EXHIBIT 4.1
RYKA, INC.
1993 STOCK OPTION PLAN
TABLE OF CONTENTS
ARTICLE I. Purpose of the Plan .1
ARTICLE II. Definitions 1
ARTICLE III. Administration of the Plan 3
ARTICLE IV. Eligibility 5
ARTICLE V. Stock Option Awards 6
ARTICLE VI. Exercise of Option 9
ARTICLE VII. Reporting Person Limitations 12
ARTICLE VIII. Terms and Conditions of Options 12
ARTICLE IX. Benefit Plans 13
ARTICLE X. Amendment, Suspension or Termination
Of the Plan 14
ARTICLE XI. Changes in the Capital Structure 14
ARTICLE XII. Effective Date and Term of the Plan 16
ARTICLE XIII. Conversion of ISOs into Non-Qualified
Options; Termination of ISOs 16
ARTICLE XIV. Application of Funds 17
ARTICLE XV. Governmental Regulation 17
ARTICLE XVI. Withholding of Additional Income Taxes 18
ARTICLE XVII. Notice to Company of Disqualifying
Disposition 18
ARTICLE XVIII. Governing Law; Construction 19
RYKA INC.
1993 STOCK OPTION PLAN
ARTICLE I
Purpose of the Plan
The purpose of this Plan is to encourage and enable employees, consultants,
directors and others who are in a position to make significant contributions to
the success of RYKA, INC. and of its affiliated corporations upon whose
judgment, initiative, and efforts the Corporation depends for the successful
conduct of its business, to acquire a closer identification of their interests
with those of the Corporation by providing them with opportunities to purchase
stock in the Corporation pursuant to options granted hereunder, thereby
Stimulating their efforts on behalf of the Corporation and strengthening their
desire to remain involved with the Corporation.
ARTICLE 11
Definitions
2.1 "Affiliated Corporation" means any stock corporation of which a
majority of the voting common or capital stock is owned directly or indirectly
by the Corporation.
2.2 "Award" means an Option granted under Article V.
2.3 "Board" means the Board of directors of the Corporation.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.5 "Committee" means a committee of not less than two members of the
Board appointed by the Board to administer the Plan, each of whom is a
"disinterested person" within the meaning of
Rule 16b-3 under the Securities Exchange Act of 1934, or any successor
provision.
2.6 "Corporation" means RYKA, INC., a Delaware corporation, or its
successor.
2.7 "Employee" means any person who is a regular full-time or part-time
employee of the Corporation or an Affiliated Corporation on or after May 28,
1993.
2.8 "Option" means an Incentive Stock Option or Non-Qualified Option
granted by the Committee under Article V of this Plan in the form of a right to
purchase Stock evidenced by an instrument containing such provisions as the
Committee may establish.
2.9 "Participant" means a person ,elected by the Committee to receive an
award under the Plan.
2.10 "Plan" means this 1993 Stock Option Plan.
2.11 "Incentive Stock Option ("ISO") means an option which qualifies as an
incentive stock option as defined in Section 422 of the Code, as amended.
2.12 "Non-Qualified option" means any option not intended to qualify as an
Incentive Stock Option.
2.13 "Stock" means the Common Stock, $.01 par value, of the Corporation or
any successor, including any adjustments in the event of changes in capital
structure of the type described in Article IX.
2.14 "Reporting Person" means a person subject to Section 16 of the
Securities Exchange Act of 1934 or any successor provision.
2.15 "Restricted Period" means the period of time selected by the
Committee during which an Award may be forfeited by the person.
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ARTICLE III
Administration of the Plan
3.1 Administration by the Committee. This Plan shall be administered by
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the Committee as defined herein. From time to time the Board may increase the
size of the Committee and appoint additional members thereto, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer the Plan. No member of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
options granted under it.
3.2 Powers. The Committee shall have full and final authority to
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operate, manage, and administer the Plan on behalf of the Corporation. This
authority includes, but is not limited to:
(a) The power to grant Awards conditionally or unconditionally,
(b) The power to prescribe the form or forms of the instruments evidencing
Awards granted under this Plan,
(c) The power to interpret the Plan,
(d) The power to provide regulations for the operation of the incentive
features of the Plan, and otherwise to prescribe and rescind
regulations for interpretation, management and administration of the
Plan,
(e) The power to delegate responsibility for Plan operation, management
and administration on such terms, consistent with the Plan, as the
Committee may establish,
(f) The power to delegate to other persons the responsibility of
performing ministerial acts in furtherance of the Plan's purpose, and
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(g) The power to engage the services of persons, companies, or
organizations in furtherance of the Plan's purpose, including but not
limited to, banks, insurance companies, brokerage firms, and
consultants.
