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EXHIBIT 4
WILLIAMS-SONOMA, INC.
STOCK OPTION PLAN
1. Purposes of the Plan. The purposes of this Plan are:
(a) to attract and retain the best available personnel for positions of
substantial responsibility,
(b) to provide additional incentive to selected key Employees and
Directors, and
(c) to promote the long term success of the Company's business.
2. Definitions. For the purposes of this Plan, the following terms will have
the following meanings:
(a) "ADMINISTRATOR" means the Board or any of its Committees that
administer this Plan, in accordance with Section 4.
(b) "APPLICABLE LAWS" means the legal requirements relating to the
administration of and issuance of securities under stock incentive plans,
including, without limitation, the requirements of state corporations law,
federal and state securities law, federal and state tax law, and the
requirements of any stock exchange or quotation system upon which the Shares may
then be listed or quoted. For all purposes of this Plan, references to statutes
and regulations shall be deemed to include any successor statutes and
regulations, to the extent reasonably appropriate as determined by the
Administrator.
(c) "BOARD" means the Board of Directors of the Company.
(D) "CAUSE" shall have the meaning set forth in an Optionee's employment
agreement with the Company (if any), or if not defined therein, shall mean (i)
acts or omissions by the Optionee which constitute intentional material
misconduct or a knowing violation of a material policy of the Company or any of
its subsidiaries, which such misconduct or violation could cause material
liability to the Company or material damage to the reputation of the Company,
(ii) the Optionee personally receiving a material benefit in money, property or
services from the Company or any of its subsidiaries or from another person
dealing with the Company or any of its subsidiaries, in material violation of
applicable law or Company policy, (iii) an act of fraud, conversion,
misappropriation, or embezzlement by the Optionee or his conviction of, or
entering a guilty plea or plea of no contest with respect to, a felony, or the
equivalent thereof (other than DUI), or (iv) any material misuse or improper
disclosure of confidential or proprietary information of the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended. For all
purposes of this Plan, references to Code sections shall be deemed to include
any successor Code sections, to the extent reasonably appropriate as determined
by the Administrator.
(f) "COMMITTEE" means a Committee appointed by the Board in accordance with
Section 4.
(g) "COMMON STOCK" means the common stock of the Company.
(h) "COMPANY" means Williams-Sonoma, Inc., a California corporation.
(i) "CONTINUOUS STATUS AS AN EMPLOYEE OR DIRECTOR" means that the
employment or director relationship is not interrupted or terminated by the
Company, any Parent or Subsidiary, or by the Employee or Director. Continuous
Status as an Employee or Director will not be considered interrupted in the case
of: (i) any leave of absence approved by the Board, including sick leave,
military leave, or any other personal leave, provided, that for purposes of
Incentive Stock Options, any such leave may not exceed 90 days, unless
reemployment upon the expiration of such leave is guaranteed by contract
(including certain Company
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policies) or statute; or (ii) transfers between locations of the Company or
between the Company, its Parent, its Subsidiaries or its successor.
(j) "DIRECTOR" means a member of the Board.
(k) "DISABILITY" means total and permanent disability as defined in Section
22(e)(3) of the Code.
(l) "EMPLOYEE" means any person, including Directors employed as a common
law employee by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company will be
sufficient, in and of itself, to constitute "employment" by the Company.
(m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
(n) "FAIR MARKET VALUE" means, as of any date, the closing sales price for
a Share (or the closing bid, if no sales are reported) as quoted on the New York
Stock Exchange on the last market trading day prior to the day of determination,
as reported in the Wall Street Journal or any other source the Administrator
considers reliable, or, if the Shares cease to be traded on the New York Stock
Exchange, the value which the Administrator determines most closely reflects the
fair market value of the Shares.
(O) "FAMILY MEMBER" means any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Optionee's household (other than a tenant or employee), a trust in which these
persons (or the Optionee) control the management of assets, and any other entity
in which these persons (or the Optionee) own more than fifty percent of the
voting interests.
(p) "GRANT NOTICE" shall mean a written notice evidencing certain terms and
conditions of an individual Option grant. The Grant Notice is part of the Option
Agreement.
(q) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(r) "NONQUALIFIED STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
(s) "OPTION" means a stock option granted under this Plan.
(t) "OPTION AGREEMENT" means a written agreement between the Company and an
Optionee evidencing the terms and conditions of an individual Option grant. Each
Option Agreement is subject to the terms and conditions of this Plan.
