CALAVO GROWERS FORM S-8



 



EXHIBIT 4.1


2001 STOCK OPTION PLAN FOR DIRECTORS

OF

CALAVO GROWERS, INC.



	1.	  	PURPOSE OF THE PLAN.



     Pursuant to this 2001 Stock Option Plan for Directors (the “Plan”) of
Calavo Growers, Inc., a California corporation (the “Company”), directors of
the Company will receive options (“Options”) to purchase shares of the common
stock of the Company, par value $0.001 per share (“Common Stock”). The purpose
of the Option grants is to encourage growers to serve as directors of the
Company and to reward directors for the valuable services that they render to
the Company.



	2.	  	TYPES OF AWARDS; ELIGIBLE PERSONS.



     The Administrator (as defined below) may, from time to time, award Options
to some or all of the directors of the Company. The Options are not intended
to qualify as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”). No awards of Options
shall be made under the Plan to any person who is not a director of the Company
on the date of the award.



	3.	  	STOCK SUBJECT TO THE PLAN; MAXIMUM NUMBER OF GRANTS.



     Subject to the adjustment provisions of Section 5.13 of the Plan, the
total number of shares of Common Stock which may be offered under, or issued
under Options granted pursuant to, the Plan shall not exceed Three Million
(3,000,000) shares of Common Stock. The shares covered by the portion of any
award under the Plan which expires, terminates or is cancelled unexercised
shall become available again for grants under the Plan. Where the exercise
price of an Option is paid by means of the director’s surrender of previously
owned shares of Common Stock or the Company’s withholding of shares otherwise
issuable upon exercise of the Option as permitted herein, only the net number
of shares issued and which remain outstanding in connection with such exercise
shall be deemed issued and no longer available for issuance under the Plan.
Subject to the adjustment provisions of Section 5.13 of the Plan, no director
shall be granted Options during any twelve-month period covering more than
Three Hundred Thousand (300,000) shares of Common Stock.



	4.	  	ADMINISTRATION.



     4.1 The Plan shall be administered by the Board of Directors of the
Company (the “Board”) or by a committee (the “Committee”) to which
administration of the Plan, or of part of the Plan, is delegated by the Board
(in either case, the “Administrator”). The Board shall appoint and remove
members of the Committee in its discretion in accordance with applicable laws.
If necessary in order to comply with Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), or Section 162(m) of the Code,
the Committee shall, in the


 








 



Board’s discretion, be comprised solely of “non-employee directors” within
the meaning of Rule 16b-3 under the Exchange Act or “outside directors” within
the meaning of Section 162(m) of the Code. The foregoing notwithstanding, the
Administrator may delegate non-discretionary administrative duties to such
employees of the Company as it deems proper, and the Board, in its discretion,
may at any time and from time to time exercise any and all rights and duties of
the Administrator under the Plan.


     4.2 Subject to the other provisions of the Plan, the Administrator shall
have the authority, in its discretion: (i) to grant Options; (ii) to determine
the fair market value of the Common Stock subject to Options; (iii) to
determine the exercise price of Options; (iv) to determine the persons to whom,
and the time or times at which, Options shall be granted and the number of
shares subject to each Option; (v) to construe and interpret the terms and
conditions of the Plan, of any Option agreement and all Options granted under
the Plan; (vi) to prescribe, amend and rescind rules and regulations relating
to the Plan; (vii) to determine the terms and conditions of each Option granted
under the Plan (which need not be identical), including, but not limited to,
the time or times at which Options shall be exercisable; (viii) with the
consent of the Option holder, to rescind any award or exercise of an Option and
to amend the terms of any Option; (ix) to reduce the exercise price of any
Option; (x) to accelerate or defer (with the consent of the Option holder) the
exercise date of any Option; (xi) to authorize any person to execute on behalf
of the Company any instrument evidencing the grant of an Option; and (xii) to
make all other determinations deemed necessary or advisable for the
administration of the Plan, any Option or Option agreement. The Administrator
may delegate non-discretionary administrative duties to such employees of the
Company as it deems proper.


     4.3 All questions of interpretation, implementation and application of the
Plan or any Option or Option agreement shall be determined by the
Administrator, which determination shall be final and binding on all persons.



	5.	  	TERMS AND CONDITIONS OF OPTIONS.



     This Section 5 describes the terms and conditions of Options granted under
the Plan. Section 6 below describes the grants of Options to directors that
are being made by the Company concurrently with the adoption of the Plan.


