EXHIBIT 10.2
THE 2001 FRESH ENTERPRISES, INC. STOCK PLAN
Fresh Enterprises, Inc., a corporation organized under the laws of the
State of California, has adopted this 2001 Fresh Enterprises, Inc. Stock Plan
(the "Plan"), effective November 6, 2001, for the benefit of its eligible
employees, consultants and directors.
The purposes of the Plan are as follows:
(1) To provide an additional incentive for directors, key Employees and
Consultants (as such terms are defined below) to further the growth, development
and financial success of the Company by personally benefiting through the
ownership of Company stock and/or rights which recognize, and depend upon, such
growth, development and financial success.
(2) To enable the Company to obtain and retain the services of directors,
key Employees and Consultants considered essential to the long range success of
the Company by offering them an opportunity to own stock in the Company and/or
rights which will increase in value with the growth, development and financial
success of the Company.
ARTICLE I.
DEFINITIONS
1.1. General. Wherever the following terms are used in the Plan they shall have
-------
the meanings specified below, unless the context clearly indicates otherwise.
1.2. Administrator. "Administrator" shall mean the entity that conducts the
-------------
general administration of the Plan as provided herein. With reference to the
administration of the Plan with respect to Options granted to Independent
Directors, the term "Administrator" shall refer to the Board. With reference to
the administration of the Plan with respect to any other Award, the term
"Administrator" shall refer to the Committee unless the Board has assumed the
authority for administration of the Plan generally as provided in Section 10.1.
1.3. Award. "Award" shall mean an Option, a Restricted Stock award, a
-----
Performance Award, a Dividend Equivalents award, a Deferred Stock award, a Stock
Payment award or a Stock Appreciation Right which may be awarded or granted
under the Plan (collectively, "Awards").
1.4. Award Agreement. "Award Agreement" shall mean a written agreement executed
---------------
by an authorized officer of the Company and the Holder which shall contain such
terms and conditions with respect to an Award as the Administrator shall
determine, consistent with the Plan.
1.5. Award Limit. "Award Limit" shall mean 262,000 shares of Common Stock, as
-----------
adjusted pursuant to Section 11.3 of the Plan.
1.6. Board. "Board" shall mean the Board of Directors of the Company.
-----
1.7. California Securities Act. "California Securities Act" shall mean the
-------------------------
California Corporate Securities Law of 1968, as amended.
1.8. Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.
----
1.9. Committee. "Committee" shall mean the Board or the Committee appointed to
---------
administer the Plan with respect to Options granted to Employees, as provided in
Section 10.1.
1.10. Common Stock. "Common Stock" shall mean the common stock of the Company,
------------
no par value per share, and any equity security of the Company issued or
authorized to be issued in the future, but excluding any preferred stock and any
warrants, options or other rights to purchase Common Stock.
1.11. Company. "Company" shall mean Fresh Enterprises, Inc., a California
-------
corporation.
1.12. Consent of Spouse. "Consent of Spouse" shall mean a Consent of Spouse in a
-----------------
form approved by the Administrator.
1.13. Consultant. "Consultant" shall mean any consultant or adviser if:
----------
(a) the consultant or adviser renders bona fide services to the Company;
(b) the services rendered by the consultant or adviser are not in
connection with the offer or sale of securities in a capital-raising transaction
and do not directly or indirectly promote or maintain a market for the Company's
securities; and
(c) the consultant or adviser is a natural person who has contracted
directly with the Company to render such services.
1.14. Deferred Stock. "Deferred Stock" shall mean Common Stock awarded under
--------------
Article VIII of the Plan.
1.15. Director. "Director" shall mean a member of the Board.
--------
1.16. Dividend Equivalent. "Dividend Equivalent" shall mean a right to receive
-------------------
the equivalent value (in cash or Common Stock) of dividends paid on Common
Stock, awarded under Article VIII of the Plan.
1.17. DRO. "DRO" shall mean a domestic relations order as defined by the Code or
---
Title I of the Employee Retirement Income Security Act of 1974, as amended, or
the rules thereunder.
1.18. Employee. "Employee" shall mean any officer or other employee (as defined
--------
in accordance with Section 3401(c) of the Code) of the Company, or of any
corporation which is a Subsidiary.
1.19. Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of
------------
1934, as amended.
1.20. Fair Market Value. "Fair Market Value" of a share of Common Stock as of a
-----------------
given date shall be (a) the closing price of a share of such stock on the
principal exchange on which shares of such stock are then trading, if any (or as
reported on any composite index which includes such
2
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (b) if such stock is not traded on an
exchange but is quoted on NASDAQ or a successor quotation system, the mean
between the closing representative bid and asked prices for such stock on the
trading day previous to such date as reported by NASDAQ or such successor
quotation system; or (c) if such stock is not publicly traded on an exchange and
not quoted on NASDAQ or a successor quotation system, the fair market value of a
share of such stock as established by the Administrator acting in good faith.
1.21. Holder. "Holder" shall mean a person who has been granted or awarded an
------
Award.
1.22. Incentive Stock Option. "Incentive Stock Option" shall mean an option
----------------------
which conforms to the applicable provisions of Section 422 of the Code and which
is designated as an Incentive Stock Option by the Administrator.
1.23. Independent Director. "Independent Director" shall mean a member of the
--------------------
Board who is not an Employee of the Company.
1.24. Non-Qualified Stock Option. "Non-Qualified Stock Option" shall mean an
--------------------------
Option which is not designated as an Incentive Stock Option by the
Administrator.
1.25. Option. "Option" shall mean a stock option granted under Article IV of the
------
Plan. An Option granted under the Plan shall, as determined by the
Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Independent Directors and
-------- -------
Consultants shall be Non-Qualified Stock Options.
1.26. Performance Award. "Performance Award" shall mean a cash bonus, stock
-----------------
bonus or other performance or incentive award that is paid in cash, Common Stock
or a combination of any of the foregoing, awarded under Article VIII of the
Plan.
1.27. Performance Criteria. "Performance Criteria" shall mean the following
--------------------
business criteria with respect to the Company, any Subsidiary or any division or
operating unit: (a) net income, (b) pre-tax income, (c) operating income, (d)
cash flow, (e) earnings per share, (f) return on equity, (g) return on invested
capital or assets, (h) cost reductions or savings, (i) funds from operations,
(j) appreciation in the fair market value of Common Stock and (k) earnings
before any one or more of the following items: interest, taxes, depreciation or
amortization.
1.28. Plan. "Plan" shall mean The 2001 Fresh Enterprises, Inc. Stock Plan.
----
1.29. Restricted Stock. "Restricted Stock" shall mean Common Stock awarded under
----------------
Article VII of the Plan.
1.30. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under the
----------
Exchange Act, as such Rule may be amended from time to time.
1.31. Section 162(m) Participant. "Section 162(m) Participant" shall mean any
--------------------------
key Employee designated by the Administrator as a key Employee whose
compensation for the fiscal year in
3
which the key Employee is so designated or a future fiscal year may be subject
to the limit on deductible compensation imposed by Section 162(m) of the Code.
1.32. Securities Act. "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended.
1.33. Stock Appreciation Right. "Stock Appreciation Right" shall mean a stock
------------------------
appreciation right granted under Article IX of the Plan.