(u) "OPTIONED STOCK" means the Common Stock subject to an Option.
(v) "OPTIONEE" means an Employee or Director who holds an outstanding
Option.
(w) "PARENT" means a "parent corporation" with respect to the Company,
whether now or later existing, as defined in Section 424(e) of the Code.
(x) "PLAN" means this 2001 Stock Option Plan.
(y) "SECTION" means, except as otherwise specified, a section of this Plan.
(z) "SHARE" means a share of the Common Stock, as adjusted in accordance
with Section 14.
(aa) "SUBSIDIARY" means a "subsidiary corporation" with respect to the
Company, whether now or later existing, as defined in Section 424(f) of the
Code.
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3. Stock Subject to this Plan. Subject to the provisions of Section 14 of this
Plan, the maximum aggregate number of Shares
which may be issued under this Plan will be 2,5000,000 Shares of Common Stock.
If an Option expires or becomes unexercisable without having been exercised
in full, the Shares that were not purchased which were subject thereto will
become available for future grant under this Plan (unless this Plan has
terminated). If the Company reacquires Shares which were issued pursuant to the
exercise of an Option, however, those reacquired Shares will not be available
for future grant under this Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Composition of the Administrator. This Plan will be administered
by (A) the Board, or (B) a Committee designated by the Board,
which Committee will be constituted to satisfy Applicable Laws.
Once appointed, a Committee will serve in its designated capacity
until otherwise directed by the Board. The Board may increase the
size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the
Committee and thereafter directly administer this Plan.
Notwithstanding the foregoing, unless the Board expressly
resolves to the contrary, from and after such time as the Company
is registered pursuant to Section 12 of the Exchange Act, this
Plan will be administered only by a Committee, which will then
consist solely of persons who are both "non-employee directors"
within the meaning of Rule 16b-3 promulgated under the Exchange
Act and "outside directors" within the meaning of Section 162(m)
of the Code; provided, however, the failure of the Committee to
be composed solely of individuals who are both "non-employee
directors" and "outside directors" shall not render ineffective
or void any awards or grants made by, or other actions taken by,
such Committee.
(ii) Multiple Administrative Bodies. This Plan may be administered by
different bodies with respect to Directors and Employees, and
different classes of Employees and Directors.
(b) Powers of the Administrator. Subject to the provisions of this
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to that Committee, the Administrator will have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(m);
(ii) to select the Employees or Directors to whom Options may be
granted;
(iii) to determine whether and to what extent Options are granted, and
whether Options are intended as Incentive Stock Options or
Nonqualified Stock Options;
(iv) to determine the number of shares of Common Stock to be covered
by each Option granted;
(v) to approve forms of Grant Notices and Option Agreements;
(vi) to determine the terms and conditions, not inconsistent with the
terms of this Plan, of any grant of Options, including, but not
limited to, (A) the Options' exercise price, (B) the time or
times when Options may be exercised, which may be based on
performance criteria or other reasonable conditions such as
Continuous Status as an Employee or Director, (C) any vesting
acceleration or waiver of forfeiture restrictions, and any
restriction or limitation regarding any Option or Optioned Stock,
based in each case on factors that the Administrator determines
in its sole discretion, including but not limited to a
requirement subjecting the Optioned Stock
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to (i) certain restrictions on transfer (including without
limitation a prohibition on transfer for a specified period of
time and/or a right of first refusal in favor of the Company),
and (ii) a right of repurchase in favor of the Company upon
termination of the Optionee's Continuous Status as an Employee
or Director;
(vii) to determine whether, to what extent and under what
circumstances Common Stock and other amounts payable with
respect to a grant of Options under this Plan will be deferred
either automatically or at the election of the participant
(including providing for and determining the amount, if any, of
any deemed earnings on any deferred amount during any deferral
period);
(viii) to construe and interpret the terms of this Plan;
(ix) to prescribe, amend, and rescind rules and regulations relating
to the administration of this Plan;
(x) to modify or amend each Option, subject to Section 16(b);
(xi) to authorize any person to execute on behalf of the Company any
instrument required to effect the grant of an Option previously
granted by the Administrator;
(xii) to accelerate the vesting or exercisability of an Option;
(xiii) to determine the terms and restrictions applicable to Options;
and
(xiv) to make all other determinations it considers necessary or
advisable for administering this Plan.
(c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations will be final and binding on all holders of
Options.
