1993 Stock Option/Stock Issuance Plan - Rubio's Restaurants Inc.
RUBIO'S RESTAURANTS, INC.
AMENDED AND RESTATED
1993 STOCK OPTION/STOCK ISSUANCE PLAN
(As Amended through October 31, 1996)
ARTICLE I
GENERAL PROVISIONS
1. PURPOSE
This 1993 Stock Option/Stock Issuance Plan ("Plan") is intended
to promote the interests of RUBIO'S RESTAURANTS, INC., a California
corporation (the "Corporation"), by providing individuals who render valuable
services to the Corporation and are thereby responsible for its financial
success with the opportunity to acquire ownership interests in the
Corporation so as to encourage them to continue to provide valuable services
to the Corporation.
2. STRUCTURE OF THE PLAN
The Plan shall be divided into two separate components: the
Option Grant Program specified in Article II and the Stock Issuance Program
specified in Article III. Under the Option Grant Program, eligible
individuals may be granted options to purchase shares of the Common Stock (as
defined below) at discounts of up to 15% of the fair market value of such
shares on the grant date. Under the Stock Issuance Program, eligible
individuals may be immediately issued shares of the Common Stock at discounts
of up to 15% from the fair market value of such shares at the time of
issuance. Any securities issued under the Plan may be fully vested when
issued or may vest over time.
3. ADMINISTRATION OF THE PLAN
A. The Plan shall be administered by the Corporation's
Board of Directors (the "Board") or by a committee (a "Committee") of two (2)
or more persons to which the Board has delegated one or more of its
administrative powers or responsibilities under the Plan (the "Plan
Administrator").
B. The Plan Administrator (the Board and any Committee, to
the extent of the Committee's delegated authority) shall have full power and
authority, subject to the express provisions of the Plan, to establish such
rules and regulations as it may deem appropriate for proper administration
and implementation of the Plan and to make such determinations under, and
issue such interpretations of, the Plan and any outstanding option grants or
share issuances as it deems necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest
in the Plan or any outstanding option or share issuance.
<PAGE>
4. OPTION GRANTS AND SHARE ISSUANCES
A. The persons eligible to receive option grants pursuant
to the Option Grant Program ("Optionee") and/or share issuances under the
Stock Issuance Program ("Participant") are limited to the following:
(I) employees (including officers and directors) of
the Corporation (or any parent or subsidiary corporation);
(II) the non-employee members of the Board or the
non-employee members of the board of directors of any parent or subsidiary
corporations; and
(III) those consultants and other independent
contractors who provide valuable services to the Corporation (or any parent
or subsidiary corporations).
B. The Plan Administrator shall have the absolute
discretion and authority (I) either to grant options in accordance with
Article II of the Plan or to effect share issuances in accordance with
Article III of the Plan with respect to eligible individuals, (II) with
respect to the option grants made under the Plan, to determine the number of
shares to be covered by each such grant, the status of the granted option as
either an Incentive Option or a non-statutory option not intended to meet
such requirements, the time or times at which each granted option is to
become exercisable and the maximum term for which the option may remain
outstanding, and (III) with respect to share issuances under the Stock
Issuance Program, to determine the number of shares to be issued to each
Participant, the vesting schedule (if any) to be applicable to the issued
shares, and the consideration to be paid by the individual for such shares.
5. STOCK SUBJECT TO THE PLAN
A. The maximum number of shares of Common Stock which may
be issued over the term of the Plan shall not exceed 325,000 shares. The
total number of shares issuable under the Plan shall be subject to adjustment
from time to time in accordance with the provisions of Section 5.C of this
Article I.
B. Shares subject to the unexercised portion of any
outstanding options under the Plan which expire or terminate prior to
exercise in full or which are otherwise cancelled in accordance with the
cancellation-regrant provisions of Section 4 of Article II will not diminish
the number of shares of Common Stock available for issuance under the Plan.
Any share of Common
-2-
<PAGE>
Stock issued under the Plan will no longer be available for subsequent
reissuance even if repurchased by the Corporation.
C. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock dividend, stock split,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the aggregate number and/or
class of shares issuable under the Plan and (ii) the aggregate number and/or
class of shares and the option price per share in effect under each
outstanding option in order to prevent the dilution or enlargement of
benefits thereunder. The adjustments determined by the Plan Administrator
shall be final, binding and conclusive.
D. Common Stock issuable under the Plan, whether under the
Option Grant Program or the Stock Issuance Program, may be subject to such
restrictions on transfer, repurchase rights or other restrictions as may be
imposed by the Plan Administrator.
6. AMENDMENT OF THE PLAN AND AWARDS
A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects whatsoever.
However, no such amendment or modification shall adversely affect the rights
and obligations of an Optionee with respect to options at the time
outstanding under the Plan, nor adversely affect the rights of any
Participant with respect to Common Stock issued under the Plan prior to such
action, unless the Optionee or Participant consents to such amendment. In
addition, the Board shall not, without the approval of the Corporation's
shareholders, amend the Plan to (i) materially increase the maximum number of
shares issuable under the Plan (except for permissible adjustments under
Article I, Section 5.C), (ii) materially increase the benefits accruing to
individuals who participate in the Plan, or (iii) materially modify the
eligibility requirements for participation in the Plan.
B. Options to purchase shares of Common Stock may be
granted under the Option Grant Program and shares of Common Stock may be
issued under the Stock Issuance Program, which are in both instances in
excess of the number of shares then available for issuance under the Plan,
provided any excess shares actually issued under the Option Grant Program or
the Stock Issuance Program are held in escrow until there is obtained
shareholder approval of an amendment sufficiently increasing the number of
shares of Common Stock available for issuance under the Plan. If such
shareholder approval is not obtained within twelve (12) months after the date
the initial excess issuances are made, whether as stock option grants or
direct stock issuances, then
-3-
<PAGE>
(I) any unexercised options representing such excess shall terminate and
cease to be exercisable and (II) the Corporation shall promptly refund to the
Optionees and Participants the option or purchase price paid for any excess
shares issued under the Plan and held in escrow, together with interest (at
the applicable Short Term Federal Rate) for the period the shares were held
in escrow, and such shares shall thereupon be automatically cancelled and
cease to be outstanding.
7. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan shall become effective when adopted by the
Board, but no option granted under the Plan shall become exercisable, and no
shares shall be issuable under the Stock Issuance Program, unless and until
the Plan shall have been approved by the Corporation's shareholders. If such
shareholder approval is not obtained within twelve (12) months after the date
of the Board's adoption of the Plan, then all options previously granted
under the Plan shall terminate, and no further options shall be granted and
no shares shall be issued under the Stock Issuance Program. Subject to such
limitation, the Plan Administrator may grant options under the Plan at any
time after the effective date and before the date fixed herein for
termination of the Plan.
B. The Plan shall terminate upon the EARLIER of (i) October
1, 2003 or (ii) the date on which all shares available for issuance under the
Plan have been issued pursuant to the exercise of options granted under
Article II or the issuance of shares under Article III. The termination is
of the Plan shall have no effect on any outstanding options under or shares
issued and outstanding under the Plan, and such securities shall thereafter
continue to have force and effect in accordance with the provisions of the
agreements evidencing such options and issuances.
8. NO EMPLOYMENT OR SERVICE RIGHTS
Nothing in the Plan shall confer upon any person any right to
continue in the service or employ of the Corporation (or any parent or
subsidiary corporation of the Corporation employing or retaining such
Optionee or Participant) for any period of specific duration or interfere
with or otherwise restrict in any way the rights of the Corporation (or any
parent or subsidiary corporation of the Corporation employing or retaining
such Optionee or Participant) or of the Optionee or the Participant, which
rights are hereby expressly reserved by each, to terminate the Service of the
Optionee or Participant at any time for any reason whatsoever, with or
without cause.
-4-
<PAGE>
9. DEFINITIONS
For all purposes under the Plan, unless specifically provided
otherwise in the option agreement evidencing the option grant and/or the
purchase agreement evidencing the purchased shares:
A. COMMON STOCK means shares of the Corporation's
authorized common stock ("Common Stock").
