Document:

Exhibit 4.2

[ARK LETTERHEAD]

[DATE]

[Employee Name 

and Address] 

Re: Grant of Stock Options

Dear [Employee]:

     On behalf of the Board of Directors and Management of Ark Restaurants Corp. (the “Company”), I am pleased to inform you that, due to your long outstanding service as an employee of the Company, the Company has determined to grant you options (the “Option”) to purchase up to [Number of Shares] shares of the Company’s common stock. Congratualtions! 

     By this letter, the Company also desires to make you aware of the terms and conditions related to the vesting and exercise of your Option. 

     The purchase price of the Option shall be $ _____ per share ("Exercise Price"). You are required to pay all original issue or transfer taxes on the exercise of the Option and all other fees and expenses necessarily incurred by you in connection with any exercise of the Option. You must exercise the Option at least one hundred (100) shares at a time and in one hundred (100) share increments. 

     You may exercise the Option by notifying us by registered or certified mail, return receipt requested, as to the number of shares you desire to purchase, accompanied by a certified or bank check payable to the order of “Ark Restaurants Corp.” in an amount equal to the Exercise Price multiplied by the number of shares for which this Option is being exercised. We will then deliver to you, or any designee specified in the notice, certificate issued in your name, or the name of any designee specified in the notice, evidencing the shares you purchased. 

     _______________ percent (___%) of the Option will vest (i.e. the date the Option will first be exercisable) on __________ and the remaining ___________(_________%) of the Option will vest on 

___________. Any vested but unexercised Option will expire and no longer be available after __________.

     If you quit or are fired, the Option shall expire thirty (30) days after that date. In the unfortunate event that you die or become disabled within the definition of Section 22(e)(3) of the Internal Revenue Code of 1986, as amended, while employed by us, the Option may be exercised by your estate at any time within one year after your death or disability. You may not give, grant, sell, exchange, transfer legal title, pledge, assign or otherwise encumber or dispose of the Option or any

interest therein, otherwise than by will or the laws of descent and distribution, and the Option shall be exercisable during the your lifetime only by you. 

     Unless a registration statement is filed with the Securities and Exchange Commission covering the shares issuable upon the exercise of the Option, such shares will be restricted securities. Sales of such restricted securities may be made only in compliance with an available exemption from such registration. We may, to the extent required by applicable securities law, place a “stop transfer” order with respect to such shares with the Company’s transfer agent and place an appropriate restrictive legend on the stock certificate(s) evidencing such shares. 

     In the event of changes in the Company’s common stock by reason of stock dividends, stock splits, recapitalizations, or reorganizations, the number of shares as to which the Option may be exercised shall be correspondingly increased to reflect an increase in the outstanding common stock or decreased to reflect a decrease in the outstanding common stock, and the Exercise Price shall be inversely adjusted that the aggregate Exercise Price after the change shall be the same as the aggregate Exercise Price before the change. No adjustment shall be made with respect to stock dividends or splits which do not exceed 5% in any fiscal year, cash dividends or the issuance to our shareholders of rights to subscribe for additional common stock or other securities. Any adjustment in the number of shares shall apply proportionately to only the unexercised portion of the Option. If fractions of a share would result from any such adjustment, the adjustment shall be revised to the next lower whole number of shares. 

     If the Company merges with or into another company or sells all or substantially all of its assets to another company, each then outstanding Option shall automatically terminate, unless otherwise provided by the Company's Board of Directors in their sole discretion. In the event of the Company’s dissolution or liquidation, all outstanding Options will automatically terminate.

     You shall only have rights as a shareholder of the Company to the extent you exercise the Option and the grant of this Options shall give you no guarantee of continued employment by us. 

	 	Very truly yours,	 
	 	 	 
	 	 	 
	 	Vincent Pascal 

Senior Vice President – Operations	 

Agreed and Accepted

_______________________

Date:Exhibit 10.14 

PROMISSORY NOTE

 

	
      $1,000,000
 	
September 25, 2006
 

PORTLAND, OREGON

 

FOR VALUE RECEIVED, Vaughan Foods, Inc. ( the “Maker” herein) promises to pay to the order of Paulson Investment Company, Inc. (the “Holder”), the aggregate principal sum of One Million and no/100ths Dollars (1,000,000.00) (the “Obligation”) to be borrowed by the Maker as follows:  

 

	
      09/28/06                                        
 	
      $250,000
 
	
      10/04/06                                        
 	
      $250,000
 
	
      10/11/06                                        
 	
      $100,000
 
	
      10/18/06                                        
 	
      $100,000
 
	
      10/25/06                                        
 	
      $100,000
 
	
      11/01/06                                        
 	
      $100,000
 
	
      11/08/06                                        
 	
$100,000
 

 

Interest on the Obligation shall accrue from the date each amount was borrowed until the Obligation is paid in full at the rate of ten percent (10%) per annum.  The Obligation and interest shall be payable in lawful money of the United States, at Portland, Oregon or such other place as the Holder hereof may designate.