3.3 Additional Powers. In addition, as to each Option to buy Stock of
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the Corporation, the Committee shall have full and final authority in its
discretion: (a) to determine the number of shares of Stock subject to each
Option; (b) to determine the time or times at which Options will be granted;
(c) to determine the option price of the shares of Stock subject to each option,
which price shall be not less than the minimum price specified in Article V of
this Plan; (d) to determine the time or times when each Option shall become
exercisable and the duration of the exercise period (including the acceleration
of any exercise period), which shall not exceed the maximum period specified in
Article V; and (e) to determine whether each option granted shall be an
Incentive Stock Option or a Non-qualified Option.
In no event may the Corporation grant an Employee any Incentive Stock
Option that is first exercisable during any one calendar year to the extent the
aggregate fair market value of the Stock (determined at the time the options are
granted) exceeds $100,000 (under all stock options plans of the Corporation and
any Affiliated Corporation); provided, however, that this paragraph shall have
no force and effect if its inclusion in the Plan is not necessary for Incentive
Stock Options issued under the Plan to qualify as such pursuant to Section
422(d)(1) of the Code.
ARTICLE IV
Eligibility
4.1 Eligible Employees. All Employees (including Directors and Officers
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who are
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Employees and who have not irrevocably elected to be ineligible to participate
in the Plan) are eligible to be granted Incentive Stock Option and Non-Qualified
Option Awards under this Plan.
4.2 Consultants, Directors and other Non-Employees. Any Consultant,
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Director (whether or not an Employee) and any other Non-Employee is eligible to
be granted Non-Qualified Option Awards under the Plan provided the person has
not irrevocably elected to be ineligible to participate in the Plan, and
provided further that upon appointment to the Committee at the first Board of
Directors meeting following the Annual Meeting of the Shareholders, each non-
employee director appointed to the Committee shall be deemed to be ineligible to
participate under the Plan during his or her period of service on the Committee.
4.3 Relevant Factors. In selecting individual Employees, Consultants,
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Directors, and other Non-Employees to whom Awards shall be granted, the
Committee shall weigh such factors as are relevant to accomplish the purpose of
the Plan as stated in Article I. An individual who has been granted an Award
may be granted one or more additional Awards, if the Committee so determines.
The granting of an Award to any individual shall neither entitle that individual
to, nor disqualify him or her from, participation in any other grant of Awards.
ARTICLE V
Stock Option Awards
5.1 Number of Shares. Subject to the provisions of Article X of this
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Plan, the aggregate number of shares of Stock for which Options may be granted
under this Plan shall not exceed 900,000 shares. The shares to be delivered
upon exercise of Options under this Plan shall be made available, at the
discretion of the Committee, either from authorized but unissued shares
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or from previously issued and reacquired shares of Stock held by the Corporation
as treasury shares, including shares purchased in the open market.
Stock issuable upon exercise of an option granted under the Plan may be
subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Committee.
5.2 Effect of Expiration, Termination or Surrender. If an Option under
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this Plan shall expire or terminate unexercised as to any shares covered
thereby, or shall cease for any reason to be exercisable in whole or in part, or
if the Company shall reacquire any unvested shares issued pursuance to options
under the Plan, such shares shall thereafter be available for the granting of
other Options under this Plan.
5.3 Term of Options. The full term of each Option granted hereunder shall
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be for such period as the Committee shall determine. In the case of Incentive
Stock options granted hereunder, the term shall not exceed (10) years from the
date of granting thereof. Each Option shall be subject to earlier termination
as provided in Sections 6.3 and 6.4. Notwithstanding the foregoing, the term of
options intended to qualify as "Incentive Stock Options" shall not exceed five
(5) years from the date of granting thereof if such option is granted to any
employee who at the time such option is granted owns more than ten percent (10%)
of the total combined voting power of all classes of stock of the Corporation.