     5.1 Option Agreement. Each Option shall be evidenced by a written Option
agreement, in form satisfactory to the Administrator, executed by the Company
and the director to whom the Option is granted. Each Option agreement may
contain such terms and conditions not inconsistent with the Plan as may be
determined by the Administrator. In the event of a conflict between the terms
or conditions of an Option agreement and the terms and conditions of the Plan,
the terms and conditions of the Plan shall govern.


     5.2 Selection of Option Recipients. The Administrator shall determine the
directors who shall receive Options and the date of each Option grant. As of
November 19, 2001, the Company’s Articles of Incorporation provide that the
Company may not issue any Options


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without the approval of at least seventy-five percent (75%) of the
Company’s authorized number of directors.


     5.3 Number of Option Shares. The Administrator shall determine the number
of shares of Common Stock to be covered by each Option.


     5.4 Exercise Price. The exercise price of each share of Common Stock that
is subject to an Option shall be determined by the Administrator.


     5.5 Option Term. No Option shall be exercisable more than five (5) years
after the date of grant or such lesser period of time as is set forth in the
Option agreement (the end of such applicable exercise period is referred to in
the Plan as the “Expiration Date”).


     5.6 Vesting of Options. Subject to any other applicable provisions of the
Plan, each Option shall vest and become exercisable at such times, in such
installments and subject to such performance or other conditions as the
Administrator determines. Notwithstanding the foregoing, the Administrator may
elect in its discretion to accelerate the time at which an Option or any
installment thereof may be exercised if permitted by applicable law. A vested
portion of an Option shall be exercisable at any time prior to its Expiration
Date. The Administrator shall be entitled to place Option forfeiture
provisions in the Option agreement on terms that it deems appropriate.


     5.7 Non-Transferability of Option Rights. Except with the express written
approval of the Administrator or unless otherwise provided in an Option
agreement, (i) no Option granted under the Plan shall be assigned or otherwise
transferred by the director, either voluntarily or by operation of law, except
by will or by the laws of descent and distribution, and (ii) during the life of
the Option holder, an Option shall be exercisable only by the Option holder.


     5.8 Manner of Option Exercise. An Option holder wishing to exercise all
or a portion of an Option shall give written notice to the Company at its
principal executive office, to the attention of the Company’s Chief Financial
Officer or other officer of the Company designated by the Administrator,
accompanied by payment of the exercise price and withholding taxes as provided
below in Sections 5.9 and 5.10. The notice from the Option holder shall
specify the number of shares to be purchased. An Option holder may elect to
purchase fewer than the total number of shares of Common Stock covered by an
Option, provided that a partial exercise of an Option may not be for fewer than
one hundred (100) shares unless fewer than that number of shares remain
unexercised, in which case the entire remaining Option must be exercised at one
time.


     5.9 Payment of the Option Exercise Price. Except as provided below,
payment in full, in cash or by check, shall be made for all Common Stock
purchased at the time written notice of exercise of an Option is given to the
Company, and proceeds of any payment shall constitute general funds of the
Company. The Administrator, in the exercise of its discretion after
considering any tax, accounting and financial consequences and confirming that
applicable


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laws have been satisfied, may authorize any one or more of the following
additional methods of payment:


          5.9.1 Acceptance of the Option holder’s full recourse promissory note for
all or part of the Option price, payable on such terms and bearing such
interest rate as determined by the Administrator (but in no event less than the
minimum interest rate specified under the Code at which no additional interest
or original issue discount would be imputed), which promissory note may be
either secured or unsecured in such manner as the Administrator shall approve
(including, without limitation, by a security interest in the shares of Common
Stock acquired upon exercise of the Option);



          5.9.2 Subject to the discretion of the Administrator and the terms of the
Option agreement granting the Option, delivery by the Option holder of shares
of Common Stock already owned by him or her for all or part of the Option
price, provided the fair market value (determined as set forth below in Section
5.15) of such shares of Common Stock is equal on the date of exercise to the
Option price, or such portion thereof as the Option holder is authorized to pay
by delivery of such stock;



          5.9.3 Subject to the discretion of the Administrator, through the
surrender of shares of Common Stock then issuable upon exercise of the Option,
provided the fair market value (determined as set forth below in Section 5.15)
of such shares of Common Stock is equal on the date of exercise to the Option
price, or such portion thereof as the director is authorized to pay by
surrender of such stock; and



          5.9.4 By means of so-called cashless exercises as permitted under
applicable rules and regulations of the Securities and Exchange Commission and
the Federal Reserve Board.