B. CORPORATE TRANSACTION means (i) a merger or
consolidation in which more than fifty percent (50%) of the Corporation's
outstanding voting stock is transferred to a person or persons different from
those who held the stock immediately prior to such transaction, or (ii) the
sale, transfer or other disposition of all or substantially all of the
Corporation's assets in complete liquidation or dissolution of the
Corporation.
C. EMPLOYEE means an individual in Service to the
Corporation (or any parent or subsidiary) and subject to its control and
direction as to both the work to be performed and the manner and method of
performance.
D. FAIR MARKET VALUE of a share of Common Stock on any
relevant date under the Plan shall be determined in accordance with the
following provisions:
(I) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded on the NASDAQ
National Market System, the fair market value shall be the closing
selling price of one share of Common Stock on the date in question, as
such price is reported by the National Association of Securities Dealers
through its NASDAQ system or any successor system. If there is no
closing selling price for the Common Stock on the date in question, then
the closing selling price on the last preceding date for which such
quotation exists shall be determinative of fair market value.
(II) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair market value
shall be the closing selling price per share of Common Stock on the date
in question on the stock exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange. If there
is no reported sale of Common Stock on such exchange on the date in
question, then the fair
-5-
<PAGE>
market value shall be the closing selling price on the exchange on the
last preceding date for which such quotation exists.
(III) If the Common Stock at the time is neither listed
nor admitted to trading on any stock exchange nor traded in the
over-the-counter market, or if the Plan Administrator determines that
the value determined pursuant to subparagraphs (I) and (II) above does
not accurately reflect the fair market value of the Common Stock, then
such fair market value shall be determined by the Plan Administrator
after taking into account such factors as the Plan Administrator shall
deem appropriate, including one or more independent professional
appraisals.
E. INCENTIVE OPTION means an option which satisfies the
requirements of Section 422 of the Internal Revenue Code.
F. PARENT corporation shall have the meaning set forth in
Sections 424 (e) of the Internal Revenue Code.
G. SERVICE to the Corporation will be considered to
continue for so long as an individual continues to render services on a
periodic basis to the Corporation (or any parent or subsidiary) whether in
the capacity of an Employee, a non-employee member of the board of directors
or a consultant or independent contractor.
H. SUBSIDIARY corporation shall have the meaning set forth
in Sections 424 (f) of the Internal Revenue Code.
I. TRANSFER shall mean (without limitation) any sale,
pledge, encumbrance, gift or other disposition of any security.
J. 10% SHAREHOLDER means an individual who owns (within the
meaning of Section 424(d) of the Internal Revenue Code) stock possessing 10%
or more of the total combined voting power of all classes of stock of the
Corporation (or any parent or subsidiary).
ARTICLE II
OPTION GRANT PROGRAM
1. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by
action of the Plan Administrator and may, at the Plan Administrator's
discretion, be either Incentive Options or nonstatutory options. Individuals
who are not Employees (as defined in subsection (c)(2) below) may only be
granted non-statutory options. Each granted option shall be evidenced by one
-6-
<PAGE>
or more instruments in the form approved by the Plan Administrator; PROVIDED,
however, that each such instrument shall comply with the terms and conditions
specified in Sections 1 and 3 of this Article II. Each instrument evidencing
an Incentive Option shall, in addition, be subject to the applicable
provisions of Section 2 of this Article II.
A. OPTION PRICE.
(I) The option price per share shall be fixed by the
Plan Administrator. In no event, however, shall the option price per share
be less than eighty-five percent (85%) of the fair market value of a share of
Common Stock on the date of the option grant.
(II) If the individual to whom the option is granted
is 10% Shareholder, then the option price per share shall not be less than
one hundred ten percent (110%) of the fair market value of the Common Stock
on the date of the option grant.
(III) The option price shall become immediately due
upon exercise of the option and shall, subject to the provisions of Article
IV, Section 1, be payable in cash or check drawn to the Corporation's order.
