1994 California Stock Option Plan - Peet's Companies Inc.
PEET'S COMPANIES, INC.
1994 CALIFORNIA STOCK OPTION PLAN
SECTION 1. Purpose.
The purpose of the 1994 California Stock Option Plan (this "Plan") is to
provide a means whereby selected employees, directors, officers, agents,
consultants, and advisors of Peet's Companies, Inc. (the "Company"), or of any
parent or subsidiary (as defined in subsection 5.8 and referred to hereinafter
as "related corporations") thereof, may be granted incentive stock options
and/or nonqualified stock options to purchase the Common Stock (as defined in
Section 3) of the Company, in order to attract and retain the service's or
advice of such employees, directors, officers, agents, consultants, and advisors
and to provide added incentive to such persons by encouraging stock ownership in
the Company.
SECTION 2. Administration.
This Plan shall be administered by the Board of Directors of the Company
(the "Board") or, in the event the Board shall appoint and/or authorize a
committee to administer this Plan, by such committee. The administrator of this
Plan shall hereinafter be referred to as the "Plan Administrator."
In the event a member of the Plan Administrator may be eligible, subject to
the restrictions set forth in Section 4, to participate in or receive or hold
options under this Plan, no member of the Plan Administrator shall vote with
respect to the granting of an option hereunder to himself or herself, as the
case may be, and, if state corporate law does not permit a committee to grant
options to directors, then any option granted under this Plan to a director for
his or her services as such shall be approved by the full Board.
The members of any committee serving as Plan Administrator shall be
appointed by the Board for such term as the Board may determine. The Board may
from time to time remove members from, or add members to, the committee.
Vacancies on the committee, however caused, shall be filled by the Board.
With respect to grants made under this Plan to individuals who are subject
to Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), the Plan Administrator shall be constituted at all times so as to meet
the requirements of Rule 16b-3 promulgated under Section 16(b) of the Exchange
Act if any of the Company's equity securities are registered pursuant to Section
12(b) or 12(g) of the Exchange Act.
2.1 Procedures. The Board shall designate one of the members of the Plan
Administrator as chairman. The Plan Administrator may hold meetings at such
times and places as it shall determine. The acts of a majority of the members of
the Plan Administrator present at meetings at which a quorum exists, or acts
reduced to or approved in writing by all Plan Administrator members, shall be
valid acts of the Plan Administrator.
1.
<PAGE>
2.2 Responsibilities. Except for the terms and conditions explicitly set
forth in this Plan, the Plan Administrator shall have the authority, in its
discretion, to determine all matters relating to the options to be granted under
this Plan, including selection of the individuals to be granted options, the
number of shares to be subject to each option, the exercise price, and all other
terms and conditions of the options. Grants under this Plan need not be
identical in any respect, even when made simultaneously. The interpretation and
construction by the Plan Administrator of any terms or provisions of this Plan
or any option issued hereunder, or of any rule or regulation promulgated in
connection herewith, shall be conclusive and binding on all interested parties,
so long as such interpretation and construction with respect to incentive stock
options correspond to the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), the regulations thereunder and any
amendments thereto.
2.3 Rule 16b-3 Compliance and Bifurcation of Plan. It is the intention of
the Company that, if any of the Company's equity securities are registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, this Plan shall comply
in all respects with Rule 16b-3 under the Exchange Act. If any Plan provision is
later found not to be in compliance with such Rule, the provision shall be
deemed null and void, and in all events this Plan shall be construed in favor of
its meeting the requirements of Rule 16b-3. Notwithstanding anything in this
Plan to the contrary, the Board, in its absolute discretion, may bifurcate this
Plan so as to restrict, limit or condition the application of any provision of
this Plan to participants who are subject to Section 16 of the Exchange Act
without so restricting, limiting or conditioning this Plan with respect to other
participants.
SECTION 3. Shares Subject to This Plan.