     5.10 Withholding Taxes. At the time of an Option exercise and as a
condition thereto, or at such other time as the amount of such obligation
becomes determinable, the Option holder shall remit to the Company in cash any
and all applicable federal and state withholding and employment taxes, in an
amount determined by the Administrator. Such obligation to remit may be
satisfied, if authorized by the Administrator in its discretion after
considering any tax, accounting and financial consequences and confirming that
applicable laws have been satisfied, by the Option holder’s (i) delivery of a
promissory note in the required amount on such terms as the Administrator deems
appropriate, (ii) tendering to the Company previously owned shares of Common
Stock with a fair market value equal to the required amount, or (iii) agreeing
to have shares of Common Stock (with a fair market value equal to the required
amount) that are acquired upon exercise of the Option withheld by the Company.


     5.11 Shareholder Rights. The date that the Company receives written
notice of an exercise hereunder accompanied by full payment of the exercise
price will be considered as the date the Option was exercised and the date that
the Option holder acquired the shares of Common Stock as to which the Option
was exercised.


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     5.12 Termination of Service as a Director. Except as otherwise provided
in the Option agreement, if for any reason a director ceases to be a director
of the Company, Options that are held at the date of the termination of his or
her directorship (to the extent then exercisable) may be exercised in whole or
in part at any time within one year after the date of such termination (but in
no event after the Expiration Date).


     5.13 Changes in Capital Structure. Subject to Section 5.14 below, if the
stock of the Company is changed by reason of a stock split, reverse stock
split, stock dividend, recapitalization, combination or reclassification,
appropriate adjustments shall be made by the Administrator, in its discretion,
in (i) the number and class of shares of stock subject to the Plan and each
Option outstanding under the Plan and (ii) the exercise price of each
outstanding Option; provided, however, that the Company shall not be required
to issue fractional shares as a result of any such adjustments. Any
adjustment, however, in an outstanding Option shall be made without change in
the total price applicable to the unexercised portion of the Option but with a
corresponding adjustment in the price for each share covered by the unexercised
portion of the Option. Adjustments under this Section 5.13 shall be made by
the Administrator, whose determination as to what adjustments shall be made,
and the extent thereof, shall be final, binding and conclusive. If an
adjustment under this Section 5.13 would result in a fractional share interest
under an Option or any installment, the Administrator’s decision as to
inclusion or exclusion of that fractional share interest shall be final, but no
fractional shares of stock shall be issued under the Plan on account of any
such adjustment.


     5.14 Corporate Transactions. Except as otherwise provided in the Option
agreement, in the event of a Corporate Transaction (as defined below), the
Administrator shall notify each current or former director who holds Options at
least thirty (30) days prior thereto or as soon as may be practicable. To the
extent not previously exercised, all Options shall terminate immediately prior
to the consummation of such Corporate Transaction unless the Administrator
determines, in its discretion, (i) to permit exercise of any Options prior to
their termination, even if such Options would not otherwise have been
exercisable, and/or (ii) to provide that all or certain of the outstanding
Options shall be assumed or an equivalent option substituted by an applicable
successor corporation or other entity or any affiliate of the successor
corporation or entity. A “Corporate Transaction” means (a) a liquidation or
dissolution of the Company; (b) a merger or consolidation of the Company with
or into another corporation or entity as a result of which the Company is not
the surviving corporation (other than a merger or consolidation with a
wholly-owned subsidiary of the Company); (c) a sale of all or substantially all
of the assets of the Company; or (d) a purchase or other acquisition of
beneficial ownership of more than fifty percent (50%) of the outstanding
capital stock of the Company in a single transaction or a series of related
transactions by one person or more than one person acting in concert
(excluding, however, a purchase of stock by the Company or by a
Company-sponsored employee benefit plan).


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     5.15 Determination of Value. For purposes of the Plan, the fair market value
of Common Stock (or of other stock or securities) of the Company shall be
determined as follows:


          5.15.1 If the stock is listed on a securities exchange, the Nasdaq
National Market, the Nasdaq Small Cap Market or is otherwise regularly quoted
by a recognized securities dealer and if closing prices are reported, its fair
market value shall be the closing price of such stock on the last business day
preceding the date on which the fair market value of the stock is to be
determined, but if closing prices are not reported, its fair market value shall
be the average of the high bid and low asked quoted prices for such stock on
the last business day preceding the date on which the fair market value of the
stock is to be determined (or if there are no closing or quoted prices for such
specified business day, then for the last preceding business day on which there
were closing or quoted prices).



          5.15.2 In the absence of an established market for the stock, the fair
market value thereof shall be determined in good faith by the Administrator,
with reference to the Company’s net worth, prospective earning power,
dividend-paying capacity and other relevant factors, including the goodwill of
the Company, the economic outlook in the Company’s industry, the Company’s
position in the industry, the Company’s management and the values of the stock
of other corporations in the same or a similar line of business.