1.34. Stock Payment. "Stock Payment" shall mean (a) a payment in the form of
-------------
shares of Common Stock, or (b) an option or other right to purchase shares of
Common Stock, as part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without limitation, salary,
bonuses and commissions, that would otherwise become payable to a key Employee
or Consultant in cash, awarded under Article VIII of the Plan.
1.35. Subsidiary. "Subsidiary" shall mean any corporation in an unbroken chain
----------
of corporations beginning with the Company if each of the corporations other
than the last corporation in the unbroken chain then owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
1.36. Substitute Award. "Substitute Award" shall mean an Option granted under
----------------
this Plan upon the assumption of, or in substitution for, outstanding equity
awards previously granted by a company or other entity in connection with a
corporate transaction, such as a merger, combination, consolidation or
acquisition of property or stock; provided, however, that in no event shall the
-------- -------
term "Substitute Award" be construed to refer to an award made in connection
with the cancellation and repricing of an Option.
1.37. Termination of Consultancy. "Termination of Consultancy" shall mean the
--------------------------
time when the engagement of a Holder as a Consultant to the Company or a
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, by resignation, discharge, death or retirement; but
excluding terminations where there is a simultaneous commencement of employment
with the Company or any Subsidiary. Unless specified otherwise in a written
employment agreement, consulting agreement or Award Agreement with the
applicable Holder, the Administrator, in its sole discretion, shall determine
the effect of all matters and questions relating to Termination of Consultancy,
including, but not by way of limitation, the question of whether a Termination
of Consultancy resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Consultancy.
Notwithstanding any other provision of the Plan, the Company or any Subsidiary
has an absolute and unrestricted right to terminate a Consultant's service at
any time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in writing.
1.38. Termination of Directorship. "Termination of Directorship" shall mean the
---------------------------
time when a Holder who is an Independent Director ceases to be a Director for
any reason, including, but not by way of limitation, a termination by
resignation, failure to be elected, death or retirement. The Board, in its sole
discretion, shall determine the effect of all matters and questions relating to
Termination of Directorship with respect to Independent Directors.
1.39. Termination of Employment. "Termination of Employment" shall mean the time
-------------------------
when the employee-employer relationship between a Holder and the Company or any
Subsidiary is
4
terminated for any reason, with or without cause, including, but not by way of
limitation, a termination by resignation, discharge, death, disability or
retirement; but excluding (a) a termination where there is a simultaneous
reemployment or continuing employment of the Holder by the Company or any
Subsidiary, (b) at the discretion of the Administrator, a termination which
results in a temporary severance of the employee-employer relationship, and (c)
at the discretion of the Administrator, a termination which is followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. Unless specified otherwise in a written
employment agreement, consulting agreement or Award Agreement with the
applicable Holder, the Administrator, in its sole discretion, shall determine
the effect of all matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a Termination
of Employment resulted from a discharge for good cause, and all questions of
whether a particular leave of absence constitutes a Termination of Employment;
provided, however, that, with respect to Incentive Stock Options, unless
- -------- -------
otherwise determined by the Administrator in its discretion, a leave of absence,
change in status from an employee to an independent contractor or other change
in the employee-employer relationship shall constitute a Termination of
Employment if, and to the extent that, such leave of absence, change in status
or other change interrupts employment for the purposes of Section 422(a)(2) of
the Code and the then applicable regulations and revenue rulings under said
Section.
ARTICLE II.
SHARES SUBJECT TO PLAN
2.1. Shares Subject to Plan.
----------------------
(a) The shares of stock subject to Awards shall be Common Stock. The
aggregate number of shares of Common Stock which may be issued upon exercise of
such Options or rights or upon any such awards under the Plan shall not exceed
six hundred one thousand four hundred ninety-nine (601,499). The shares of
Common Stock issuable upon exercise of such Options or rights or upon any such
awards may be either previously authorized but unissued shares or treasury
shares.
(b) The maximum number of shares which may be subject to Awards granted
under the Plan to any individual in any calendar year shall not exceed the Award
Limit. To the extent required by Section 162(m) of the Code, shares subject to
Options which are canceled continue to be counted against the Award Limit.
2.2. Add-back of Options and Other Rights. If any Option, or other right to
------------------------------------
acquire shares of Common Stock under any other Award under the Plan, expires or
is canceled without having been fully exercised, or is exercised in whole or in
part for cash as permitted by the Plan, the number of shares subject to such
Option or other right but as to which such Option or other right was not
exercised prior to its expiration, cancellation or exercise may again be
optioned, granted or awarded hereunder, subject to the limitations of Section
2.1. Furthermore, any shares subject to Awards which are adjusted pursuant to
Section 11.3 and become exercisable with respect to shares of stock of another
corporation shall be considered canceled and may again be optioned, granted or
awarded hereunder, subject to the limitations of Section 2.1. Shares of Common
5
Stock which are delivered by the Holder or withheld by the Company upon the
exercise of any Award under the Plan, in payment of the exercise price thereof
or tax withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. If any shares of Restricted Stock are
surrendered by the Holder or repurchased by the Company pursuant to Section 7.4
or 7.5 hereof, such shares may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Notwithstanding the provisions of
this Section 2.2, no shares of Common Stock may again be optioned, granted or
awarded if such action would cause an Incentive Stock Option to fail to qualify
as an incentive stock option under Section 422 of the Code.
ARTICLE III.
GRANTING OF AWARDS
3.1. Award Agreement. Each Award shall be evidenced by an Award Agreement. Award
---------------
Agreements evidencing Awards intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.
3.2. Provisions Applicable to Section 162(m) Participants.
----------------------------------------------------
(a) The Committee, in its discretion, may determine whether an Award is to
qualify as performance-based compensation as described in Section 162(m)(4)(C)
of the Code.
(b) Notwithstanding anything in the Plan to the contrary, the Committee may
grant any Award to a Section 162(m) Participant, including Restricted Stock the
restrictions with respect to which lapse upon the attainment of performance
goals which are related to one or more of the Performance Criteria and any
performance or incentive award described in Article VIII that vests or becomes
exercisable or payable upon the attainment of performance goals which are
related to one or more of the Performance Criteria.
(c) To the extent necessary to comply with the performance-based
compensation requirements of Section 162(m)(4)(C) of the Code, with respect to
any Award granted under Articles VII and VIII which may be granted to one or
more Section 162(m) Participants, no later than ninety (90) days following the
commencement of any fiscal year in question or any other designated fiscal
period or period of service (or such other time as may be required or permitted
by Section 162(m) of the Code), the Committee shall, in writing, (i) designate
one or more Section 162(m) Participants, (ii) select the Performance Criteria
applicable to the fiscal year or other designated fiscal period or period of
service, (iii) establish the various performance targets, in terms of an
objective formula or standard, and amounts of such Awards, as applicable, which
may be earned for such fiscal year or other designated fiscal period or period
of service and (iv) specify the relationship between Performance Criteria and
the performance targets and the amounts of such Awards, as applicable, to be
earned by each Section 162(m) Participant for such fiscal year or other
designated fiscal period or period of service. Following the completion of each
fiscal year or other designated fiscal period or period of service, the
Committee shall certify
6
in writing whether the applicable performance targets have been achieved for
such fiscal year or other designated fiscal period or period of service. In
determining the amount earned by a Section 162(m) Participant, the Committee
shall have the right to reduce (but not to increase) the amount payable at a
given level of performance to take into account additional factors that the
Committee may deem relevant to the assessment of individual or corporate
performance for the fiscal year or other designated fiscal period or period of
service.