Notwithstanding the above, should the Corporation's outstanding Common Stock
be registered under Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "1934 Act") at the time the option is exercised, then the option
price may also be paid as follows:
- in shares of Common Stock held by the Optionee for
the requisite period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes and valued at fair market value
on the exercise date; or
- through a special sale and remittance procedure
pursuant to which the Optionee provides irrevocable written instructions
(I) to a designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, an amount sufficient to cover the
aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Corporation by reason of such purchase and (II) to the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm in order to effect the sale transaction.
-7-
<PAGE>
Except to the extent such sale and remittance procedure is utilized, payment
of the option price must occur at the time the option is exercised.
B. TERM AND EXERCISE OF OPTIONS. Each option granted under
the Plan shall be exercisable at such time or times, during such period, and
for such number of shares as shall be determined by the Plan Administrator
and set forth in the stock option agreement evidencing such option. However,
no option granted under the Plan shall have a term in excess of ten (10)
years from the grant date.
C. NO ASSIGNMENT. During the lifetime of the Optionee, the
option shall be exercisable only by the Optionee and shall not be assignable
or transferable by the Optionee otherwise than by will or by the laws of
descent and distribution following the Optionee's death.
D. TERMINATION OF SERVICE. Except to the extent otherwise
provided pursuant to Section 5 of this Article II, the following provisions
shall govern the exercise period applicable to any options held by the
Optionee at the time of cessation of Service or death.
(I) Should the Optionee cease to remain in Service for
any reason other than death or permanent disability, then the period during
which each outstanding option held by such Optionee is to remain exercisable
shall be limited to the three (3)-month period following the date of such
cessation of Service.
(II) In the event such Service terminates by reason of
permanent disability (as defined in Section 22(e)(3) of the Internal Revenue
Code) or should the Optionee die while holding one or more outstanding
options, then the period during which each such option is to remain
exercisable shall be limited to the twelve (12)-month period following the
date of the Optionee's cessation of service or death. During the limited
exercise period following the Optionee's death, the option may be exercised
by the personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the Optionee's will or
in accordance with the laws of descent and distribution.
(III) Under no circumstances, however, shall any such
option be exercisable after the specified expiration date of the option term.
(IV) Each such option shall, during such limited
exercise period, be exercisable for any or all of the shares for which the
option is exercisable on the date of the Optionee's cessation of Service.
Upon the expiration of such
-8-
<PAGE>
limited exercise period or (if earlier) upon the expiration of the option
term, the option shall terminate and cease to be exercisable.
E. SHAREHOLDER RIGHTS. An Optionee shall have none of the
rights of a shareholder with respect to any shares covered by the option
until such Optionee shall have exercised the option and paid the option price.
2. INCENTIVE OPTIONS
A. All provisions of the Plan shall be applicable to the
Incentive Options granted hereunder and, in addition, the terms and
conditions specified in this Section 2 shall be applicable to Incentive
Options granted under the Plan. Options which are specifically designated as
"nonstatutory" options when issued under the Plan shall NOT be subject to
such terms and conditions set forth herein. Incentive Options may only be
granted to individuals who are Employees.
B. OPTION PRICE. The option price per share of the Common
Stock subject to an Incentive Option shall in no event be less than one
hundred percent (100%) of the fair market value of a share of Common Stock on
the grant date.
C. DOLLAR LIMITATION. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common Stock
for which one or more options granted to any Employee under this Plan (or any
other option plan of the Corporation or any parent or subsidiary corporation)
may for the first time become exercisable as incentive stock options under
the Federal tax laws during any one calendar year shall not exceed the sum of
One Hundred Thousand Dollars ($100,000). To the extent the Employee holds
two or more such options which become exercisable for the first time in the
same calendar year, the foregoing limitation on the exercisability of such
options as Incentive Options under the Federal tax laws shall be applied on
the basis of the order in which such options are granted.
D. TERM. No option granted to a 10% Shareholder shall have
a term in excess of five (5) years from the grant date.