5. Eligibility. Options granted under this Plan may be Incentive Stock Options
or Nonqualified Stock Options, as determined by the Administrator at the time of
grant. Nonqualified Stock Options may be granted to Employees and Directors.
Incentive Stock Options may be granted only to Employees. If otherwise eligible,
an Employee or Director who has been granted an Option may be granted additional
Options.
6. Limitations on Grants of Incentive Stock Options. Each Option will be
designated in the Grant Notice as either an Incentive Stock Option or a
Nonqualified Stock Option. However, notwithstanding such designations, if the
Shares subject to an Optionee's Incentive Stock Options (granted under all plans
of the Company or any Parent or Subsidiary), which become exercisable for the
first time during any calendar year, have a Fair Market Value in excess of
$100,000, the Options accounting for this excess will be treated as Nonqualified
Stock Options. For purposes of this Section 5, Incentive Stock Options will be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares will be determined as of the time of grant.
7. Limit on Annual Grants to Individuals. From and after such time as the
Company is required to be registered pursuant to Section 12 of the Exchange Act,
no Optionee may receive grants, during any fiscal year of the Company or portion
thereof, of Options which, in the aggregate, cover more than 1,000,000 Shares,
subject to adjustment as provided in Section 14. If an Option expires or
terminates for any reason without having been exercised in full, the unpurchased
shares subject to that expired or terminated Option will continue to count
against the maximum numbers of shares for which Options may be granted to an
Optionee during any fiscal year of the Company or portion thereof.
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8. Term of this Plan. Subject to Section 20, this Plan will become effective
upon the earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company as described in Section 20. It will continue in
effect for a term of ten years unless terminated earlier under Section 16.
Unless otherwise provided in this Plan, its termination will not affect the
validity of any Option outstanding at the date of termination.
9. Term of Option. The term of each Option will be stated in the Option
Agreement; provided, however, that in no event may the term be more than ten
years from the date of grant. In addition, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent of the voting power of
all classes of capital stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option will be five years from the date of grant or
any shorter term specified in the Option Agreement.
10. Option Exercise Price and Consideration.
(a) Exercise Price of Incentive Stock Options. The exercise price for
Shares to be issued pursuant to exercise of an Incentive Stock Option will be
determined by the Administrator provided that the per Share exercise price will
be no less than 100% of the Fair Market Value per Share on the date of grant;
provided, further that in the case of an Incentive Stock Option granted to an
Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent of the voting power of all classes of capital
stock of the Company or any Parent or Subsidiary, the per Share exercise price
will be no less than 110% of the Fair Market Value per Share on the date of
grant.
(b) Exercise Price of Nonqualified Stock Options. In the case of a
Nonqualified Stock Option, the exercise price for Shares to be issued pursuant
to the exercise of any such Option will be determined by the Administrator.
(c) Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator will fix the period within which the Option may be exercised
and will determine any conditions which must be satisfied before the Option may
be exercised. Exercise of an Option may be conditioned upon performance criteria
or other reasonable conditions such as Continuous Status as an Employee or
Director.
(d) Form of Consideration. The Administrator will determine the acceptable
form of consideration for exercising an Option, including the method of payment.
Such consideration may consist partially or entirely of:
(i) cash;
(ii) a promissory note made by the Optionee in favor of the Company;
(iii) other Shares which have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which an
Option will be exercised and which have been owned for a period of at least six
months;
(iv) delivery of a properly executed exercise notice together with any
other documentation as the Administrator and the Optionee's broker, if
applicable, requires to effect an exercise of the Option and delivery to the
Company of the sale or loan proceeds required to pay the exercise price; or
(v) any other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Laws.
11. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder will be exercisable according to the terms of this Plan and at times
and under conditions determined by the
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Administrator and set forth in the Option Agreement; provided, however, that an
Option may not be exercised for a fraction of a Share.
An Option will be deemed exercised when the Company receives: (i) written
notice of exercise (in accordance with the Option Agreement) from the person
entitled to exercise the Option, (ii) full payment for the Shares with respect
to which the Option is exercised, and (iii) all representations,
indemnifications and documents reasonably requested by the Administrator. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and this Plan. Shares issued
upon exercise of an Option will be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the stock certificate evidencing such Shares is issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder will exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. Subject to the provisions of
Sections 12(d), 17, and 18, the Company will issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 14 of this
Plan. Notwithstanding the foregoing, the Administrator in its discretion may
require the Company to retain possession of any certificate evidencing Shares of
Common Stock acquired upon exercise of an Option, if those Shares remain subject
to repurchase under the provisions of the Option Agreement or any other
agreement between the Company and the Optionee, or if those Shares are
collateral for a loan or obligation due to the Company.