(d) Furthermore, notwithstanding any other provision of the Plan, any Award
which is granted to a Section 162(m) Participant and is intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in Section 162(m) of
the Code (including any amendment to Section 162(m) of the Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as performance-based compensation as described in Section 162(m)(4)(C) of the
Code, and the Plan shall be deemed amended to the extent necessary to conform to
such requirements.
3.3. Limitations Applicable to Section 16 Persons. Notwithstanding any other
--------------------------------------------
provision of the Plan, the Plan, and any Award granted or awarded to any
individual who is then subject to Section 16 of the Exchange Act, shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, the Plan and Awards granted or
awarded hereunder shall be deemed amended to the extent necessary to conform to
such applicable exemptive rule.
3.4. Consideration. In consideration of the granting of an Award under the Plan,
-------------
the Holder shall agree, in the Award Agreement, to render faithful and efficient
services to the Company (and its Subsidiaries) and shall specifically
acknowledge that the Awards are granted in respect of such future services.
3.5. At-Will Employment. Nothing in the Plan or in any Award Agreement hereunder
------------------
shall confer upon any Holder any right to continue in the employ of, or as a
Consultant for, the Company or any Subsidiary, or as a director of the Company,
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary, which are hereby expressly reserved, to discharge any Holder at any
time for any reason whatsoever, with or without cause, except to the extent
expressly provided otherwise in a written agreement between the Holder and the
Company and any Subsidiary.
ARTICLE IV.
GRANTING OF OPTIONS TO EMPLOYEES,
CONSULTANTS AND INDEPENDENT DIRECTORS
4.1. Eligibility. Any Employee or Consultant selected by the Committee pursuant
-----------
to Section 4.4(a)(i) shall be eligible to be granted an Option. Each Independent
Director of the Company shall be eligible to be granted Options at the times and
in the manner set forth in Section 4.5.
7
4.2. Disqualification for Stock Ownership. No person may be granted an Incentive
------------------------------------
Stock Option under the Plan if such person, at the time the Incentive Stock
Option is granted, owns stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company or any then
existing Subsidiary or parent corporation (within the meaning of Section 422 of
the Code) unless such Incentive Stock Option conforms to the applicable
provisions of Section 422 of the Code.
4.3. Qualification of Incentive Stock Options. No Incentive Stock Option shall
----------------------------------------
be granted to any person who is not an Employee.
4.4. Granting of Options.
-------------------
(a) The Administrator shall from time to time, in its sole discretion, and
subject to applicable limitations of the Plan:
(i) Determine which Employees are key Employees and select from
among the key Employees, Consultants or Independent Directors (including
Employees, Independent Directors and Consultants who have previously
received Awards under the Plan) such of them as in its opinion should be
granted Options;
(ii) Subject to the Award Limit, determine the number of shares to be
subject to such Options granted to the selected individuals;
(iii) Subject to Section 4.3, determine whether such Options are to be
Incentive Stock Options or Non-Qualified Stock Options and whether such
Options are to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code; and
(iv) Determine the terms and conditions of such Options, consistent
with the Plan; provided, however, that the terms and conditions of Options
-------- -------
intended to qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall include, but not be limited to, such
terms and conditions as may be necessary to meet the applicable provisions
of Section 162(m) of the Code.
(b) Upon the selection of a key Employee, Consultant or Independent
Director to be granted an Option, the Administrator shall instruct the Secretary
of the Company to issue the Option and may impose such conditions on the grant
of the Option as it deems appropriate.
(c) Any Incentive Stock Option granted under the Plan may be modified by
the Administrator, with the consent of the Holder, to disqualify such Option
from treatment as an "incentive stock option" under Section 422 of the Code.
4.5. Options in Lieu of Cash Compensation. Options may be granted under the Plan
------------------------------------
to Employees and Consultants in lieu of cash bonuses which would otherwise be
payable to such Employees and Consultants and to Independent Directors in lieu
of directors' fees which would otherwise be payable to such Independent
Directors, pursuant to such policies which may be adopted by the Administrator
from time to time.
8
ARTICLE V.
TERMS OF OPTIONS
5.1. Option Price. The price per share of the shares subject to each Option
------------
granted to Employees and Consultants shall be set by the Committee; provided,
--------
however, that such price shall be no less than the par value of a share of
- -------
Common Stock, unless otherwise permitted by applicable state law, and:
(a) in the case of Options intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code, such price shall
not be less than 100% of the Fair Market Value of a share of Common Stock on the
date the Option is granted;
(b) in the case of Incentive Stock Options such price shall not be less
than 100% of the Fair Market Value of a share of Common Stock on the date the
Option is granted (or the date the Option is modified, extended or renewed for
purposes of Section 424(h) of the Code);
(c) in the case of Incentive Stock Options granted to an individual then
owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company or any
Subsidiary or parent corporation thereof (within the meaning of Section 422 of
the Code), such price shall not be less than 110% of the Fair Market Value of a
share of Common Stock on the date the Option is granted (or the date the Option
is modified, extended or renewed for purposes of Section 424(h) of the Code);
(d) in the case of Options issued in reliance upon the exemption afforded
under Section 25102(o) of the California Securities Act, such price shall not be
less than 85% of the Fair Market Value of the shares of Common Stock as of the
date the Option is granted; unless the Option is granted to an individual then
owning more than 10% of the total combined voting power or value of all classes
of stock of the Company or any Subsidiary or parent corporation thereof, in
which case such price shall not be less than 110% of the Fair Market Value of
the shares of Common Stock on the date the Option is granted.
5.2. Option Term. The term of an Option shall be set by the Administrator in its
-----------
discretion; provided, however, that, in the case of Incentive Stock Options, the
-------- -------
term shall not be more than ten (10) years from the date the Incentive Stock
Option is granted, or five (5) years from the date the Incentive Stock Option is
granted if the Incentive Stock Option is granted to an individual then owning
(within the meaning of Section 424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary
or parent corporation thereof (within the meaning of Section 422 of the Code).
Except as limited by requirements of Section 422 of the Code and regulations and
rulings thereunder applicable to Incentive Stock Options, the Administrator may
extend the term of any outstanding Option in connection with any Termination of
Employment, Termination of Consultancy or Termination of Directorship of the
Holder, or amend any other term or condition of such Option relating to such a
termination.
5.3. Option Vesting.
--------------
(a) The period during which the right to exercise, in whole or in part, an
Option vests in the Holder shall be set by the Administrator and the
Administrator may determine that an
9
Option may not be exercised in whole or in part for a specified period after it
is granted; provided, however, that, unless the Administrator otherwise provides
-------- -------
in the terms of the Award Agreement or otherwise, no Option shall be exercisable
by any Holder who is then subject to Section 16 of the Exchange Act within the
period ending six months and one day after the date the Option is granted. At
any time after grant of an Option, the Administrator may, in its sole discretion
and subject to whatever terms and conditions it selects, accelerate the period
during which an Option vests. Notwithstanding the foregoing, no Option granted
in reliance upon the exemption afforded by Section 25102(o) of the California
Securities Act shall provide for vesting for a period of time which exceeds 5
years from the date of grant of the Option, and which does not vest at least 20%
per year on a cumulative basis from date of grant (i.e., 0% upon grant, 20%
after one year, 40% after two years, etc.).
