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Exhibit 4.4  

 
 

MOVIE GALLERY, INC.    
    
    2003 EMPLOYEE STOCK PURCHASE PLAN    
    

        The following constitutes the provisions of the 2003 Employee Stock Purchase Plan of Movie Gallery, Inc. 

        1.    Purpose.    The purpose of the Plan is to provide Employees with an opportunity to
purchase Common Stock of the Company. It is the intention of the Company to have the Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the Code. The provisions of the Plan
shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code. 

        2.    Definitions.    

        (a)   "Board" means the Board of Directors of the Company. 

        (b)   "Code" means the Internal Revenue Code of 1986, as amended. 

        (c)   "Common Stock" means the common stock, par value $.001 per share, of the Company. 

        (d)   "Company" means Movie Gallery, Inc., a Delaware corporation. 

        (e)   "Compensation" means total cash compensation received by an Employee from the Company or a Designated Subsidiary. By way
of illustration, but not limitation, Compensation includes regular compensation such as salary, wages, overtime, shift differentials, bonuses, commissions and incentive compensation, but excludes
relocation, expense reimbursements, tuition or other reimbursements and income realized as a result of participation in any stock option, stock purchase, or similar plan of the Company or any
Designated Subsidiary. 

        (f)    "Continuous Status as an Employee" means the absence of any interruption or termination of service as an Employee.
Continuous Status as an Employee shall not be considered interrupted in the case of (i) sick leave; (ii) military leave; (iii) any other leave of absence approved by the Board or
other administrator of the Plan or pursuant to any Company-approved benefit plan or program or required by any applicable law, including the Family and Medical Leave Act of 1993, provided that such
leave is for a period of not more than 90 days, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or (iv) in the case of transfers between
locations of the Company or between the Company and its Designated Subsidiaries. 

        (g)   "Contributions" means all amounts credited to the account of a participant pursuant to the Plan. 

        (h)   "Corporate Transaction" means a sale of all or substantially all of the Company's assets, or a merger, consolidation or
other capital reorganization of the Company with or into another corporation. 

        (i)    "Designated Broker" has the meaning given such term in Section 5(a). 

        (j)    "Designated Subsidiaries" means the Subsidiaries that have been designated by the Board from time to time in its sole
discretion as eligible to participate in the Plan. 

        (k)   "Employee" means any person, including an Officer, who is an Employee of the Company or one of its Designated
Subsidiaries for tax purposes and who is customarily employed for at least twenty (20) hours per week and more than five (5) months in a calendar year by the Company or one of its
Designated Subsidiaries. 

        (l)    "Enrollment Documents" has the meaning given such term in Section 5(a). 

        (m)  "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

 

        (n)   "Fair Market Value" has the meaning given such term in Section 7(b). 

        (o)   "New Purchase Date" has the meaning given such term in Section 18(b). 

        (p)   "Offering Date" means the first business day of each Offering Period of the Plan. 

        (q)   "Offering Period" means a period of six (6) months commencing on April 1 and October 1 of each year. 

        (r)   "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder. 

        (s)   "Plan" means this 2003 Employee Stock Purchase Plan. 

        (t)    "Purchase Date" means the last day of each Offering Period of the Plan. 

        (u)   "Purchase Price" means with respect to an Offering Period an amount equal to 85% of the Fair Market Value of a Share of
Common Stock on the Offering Date or on the Purchase Date, whichever is lower; provided, however, that in the event (i) of any stockholder-approved increase in the number of Shares available
for issuance under the Plan, (ii) all or a portion of such additional Shares are to be issued with respect to the Offering Period that is underway at the time of such increase ("Additional
Shares"), and (iii) the Fair Market Value of a Share of Common Stock on the date of such increase (the "Approval Date Fair Market Value") is higher than the Fair Market Value on the Offering
Date for any such Offering Period, then in such instance the Purchase Price with respect to Additional Shares shall be 85% of the Approval Date Fair Market Value or the Fair Market Value of a Share of
Common Stock on the Purchase Date, whichever is lower. 

        (v)   "Reserves" has the meaning given such term in Section 18(a). 

        (w)  "Share" means a share of Common Stock, as adjusted in accordance with Section 18 of the Plan. 

        (x)   "Subsidiary" means a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary. 

        3.    Eligibility.    

        (a)   Any
person who is an Employee as of the Offering Date of a given Offering Period shall be eligible to participate in such Offering Period under the Plan, subject to the
requirements of Section 5(a) and the limitations imposed by Section 423(b) of the Code. 