3. [RESERVED]
4. CANCELLATION AND NEW GRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at
any time and from time to time, with the consent of the affected Optionees,
the cancellation of any or all outstanding options under the Plan and to
grant in substitution
-9-
<PAGE>
therefor new options under the Plan covering the same or a different numbers
of shares of Common Stock but having an option price per share established at
the time of such cancellation and regrant in accordance with the provisions
of this Plan.
5. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority to
extend (either at the time the option is granted or at any time while the
option remains outstanding) the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service, from the
limited period otherwise applicable under subsection 1(c) of Article II, to
such greater period of time as the Plan Administrator may deem appropriate
under the circumstances. In no event, however, shall such option be
exercisable after the specified expiration date of the option term.
6. CASH-OUT OF OPTIONS
A. One or more Optionees may, in the Plan Administrator's
sole discretion, be granted limited cash-out rights to operate in tandem with
their outstanding options under the Plan; such limited cash-out rights shall
be exercisable only if the Corporation's outstanding Common Stock is
registered under Section 12(g) of the 1934 Act and the Optionee is subject to
the short-swing profit restrictions of the Federal securities laws. Any
option with such a limited right in effect for at least six (6) months shall
automatically be cancelled upon the acquisition of fifty percent (50%) or
more of the Corporation's outstanding Common Stock (excluding for purposes of
calculating such percent the Common Stock holdings of officers and directors
of the Corporation who are subject to the short-swing profit restrictions of
the Federal securities laws) pursuant to a tender or exchange offer made by a
person or group of related persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by or is under common
control with the Corporation) which the Board does not recommend the
Corporation's shareholders to accept. In return for the cancelled option,
the Optionee shall be entitled to a cash distribution from the Corporation in
an amount equal to the excess of (i) the Cash-Out Price of the shares of
Common Stock in which the Optionee is vested under the cancelled option over
(ii) the aggregate exercise price payable for such vested shares. The cash
distribution payable upon such cancellation shall be made within five (5)
days following the completion of such tender or exchange offer, and neither
the approval of the Plan Administrator nor the consent of the Board shall be
required in connection with such cancellation and distribution.
-10-
<PAGE>
B. For purposes of calculating the cash distribution, the
Cash-Out Price per share of the vested Common Stock subject to the cancelled
option shall be deemed to be equal to the GREATER of (i) the value per share
on the date of surrender, as determined in accordance with the valuation
provisions of subsection 1(a)(4) of Article II, or (ii) the highest reported
price per share paid in effecting the tender or exchange offer. However, if
the cancelled option is an Incentive Option, then the Cash-Out Price shall
not exceed the value per share determined under clause (i) above.
C. The shares of Common Stock subject to any option
cancelled for an appreciation distribution in accordance with this Section 6
shall NOT be available for subsequent option grants or share issuances under
the Plan.
ARTICLE III
STOCK ISSUANCE PROGRAM
1. STOCK ISSUANCES
Shares of Common Stock shall be issuable under the Stock
Issuance Program through direct and immediate issuances without any
intervening stock option grants. Each such stock issuance shall be evidenced
by a Stock Issuance Agreement ("Issuance Agreement") which shall be in
compliance with the provisions of the Plan.
2. ISSUE PRICE
A. The purchase price per share shall be fixed by the Plan
Administrator, but in no event shall it be less than eighty-five percent
(85%) of the fair market value of a share of Common Stock at the time of
issuance.
B. If any individual to whom a share issuance is made
hereunder is a 10% Shareholder, the purchase price per share shall not be
less than one hundred ten percent (110%) of the fair market value of a share
of Common Stock at the time of issuance.
3. PAYMENT OF ISSUE PRICE
Except as provided in Article IV, Section 1, shares shall be
issued only in exchange for cash, a check payable to the Corporation or for
services rendered.
-11-
<PAGE>
ARTICLE IV
MISCELLANEOUS
1. LOANS
A. The Plan Administrator may assist any Optionee or
Participant (including an Optionee or Participant who is an officer or
director of the Corporation) in the exercise of one or more options granted
to such Optionee under the Option Grant Program or the purchase of one or
more shares issued to such Participant under the Stock Issuance Program,
including the satisfaction of any Federal and State income and employment tax
obligations arising therefrom, by (i) authorizing the extension of a loan
from the Corporation to such Optionee or Participant, or (ii) permitting the
Optionee or Participant to pay the option price or purchase price for the
purchased Common Stock in installments over a period of years.