The shares subject to this Plan shall be the Company's Common Stock (the
"Common Stock"), currently authorized but unissued. Subject to adjustment as
provided in Section 7, the aggregate amount of Common Stock to be delivered upon
the exercise of all options granted under this Plan shall not exceed 415,800
shares as such Common Stock was constituted on the effective date of this Plan;
provided, however, that the number of shares of Common Stock available for
issuance under this Plan shall be reduced from time to time in direct proportion
to the number of shares of Common Stock reserved for issuance pursuant to
options granted under the Company's 1993 Stock Option Plan. If any option
granted under this Plan shall expire or be surrendered, exchanged for another
option, cancelled or terminated for any reason without having been exercised in
full, the unpurchased shares subject thereto shall thereupon again be available
for purposes of this Plan, including for replacement options which may be
granted in exchange for such expired, surrendered, exchanged, cancelled or
terminated options.
SECTION 4. Eligibility.
An incentive stock option may be granted only to any individual who, at the
time the option is granted, is an employee of the Company or any related
corporation. A nonqualified stock option may be granted to any employee,
director, officer, agent, consultant, or advisor of the Company or any related
corporation, whether an individual or an entity. Any party to whom an option is
granted under this Plan shall be referred to hereinafter as an "Optionee."
2.
<PAGE>
SECTION 5. Terms and Conditions of Options.
Options granted under this Plan shall be evidenced by written agreements
which shall contain such terms, conditions, limitations and restrictions as the
Plan Administrator shall deem advisable and which are not inconsistent with this
Plan. Notwithstanding the foregoing, options shall include or incorporate by
reference the following terms and conditions:
5.1 Number of Shares and Price. The maximum number of shares that may be
purchased pursuant to the exercise of each option and the price per share at
which such option is exercisable (the "exercise price") shall be as established
by the Plan Administrator, provided that the Plan Administrator shall act in
good faith to establish the exercise price which shall be not less than the fair
market value per share of the Common Stock at the time the option is granted
with respect to incentive stock options and not less than 85% of the fair market
value of the Common Stock at the time the option is granted with respect to
nonqualified stock options, and also provided that, with respect to incentive
stock options granted to greater than 10% shareholders, the exercise price shall
be as required by subsection 6.1. The foregoing notwithstanding, the maximum
number of shares with respect to which an option or options may be granted to
any Optionee in any one fiscal year of the Company shall not exceed 300,000
shares (the "Maximum Annual Optionee Grant").
5.2 Term and Maturity. Subject to the restrictions contained in Section 6
with respect to granting incentive stock options to greater than 10%
shareholders, the term of each incentive stock option shall be as established by
the Plan Administrator and, if not so established, shall be 10 years from the
date it is granted but in no event shall it exceed 10 years. The term of each
nonqualified stock option shall be as established by the Plan Administrator and,
if not so established, shall be 10 years. To ensure that the Company or related
corporation will achieve the purpose and receive the benefits contemplated in
this Plan, any option granted to any Optionee hereunder shall, unless the
condition of this sentence is waived or modified in the agreement evidencing the
option or by resolution adopted at any time by the Plan Administrator, be
exercisable according to the following schedule:/*/
Period of Optionee's Continuous
Relationship With the Company
or Related Corporation From Portion of Total Option
the Date the Option is Granted Which Is Exercisable
----------------------------------------- -----------------------------------
Upon Grant 60%
after 1 year 80%
after 2 years 100%
_____________
* Note: With respect to options granted as of February 9, 1996, the Plan
Administrator has established a different vesting schedule. Please see your
Grant Letter for the applicable vesting schedule.
3.
<PAGE>
5.3 Exercise. Subject to the vesting schedule described in subsection 5.2,
each option may be exercised in whole or in part at any time and from time to
time. However, the Plan Administrator may in its discretion require that a
minimum number of shares be purchased upon any exercise of option rights
hereunder, provided that such minimum may in no event exceed 100 shares. Only
whole shares win be issued pursuant to the exercise of any option. An option
shall be exercised by delivery to the Company of notice of the number of shares
with respect to which the option is exercised, together with payment of the
exercise price.