Exercising an Option in any manner will decrease the number of Shares
thereafter available, both for purposes of this Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.
(b) Termination of Employment Relationship or Directorship. If an Optionee
holds exercisable Options on the date his or her Continuous Status as an
Employee or Director terminates (other than because of termination due to Cause,
death or Disability), the Optionee may exercise those Options until their
expiration as set forth in the Option Agreement (which, in the case of Incentive
Stock Options, shall not be later than 90 days after the date of such
termination). If the Optionee is not entitled to exercise his or her entire
Option at the date of such termination, the Shares covered by the unexercisable
portion of the Option will revert to this Plan. If the Optionee does not
exercise an Option within the time specified above after termination, that
Option will expire, and the Shares covered by it will revert to this Plan.
(c) Disability of Optionee. If an Optionee holds exercisable Options on the
date his or her Continuous Status as an Employee or Director terminates because
of Disability, the Optionee may exercise those Options until their expiration as
set forth in the Option Agreement. If the Optionee is not entitled to exercise
his or her entire Option at the date of such termination, the Shares covered by
the unexercisable portion of the Option will revert to this Plan. If the
Optionee does not exercise an Option within the time specified above after
termination, that Option will expire, and the Shares covered by it will revert
to this Plan.
(d) Death of Optionee. If an Optionee holds exercisable Options on the date
his or her death, the Optionee's estate or a person who acquired the right to
exercise the Option by bequest or inheritance may exercise those Options until
their expiration as set forth in the Option Agreement. If the Optionee is not
entitled to exercise his or her entire Option at the date of death, the Shares
covered by the unexercisable portion of the Option will revert to this Plan. If
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance does not exercise an Option within the time specified
above after termination, that Option will expire, and the Shares covered by it
will revert to this Plan.
(e) Termination for Cause. If an Optionee's Continuous Status as an
Employee or Director is terminated for Cause, then all Options (including any
vested Options) held by Optionee shall immediately be terminated and canceled.
(f) Disqualifying Dispositions of Incentive Stock Options. If Common Stock
acquired upon exercise of any Incentive Stock Option is disposed of in a
disposition that, under Section 422 of the Code, disqualifies the holder from
the application of Section 421(a) of the Code, the holder of the Common Stock
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immediately before the disposition will comply with any requirements imposed by
the Company in order to enable the Company to secure the related income tax
deduction to which it is entitled in such event.
12. Non-Transferability of Options.
(a) No Transfer. An Option may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. Notwithstanding the foregoing, to the extent
that the Administrator so authorizes at the time a Nonqualified Stock Option is
granted or amended, (i) such Option may be assigned pursuant to a qualified
domestic relations order as defined by the Code, and exercised by the spouse of
the Optionee who obtained such Option pursuant to such qualified domestic
relations order, and (ii) such Option may be assigned, in whole or in part,
during the Optionee's lifetime to one or more Family Members of the Optionee.
Rights under the assigned portion may be exercised by the Family Member(s) who
acquire a proprietary interest in such Option pursuant to the assignment. The
terms applicable to the assigned portion shall be the same as those in effect
for the Option immediately before such assignment and shall be set forth in such
documents issued to the assignee as the Administrator deems appropriate.
(b) Designation of Beneficiary. An Optionee may file a written designation
of a beneficiary who is to receive any Options that remain unexercised in the
event of the Optionee's death. If a participant is married and the designated
beneficiary is not the spouse, spousal consent will be required for the
designation to be effective. The Optionee may change such designation of
beneficiary at any time by written notice to the Administrator, subject to the
above spousal consent requirement.
(c) Effect of No Designation. If an Optionee dies and there is no
beneficiary validly designated and living at the time of the Optionee's death,
the Company will deliver such Optionee's Options to the executor or
administrator of his or her estate, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such Options to the spouse or to any one or more
dependents or relatives of the Optionee, or if no spouse, dependent or relative
is known to the Company, then to such other person as the Company may designate.