        (b)   Any
provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) if, immediately after the grant, such
Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to
purchase stock possessing five percent (5%) or more of the total combined voting power or value of all classes of stock of the Company or of any Subsidiary of the Company, or (ii) if such
option would permit his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate
that exceeds Twenty-Five Thousand Dollars ($25,000) of the Fair Market Value of such stock (determined at the time such option is granted)
for each calendar year in which such option is outstanding at any time. 

        4.    Offering Periods.    The Plan shall be implemented by a series of Offering Periods of
six (6) months' duration, with new Offering Periods commencing on or about April 1 and October 1 of each year (or at such other time or times as may be determined by the Board).
The first Offering Period shall commence on October 1, 2003 and continue until March 31, 2004. The Plan shall continue 

2

 

until
terminated in accordance with Section 19 hereof. The Board shall have the power to change the duration and/or the frequency of Offering Periods with respect to future offerings without
stockholder approval if such change is announced at least five (5) days prior to the scheduled beginning of the first Offering Period to be affected. 

        5.    Participation.    

        (a)   An
eligible Employee may become a participant in the Plan by completing a subscription agreement and any other required documents ("Enrollment Documents") provided by
the Company and submitting them to the Company's Human Resources Department or the stock brokerage or other financial services firm designated by the Company ("Designated Broker") prior to the
applicable Offering Date, unless a later time for submission of the Enrollment Documents is set by the Board for all eligible Employees with respect to a given Offering Period. The Enrollment
Documents and their submission may be electronic, as directed by the Company. The Enrollment Documents shall set forth the percentage of the participant's Compensation (subject to Section 6(a)
below) to be paid as Contributions pursuant to the Plan. 

        (b)   Payroll
deductions shall commence on the first full payroll following the Offering Date and shall end on the last payroll paid on or prior to the Purchase Date of the
Offering Period to which the Enrollment Documents are applicable, unless sooner terminated by the participant as provided in Section 10. 

        6.    Method of Payment of Contributions.    

        (a)   A
participant shall elect to have payroll deductions made on each payday during the Offering Period in an amount not less than one percent (1%) and not more than ten
percent (10%) (or such greater percentage as the Board may establish from time to time before an Offering Date) of such participant's Compensation on each payday during the Offering Period. All
payroll deductions made by a participant shall be credited to his or her account under the Plan. A participant may not make any additional payments into such account. 

        (b)   A
participant may discontinue his or her participation in the Plan as provided in Section 10, or, on one occasion only during an Offering Period may increase or
decrease the rate of his or her Contributions with respect to the Offering Period by completing and filing with the Company new Enrollment Documents authorizing a change in the payroll deduction rate.
The change in rate shall be effective as of the beginning of the next payroll period following the date of filing of the new Enrollment Documents, if the documents are completed at least five
(5) business days prior to such date and, if not, as of the beginning of the next succeeding payroll period. 

        (c)   Notwithstanding
the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) herein, a participant's payroll
deductions may be decreased during any Offering Period scheduled to end during the current calendar year to 0%. Payroll deductions shall re-commence at the rate provided in such
participant's Enrollment Documents at the beginning of the first Offering Period that is scheduled to end in the following calendar year, unless terminated by the participant as provided in
Section 10. 

        7.    Grant of Option.    

        (a)   On
the Offering Date of each Offering Period, each eligible Employee participating in such Offering Period shall be granted an option to purchase on each Purchase Date a
number of Shares of Common Stock determined by dividing such Employee's Contributions accumulated prior to such Purchase Date and retained in the participant's account as of the Purchase Date by the
applicable Purchase Price; provided however that the maximum number of Shares an Employee may purchase during each Offering Period shall be 10,000 Shares (subject to any 

3

 

adjustments
pursuant to Section 18 below), and provided further that such purchase shall be subject to the limitations set forth in Sections 3(b) and 12. The Board may impose additional limits
for any offering Period. 

        (b)   The
fair market value of the Company's Common Stock on a given date (the "Fair Market Value") shall be determined by the Board in its discretion based on the closing
sales price of the Common Stock for such date (or, in the event that the Common Stock is not traded on such date, on the immediately preceding trading date), as reported by the National Association of
Securities Dealers Automated Quotation (Nasdaq) National Market or, if such price is not reported, the mean of the bid and asked prices per share of the Common Stock as reported by Nasdaq or, in the
event the Common Stock is listed on a stock exchange, the Fair Market Value per share shall be the closing sales price on such exchange on such date (or, in the event that the Common Stock is not
traded on such date, on the immediately preceding trading date), as reported in The Wall Street Journal. 