(b) No portion of an Option which is unexercisable at Termination of
Employment, Termination of Consultancy or Termination of Directorship, as
applicable, shall thereafter become exercisable, except as may be otherwise
provided by the Administrator either in the Award Agreement or by action of the
Administrator following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value of stock with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by a Holder during any calendar year (under the Plan and all
other incentive stock option plans of the Company and any parent or subsidiary
corporation, within the meaning of Section 422 of the Code) of the Company,
exceeds $100,000, such Options shall be treated as Non-Qualified Options to the
extent required by Section 422 of the Code. The rule set forth in the preceding
sentence shall be applied by taking Options into account in the order in which
they were granted. For purposes of this Section 5.3(c), the Fair Market Value of
stock shall be determined as of the time the Option with respect to such stock
is granted.
5.4. Substitute Awards.
-----------------
Notwithstanding the foregoing provisions of this Article V to the contrary,
in the case of an Option that is a Substitute Award, the price per share of the
shares subject to such Option may be less than the Fair Market Value per share
on the date of grant, provided, that the excess of:
--------
(a) the aggregate Fair Market Value (as of the date such Substitute Award
is granted) of the shares subject to the Substitute Award; over
(b) the aggregate exercise price thereof;
does not exceed the excess of
(x) the aggregate fair market value (as of the time immediately preceding
the transaction giving rise to the Substitute Award, such fair market value to
be determined by the Committee) of the shares of the predecessor entity that
were subject to the grant assumed or substituted for by the Company; over
(y) the aggregate exercise price of such shares.
10
ARTICLE VI.
EXERCISE OF OPTIONS
6.1. Partial Exercise. An exercisable Option may be exercised in whole or in
----------------
part. However, an Option shall not be exercisable with respect to fractional
shares and the Administrator may require that, by the terms of the Option, a
partial exercise be with respect to a minimum number of shares.
6.2. Manner of Exercise. All or a portion of an exercisable Option shall be
------------------
deemed exercised upon delivery of all of the following to the Secretary of the
Company or his or her office:
(a) A written notice complying with the applicable rules established by the
Administrator stating that the Option, or a portion thereof, is exercised. The
notice shall be signed by the Holder or other person then entitled to exercise
the Option or such portion of the Option;
(b) A Consent of Spouse from the spouse of the Holder or other person then
entitled to exercise the Option or such portion of the Option;
(c) Such representations and documents as the Administrator, in its sole
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal or state
securities laws or regulations. The Administrator may, in its sole discretion,
also take whatever additional actions it deems appropriate to effect such
compliance including, without limitation, placing legends on share certificates
and issuing stop-transfer notices to agents and registrars;
(d) In the event that the Option shall be exercised pursuant to Section
11.1 by any person or persons other than the Holder, appropriate proof of the
right of such person or persons to exercise the Option; and
(e) Full cash payment to the Secretary of the Company for the shares with
respect to which the Option, or portion thereof, is exercised. However, the
Administrator, may in its discretion (i) allow a delay in payment up to thirty
(30) days from the date the Option, or portion thereof, is exercised; (ii) allow
payment, in whole or in part, through the delivery of shares of Common Stock
which have been owned by the Holder for at least six months, duly endorsed for
transfer to the Company with a Fair Market Value on the date of delivery equal
to the aggregate exercise price of the Option or exercised portion thereof;
(iii) allow payment, in whole or in part, through the surrender of shares of
Common Stock then issuable upon exercise of the Option having a Fair Market
Value on the date of Option exercise equal to the aggregate exercise price of
the Option or exercised portion thereof; (iv) allow payment, in whole or in
part, through the delivery of property of any kind which constitutes good and
valuable consideration; (v) allow payment, in whole or in part, through the
delivery of a full recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Administrator; (vi) allow
payment, in whole or in part, through the delivery of a notice that the Holder
has placed a market sell order with a broker with respect to shares of Common
Stock then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to
11
the Company in satisfaction of the Option exercise price, provided that payment
--------
of such proceeds is then made to the Company upon settlement of such sale; or
(vii) allow payment through any combination of the consideration provided in the
foregoing subparagraphs (ii), (iii), (iv), (v) and (vi). In the case of a
promissory note, the Administrator may also prescribe the form of such note and
the security to be given for such note. The Option may not be exercised,
however, by delivery of a promissory note or by a loan from the Company when or
where such loan or other extension of credit is prohibited by law.
6.3. Conditions to Issuance of Stock Certificates. The Company shall not be
--------------------------------------------
required to issue or deliver any certificate or certificates for shares of stock
purchased upon the exercise of any Option or portion thereof prior to
fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on which
such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law, or under the rulings or regulations of
the Securities and Exchange Commission or any other governmental regulatory body
which the Administrator shall, in its sole discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Administrator shall, in its sole
discretion, determine to be necessary or advisable; and
(d) The receipt by the Company of full payment for such shares, including
payment of any applicable withholding tax, which in the discretion of the
Administrator may be in the form of consideration used by the Holder to pay for
such shares under Section 6.2(d).
6.4. Rights as Stockholders. Holders shall not be, nor have any of the rights or
----------------------
privileges of, stockholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until such Holder shall
have paid to the Company the Option exercise price and applicable withholding
tax.
6.5. Ownership and Transfer Restrictions. The Administrator, in its sole
-----------------------------------
discretion, may impose such restrictions on the ownership and transferability of
the shares purchasable upon the exercise of an Option as it deems appropriate.
Any such restriction shall be set forth in the respective Award Agreement and
may be referred to on the certificates evidencing such shares. The Holder shall
give the Company prompt notice of any disposition of shares of Common Stock
acquired by exercise of an Incentive Stock Option within (a) two years from the
date of granting (including the date the Option is modified, extended or renewed
for purposes of Section 424(h) of the Code) such Option to such Holder or (b)
one year after the transfer of such shares to such Holder.
6.6. Additional Limitations on Exercise of Options. Holders may be required to
---------------------------------------------
comply with any timing or other restrictions with respect to the settlement or
exercise of an Option, including a window-period limitation, as may be imposed
in the discretion of the Administrator.
12
ARTICLE VII.
AWARD OF RESTRICTED STOCK
7.1. Eligibility. Subject to the Award Limit, Restricted Stock may be awarded to
-----------
any Employee who the Committee determines is a key Employee or any Consultant
who the Committee determines should receive such an Award.
7.2. Award of Restricted Stock.
-------------------------
(a) The Committee may from time to time, in its sole discretion:
(i) Determine which Employees are key Employees and select from
among the key Employees or Consultants (including Employees or Consultants
who have previously received other Awards under the Plan) such of them as
in its opinion should be awarded Restricted Stock; and
(ii) Determine the purchase price, if any, and other terms and
conditions applicable to such Restricted Stock, consistent with the Plan.
(iii) The Committee shall establish the purchase price, if any, and
form of payment for Restricted Stock; provided, however, that such purchase
price shall be no less than the par value of the Common Stock to be
purchased, unless otherwise permitted by applicable state law. In all
cases, legal consideration shall be required for each issuance of
Restricted Stock. If the Restricted Stock is issued in reliance upon the
exemption afforded by Section 25102(o) of the California Securities Act,
the purchase price shall not be less than 85% of the Fair Market Value of
the Restricted Stock as of the date of grant of such purchase right or the
consummation of such purchase; provided, however, if the Restricted Stock
is awarded to an individual who owns more than 10% of the total combined
voting power or value of all classes of stock of the Company or any
Subsidiary or parent corporation thereof, such purchase price may not be
less than 100% of the Fair Market Value of the Restricted Stock as of the
date of grant of such purchase right or the consummation of such purchase.