5.4 Payment of Exercise Price. Payment of the option exercise price shall
be made in fun at the time the notice of exercise of the option is delivered to
the Company and shall be in cash, bank certified or cashier's check or personal
check (unless at the time of exercise the Plan Administrator in a particular
case determines not to accept a personal check) for the shares being purchased.
The Plan Administrator can determine at any time before exercise that
additional forms of payment will be permitted. To the extent permitted by the
Plan Administrator and applicable laws and regulations (including, but not
limited to, federal tax and securities laws and regulations and state corporate
law), an option may be exercised by:
(a) delivery of shares of Common Stock of the Company held by an
Optionee having a fair market value equal to the exercise price, such fair
market value to be determined in good faith by the Plan Administrator; provided,
however, that payment in stock held by an Optionee shall not be made unless the
stock shall have been owned by the Optionee for a period of at least six months;
(b) delivery of a full-recourse promissory note executed by the
Optionee; provided that (i) such note delivered in connection with an incentive
stock option shall, and such note delivered in connection with a nonqualified
stock option may, in the sole discretion of the Plan Administrator, bear
interest at a rate specified by the Plan Administrator but in no case less than
the rate required to avoid imputation of interest (taking into account any
exceptions to the imputed interest rules) for federal income tax purposes, (ii)
the Plan Administrator in its sole discretion shall specify the term and other
provisions of such note at the time an incentive stock option is granted or at
any time prior to exercise of a nonqualified stock option, (iii) the Plan
Administrator may require that the Optionee pledge to the Company for the
purpose of securing the payment of such note the shares of Common Stock to be
issued to the Optionee upon exercise of the option and may require that the
certificate representing such shares be held in escrow in order to perfect the
Company's security interest, and (iv) the Plan Administrator in its sole
discretion may at any time restrict or rescind this right upon notification to
the Optionee; or
(c) delivery of a properly executed exercise notice, together with
irrevocable instructions to a broker, all in accordance with the regulations of
the Federal Reserve Board, to promptly deliver to the Company the amount of sale
or loan proceeds to pay the exercise price and any federal, state or local
withholding tax obligations that may arise in connection with the exercise.
5.5 Withholding Tax Requirement. The Company or any related corporation
shall have the right to retain and withhold from any payment of cash or shares
of Common Stock
4.
<PAGE>
under this Plan the amount of taxes required by any government to be withheld or
otherwise deducted and paid with respect to such payment. At its discretion, the
Company may require an Optionee receiving shares of Common Stock to reimburse
the Company for any such taxes required to be withheld by the Company and
withhold any distribution in whole or in part until the Company is so
reimbursed. In lieu thereof, the Company shall have the right to withhold from
any other cash amounts due or to become due from the Company to the Optionee an
amount equal to such taxes. The Company may also retain and withhold or the
Optionee may elect, subject to approval by the Company at its sole discretion,
to have the Company retain and withhold a number of shares having a market value
not less than the amount of such taxes required to be withheld by the Company to
reimburse the Company for any such taxes and cancel (in whole or in part) any
such shares so withheld. In order to qualify such election for exemption under
Rule 16b-3 promulgated under Section 16(b) of the Exchange Act, any individual
who is subject to Section 16 under the Exchange Act must exercise the option
during the quarterly 10-day window period required under Section 16(b) of the
Exchange Act for exercises of stock appreciation rights, and the election
relating to such option exercise must be (i) an irrevocable election made six
months prior to the date the option exercise becomes taxable; (ii) an election
that is made during a window period; or (iii) an election that is made prior to
a window period, provided the election becomes effective as of the next window
period.
5.6 Holding Periods.
5.6.1 Securities and Exchange Act Section 16. If an individual
subject to Section 16 of the Exchange Act sells shares of Common Stock obtained
upon the exercise of a stock option within six months after the date the option
was granted, such sale may result in short-swing profit recovery under Section
16(b) of the Exchange Act.