        8.    Exercise of Option.    Unless a participant withdraws from the Plan as provided in
Section 10, his or her option for the purchase of Shares will be exercised automatically on each Purchase Date of an Offering Period, and the maximum number of full Shares subject to the option
will be purchased at the applicable Purchase Price with the accumulated Contributions in his or her account. In lieu of issuing fractional Shares, any excess Contributions shall remain in the
participant's account, and shall be applied to future Share purchases. The Shares purchased upon exercise of an option hereunder shall be deemed to be transferred to the participant on the Purchase
Date. During his or her lifetime, a participant's option to purchase Shares hereunder is exercisable only by him or her. 

        9.    Delivery.    As promptly as practicable after a Purchase Date, the number of Shares
purchased by each participant upon exercise of his or her option shall be deposited into an account established in the participant's name with the Designated Broker. Any payroll deductions accumulated
in a participant's account that are not applied toward the purchase of Shares on a Purchase Date due to limitations imposed by the Plan shall be returned to the participant. 

        10.    Voluntary Withdrawal; Termination of Employment.    

        (a)   A
participant may withdraw all but not less than all the Contributions credited to his or her account under the Plan at any time prior to a Purchase Date by submitting a
completed "Notice of Withdrawal" form to the Company's Human Resources Department or electronically completing the required documentation provided by the Company through the Designated Broker, as
directed by the Company's Human Resources Department. All of the participant's Contributions credited to his or her account will be paid to him or her promptly after receipt of his or her notice of
withdrawal and his or her option for the current period will be automatically terminated, and no further Contributions for the purchase of Shares will be made during the Offering Period. 

        (b)   Upon
termination of the participant's Continuous Status as an Employee prior to the Purchase Date of an Offering Period for any reason, whether voluntary or involuntary,
including retirement or death, the Contributions credited to his or her account will be returned to him or her or, in the case of his or her death, to the person or persons entitled thereto under
Section 14, and his or her option will be automatically terminated. 

        (c)   In
the event an Employee fails to remain in Continuous Status as an Employee of the Company for at least twenty (20) hours per week during the Offering Period in
which the Employee is a participant, he or she will be deemed to have elected to withdraw from the Plan and the Contributions credited to his or her account will be returned to him or her and his or
her option will be terminated. 

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        (d)   A
participant's withdrawal from an offering will not have any effect upon his or her eligibility to participate in a succeeding offering or in any similar plan that may
hereafter be adopted by the Company. 

        11.    Interest.    No interest shall accrue on the Contributions of a participant in the
Plan. 

        12.    Stock.    

        (a)   Subject
to adjustment as provided in Section 18, the maximum number of Shares that shall be made available for sale under the Plan shall be 250,000 Shares. If the
Board determines that, on a given Purchase Date, the number of Shares with respect to which options are to be exercised may exceed (1) the number of Shares that were available for sale under
the Plan on the Offering Date of the applicable Offering Period, or (2) the number of Shares available for sale under the Plan on such Purchase Date, the Board may in its sole discretion
provide (x) that the Company shall make a pro rata allocation of the Shares available for purchase on such Offering Date or Purchase Date, as applicable, in as uniform a manner as shall be
practicable and as it shall determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Purchase Date,
and continue the Plan as then in effect, or (y) that the Company shall make a pro rata allocation of the Shares available for purchase on such Offering Date or Purchase Date, as applicable, in
as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all participants exercising options to purchase Common Stock on such Purchase Date,
and terminate the Plan pursuant to Section 19 below. The Company may make a pro rata allocation of the Shares available on the Offering Date of any applicable Offering Period pursuant to the
preceding sentence, notwithstanding any authorization of additional Shares for issuance under the Plan by the Company's stockholders subsequent to such Offering Date. 

        (b)   The
participant shall have no interest or voting right in Shares covered by his or her option until such option has been exercised. 

        (c)   Shares
to be delivered to a participant under the Plan will be registered in the name of the participant or in the name of the participant and his or her spouse. 

        13.    Administration.    The Board, or a committee named by the Board, shall supervise and
administer the Plan and shall have full power to adopt, amend and rescind any rules deemed desirable and appropriate for the administration of the Plan and not inconsistent with the Plan, to construe
and interpret the Plan, and to make all other determinations necessary or advisable for the administration of the Plan. 