(b) Upon the selection of a key Employee or Consultant to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue such Restricted Stock and may impose such conditions on the issuance of
such Restricted Stock as it deems appropriate, including but not limited to the
delivery of a Consent of Spouse to the Secretary of the Company by the spouse of
the individual who is awarded the Restricted Stock.
7.3. Rights as Stockholders. Subject to Section 7.4, upon delivery of the shares
----------------------
of Restricted Stock to the escrow holder pursuant to Section 7.6, the Holder
shall have, unless otherwise provided by the Committee, all the rights of a
stockholder with respect to said shares, subject to the restrictions in his or
her Award Agreement, including the right to receive all dividends and other
distributions paid or made with respect to the shares; provided, however, that
-------- -------
in the discretion of the Committee, any extraordinary distributions with respect
to the Common Stock shall be subject to the restrictions set forth in Section
7.4.
13
7.4. Restriction. All shares of Restricted Stock issued under the Plan
-----------
(including any shares received by holders thereof with respect to shares of
Restricted Stock as a result of stock dividends, stock splits or any other form
of recapitalization) shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Committee shall provide, which restrictions
may include, without limitation, restrictions concerning voting rights and
transferability and restrictions based on duration of employment with the
Company, Company performance and individual performance; provided, however,
-------- -------
that, unless the Committee otherwise provides in the terms of the Award
Agreement or otherwise, no share of Restricted Stock granted to a person subject
to Section 16 of the Exchange Act shall be sold, assigned or otherwise
transferred until at least six months and one day have elapsed from the date on
which the Restricted Stock was issued, and provided, further, that, except with
-------- -------
respect to shares of Restricted Stock granted to Section 162(m) Participants, by
action taken after the Restricted Stock is issued, the Committee may, on such
terms and conditions as it may determine to be appropriate, remove any or all of
the restrictions imposed by the terms of the Award Agreement. If no
consideration was paid by the Holder upon issuance, such Holder's rights in
unvested Restricted Stock shall lapse, and such Restricted Stock shall be
surrendered to the Company without consideration, upon Termination of Employment
or, if applicable, upon Termination of Consultancy with the Company; provided,
--------
however, that the Committee in its sole discretion may provide that such rights
- -------
shall not lapse in the event of a Termination of Employment following a "change
of ownership or control" (within the meaning of Treasury Regulation Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or because
of the Holder's death or disability; provided, further, that, except with
-------- -------
respect to shares of Restricted Stock granted to Section 162(m) Participants,
the Committee in its sole discretion may provide that no such lapse or surrender
shall occur in the event of a Termination of Employment, or a Termination of
Consultancy, without cause or following any change in control of the Company or
because of the Holder's retirement, or otherwise.
7.5. Repurchase of Restricted Stock. The Committee shall provide in the terms of
------------------------------
each individual Award Agreement that the Company shall have the right to
repurchase from the Holder the Restricted Stock then subject to restrictions
under the Award Agreement immediately upon a Termination of Employment or, if
applicable, upon a Termination of Consultancy, at a cash price per share equal
to the lesser of (a) the original price paid per share for such Restricted
Stock, without interest, or (b) the fair market value of the shares of
Restricted Stock on the date that the Company exercises its repurchase right
(which, for purposes of this Section 7.5, shall be deemed to have occurred, if
at all, on the date of the Holder's Termination of Consultancy, Termination of
Directorship or Termination of Employment, as applicable); provided, however,
-------- -------
that the Committee in its sole discretion may provide that no such right of
repurchase shall exist in the event of a Termination of Employment following a
"change of ownership or control" (within the meaning of Treasury Regulation
Section 1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or
because of the Holder's death or disability; provided, further, that, except
-------- -------
with respect to shares of Restricted Stock granted to Section 162(m)
Participants, the Committee in its sole discretion may provide that no such
right of repurchase shall exist in the event of a Termination of Employment, or
a Termination of Consultancy, without cause or following any change in control
of the Company or because of the Holder's retirement, or otherwise.
14
7.6. Escrow. Except as the Committee shall otherwise provide in the Award
------
Agreement or otherwise, the Secretary of the Company or such other escrow holder
as the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Award Agreement with respect to the shares evidenced by such certificate expire
or shall have been removed.
7.7. Legend. In order to enforce the restrictions imposed upon shares of
------
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Award Agreements, which legend or legends
shall make appropriate reference to the conditions imposed thereby.
7.8. Section 83(b) Election. If a Holder makes an election under Section 83(b)
----------------------
of the Code, or any successor section thereto, to be taxed with respect to the
Restricted Stock as of the date of transfer of the Restricted Stock rather than
as of the date or dates upon which the Holder would otherwise be taxable under
Section 83(a) of the Code, the Holder shall deliver a copy of such election to
the Company immediately after filing such election with the Internal Revenue
Service.
ARTICLE VIII.
PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK, STOCK PAYMENTS
8.1. Eligibility. Subject to the Award Limit, one or more Performance Awards,
-----------
Dividend Equivalents, awards of Deferred Stock, and/or Stock Payments may be
granted to any Employee whom the Committee determines is a key Employee or any
Consultant whom the Committee determines should receive such an Award.
8.2. Performance Awards. Any key Employee or Consultant selected by the
------------------
Committee may be granted one or more Performance Awards. The value of such
Performance Awards may be linked to any one or more of the Performance Criteria
or other specific performance criteria determined appropriate by the Committee,
in each case on a specified date or dates or over any period or periods
determined by the Committee. In making such determinations, the Committee shall
consider (among such other factors as it deems relevant in light of the specific
type of award) the contributions, responsibilities and other compensation of the
particular key Employee or Consultant.
8.3. Dividend Equivalents.
--------------------
(a) Any key Employee or Consultant selected by the Committee may be granted
Dividend Equivalents based on the dividends declared on Common Stock, to be
credited as of dividend payment dates, during the period between the date a
Stock Appreciation Right, Deferred Stock or Performance Award is granted, and
the date such Stock Appreciation Right, Deferred Stock or Performance Award is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Common Stock by
such formula and at such time and subject to such limitations as may be
determined by the Committee.
15
(b) Any Holder of an Option who is an Employee or Consultant selected by
the Committee may be granted Dividend Equivalents based on the dividends
declared on Common Stock, to be credited as of dividend payment dates, during
the period between the date an Option is granted, and the date such Option is
exercised, vests or expires, as determined by the Committee. Such Dividend
Equivalents shall be converted to cash or additional shares of Common Stock by
such formula and at such time and subject to such limitations as may be
determined by the Committee.
(c) Any Holder of an Option who is an Independent Director selected by the
Board may be granted Dividend Equivalents based on the dividends declared on
Common Stock, to be credited as of dividend payment dates, during the period
between the date an Option is granted, and the date such Option is exercised,
vests or expires, as determined by the Board. Such Dividend Equivalents shall be
converted to cash or additional shares of Common Stock by such formula and at
such time and subject to such limitations as may be determined by the Board.
(d) Dividend Equivalents granted with respect to Options intended to be
qualified performance-based compensation for purposes of Section 162(m) of the
Code shall be payable, with respect to pre-exercise periods, regardless of
whether such Option is subsequently exercised.