5.6.2 Taxation of Stock Options. In order to obtain certain tax
benefits afforded to incentive stock options under Section 422 of the Code, an
optionee must hold the shares issued upon the exercise of an incentive stock
option for two years after the date of grant of the option and one year from the
date of exercise. An optionee may be subject to the alternative minimum tax at
the time of exercise of an incentive stock option.
The Plan Administrator may require an Optionee to give the Company prompt
notice of any disposition of shares acquired by the exercise of an incentive
stock option prior to the expiration of such holding periods.
Tax advice should be obtained by an Optionee when exercising any option and
prior to the disposition of the shares issued upon the exercise of any option.
5.7 Transferability of Options. Options granted under this Plan and the
rights and privileges conferred hereby may not be transferred, assigned, pledged
or hypothecated in any manner (whether by operation of law or otherwise) other
than by win or by the applicable laws of descent and distribution and shall not
be subject to execution, attachment or similar process. During an Optionee's
lifetime, any options granted under this Plan are personal to him or her and are
exercisable solely by such Optionee. Any attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any option under this Plan or of any right
or privilege conferred hereby, contrary to the Code or to the provisions of this
Plan, or the sale or levy or any attachment or
5.
<PAGE>
similar process upon the rights and privileges conferred hereby shall be null
and void. Notwithstanding the foregoing, to the extent permitted by Rule 16b-3
under the Exchange Act and other applicable law and regulation, the Plan
Administrator may permit an Optionee to (i) during the Optionee's lifetime,
designate a person who may exercise the option after the Optionee's death by
giving written notice of such designation to the Company. Such designation may
be changed from time to time by the Optionee by giving written notice to the
Company revoking any earlier designation and making a new designation or (ii)
with respect to nonqualified stock options, transfer the option and the rights
and privileges conferred hereby.
5.8 Termination of Relationship. If the Optionee's relationship with the
Company or any related corporation ceases for any reason other than death or
total disability, and unless by its terms the option sooner terminates or
expires, then the Optionee may exercise, for a three-month period, that portion
of the Optionee's option which is exercisable at the time of such cessation, but
the Optionee's option shall terminate at the end of such period following such
cessation as to all shares for which it has not theretofore been exercised,
unless such provision is waived in the agreement evidencing the option. If, in
the case of an incentive stock option, an Optionee's relationship with the
Company or any related corporation changes (i.e., from employee to nonemployee,
such as a consultant), such change shall constitute a termination of an
Optionee's employment with the Company or any related corporation and the
Optionee's incentive stock option shall terminate in accordance with this
subsection 5.8. Upon the expiration of the three-month period following
cessation of employment in the case of an incentive stock option, or at any time
prior to the expiration of the option in the case of a nonqualified stock
option, the Plan Administrator shall have sole discretion in a particular
circumstance to extend the exercise period following such cessation to any date
up to the termination or expiration of the option. If, however, in the case of
an incentive stock option, the Optionee does not exercise the Optionee's option
within three months after cessation of employment, the option will no longer
qualify as an incentive stock option under the Code.
If an Optionee's relationship with the Company or any related corporation
ceases because of a less than total disability, the Optionee's option shall not
terminate until the end of the 6-month period following such cessation (unless
by its terms it sooner terminates and expires). If, however, in the case of an
incentive stock option, the Optionee does not exercise the Optionee's option
within three months after cessation of employment, the option will no longer
qualify as an incentive stock option under the Code.
If an Optionee's relationship with the Company or any related corporation
ceases because of a total disability, the Optionee's option shall not terminate
or, in the case of an incentive stock option, cease to be treated as an
incentive stock option until the end of the 12-month period following such
cessation (unless by its terms it sooner terminates and expires). As used in
this Plan, the term "total disability" refers to a mental or physical impairment
of the Optionee which is expected to result in death or which has lasted or is
expected to last for a continuous period of 12 months or more and which causes
the Optionee to be unable, in the opinion of the Company and two independent
physicians, to perform his or her duties for the Company and to be engaged in
any substantial gainful activity. Total disability shall be deemed to have
occurred on the first day after the Company and the two independent physicians
have furnished their opinion of total disability to the Plan Administrator.