5.4 Option Price. The option price shall be determined by the Committee
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at the time any Option is granted. In the case of Incentive Stock Options, the
exercise price shall not be less than 100% of the fair market value of the
shares covered thereby at the time the Incentive Stock Option is granted (but in
no event less than par value), provided that in the case where an Incentive
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Stock Option is granted hereunder to any Employee who at the time of grant owns
Stock possessing more than 10% of the combined voting power of all classes of
stock of the Corporation and its Affiliated Corporations, the Incentive Stock
Option price shall equal not less than 110% of the fair market value of the
shares covered thereby at the time the Incentive Stock Option is granted. In
the case of Non-Qualified Stock Options, the exercise price shall not be less
than par value.
5.5 Fair Market Value. If, at any time an option is granted under the
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Plan, the Corporation's Stock is publicly traded, "fair market value" shall be
determined as of the last business day for which the prices or quotes discussed
in this sentence are available prior to the date such Option is granted and
shall mean (i) the average (on that date) of the high and low prices of the
Stock on the principal national securities exchange on which the Stock is
traded, if the Stock is then traded on a national securities exchange; or (ii)
the last reported sale price (on that date) of the Stock on the NASDAQ National
Market List, if the Stock is not then traded on a national securities exchange;
or (iii) the closing bid price (or average of bid prices) last quoted (on that
date) by an established Quotation service for over-the-counter securities, if
the Stock is not reported on the NASDAQ National Market List. However, it the
Stock is not publicly traded at the time an Option is granted under the Plan,
"fair market value" shall be deemed to be the fair value of the Stock as
determined by the Committee under Section 3.3.
5.6 Non-Transferability of Options. No Option granted under this Plan
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shall be transferable by the grantee otherwise than by will or the laws of
descent and distribution, and such Option may be exercised during the grantee's
lifetime only by the grantee.
5.7 Foreign Nationals. Awards may be granted to Participants who are
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foreign
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nationals or employed outside the United States on such terms and Conditions
different from those specified in the Plan as the Committee considers necessary
or advisable to achieve the purposes of the Plan or comply with applicable laws.
ARTICLE VI
Exercise of Option
6.1 Exercise. Each Option granted under the Plan shall be exercisable on
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such date or dates and during such period and for such number of shares as shall
be determined pursuant to the provisions of the instrument evidencing such
Option. The Committee shall have the right to accelerate the date of exercise
of any option, provided that, the Committee shall not accelerate the exercise
date of any Incentive Stock Option granted if such acceleration would violate
the annual vesting limitation contained in Section 422(d)(1) of the Code.
6.2 Notice of Exercise. A person electing to exercise an Option shall
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give written notice to the Corporation of such election and of the number of
shares lie or she has elected to purchase and shall at the time of exercise
tender the full purchase price of the shares he or she has elected to purchase.
6.3 Delivery of Stock. No shares shall be delivered pursuant to any
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exercise of an Option until payment in full of the option price therefor is
received by the Corporation. Such payment may be made in whole or in part in
cash or, to the extent permitted by the Committee at or after the grant of an
Option, by delivery of a note or shares of the stock owned by the optionee,
including Restricted Stock, valued at their fair market value on the date of
delivery, or such other lawful consideration as the Committee may determine.
Until such person has been issued a certificate or
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certificates for the shares so purchased, he or she shall possess no rights of a
record holder with respect to any of such shares.
6.4 Option Unaffected by Change in Duties. No Incentive Stock Option,
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and, unless otherwise determined by the Committee, no Non-Qualified Option
granted to a person who is, on the date of the grant, an Employee of the
Corporation or an Affiliated Corporation, shall be affected by any change of
duties or position of the optionee (including transfer to or from an Affiliated
Corporation), so long as he or she continues to be an Employee. Employment
shall be considered as continuing and uninterrupted during any bona fide leave
of absence (such as those attributable to illness, military obligations or
governmental service) provided that the period of such leave does not exceed 90
days or, if longer, any period during which such optionee's right to
reemployment is guaranteed by statute. A bona fide leave of absence with
the written approval of the Committee shall not be considered an interruption of
employment under the Plan, provided that such written approval contractually
obligates the Corporation or any Affiliated Corporation to continue the
employment of the optionee after the approved period of absence. If the
optionee shall cease to be an Employee for any reason other than death, such
Option shall thereafter be exercisable only to the extent of the purchase
rights, if any, which have accrued as of the date of such cessation; provided
that (i) the Committee may provide in the instrument evidencing any Option that
the Committee may in its absolute discretion, upon any such cessation of
employment, determine (but be under no obligation to determine) that such
accrued purchase rights shall be deemed to include additional shares covered by
such Option; and (ii) unless the Committee shall otherwise provide in the
instrument evidencing any Option, upon any such cessation of employment, such
remaining rights to purchase shall in any event terminate upon the earlier of
(A) the expiration of the original term of the Option; or (B)
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where such cessation of employment is on account of disability, the expiration
of one year from the date of such cessation of employment and, otherwise, the
Expiration of three months from such date. For purposes of the Plan, the term
"disability" shall mean "permanent and total disability" as defined in Section
22(e)(3) of the Code.