 

Interest shall be computed monthly on the basis of a 365-day year or 366-day year, as applicable, and actual days elapsed.  Maker shall have the right to prepay at any time in advance of maturity, without premium or penalty, all or any part of the principal amount of this Promissory Note or interest thereon.  Payments shall be first applied to outstanding interest and thereafter to the principal.

 

This Promissory Note shall be payable by Maker on the earlier of June 30, 2008 or the closing, after consummation of the Maker’s initial public offering, of an equity financing by Maker which raises at least $4 million in gross proceeds.

 

Maker waives diligence, presentment, demand, protest, and notice of any kind whatsoever.  The non-exercise by Holder of any of Holder’s rights hereunder in any instance shall not constitute a waiver thereof in that or any subsequent instance.

 

Maker shall pay upon demand any and all expenses, including reasonable attorney fees, incurred or paid by Holder without suit or action in attempting to collect funds due under this Promissory Note.  In the event an action is instituted to enforce or interpret any of the terms of this Promissory Note including but not limited to any action or participation by Maker in, or in connection with, a case or proceeding under the U.S. Bankruptcy Code or any successor statute, the prevailing party shall be entitled to recover all expenses reasonably incurred at, before and after trial, on appeal, and on review whether or not taxable as costs, including, 

 

 

 

without limitation, attorneys’ fees, witness fees (expert and otherwise), deposition costs, copying charges and other expenses.

 

This Promissory Note is to be construed in all respects and enforced according to the laws of the State of Oregon.

 

	 	“MAKER”
	 	 	 	 
	 	VAUGHAN FOODS, INC.
	 	 	 	 
	 	by:	/s/ Mark E. Vaughan	 
	 	 	 	 
	 	Its:	PresidentExhibit 10.15 

 

THIS NOTE HAS NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW (COLLECTIVELY, THE "SECURITIES LAWS"), AND HAS BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. THIS NOTE MAY NOT BE SOLD, OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS IT (I) IS REGISTERED OR QUALIFIED UNDER ALL APPLICABLE SECURITIES LAWS OR (II) IS EXEMPT FROM REGISTRATION OR QUALIFICATION UNDER SUCH LAWS AND THE ISSUER IS PROVIDED WITH AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED.

 

PROMISSORY NOTE

 

	
            $875,000
 	
            July
                3, 2007      

Moore, Oklahoma
 

 

FOR VALUE RECEIVED, Vaughan Foods, Inc., an Oklahoma corporation (“Debtor”), promises to pay to Herb Grimes (“Lender”), at the offices of the Debtor, on June 30, 2008 (the “Maturity Date”) the principal sum of EIGHT HUNDRED SEVENTY-FIVE THOUSAND DOLLARS and 00/100 (US$875,000.00) with interest thereon at the rate of ten percent (10%) per annum.  

 

Interest as aforesaid shall be calculated on the basis of actual number of days elapsed over a year of 360 days.

 

Notwithstanding anything to the contrary that may be contained herein, if at any time after the date hereof and prior to the Maturity Date, Debtor shall have sold any equity securities in a transaction wherein the gross proceeds received by the Debtor equal or exceed four million dollars ($4,000,000.00) (a “Qualified Sale,”) then upon the closing of such Qualified Sale, the entire outstanding principal and accrued and unpaid interest on this Note shall be due and payable.

 

If this Note, or any payment hereunder, falls due on a Saturday, Sunday or a day that is a public holiday in the State of Oklahoma, this Note, or such payment hereunder, shall be made on the next succeeding business day and such additional time shall be included in the computation of any interest payable hereunder.

 

Debtor may at its option prepay all or any part of the unpaid principal amount of this Note and accrued interest thereon.  Any partial prepayment shall be applied first to interest and the remaining balance of such payment, if any, to principal.

 

If any provision of this Note would require Debtor to pay interest hereon at a rate exceeding the highest rate allowed by applicable law, Debtor shall instead pay interest under this Note at the highest rate permitted by applicable law.

 

IN WITNESS WHEREOF, Debtor has executed this Promissory Note as of the date first above written.

 

 

 

 

 

	 	VAUGHAN
          FOODS, INC.

      An
    Oklahoma corporation
	 
	 	 	 	 
	 	By:	Mark Vaughan	 
	 	Name:	/s/ Mark E. Vaughan 	 
	 	Title:	President and Chief Operating Officer	 

 

 

 

 

 

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