        14.    Designation of Beneficiary.    

        (a)   A
participant may designate a beneficiary who is to receive any Shares and cash, if any, from the participant's account under the Plan in the event of such participant's
death subsequent to the end of an Offering Period but prior to delivery to him or her of such Shares and cash. In addition, a participant may designate a beneficiary who is to receive any cash from
the participant's account under the Plan in the event of such participant's death prior to the Purchase Date of an Offering Period. If a participant is married and the designated beneficiary is not
the spouse, spousal consent shall be required for such designation to be effective. Beneficiary designations under this Section 14(a) shall be made as directed by the Human Resources Department
of the Company, which may require electronic submission of the required documentation with the Designated Broker. 

        (b)   Such
designation of beneficiary may be changed by the participant (and his or her spouse, if any) at any time by submission of the required notice, which required notice
may be electronic. In the event of the death of a participant and in the absence of a beneficiary validly designated 

5

 

under
the Plan who is living at the time of such participant's death, the Company shall deliver such Shares and/or cash to the executor or administrator of the estate of the participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such Shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 

        15.    Transferability.    Neither Contributions credited to a participant's account nor any
rights with regard to the exercise of an option or to receive Shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent
and distribution, or as provided in Section 14) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds in accordance with Section 10. 

        16.    Use of Funds.    All Contributions received or held by the Company under the Plan may
be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such Contributions. 

        17.    Reports.    Individual accounts will be maintained for each participant in the Plan.
Statements of account will be provided to participating Employees by the Company or the Designated Broker at least annually, which statements will set forth the amounts of Contributions, the per Share
Purchase Price, the number of Shares purchased and the remaining cash balance, if any. 

        18.    Adjustments Upon Changes in Capitalization; Corporate Transactions.    

        (a)   Adjustment.    Subject to any required action by the stockholders of the Company, the number of Shares covered
by each option under the Plan that has not yet been exercised, the number of Shares that have been authorized for issuance under the Plan but have not yet been placed under option (collectively, the
"Reserves"), the maximum number of Shares of Common Stock that may be purchased by a participant in an Offering Period, the number of Shares of Common Stock set forth in Section 12(a) above,
and the price per Share of Common Stock covered by each option under the Plan that has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock (including any such change in the number of Shares of Common Stock
effected in connection with a change in domicile of the Company), or any other increase or decrease in the number of Shares effected without receipt of consideration by the Company; provided
however that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company 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 an option. 

        (b)   Corporate Transactions.    In the event of a dissolution or liquidation of the Company, any Offering Period
then in progress will terminate immediately prior to the consummation of such action, unless otherwise provided by the Board. In the event of a Corporate Transaction, each option outstanding under the
Plan shall be assumed or an equivalent option shall be substituted by the successor corporation or a parent or Subsidiary of such successor corporation. The Board may determine, in its sole and
absolute discretion, that in the alternative, each Offering Period then in progress shall be shortened and a new Purchase Date shall be set (the "New Purchase Date"), as of which date any Offering
Period then in progress will terminate. The New Purchase Date shall be on or before the date of consummation of the transaction and the Board shall notify each participant in writing, at least ten
(10) days prior to the New Purchase Date, that the Purchase 

6

 

Date
for his or her option has been changed to the New Purchase Date and that his or her option will be exercised automatically on the New Purchase Date, unless prior to such date he or she has
withdrawn from the Offering Period as provided in Section 10. For purposes of this Section 18, an option granted under the Plan shall be deemed to be assumed, without limitation, if, at
the time of issuance of the stock or other consideration upon a Corporate Transaction, each holder of an option under the Plan would be entitled to receive upon exercise of the option the same number
and kind of shares of stock or the same amount of property, cash or securities as such holder would have been entitled to receive upon the occurrence of the transaction if the holder had been,
immediately prior to the transaction, the holder of the number of Shares of Common Stock covered by the option at such time (after giving effect to any adjustments in the number of Shares covered by
the option as provided for in this Section 18); provided however that if the consideration received in the transaction is not solely common stock of the successor corporation or its parent (as
defined in Section 424(e) of the Code), the Board may, with the consent of the successor corporation, provide for the consideration to be received upon exercise of the option to be solely
common stock of the successor corporation or its parent equal in Fair Market Value to the per Share consideration received by holders of Common Stock in the transaction. 