6.5 Death of Optionee. Should an optionee die while in possession of the
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legal right to Exercise an Option or Options under this Plan, such persons as
shall have acquired, by will or by the laws of descent and distribution, the
right to exercise any Options theretofore granted, may unless otherwise provided
by the Committee in any instrument evidencing any Option, exercise such Options
at any time prior to one year from the date of death; provided, that such Option
or Options shall expire in all events no later than the last day of the original
term of such Option; provided, further, that any such exercise shall be limited
to the purchase rights that have accrued as of the date when the optionee ceased
to be an Employee, whether by death or otherwise, unless the Committee provides
in the instrument. evidencing such Option that, in the discretion of the
Committee, additional shares covered by such Option may become subject, to
purchase immediately upon the death of the optionee.
ARTICLE VII
Reporting Person Limitations
Notwithstanding any other provision of the Plan, to the extent required to
qualify for the exemption provided by Rule 16b-3 under the Securities Exchange
Act of 1934, and any successor provision, (i) any Stock or other equity security
offered under the Plan to a Reporting Person may not be sold for at least six
(6) months after acquisition, except in case of death or disability and (ii)
any Option, or other similar right related to an equity security, issued under
the Plan to a Reporting Person
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shall not be transferable other titan by will or the laws of descent and
distribution, shall not, be exercisable for at least six (6) months except in
the case of death or disability, and shall be exercisable during the
Participant's lifetime only by the Participant or the Participant's guardian or
legal representative.
ARTICLE VIII
Terms and Conditions of Options
Options shall be evidenced by instruments (which need not be identical) in
such forms as the Committee may from time to time approve. Such instruments
shall conform to the terms and conditions set forth in Articles 5 and 6 hereof
and may contain such other provisions as the Committee deems advisable that are
not inconsistent with the Plan, including restrictions applicable to shares of
Stock issuable upon exercise of Options. In granting any Non-Qualified Option,
the Committee may specify that such Non-Qualified Option shall be subject to the
restrictions set forth herein with respect to Incentive Stock Options, or to
such other termination and cancellation provisions as the Committee may
determine. The Committee may from time to time confer authority and
responsibility on one or more of its own members and/or one or more officers of
the Corporation to execute and deliver such instruments. The proper officers
of the Corporation are authorized and directed to take any and all action
necessary or advisable from time to time to carry out the terms of such
instruments.
ARTICLE IX
Benefit Plans
Awards under the Plan are discretionary and are not a part of regular
salary. Awards may not be used in determining the amount of compensation for
any purpose under the benefit plans of the
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Corporation, or an Affiliated Corporation, except as the Committee may from time
to time expressly provide. Neither the Plan, an Option or any instrument
evidencing an option confers upon any Employee the right to continued employment
with the Corporation or an Affiliated Corporation.
ARTICLE X
Amendment, Suspension or Termination of the Plan
The Board may suspend the Plan or any part thereof at any time or may
terminate the Plan in its entirety. Awards shall not be granted after Plan
termination.
The Board may also amend the Plan from time to time, except that amendments
which affect the following subjects must be approved by stockholders of the
Corporation.
(a) Except as provided in Article XI relative to capital changes, the
number of shares as to which Options may be granted pursuant to Article V;
(b) The maximum term of Options granted;
(c) The minimum price at which Options may be granted;
(d) The term of the Plan; and
(e) The requirements as to eligibility for participation in the Plan.
Awards granted prior to suspension or termination of the Plan may not be
canceled solely because of such suspension or termination, except with the
consent of the grantee of the Award.
ARTICLE XI
Changes in Capital Structure
The instruments evidencing options granted hereunder shall be subject to
adjustment in the
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event of changes in the outstanding Stock of the Corporation by reasonable of
stock dividends, stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges or other relevant changes in
capitalization occurring after the date of an Award to the same extent as would
affect an actual share of stock issued and outstanding on the effective date of
such change. Such adjustment to outstanding Options shall be made without change
in the total price applicable to the unexercised portion of such options, and a
corresponding adjustment in the applicable option price per share shall be made.