6.
<PAGE>
Options granted under the Plan shall not be affected by any change of
relationship with the Company so long as the Optionee continues to be an
employee, director, officer, agent, consultant, or advisor of the Company or of
a related corporation; however, a change in an Optionee's status from an
employee to a nonemployee (e.g., consultant or independent contractor) shall
result in the termination of an outstanding incentive stock option held by such
Optionee. The Plan Administrator, in its absolute discretion, may determine all
questions of whether particular leaves of absence constitute a termination of
services; provided, however, that with respect to incentive stock options, such
determination shall be subject to any requirements contained in the Code. The
foregoing notwithstanding, with respect to incentive stock options, employment
shall not be deemed to continue beyond the first 90 days of such leave, unless
the Optionee's reemployment rights are guaranteed by statute or by contract.
As used herein, the term "related corporation," when referring to a
subsidiary corporation, shall mean any corporation (other than the Company) in,
at the time of the granting of the option, an unbroken chain of corporations
ending with the Company, if stock possessing 50% or more of the total combined
voting power of all classes of stock of each of the corporations other than the
Company is owned by one of the other corporations in such chain. When referring
to a parent corporation, the term "related corporation" shall mean any
corporation in an unbroken chain of corporations ending with the Company if, at
the time of the granting of the option, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.
5.9 Death of Optionee. If an Optionee dies while he or she has a
relationship with the Company or any related corporation or within the three-
month period (or 6-month period in the case of less than totally disabled
Optionees or 12-month period in the case of totally disabled Optionees)
following cessation of such relationship, any option held by such Optionee to
the extent that the Optionee would have been entitled to exercise such option,
may be exercised within one year after his or her death by the personal
representative of his or her estate or by the person or persons to whom the
Optionee's rights under the option shall pass (i) by will or by the applicable
laws of descent and distribution or (ii) by a designation or transfer pursuant
to Section 5.7.
5.10 No Status As Shareholder. Neither the Optionee nor any party to which
the Optionee's rights and privileges under the option may pass shall be, or have
any of the rights or privileges of, a shareholder of the Company with respect to
any of the shares issuable upon the exercise of any option granted under this
Plan unless and until such option has been exercised.
5.11 Continuation of Relationship. Nothing in this Plan or in any option
shall confer upon any Optionee any right to continue in the employ or other
relationship of the Company or of a related corporation, or to interfere in any
way with the right of the Company or of any such related corporation to
terminate his or her employment or other relationship with the Company at any
time.
5.12 Modification and Amendment of Option. Subject to the requirements of
Code Section 422 with respect to incentive stock options and to the terms and
conditions and within the limitations of this Plan, the Plan Administrator may
modify or amend outstanding options
7.
<PAGE>
granted under this Plan. The modification or amendment of an outstanding option
shall not, without the consent of the Optionee, impair or diminish any of his or
her rights or any of the obligations of the Company under such option. Except as
otherwise provided in this Plan, no outstanding option shall be terminated
without the consent of the Optionee.
5.13 Limitation on Value for Incentive Stock Options. As to all incentive
stock options granted under the terms of this Plan, to the extent that the
aggregate fair market value of the shares (determined at the time the incentive
stock option is granted) with respect to which incentive stock options are
exercisable for the first time by the Optionee during any calendar year (under
this Plan and all other incentive stock option plans of the Company, a related
corporation or a predecessor corporation) exceeds $100,000, such options shall
be treated as nonqualified stock options. The previous sentence shall not apply
if the Internal Revenue Service issues a public rule, issues a private ruling to
the Company, any Optionee or any legatee, personal representative or distributee
of an Optionee or issues regulations changing or eliminating such annual limit.