	6.	  	INITIAL OPTION GRANTS ON THE PLAN’S EFFECTIVE DATE.



     On the effective date of the Plan, each director shall be granted an
Option under the Plan with the following terms and conditions:


     6.1 Each Option shall be evidenced by a written Option agreement and shall
be subject to all of the terms and conditions of the Plan.


     6.2 The Administrator shall determine the number of shares of Common Stock
to be covered by each Option.


     6.3 The exercise price of each share of Common Stock that is subject to an
Option shall be Five Dollars ($5.00), which is $0.50 per share in excess of the
Administrator’s good faith determination of the fair market value of the Common
Stock.


     6.4 Each Option shall be fully exercisable as of its grant date and shall
expire on the fifth anniversary of its grant date, subject to earlier
expiration pursuant to Section 5.12 upon a director’s termination of service or
pursuant to Section 5.14 upon a Corporate Transaction.



	7.	  	NO GUARANTEE OF CONTINUED DIRECTORSHIP.



     Neither the Plan nor the granting of any Option shall constitute or be
evidence of any agreement or understanding that any director has a right (i) to
continue as a director for any period of time or (ii) to receive Option grants
after the effective date of the Plan.


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	8.	  	CONDITIONS UPON THE ISSUANCE OF SHARES.



     8.1 Securities Act. Shares of Common Stock shall not be issued pursuant
to the exercise of an Option unless the Administrator determines that the
exercise of such Option and the issuance and delivery of such shares pursuant
thereto will comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended (the “Securities Act”),
applicable state and foreign securities laws and the requirements of any stock
exchange or Nasdaq market system upon which the Common Stock may be listed.
The inability of the Company to obtain from any applicable regulatory body a
permit, order or approval deemed by the Administrator to be necessary to the
lawful issuance and sale of any shares of Common Stock under the Plan shall
relieve the Company of any liability in respect of the failure to issue or sell
such shares as to which such requisite permit, order or approval shall not have
been obtained. As a condition to the exercise of any Option, the Administrator
may require an Option holder to satisfy any qualifications that may be
necessary or appropriate, to evidence compliance with any applicable law or
regulation and to make any representation or warranty with respect thereto as
may be reasonably requested by the Administrator.


     8.2 Shareholders’ Agreement. As a further condition to the receipt of
Common Stock pursuant to the exercise of an Option, an Option holder may be
required by the Administrator, in the Administrator’s discretion, to enter into
a shareholders’ agreement with the Company which will restrict the
transferability of the Common Stock and contain other customary provisions
including rights of repurchase or first refusal on the part of the Company.


     8.3 Non-Competition Agreement. As a further condition to the receipt of
Common Stock pursuant to the exercise of an Option, an Option holder may be
required not to render services for any organization, or to engage directly or
indirectly in any business, competitive with the Company at any time during
which an Option is outstanding and for up to two (2) years after any exercise
of an Option or the receipt of Common Stock pursuant to the exercise of an
Option. Failure to comply with this condition shall cause such Option and the
exercise or issuance of shares thereunder to be rescinded and the benefit of
such exercise or issuance to be repaid to the Company.



	9.	  	NON-EXCLUSIVITY OF THE PLAN.



     The adoption of the Plan shall not be construed as creating any
limitations on the power of the Company to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options and other stock purchase rights to directors,
officers, employees and other persons other than under the Plan.



	10.	  	AMENDMENT OR TERMINATION OF THE PLAN.



     The Board may at any time amend, suspend or terminate the Plan. If not
earlier terminated, the Plan shall automatically terminate ten (10) years after
the date of its adoption by the Board. Except as provided in Section 5.14 with
respect to a Corporate Transaction,


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termination of the Plan shall not affect the terms and conditions of any
outstanding Options. Without the consent of the Option holder, no amendment or
suspension of the Plan may adversely affect outstanding Options except to
conform the Plan to the requirements of applicable laws. Neither the adoption
of the Plan nor any amendment, suspension or termination of the Plan shall
require shareholder approval unless (i) shareholder approval is required under
other applicable laws or under the regulations of any stock exchange or Nasdaq
market system on which the Common Stock is listed or (ii) the Board otherwise
concludes that shareholder approval is advisable.



	11.	  	EFFECTIVE DATE OF THE PLAN; GOVERNING LAW.



     The effective date of the Plan is November 19, 2001. The Plan shall be
governed by, and construed and enforced in accordance with, the internal laws
of the State of California without giving effect to conflict-of-law principles.



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