8.4. Stock Payments. Any key Employee or Consultant selected by the Committee
--------------
may receive Stock Payments in the manner determined from time to time by the
Committee. The number of shares shall be determined by the Committee and may be
based upon the Performance Criteria or other specific performance criteria
determined appropriate by the Committee, determined on the date such Stock
Payment is made or on any date thereafter.
8.5. Deferred Stock. Any key Employee or Consultant selected by the Committee
--------------
may be granted an award of Deferred Stock in the manner determined from time to
time by the Committee. The number of shares of Deferred Stock shall be
determined by the Committee and may be linked to the Performance Criteria or
other specific performance criteria determined to be appropriate by the
Committee, in each case on a specified date or dates or over any period or
periods determined by the Committee. Common Stock underlying a Deferred Stock
award will not be issued until the Deferred Stock award has vested, pursuant to
a vesting schedule or performance criteria set by the Committee. Unless
otherwise provided by the Committee, a Holder of Deferred Stock shall have no
rights as a Company stockholder with respect to such Deferred Stock until such
time as the Award has vested and the Common Stock underlying the Award has been
issued.
8.6. Term. The term of a Performance Award, Dividend Equivalent, award of
----
Deferred Stock and/or Stock Payment shall be set by the Committee in its
discretion.
8.7. Exercise or Purchase Price. The Committee may establish the exercise or
--------------------------
purchase price of a Performance Award, shares of Deferred Stock, or shares
received as a Stock Payment; provided, however, that such price shall not be
-------- -------
less than the par value for a share of Common Stock, unless otherwise permitted
by applicable state law.
16
8.8. Exercise Upon Termination of Employment, Termination of Consultancy or
----------------------------------------------------------------------
Termination of Directorship. A Performance Award, Dividend Equivalent, award of
- ---------------------------
Deferred Stock and/or Stock Payment is exercisable or payable only while the
Holder is an Employee, Consultant or Independent Director, as applicable;
provided, however, that the Administrator in its sole discretion may provide
- -------- -------
that the Performance Award, Dividend Equivalent, award of Deferred Stock and/or
Stock Payment may be exercised or paid subsequent to a Termination of Employment
following a "change of control or ownership" (within the meaning of Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company; provided,
--------
further, that except with respect to Performance Awards granted to Section
- -------
162(m) Participants, the Administrator in its sole discretion may provide that
Performance Awards may be exercised or paid following a Termination of
Employment or a Termination of Consultancy without cause, or following a change
in control of the Company, or because of the Holder's retirement, death or
disability, or otherwise.
8.9. Form of Payment. Payment of the amount determined under Section 8.2 or 8.3
---------------
above shall be in cash, in Common Stock or a combination of both, as determined
by the Committee. To the extent any payment under this Article VIII is effected
in Common Stock, it shall be made subject to satisfaction of all provisions of
Section 6.3.
ARTICLE IX.
STOCK APPRECIATION RIGHTS
9.1. Grant of Stock Appreciation Rights. A Stock Appreciation Right may be
----------------------------------
granted to any key Employee or Consultant selected by the Committee. A Stock
Appreciation Right may be granted (a) in connection and simultaneously with the
grant of an Option, (b) with respect to a previously granted Option, or (c)
independent of an Option. A Stock Appreciation Right shall be subject to such
terms and conditions not inconsistent with the Plan as the Committee shall
impose and shall be evidenced by an Award Agreement.
9.2. Coupled Stock Appreciation Rights.
---------------------------------
(a) A Coupled Stock Appreciation Right ("CSAR") shall be related to a
particular Option and shall be exercisable only when and to the extent the
related Option is exercisable.
(b) A CSAR may be granted to the Holder for no more than the number of
shares subject to the simultaneously or previously granted Option to which it is
coupled.
(c) A CSAR shall entitle the Holder (or other person entitled to exercise
the Option pursuant to the Plan) to surrender to the Company unexercised a
portion of the Option to which the CSAR relates (to the extent then exercisable
pursuant to its terms) and to receive from the Company in exchange therefor an
amount determined by multiplying the difference obtained by subtracting the
Option exercise price from the Fair Market Value of a share of Common Stock on
the date of exercise of the CSAR by the number of shares of Common Stock with
respect to which the CSAR shall have been exercised, subject to any limitations
the Committee may impose.
17
9.3. Independent Stock Appreciation Rights.
-------------------------------------
(a) An Independent Stock Appreciation Right ("ISAR") shall be unrelated to
any Option and shall have a term set by the Committee. An ISAR shall be
exercisable in such installments as the Committee may determine. An ISAR shall
cover such number of shares of Common Stock as the Committee may determine;
provided, however, that unless the Committee otherwise provides in the terms of
- -------- -------
the ISAR or otherwise, no ISAR granted to a person subject to Section 16 of the
Exchange Act shall be exercisable until at least six months have elapsed from
(but excluding) the date on which the Option was granted. The exercise price per
share of Common Stock subject to each ISAR shall be set by the Committee. An
ISAR is exercisable only while the Holder is an Employee or Consultant; provided
that the Committee may determine that the ISAR may be exercised subsequent to
Termination of Employment or Termination of Consultancy without cause, or
following a Change in Control of the Company, or because of the Holder's
retirement, death or disability, or otherwise.
(b) An ISAR shall entitle the Holder (or other person entitled to exercise
the ISAR pursuant to the Plan) to exercise all or a specified portion of the
ISAR (to the extent then exercisable pursuant to its terms) and to receive from
the Company an amount determined by multiplying the difference obtained by
subtracting the exercise price per share of the ISAR from the Fair Market Value
of a share of Common Stock on the date of exercise of the ISAR by the number of
shares of Common Stock with respect to which the ISAR shall have been exercised,
subject to any limitations the Committee may impose.
9.4. Payment and Limitations on Exercise.
-----------------------------------
(a) Payment of the amounts determined under Section 9.2(c) and 9.3(b)
above shall be in cash, in Common Stock (based on its Fair Market Value as of
the date the Stock Appreciation Right is exercised) or a combination of both, as
determined by the Committee. To the extent such payment is effected in Common
Stock it shall be made subject to satisfaction of all provisions of Section 6.3
above pertaining to Options.
(b) Holders of Stock Appreciation Rights may be required to comply with
any timing or other restrictions with respect to the settlement or exercise of a
Stock Appreciation Right, including a window-period limitation, as may be
imposed in the discretion of the Committee.
ARTICLE X.
ADMINISTRATION
10.1. Administrator. Prior to the Company's initial registration of Common Stock
-------------
under Section 12 of the Exchange Act, the Board shall administer the Plan and
references herein to "Committee" and "Administrator" shall be construed as
references to the Board. Following such registration, the Compensation Committee
(or another committee or a subcommittee of the Board assuming the functions of
the Committee under the Plan) which shall consist solely of two or more
Independent Directors appointed by and holding office at the pleasure of the
Board, each of whom is both a "non-employee director" as defined by Rule 16b-3
and an "outside director" for purposes of Section 162(m) of the Code shall
administer the Plan with respect to Awards granted to Employees and Consultants.
Appointment of Committee members shall be effective
18
upon acceptance of appointment. Committee members may resign at any time by
delivering written notice to the Board. Vacancies in the Committee may be filled
by the Board.
