or the date on which all the shares of Stock available for issuance under the Plan have been issued and all restrictions on such shares under the terms of the Plan and the agreements evidencing Options granted under the Plan have lapsed. However, all Options shall be granted, if at all, within ten (10) years from the earlier of the date the Plan is adopted by the Board or the date the Plan is duly approved by the stockholders of the Company. |
| 2. | Section 6.3 of the Plan currently reads, as follows: |
| 6.3 | Exercisability and Term of Options . Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of six (6) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, and (c) no Option granted to a prospective Employee or prospective Director may become exercisable prior to the date on which such person commences Service with a Participating Company. Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall terminate six (6) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions. |
| Section 6.3 of the Plan is hereby amended to read, as follows: |
| 6.3 | Exercisability and Term of Options . Options shall be exercisable at such time or times, or upon such event or events, and subject to such terms, conditions, performance criteria and restrictions as shall be determined by the Board and set forth in the Option Agreement evidencing such Option; provided, however, that (a) no Option shall be exercisable after the expiration of ten (10) years after the effective date of grant of such Option, (b) no Incentive Stock Option granted to a Ten Percent Owner Optionee shall be exercisable after the expiration of five (5) years after the effective date of grant of such Option, and (c) no Option granted to a prospective Employee or prospective Director may become exercisable prior to the date on which such person commences Service with a Participating Company. Subject to the foregoing, unless otherwise specified by the Board in the grant of an Option, any Option granted hereunder shall terminate ten (10) years after the effective date of grant of the Option, unless earlier terminated in accordance with its provisions. |
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3. Pursuant to Section 10 of the Plan, the foregoing amendments shall be deemed to have been made effective ab initio (from the beginning) under the Company’s and Option holders’ mistaken belief.
Except as set forth herein, the Plan, as amended, remains in full force and effect.
| THE BOARD OF DIRECTORS OF | |
| ARK RESTAURANTS CORP. |
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EXHIBIT 5.1
Davidoff Hutcher & Citron LLP
605 Third Avenue, 34 th Floor
New York, NY 10158
Tel: 212-557-7200
Fax: 212-286-1884
October 12, 2018
Ark Restaurants Corp.
85 Fifth Avenue
New York, NY 10003
| Re: | Ark Restaurants Corp. | |
| Registration Statement on Form S-8 |
Ladies and Gentlemen:
We have acted as counsel for Ark Restaurants Corp. (the “Company”) in connection with the preparation of the Registration Statement on Form S-8 (the “Registration Statement”) to be filed by the Company with the Securities and Exchange Commission (the “Commission”) for the registration under the Securities Act of 1933, as amended (the “Securities Act”) of 500,000 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share (the “Common Stock”), issuable under the Ark Restaurants Corp. 2016 Stock Option Plan (the “Plan”), including any Shares to be offered for resale by the selling stockholders listed in the reoffer prospectus contained in the Registration Statement.
This opinion is delivered in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.
You have requested our opinion as to the matters set forth below in connection with the Registration Statement. For purposes of rendering that opinion, we have examined the Plan document, the Registration Statement, the Company’s Certificate of Incorporation, as amended, Bylaws, as amended, and the corporate actions of the Company that provide for the adoption of the Plan, the reservation of the Shares for issuance by the Company thereunder, and we have made such other investigation as we have deemed appropriate. We have not independently established any of the facts so relied on. We have also assumed that all of the Shares eligible for issuance under the Plan following the date hereof will be issued for not less than par value.
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In rendering our opinion, we also have made the assumptions that are customary in opinion letters of this kind, including the assumptions of the genuineness of all signatures on original documents, the authenticity of all documents submitted to us as originals, the conformity to originals of all documents submitted to us as copies thereof, and the due execution and delivery of all documents where due execution and delivery are prerequisites to the effectiveness thereof. We have not verified any of those assumptions.
Our opinion set forth below is limited to the laws of the State of New York, including the statutory provisions and all applicable provisions of the New York Constitution and the reported judicial decisions interpreting those laws. We are not opining on, and we assume no responsibility for, the applicability to or effect on any of the matters covered herein of any other laws, the laws of any other jurisdiction or the local laws of any jurisdiction. The foregoing opinions are rendered as of the date of this letter. We assume no obligation to update or supplement any of such opinions to reflect any changes of law or fact that may occur.
Based on the foregoing and in reliance thereon, and subject to the assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that when the Registration Statement has become effective under the Act with respect to the Shares , such Shares are duly authorized for issuance by the Company and, when issued and paid for in accordance with the terms of the respective awards granted under and governed by the Plan and the Registration Statement, will be validly issued, fully paid, and nonassessable.
We are furnishing this opinion letter to you solely in connection with the Registration Statement. You may not rely on this opinion letter in any other connection, and it may not be furnished to or relied upon by any other person for any purpose, without our specific prior written consent. We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement. In giving our consent we do not thereby admit that we are experts with respect to any part of the Registration Statement, the Prospectus or any Prospectus Supplement within the meaning of the term “expert,” as used in Section 11 of the Securities Act or the rules and regulations promulgated thereunder by the Commission, nor do we admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder.
| Very truly yours, | ||
| DAVIDOFF HUTCHER & CITRON LLP | ||
| By: | /s/ Elliot H. Lutzker | |
| Elliot H. Lutzker | ||
EXHIBIT 23.1
CONSENT OF COUNSEL
We hereby consent to the reference to us under the caption “Legal Matters” in the Prospectus contained in this Registration Statement.
| /s/ Davidoff Hutcher & Citron LLP | ||
| DAVIDOFF HUTCHER & CITRON LLP |
October 12, 2018
New York, New York
EXHIBIT 23.2
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in this Registration Statement on Form S-8 of Ark Restaurants Corp. of our report dated December 29, 2017, relating to our audits of the consolidated financial statements of Ark Restaurants Corp. and subsidiaries as of and for the years ended September 30, 2017 and October 1, 2016, which appears in the Annual Report on Form 10-K of Ark Restaurants Corp. for the year ended September 30, 2017.
We also consent to the reference to our firm under the caption “Experts” in the Prospectus, which is part of this Registration Statement.
/s/ CohnReznick LLP
New York, New York
October 12, 2018