SECTION 6. Greater Than 10% Shareholders.
6.1 Exercise Price and Term of Incentive Stock Options. If an incentive
stock option is granted under this Plan to any employee who owns more than 10%
of the total combined voting power of all classes of stock of the Company or any
related corporation, the term of such incentive stock options shall not exceed
five years and the exercise price shall be not less than 110% of the fair market
value of the shares at the time the incentive stock option is granted. This
provision shall control notwithstanding any contrary terms contained in an
option agreement or any other document.
6.2 Attribution Rule. For purposes of subsection 6.1, in determining stock
ownership, an employee shall be deemed to own the shares owned, directly or
indirectly, by or for his or her brothers, sisters, spouse, ancestors and lineal
descendants. Shares owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be deemed to be owned proportionately by or
for its shareholders, partners or beneficiaries. If an employee or a person
related to the employee owns an unexercised option or warrant to purchase shares
of the Company, the shares subject to that portion of the option or warrant
which is unexercised shall not be counted in determining stock ownership. For
purposes of this Section 6, shares owned by an employee shall include all shares
actually issued and outstanding immediately before the grant of the incentive
stock option to the employee.
SECTION 7. Adjustments Upon Changes in Capitalization.
The aggregate number and class of shares for which options may be granted
under this Plan, the Maximum Annual Optionee Grant set forth in Section 5.1, the
number and class of shares covered by each outstanding option and the exercise
price per share thereof (but not the total price), and each such option, shall
all be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a split-up or
consolidation of shares or any like capital adjustment, or the payment of any
stock dividend.
8.
<PAGE>
7.1 Effect of Liquidation or Reorganization.
7.1.1 Cash, Stock or Other Property for Stock. Except as provided
in subsection 7.1.2, upon a merger (other than a merger of the Company in which
the holders of shares of Common Stock immediately prior to the merger have the
same proportionate ownership of shares of Common Stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation, reorganization (other than a mere reincorporation
or the creation of a holding company) or liquidation of the Company, as a result
of which the shareholders of the Company receive cash, stock or other property
in exchange for or in connection with their shares of Common Stock, any option
granted hereunder shall terminate, but the Optionee shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, separation, reorganization or liquidation to exercise such Optionee's
option to the extent the vesting requirements set forth in the option agreement
have been satisfied.
7.1.2 Conversion of Options on Stock for Stock Exchange. If the
shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Common Stock in any
transaction involving a merger (other than a merger of the Company in which the
holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, separation
or reorganization (other than a mere reincorporation or the creation of a
holding company), all options granted hereunder shall be converted into options
to purchase shares of Exchange Stock unless the Company and the corporation
issuing the Exchange Stock, in their sole discretion, determine that any or all
such options granted hereunder shall not be converted into options to purchase
shares of Exchange Stock but instead shall terminate in accordance with the
provisions of subsection 7.1.1. The amount and price of converted options shall
be determined by adjusting the amount and price of the options granted hereunder
in the same proportion as used for determining the number of shares of Exchange
Stock the holders of the Common Stock receive in such merger, consolidation,
acquisition of property or stock, separation or reorganization. Unless
accelerated by the Board, the vesting schedule set forth in the option agreement
shall continue to apply to the options granted for the Exchange Stock.
7.2 Fractional Shares. In the event of any adjustment in the number of
shares covered by any option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the number
of full shares resulting from such adjustment.
7.3 Determination of Board to Be Final. All Section 7 adjustments shall be
made by the Board, and its determination as to what adjustments shall be made,
and the extent thereof, shall be final, binding and conclusive. Unless an
Optionee agrees otherwise, any change or adjustment to an incentive stock option
shall be made in such a manner so as not to constitute a "modification' as
defined in Code Section 425(h) and so as not to cause his or her incentive stock
option issued hereunder to fail to continue to qualify as an incentive stock
option as defined in Code Section 422(b).
9.
<PAGE>
SECTION 8. Securities Regulation.