10.2. Duties and Powers of Committee. It shall be the duty of the Committee to
------------------------------
conduct the general administration of the Plan in accordance with its
provisions. The Committee shall have the power to interpret the Plan and the
Award Agreements, and to adopt such rules for the administration,
interpretation, and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement
provided that the rights or obligations of the Holder of the Award that is the
subject of any such Award Agreement are not affected adversely. Any such grant
or award under the Plan need not be the same with respect to each Holder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its sole
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan except with respect to matters
which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee. Notwithstanding the foregoing, the full Board, acting by a
majority of its members in office, shall conduct the general administration of
the Plan with respect to Options and Dividend Equivalents granted to Independent
Directors.
10.3. Majority Rule; Unanimous Written Consent. The Committee shall act by a
----------------------------------------
majority of its members in attendance at a meeting at which a quorum is present
or by a memorandum or other written instrument signed by all members of the
Committee.
10.4. Compensation; Professional Assistance; Good Faith Actions. Members of the
---------------------------------------------------------
Committee shall receive such compensation for their services as members as may
be determined by the Board. All expenses and liabilities which members of the
Committee incur in connection with the administration of the Plan shall be borne
by the Company. The Committee may, with the approval of the Board, employ
attorneys, consultants, accountants, appraisers, brokers, or other persons. The
Committee, the Company and the Company's officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee or the Board in good faith shall be final and binding upon all
Holders, the Company and all other interested persons. No members of the
Committee or Board shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan or Awards, and all
members of the Committee and the Board shall be fully protected by the Company
in respect of any such action, determination or interpretation.
10.5. Delegation of Authority to Grant Awards. The Committee or Board may, but
---------------------------------------
need not, delegate from time to time some or all of its authority to grant
Awards under the Plan to a committee consisting of one or more members of the
Committee or of one or more officers of the Company; provided, however, that the
Committee may not delegate its authority to grant Awards to individuals (i) who
are subject on the date of the grant to the reporting rules under Section 16(a)
of the Exchange Act, (ii) who are Section 162(m) Participants or (iii) who are
officers of the Company who are delegated authority by the Committee hereunder.
Any delegation hereunder shall be subject to the restrictions and limits that
the Committee or Board specifies at the time of such delegation of authority and
may be rescinded at any time by the Committee or
19
Board. At all times, any committee appointed under this Section 10.5 shall serve
in such capacity at the pleasure of the Committee or Board.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
11.1. Not Transferable. No Award under the Plan may be sold, pledged, assigned
----------------
or transferred in any manner other than by will or the laws of descent and
distribution or, subject to the consent of the Administrator, pursuant to a DRO,
unless and until such Award has been exercised, or the shares underlying such
Award have been issued, and all restrictions applicable to such shares have
lapsed. No Award or interest or right therein shall be liable for the debts,
contracts or engagements of the Holder or his or her successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means whether such disposition be voluntary
or involuntary or by operation of law by judgment, levy, attachment, garnishment
or any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.
During the lifetime of the Holder, only he or she may exercise an Option or
other Award (or any portion thereof) granted to him or her under the Plan,
unless it has been disposed of with the consent of the Administrator pursuant to
a DRO. After the death of the Holder, any exercisable portion of an Option or
other Award may, prior to the time when such portion becomes unexercisable under
the Plan or the applicable Award Agreement, be exercised by his or her personal
representative or by any person empowered to do so under the deceased Holder's
will or under the then applicable laws of descent and distribution.
11.2. Amendment, Suspension or Termination of the Plan. Except as otherwise
------------------------------------------------
provided in this Section 11.2, the Plan may be wholly or partially amended or
otherwise modified, suspended or terminated at any time or from time to time by
the Administrator. However, without approval of the Company's stockholders given
within twelve months before or after the action by the Administrator, no action
of the Administrator may, except as provided in Section 11.3, increase the
limits imposed in Section 2.1 on the maximum number of shares which may be
issued under the Plan. No amendment, suspension or termination of the Plan
shall, without the consent of the Holder alter or impair any rights or
obligations under any Award theretofore granted or awarded, unless the Award
itself otherwise expressly so provides. No Awards may be granted or awarded
during any period of suspension or after termination of the Plan, and in no
event may any Incentive Stock Option be granted under the Plan after the first
to occur of the following events:
(a) The expiration of ten years from the date the Plan is adopted by the
Board; or
(b) The expiration of ten years from the date the Plan is approved by the
Company's stockholders under Section 11.4.
20
11.3. Changes in Common Stock or Assets of the Company, Acquisition or
----------------------------------------------------------------
Liquidation of the Company and Other Corporate Events.
-----------------------------------------------------
(a) Subject to Section 11.3 (d), in the event that the Administrator
determines that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company, or exchange of Common Stock or
other securities of the Company, issuance of warrants or other rights to
purchase Common Stock or other securities of the Company, or other similar
corporate transaction or event, in the Administrator's sole discretion, affects
the Common Stock such that an adjustment is determined by the Administrator to
be appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan or with respect
to an Award, then the Administrator shall, in such manner as it may deem
equitable, adjust any or all of
(i) the number and kind of shares of Common Stock (or other
securities or property) with respect to which Awards may be granted or
awarded (including, but not limited to, adjustments of the limitations in
Section 2.1 on the maximum number and kind of shares which may be issued
and adjustments of the Award Limit),
(ii) the number and kind of shares of Common Stock (or other
securities or property) subject to outstanding Awards, and
(iii) the grant or exercise price with respect to any Award.
(b) Subject to Section 11.3(d) and the terms of any written employment
agreement, consulting agreement or Award Agreement with the applicable Holder,
in the event of any transaction or event described in Section 11.3(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Administrator, in its sole discretion, and on such terms and
conditions as it deems appropriate, either by the terms of the Award or by
action taken prior to the occurrence of such transaction or event and either
automatically or upon the Holder's request, is hereby authorized to take any one
or more of the following actions whenever the Administrator determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any Award under the Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles:
(i) To provide for either the purchase of any such Award for an
amount of cash equal to the amount that could have been attained upon the
exercise of such Award or realization of the Holder's rights had such
Award been currently exercisable or payable or fully vested or the
replacement of such Award with other rights or property selected by the
Administrator in its sole discretion;
(ii) To provide that the Award cannot vest, be exercised or become
payable
21
after such event;
(iii) To provide that such Award shall be exercisable as to all shares
covered thereby, notwithstanding anything to the contrary in Section 5.3 or
5.4 or the provisions of such Award;
(iv) To provide that such Award be assumed by the successor or
survivor corporation, or a parent or subsidiary thereof, or shall be
substituted for by similar options, rights or awards covering the stock of
the successor or survivor corporation, or a parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares and
prices; and
(v) To make adjustments in the number and type of shares of Common
Stock (or other securities or property) subject to outstanding Awards, and
in the number and kind of outstanding Restricted Stock or Deferred Stock
and/or in the terms and conditions of (including the grant or exercise
price), and the criteria included in, outstanding options, rights and
awards and options, rights and awards which may be granted in the future.
(vi) To provide that, for a specified period of time prior to such
event, the restrictions imposed under an Award Agreement upon some or all
shares of Restricted Stock or Deferred Stock may be terminated, and, in the
case of Restricted Stock, some or all shares of such Restricted Stock may
cease to be subject to repurchase under Section 7.5 or forfeiture under
Section 7.4 after such event.
(c) Subject to Sections 11.3(d), 3.2 and 3.3, the Administrator may, in
its discretion, include such further provisions and limitations in any Award,
agreement or certificate, as it may deem equitable and in the best interests of
the Company.