B. The terms of any loan or installment method of payment
(including the interest rate and terms of repayment) shall be established by
the Plan Administrator in its sole discretion. Loans or installment payments
may be granted with or without security or collateral. However, any loan
made to a consultant or other non-employee advisor must be secured by
property other than the purchased shares of Common Stock. In all events the
maximum credit available to each Optionee or Participant may not exceed the
SUM of (i) the aggregate option price or purchase price payable for the
purchased shares plus (ii) any Federal and State income and employment tax
liability incurred by the Optionee or Participant in connection with such
exercise or purchase.
C. The Plan Administrator may, in its absolute discretion,
determine that one or more loans extended under the financial assistance
program shall be subject to forgiveness by the Corporation in whole or in
part upon such terms and conditions as the Board in its discretion deems
appropriate.
2. VESTING OF SHARES
A. Options granted or shares issued under the Plan shall
vest in one or more installments. The elements of the vesting schedule shall
be determined by the Plan Administrator and specified in the agreement
governing such issuance. Such elements may include, among others, the
performance or service objectives to be completed or achieved, the number of
installments in which the shares are to vest, the interval or intervals
between installments and the effect which death, disability or other event
designated by the Plan Administrator is to have upon the vesting schedule.
In no event, however, may the Plan Administrator impose a vesting schedule
upon any shares
-12-
<PAGE>
issued under the Plan which is results in the shares vesting (or failure to
vest) of fewer than 20% of the total number of shares each year beginning one
year after the option grant date in the case of shares issued pursuant to
options granted under the Option Grant Program, or the issue date in the case
of the shares issued under the Stock Issuance Program. In extraordinary
circumstances, the Plan Administrator may grant options or issue shares which
are fully and immediately vested upon issuance.
B. Any new, additional or different shares of stock or
other property (including money paid other than as a regular cash dividend)
which the holder of unvested Common Stock may have the right to receive by
reason of a stock dividend, stock split, reclassification or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
limitations applicable to the unvested Common Stock with respect to which it
was paid or arose, and (ii) such escrow arrangements as the Plan
Administrator shall deem appropriate.
C. No person to whom shares of Common Stock have been issued
pursuant to the Plan may Transfer any such shares which have not vested.
Notwithstanding the above, the Participant shall have the right to make a
gift of unvested shares acquired under the Plan to his/her spouse, parents or
issue or to a trust established for such spouse, parents or issue, provided
the transferee of such shares delivers to the Corporation a written agreement
to be bound by all the provisions of the Plan and the Issuance or Stock
Purchase Agreement executed by the Participant at the time of his/her
acquisition of the gifted shares.
3. REPURCHASE RIGHTS
A. Should any person to whom shares of Common Stock have
been issued under the Plan terminate Service for any reason while any such
shares remain unvested (together with any other property described in Section
2.B), then the Corporation shall have the right to repurchase, at the
original purchase price paid by the Participant, all or (with the consent of
such person) any portion of the unvested shares, and such person shall
thereafter cease to have any further rights with respect to the repurchased
shares.
B. The Plan Administrator may in its discretion elect not
to exercise, in whole or in part, its repurchase rights with respect to any
unvested Common Stock (or other property) which would otherwise at the time
be subject to repurchase pursuant to the provisions of this Section 3.
-13-
<PAGE>
4. SECURITIES LAWS AND LEGENDS
A. No shares of Common Stock or other assets shall be
issued or delivered under this Plan unless and until the Corporation shall
have determined that there has been full and adequate compliance with all
applicable requirements of the Federal and state securities laws and all
other applicable legal and regulatory requirements.