(d) Death of Spouse or Dissolution of Marriage. If an Optionee designates
his or her spouse as beneficiary, that designation will be deemed automatically
revoked if the Optionee's marriage is later dissolved. Similarly, any
designation of a beneficiary will be deemed automatically revoked upon the death
of the beneficiary if the beneficiary predeceases the Optionee. Without limiting
the generality of the preceding sentence, the interest in Options of a spouse of
an Optionee who has predeceased the Optionee or (except as provided in Section
12(a) regarding qualified domestic relations orders) whose marriage has been
dissolved will automatically pass to the Optionee, and will not be transferable
by such spouse in any manner, including but not limited to such spouse's will,
nor will any such interest pass under the laws of intestate succession.
13. Withholding Taxes. The Company will have the right to take whatever steps
the Administrator deems necessary or appropriate to comply with all applicable
federal, state, local, and employment tax withholding requirements, and the
Company's obligations to deliver Shares upon the exercise of an Option will be
conditioned upon compliance with all such withholding tax requirements. Without
limiting the generality of the foregoing, upon the exercise of an Option, the
Company will have the right to withhold taxes from any other compensation or
other amounts which it may owe to the Optionee, or to require the Optionee to
pay to the Company the amount of any taxes which the Company may be required to
withhold with respect to the Shares issued on such exercise. Without limiting
the generality of the foregoing, the Administrator in its discretion may
authorize the Optionee to satisfy all or part of any withholding tax liability
by (a) having the Company withhold from the Shares which would otherwise be
issued on the exercise of an Option that number of Shares having a Fair Market
Value, as of the date the withholding tax liability arises, equal to or less
than the amount of the Company's withholding tax liability, or (b) by delivering
to the Company previously-owned and unencumbered Shares of the Common Stock
having a Fair Market Value, as of the date the withholding tax liability arises,
equal to or less than the amount of the Company's withholding tax liability.
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14. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, if the outstanding shares of Common Stock are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company or a successor entity, or for other
property (including without limitation, cash), through reorganization,
recapitalization, reclassification, stock combination, stock dividend, stock
split, reverse stock split, spin off or other similar transaction, an
appropriate and proportionate adjustment will be made in the maximum number and
kind of shares as to which Options may be granted under this Plan. A
corresponding adjustment changing the number or kind of shares allocated to
unexercised Options which have been granted prior to any such change will
likewise be made. Any such adjustment in the outstanding Options will be made
without change in the aggregate purchase price applicable to the unexercised
portion of the Options but with a corresponding adjustment in the price for each
share or other unit of any security covered by the Option. Such adjustment will
be made by the Administrator, whose determination in that respect will be final,
binding, and conclusive.
Where an adjustment under this Section 14(a) is made to an Incentive Stock
Option, the adjustment will be made in a manner which will not be considered a
"modification" under the provisions of subsection 424(h)(3) of the Code.
(b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, to the extent that an Option had not been previously
exercised , it will terminate immediately prior to the consummation of such
proposed dissolution or liquidation. In such instance, the Administrator may, in
the exercise of its sole discretion, declare that any Option will terminate as
of a date fixed by the Administrator and give each Optionee the right to
exercise his or her Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.
(c) Corporate Transaction. Upon the happening of a merger, reorganization or
sale of substantially all of the assets of the Company, the Administrator, may,
in its sole discretion, do one or more of the following: (i) shorten the period
during which Options are exercisable (provided they remain exercisable for at
least 30 days after the date notice of such shortening is given to the
Optionees); (ii) accelerate any vesting schedule to which an Option is subject;
(iii) arrange to have the surviving or successor entity or any parent entity
thereof assume the Options or grant replacement options with appropriate
adjustments in the option prices and adjustments in the number and kind of
securities issuable upon exercise or adjustments so that the Options or their
replacements represent the right to purchase the shares of stock, securities or
other property (including cash) as may be issuable or payable as a result of
such transaction with respect to or in exchange for the number of Shares of
Common Stock purchasable and receivable upon exercise of the Options had such
exercise occurred in full prior to such transaction; or (iv) cancel Options upon
payment to the Optionees in cash or securities having a Fair Market Value, with
respect to each Option to the extent then exercisable (including, if applicable,
any Options as to which the vesting schedule has been accelerated as
contemplated in clause (ii) above), of an amount that is the equivalent of the
excess of the Fair Market Value of the Common Stock (at the effective time of
the merger, reorganization, sale or other event) over the exercise price of the
Option. The Administrator may also provide for one or more of the foregoing
alternatives in any particular Option Agreement.