(d) With respect to Awards which are granted to Section 162(m)
Participants and are intended to qualify as performance-based compensation under
Section 162(m)(4)(C), no adjustment or action described in this Section 11.3 or
in any other provision of the Plan shall be authorized to the extent that such
adjustment or action would cause such Award to fail to so qualify under Section
162(m)(4)(C), or any successor provisions thereto. No adjustment or action
described in this Section 11.3 or in any other provision of the Plan shall be
authorized to the extent that such adjustment or action would cause the Plan to
violate Section 422(b)(1) of the Code. Furthermore, no such adjustment or action
shall be authorized to the extent such adjustment or action would result in
short-swing profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Administrator determines that the Award is
not to comply with such exemptive conditions. The number of shares of Common
Stock subject to any Award shall always be rounded to the next whole number.
(e) Notwithstanding the foregoing, in the event that the Company becomes a
party to a transaction that is intended to qualify for "pooling of interests"
accounting treatment and, but for one or more of the provisions of this Plan or
any Award Agreement would so qualify, then this Plan and any Award Agreement
shall be interpreted so as to preserve such accounting treatment, and to the
extent that any provision of the Plan or any Award Agreement would disqualify
the transaction from pooling of interests accounting treatment (including, if
22
applicable, an entire Award Agreement), then such provision shall be null and
void. All determinations to be made in connection with the preceding sentence
shall be made by the independent accounting firm whose opinion with respect to
"pooling of interests" treatment is required as a condition to the Company's
consummation of such transaction.
(f) The existence of the Plan, the Award Agreement and the Awards granted
hereunder shall not affect or restrict in any way the right or power of the
Company or the shareholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company's capital
structure or its business, any merger or consolidation of the Company, any issue
of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stocks whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.
11.4. Approval of Plan by Stockholders. The Plan will be submitted for the
--------------------------------
approval of the Company's stockholders within twelve months after the date of
the Board's initial adoption of the Plan. Awards may be granted or awarded prior
to such stockholder approval, provided that such Awards shall not be exercisable
nor shall such Awards vest prior to the time when the Plan is approved by the
stockholders, and provided further that if such approval has not been obtained
at the end of said twelve-month period, all Awards previously granted or awarded
under the Plan shall thereupon be canceled and become null and void. In
addition, if the Board determines that Awards other than Options or Stock
Appreciation Rights which may be granted to Section 162(m) Participants should
continue to be eligible to qualify as performance-based compensation under
Section 162(m)(4)(C) of the Code, the Performance Criteria must be disclosed to
and approved by the Company's stockholders no later than the first stockholder
meeting that occurs in the fifth year following the year in which the Company's
stockholders previously approved the Performance Criteria.
11.5. Tax Withholding. The Company shall be entitled to require payment in cash
---------------
or deduction from other compensation payable to each Holder of any sums required
by federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Award. The Administrator may in its
discretion and in satisfaction of the foregoing requirement allow such Holder to
elect to have the Company withhold shares of Common Stock otherwise issuable
under such Award (or allow the return of shares of Common Stock) having a Fair
Market Value equal to the sums required to be withheld.
11.6. Loans. The Committee may, in its discretion, extend one or more loans to
-----
key Employees in connection with the exercise or receipt of an Award granted or
awarded under the Plan, or the issuance of Restricted Stock or Deferred Stock
awarded under the Plan. The terms and conditions of any such loan shall be set
by the Committee.
11.7. Forfeiture Provisions. Pursuant to its general authority to determine the
---------------------
terms and conditions applicable to Awards under the Plan, the Administrator
shall have the right to provide, in the terms of Awards made under the Plan, or
to require a Holder to agree by separate written instrument, that (a) (i) any
proceeds, gains or other economic benefit actually or constructively
23
received by the Holder upon any receipt or exercise of the Award, or upon the
receipt or resale of any Common Stock underlying the Award, must be paid to the
Company, and (ii) the Award shall terminate and any unexercised portion of the
Award (whether or not vested) shall be forfeited, if (b)(i) a Termination of
Employment, Termination of Consultancy or Termination of Directorship occurs
prior to a specified date, or within a specified time period following receipt
or exercise of the Award, or (ii) the Holder at any time, or during a specified
time period, engages in any activity in competition with the Company, or which
is inimical, contrary or harmful to the interests of the Company, as further
defined by the Administrator or (iii) the Holder incurs a Termination of
Employment, Termination of Consultancy or Termination of Directorship for cause.
11.8. Effect of Plan Upon Options and Compensation Plans. The adoption of the
--------------------------------------------------
Plan shall not affect any other compensation or incentive plans in effect for
the Company or any Subsidiary. Nothing in the Plan shall be construed to limit
the right of the Company (a) to establish any other forms of incentives or
compensation for Employees, Directors or Consultants of the Company or any
Subsidiary or (b) to grant or assume options or other rights or awards otherwise
than under the Plan in connection with any proper corporate purpose including
but not by way of limitation, the grant or assumption of options in connection
with the acquisition by purchase, lease, merger, consolidation or otherwise, of
the business, stock or assets of any corporation, partnership, limited liability
company, firm or association.
11.9. Compliance with Laws. The Plan, the granting and vesting of Awards under
--------------------
the Plan and the issuance and delivery of shares of Common Stock and the payment
of money under the Plan or under Awards granted or awarded hereunder are subject
to compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.
11.10. Titles. Titles are provided herein for convenience only and are not to
------
serve as a basis for interpretation or construction of the Plan.
11.11. Governing Law. The Plan and any agreements hereunder shall be
-------------
administered, interpreted and enforced under the internal laws of the State of
California without regard to conflicts of laws thereof.
11.12. Financial Reports. To the extent required by applicable law, and not less
-----------------
often than annually, the Company shall furnish to current Holders of Awards
under the Plan and Holders of shares of Common Stock issued under the Plan upon
exercise of Awards, the Company's financial statements, including a balance
sheet, which set forth the Company's financial condition and results of
operations, unless such Holders have duties with the Company that assure them
access to equivalent information. Such financial statements need not be audited.
24
* * *
I hereby certify that the foregoing Plan was duly adopted by the Board of
Directors of Fresh Enterprises, Inc. on November 6, 2001 and was duly approved
by the shareholders of the Company on the same day.
Executed on this 6th day of November, 2001.
/s/ Therese Hasnas
-----------------------------------------
Therese Hasnas, Secretary
25
AMENDMENT NO. 1
TO
2001 FRESH ENTERPRISES, INC. STOCK PLAN
THIS AMENDMENT NO. 1 dated as of April 5, 2002 (this "Amendment") amends
the 2001 Fresh Enterprises Stock Plan (the "Plan") and is made with reference to
the following facts (all capitalized terms not otherwise defined herein have the
meanings set forth in the Plan):
WHEREAS, the Board has determined that pursuant to and in accordance
with Section 11.2 of the Plan, it is necessary and advisable to increase
the number of shares subject to the Plan; and
WHEREAS, the increase in the number of shares has been duly approved
by the requisite consent of the Corporation's shareholders,
NOW, THEREFORE, BE IT RESOLVED, Section 2.1(a) of the Plan is hereby
amended by substituting the number "one million one hundred one thousand
four hundred ninety-nine (1,101,499)" in lieu of the number "six hundred
one thousand four hundred ninety-nine (601,499)."
Except as expressly amended herein, the Plan shall continue in full force
and effect in accordance with its terms.