In the event of any such change, the aggregate number and classes of shares for
which Options may thereafter be granted under Section 5.1 of this Plan may be
appropriately adjusted as determined by the Committee so as to reflect such
change.
Notwithstanding the foregoing, any adjustments made pursuant to this
Article XI with respect to Incentive Stock Options shall be made only after the
Committee, after consulting with counsel for the Corporation, determines whether
such adjustments would constitute a "modification" of such Incentive Stock
Options (as that term is defined in Section 425 of the Code) or would cause any
adverse tax consequences for The holders of such Incentive Stock Options. If
the Committee determines that such adjustments made with respect to Incentive
Stock Options would constitute a modification of such Incentive Stock Options,
it may refrain from making such adjustments.
In the event of the proposed dissolution or liquidation of the Corporation,
each Option will terminate immediately prior to the consummation of such
proposed action or at such other time and subject to such other conditions as
shall be determined by the Committee.
Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. No
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adjustments shall be made for dividends paid in cash or in property other than
securities of the Corporation.
No fractional shares shall be issued under the Plan and the optionee shall
receive from the Corporation cash in lieu of such fractional shares.
ARTICLE XII
Effective Date and Term of the Plan
The Plan shall become effective on May 28, 1993. The Plan shall continue
until such time as it may be terminated by action of the Board; provided,
however, that no Options may be granted under this Plan on or after the tenth
anniversary of the effective date hereof.
ARTICLE XIII
Conversion of ISO's into Non-Qualified Options;
Termination of ISO's
The Committee, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's
Incentive Stock Options, that have not been exercised on the date of conversion,
into Non-Qualified Options at any time prior to the expiration of such Incentive
Stock Options, regardless of whether the optionee is an employee of the
Corporation or an Affiliated Corporation at the time of such conversion. Such
actions may includes but not be limited to, extending the exercise period or
reducing the exercise price of such Options. At the time of such conversion,
the Committee (with the consent of the optionee) may impose such conditions on
the exercise of the resulting Non-Qualified Options as the Committee in its
discretion may determine,
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Provided that such conditions shall not be inconsistent with the Plan. Nothing
in the Plan shall be deemed to give any optionee the right to have such
optionee's Incentive Stock Options converted into Non-Qualified options, and no
such conversion shall occur until and unless the Committee takes appropriate
action. The Committee, with the consent of the optionee, may also terminate any
portion of any Incentive Stock Option that has not been exercised at the time of
such termination.
ARTICLE XIV
Application of Funds
The proceeds received by the Corporation from the sale of shares pursuant
to Options granted under the Plan shall be used for general corporate purposes.
ARTICLE XV
Governmental Regulation
The Corporation's obligation to sell and deliver shares of Stock under this
Plan is subject to the approval of any governmental authority required in
connection with the authorization, issuance or sale of such shares.
ARTICLE XVI
Withholding of Additional Income Taxes
Upon the exercise of a Non-Qualified Option or the making of a
Disqualifying Disposition (as defined in Article XVI) the Corporation, in
accordance with Section 3402(a) of the Code, may require the optionee to pay
additional withholding taxes in respect of the amount that is considered
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compensation includible in such person's gross income. The Committee in its
discretion may condition the exercise of an Option on the payment of such
additional withholding taxes.
ARTICLE XVII
Notice to Company of Disqualifying Disposition
Each employee who receives an Incentive Stock Option must agree to notify
the Corporation in writing immediately after the employee makes a Disqualifying
Disposition of any Stock acquired pursuant to the exercise of an Incentive Stock
Option. A Disqualifying Disposition is any disposition (including any sale) of
such Stock before the later of (a) two years after the date the employee was
granted the Incentive Stock Option or (b) one year after the date the employee
acquired Stock by exercising the Incentive Stock Option. If the employee
has died before such stock is sold, these holding period requirements do not
apply and no Disqualifying Disposition can occur thereafter.
ARTICLE XVIII
Governing Law; Construction
The validity and construction of the Plan and the instruments evidencing
Options shall be governed by the laws of the State of Delaware. In construing
this Plan, the singular shall include the plural and the masculine gender shall
include the feminine and neuter, unless the context otherwise requires.
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