B. All unvested shares of Common Stock issued under the
Plan shall bear a restrictive legend until such legend is removed in
accordance with applicable law. The restrictive legend shall be
substantially as follows:
"The securities represented by this certificate are
unvested and are accordingly subject to repurchase by the
Corporation pursuant to the provisions of the agreement between
the Corporation and the registered holder of the securities (or
his/her predecessor in interest). Such agreement imposes
restrictions on the transferability of the securities represented
by this certificate and grants certain repurchase rights to the
Corporation in the event the registered holder (or predecessor in
interest) terminates his/her employment or service with the
Corporation. A copy of such agreement is on file at the principal
office of the Corporation."
As shares acquired under the Plan vest, the Corporation shall, upon the
request of the shareholder and delivery of appropriate certificates during
the period or periods designated each year by the Plan Administrator, issue a
new certificate for the vested shares without the restrictive legend set
forth above. If the Corporation repurchases any unvested shares from a
shareholder, the Corporation shall at the time the repurchase is effected
deliver a new certificate, without the restrictive legend, representing the
number of shares (if any) in which the shareholder is vested and which are
accordingly no longer subject to repurchase by the Corporation.
5. RIGHT OF FIRST REFUSAL
Until such time as the Corporation's outstanding shares of
Common Stock are first registered under Section 12(g) of the 1934 Act, the
Plan Administrator may subject any shares issued pursuant to the Plan to a
right of first refusal with respect to any proposed disposition of such
shares other than a Transfer permitted by Section 2.C of this Article IV.
Such right of first refusal shall be exercisable by the Corporation (or its
assignees) in accordance with the terms and conditions specified in the
instrument governing the issuance of such shares.
-14-
<PAGE>
6. SHAREHOLDER RIGHTS
Subject to the rights of the Corporation set forth herein or in
any other agreement entered into between the Corporation and an issuee of
shares under the Plan, each person to whom shares of Common Stock have been
issued under the Plan shall have all the rights of a shareholder with respect
to those shares whether or not his/her interest in such shares is vested.
Accordingly, the Participant shall have the right to vote such shares and to
receive any cash dividends or other distributions paid or made with respect
to such shares.
7. CORPORATE TRANSACTION
A. All of the Corporation's outstanding repurchase rights
under this Article III shall be assigned to the successor corporation (or
parent thereof) in connection with a Corporate Transaction (as defined in
Article I, Paragraph 9.B), provided that, should the Corporation determine
not to assign such rights, the repurchase rights will automatically terminate
upon the occurrence of the Corporate Transaction.
B. Upon the consummation of any shareholder-approved
Corporate Transaction, the corporation will use reasonable efforts to cause
the successor to assume all outstanding options. Any option outstanding
under the Plan which is not assumed in a Corporate Transaction shall
terminate and cease to be exercisable.
C. Each outstanding option which is assumed in connection
with the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to
apply and pertain to the number and class of securities which would be
issuable, in consummation of such Corporate Transaction, to an actual holder
of the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction, and appropriate adjustments
shall also be made to the option price payable per share, provided the
aggregate option price payable for such securities shall remain the same.
Appropriate adjustments shall also be made to the class and number of
securities available for issuance under the Plan following the consummation
of such Corporate Transaction.
D. The grant of options and the issuance of shares under
this Plan shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure
or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.
-15-
<PAGE>
8. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the issuance
of shares of Common Stock under the Plan shall be used for general corporate
purposes.
9. WITHHOLDING
The Corporation's obligation to deliver shares upon the
exercise of any options granted under Article II or upon the purchase of any
shares issued under Article III shall be subject to the satisfaction of all
applicable Federal, State and local income and employment tax withholding
requirements.
10. REGULATORY APPROVALS
The implementation of the Plan, the granting of any options
under the Option Grant Program, the issuance of any shares under the Stock
Issuance Program, and the issuance of Common Stock upon the exercise of the
option grants made hereunder shall be subject to the Corporation's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Plan, the options granted under it, and the
Common Stock issued pursuant to it.
11. FINANCIAL REPORTS
The Corporation shall deliver a balance sheet and an income
statement at least annually to each Optionee holding an outstanding option
under the Plan and to each Participant holding a right to purchase stock
under the Plan, unless the Optionee or Participant is a key employee whose
duties in connection with the Corporation assure such employee access to
equivalent information.
-16-