15. Date of Grant. The date of grant of an Option will be, for all purposes, the
date as of which the Administrator makes the determination granting such Option,
or any other, later date determined by the Administrator and specified in the
Option Agreement. Notice of the determination will be provided to each Optionee
within a reasonable time after the date of grant.
16. Amendment and Termination of this Plan.
(a) Amendment and Termination. The Board may at any time amend, alter or
suspend or terminate this Plan.
(b) Shareholder Approval. The Company will obtain shareholder approval of
any Plan amendment that increases the number of Shares for which Options may be
granted, or to the extent necessary and desirable to comply with Section 422 of
the Code (or any successor statute) or other Applicable Laws, or
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the requirements of any exchange or quotation system on which the Common Stock
is listed or quoted. Such shareholder approval, if required, will be obtained in
such a manner and to such a degree as is required by the Applicable Law or
requirement.
(c) Effect of Amendment or Termination. No amendment, alteration, suspension
or termination of this Plan will impair the rights of a Optionee, unless
mutually agreed otherwise between the Optionee and the Administrator. Any such
agreement must be in writing and signed by the Optionee and the Company.
17. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares will not be issued pursuant to the exercise of
an Option unless the exercise of such Option and the issuance and delivery of
such Shares will comply with all Applicable Laws, and will be further subject to
the approval of counsel for the Company with respect to such compliance. Any
securities delivered under this Plan will be subject to such restrictions, and
the person acquiring such securities will, 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 Laws. To the
extent permitted by Applicable Laws, this Plan and Options granted hereunder
will be deemed amended to the extent necessary to conform to such laws, rules
and regulations.
(b) Investment Representation. As a condition to the exercise of an Option ,
the Company may require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are being acquired only
for investment and without any present intention to sell, transfer, or
distribute such Shares.
18. Liability of Company.
(a) Inability to Obtain Authority. If the Company cannot, by the exercise of
commercially reasonable efforts, obtain authority from any regulatory body
having jurisdiction for the sale of any Shares under this Plan, and such
authority is deemed by the Company's counsel to be necessary to the lawful
issuance of those Shares, the Company will be relieved of any liability for
failing to issue or sell those Shares.
(b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an
Option exceed, as of the date of grant, the number of Shares which may be issued
under this Plan without additional shareholder approval, that Option will be
contingent with respect to such excess Shares, unless and until shareholder
approval of an amendment sufficiently increasing the number of Shares subject to
this Plan is timely obtained in accordance with Section 16(a).
(c) Rights of Participants and Beneficiaries. The Company will pay all
amounts payable under this Plan only to the Optionee, or beneficiaries entitled
thereto pursuant to this Plan. The Company will not be liable for the debts,
contracts, or engagements of any Optionee or his or her beneficiaries, and
rights to cash payments under this Plan may not be taken in execution by
attachment or garnishment, or by any other legal or equitable proceeding while
in the hands of the Company.
19. Reservation of Shares. The Company will at all times reserve and keep
available for issuance a number of Shares sufficient to satisfy this Plan's
requirements during its term.
20. Shareholder Approval. Continuance of this Plan will be subject to approval
by the shareholders of the Company within 12 months before or after the date of
its adoption. Such shareholder approval will be obtained in the manner and to
the degree required under Applicable Laws. Options may be granted but Options
may not be exercised prior to shareholder approval of this Plan. If any Options
are so granted and shareholder approval is not obtained within 12 months of the
date of adoption of this Plan by the Board, those Options will terminate
retroactively as of the date they were granted.
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21. Legending Share Certificates. In order to enforce any restrictions imposed
upon Common Stock issued upon exercise of an Option granted under this Plan or
to which such Common Stock may be subject, the Administrator may cause a legend
or legends to be placed on any share certificates representing such Common
Stock, which legend or legends will make appropriate reference to such
restrictions, including, but not limited to, a restriction against sale of such
Common Stock for any period of time as may be required by Applicable Laws.
Additionally, and not by way of limitation, the Administrator may impose such
restrictions on any Common Stock issued pursuant to this Plan as it may deem
advisable.
22. No Employment Rights. Neither this Plan nor any Option will confer upon an
Optionee any right with respect to continuing the Optionee's employment
relationship with the Company, or continuing service as a Director, nor will
they interfere in any way with the Optionee's right or the Company's right to
terminate such employment relationship or directorship at any time, with or
without cause.
23. Governing Law. This Plan will be governed by, and construed in accordance
with the laws of the State of California (without giving effect to conflicts of
law principles).