Shares shall not be issued with respect to an option granted under this
Plan unless the exercise of such option and the issuance and delivery of such
shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance, including the
availability, if applicable, of an exemption from registration for the issuance
and sale of any shares hereunder. Inability of the Company to obtain, from any
regulatory body having jurisdiction, the authority deemed by the Company's
counsel to be necessary for the lawful issuance and sale of any shares hereunder
or the unavailability of an exemption from registration for the issuance and
sale of any shares hereunder shall relieve the Company of any liability in
respect of the nonissuance or sale of such shares as to which such requisite
authority shall not have been obtained.
As a condition to the exercise of an option, the Company may require the
Optionee to represent and warrant at the time of any such exercise that the
shares are being purchased only for investment and without any present intention
to sell or distribute such shares if, in the opinion of counsel for the Company,
such a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order against
any shares of stock may be placed on the official stock books and records of the
Company, and a legend indicating that the stock may not be pledged, sold or
otherwise transferred unless an opinion of counsel is provided (concurred in by
counsel for the Company) stating that such transfer is not in violation of any
applicable law or regulation, may be stamped on stock certificates in order to
assure exemption from registration. The Plan Administrator may also require such
other action or agreement by the Optionees as may from time to time be necessary
to comply with the federal and state securities laws. THIS PROVISION SHALL NOT
OBLIGATE THE COMPANY TO UNDERTAKE REGISTRATION OF THE OPTIONS OR STOCK
HEREUNDER.
Should any of the Company's capital stock of the same class as the stock
subject to options granted hereunder be listed on a national securities
exchange, all stock issued hereunder if not previously listed on such exchange
shall be authorized by that exchange for listing thereon prior to the issuance
thereof.
SECTION 9. Amendment and Termination.
9.1 Board Action. The Board may at any time suspend, amend or terminate
this Plan, provided that, to the extent required for compliance with Rule l6b-3
promulgated under Section 16(b) of the Exchange Act, Section 422 of the Code or
by any applicable law or regulation, the Company's shareholders must approve any
amendment which will:
(a) increase the number of shares that may be issued under this Plan;
(b) with respect to nonqualified stock options, materially modify the
requirements as to eligibility for participation in this Plan or, with respect
to incentive stock
10.
<PAGE>
options, change the designation of the participants or class of participants
eligible for participation in this Plan;
(c) materially increase the benefits accruing to the participants
under this Plan; or
(d) otherwise require shareholder approval under any applicable law
or regulation.
Such shareholder approval must be obtained (i) within 12 months of the
adoption by the Board of such amendment or (ii) if earlier, and to the extent
required for compliance with Rule 16b-3 promulgated under Section 16(b) of the
Exchange Act, at the next annual meeting of shareholders after such adoption by
the Board.
Any amendment made to this Plan which would constitute a "modification" to
incentive stock options outstanding on the date of such amendment, shall not be
applicable to such outstanding incentive stock options, but shall have
prospective effect only, unless the Optionee agrees otherwise.
9.2 Automatic Termination. Unless sooner terminated by the Board, this
Plan shall terminate ten years from the earlier of (a) the date on which this
Plan is adopted by the Board or (b) the date on which this Plan is approved by
the shareholders of the Company. No option may be granted after such termination
or during any suspension of this Plan. The amendment or termination of this Plan
shall not, without the consent of the option holder, alter or impair any rights
or obligations under any option theretofore granted under this Plan.
SECTION 10. Effectiveness of This Plan.
This Plan shall become effective upon adoption by the Board so long as it
is approved by the Company's shareholders at any time within 12 months of such
adoption of this Plan or, if earlier, and to the extent required for compliance
with Rule 16b-3 under the Exchange Act, at the next annual meeting of
shareholders after adoption by the Board.
Plan adopted by the Board of Directors on July 20, 1994 and approved by the
shareholders on August 29, 1994. Amended by the Board of Directors on February
22, 1995.
11.