        The
Board may, if it so determines in the exercise of its sole discretion, also make provision for adjusting the Reserves, as well as the price per Share of Common Stock covered by each
outstanding option, in the event that the Company effects one or more reorganizations, recapitalizations, rights offerings or other increases or reductions of Shares of its outstanding Common Stock,
and in the event of the Company's being consolidated with or merged into any other corporation. 

        19.    Amendment or Termination.    

        (a)   The
Board may at any time and for any reason terminate or amend the Plan. Except as provided in Section 18, no such termination of the Plan may affect options
previously granted, provided that the Plan or an Offering Period may be terminated by the Board on a Purchase Date or by the Board's setting a new Purchase Date with respect to an Offering Period then
in progress if the Board determines that termination of the Plan and/or the Offering Period is in the best interests of the Company and the stockholders or if continuation of the Plan and/or the
Offering Period would cause the Company to incur adverse accounting charges as a result of a change after the effective date of the Plan in the generally accepted accounting rules applicable to the
Plan. Except as provided in Section 18 and in this Section 19, no amendment to the Plan shall make any change in any option previously granted that adversely affects the rights of any
participant. In addition, to the extent necessary to comply with Rule 16b-3 under the Exchange Act, or under Section 423 of the Code (or any successor rule or provision or
any applicable law or regulation), the Company shall obtain stockholder approval in such a manner and to such a degree as so required. 

        (b)   Without
stockholder consent and without regard to whether any participant rights may be considered to have been adversely affected, the Board (or its committee) shall be
entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company's processing of properly
completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for
each participant properly correspond with amounts withheld from the participant's Compensation, and establish such other limitations or procedures as the Board (or its committee) determines in its
sole discretion are advisable that are consistent with the Plan. 

7

 

        20.    Notices.    All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt
thereof. 

        21.    Conditions Upon Issuance of Shares.    Shares shall not be issued with respect to an
option unless the exercise of such option and the issuance and delivery of such Shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, applicable state and foreign securities laws and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance. 

        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
purchased
only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned
applicable provisions of law. 

        22.    Term of Plan; Effective Date.    The Plan shall become effective upon approval by the
Company's stockholders. It shall continue in effect for a term of 10 years unless sooner terminated under Section 19. 

        23.    Additional Restrictions of Rule 16b-3.    The terms and conditions
of options granted hereunder to, and the purchase of Shares by, persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of Rule 16b-3.
The Plan shall be deemed to contain, and such options shall contain, and the Shares issued upon exercise thereof shall be subject to, such additional conditions and restrictions as may be required by
Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions. 

8

  

 
 

MOVIE GALLERY, INC.    
    
    2003 EMPLOYEE STOCK PURCHASE PLAN
  SUBSCRIPTION AGREEMENT    
    

New
Election              

Change
of Election              

        1.     I,                        ,
hereby elect to participate in the Movie Gallery, Inc. 2003 Employee Stock Purchase Plan (the "Plan") for the Offering
Period                        ,
            to                             
       and subscribe to purchase shares of the Company's Common Stock in accordance with this Subscription Agreement and the Plan. 

        2.     I
elect to have Contributions in the amount of    % of my Compensation, as those terms are defined in the Plan, applied to this purchase. I understand that this
amount must not be less than 1% and not more than 10% of my Compensation during the Offering Period. (Please note that no fractional percentages are permitted). 

        3.     I
hereby authorize payroll deductions from each paycheck during the Offering Period at the rate stated in Item 2 of this Subscription Agreement. I understand that all
payroll deductions made by me shall be credited to my account under the Plan and that I may not make any additional payments into such account. I understand that all payments made by me shall be
accumulated for the purchase of shares of Common Stock at the applicable purchase price determined in accordance with the Plan. I further understand that, except as otherwise set forth in the Plan,
shares will be purchased for me automatically on the Purchase Date of each Offering Period unless my employment is terminated prior to the Purchase Date or I otherwise withdraw from the Plan by giving
written notice to the Company for such purpose. 

        4.     I
understand that I may discontinue at any time prior to the Purchase Date my participation in the Plan as provided in Section 10 of the Plan. I also understand
that I can increase or decrease the rate of my Contributions on one occasion only with respect to each rate change during any Offering Period by completing and filing a new Subscription Agreement with
such increase or decrease taking effect as of the beginning of the payroll period following the date of filing of the new Subscription Agreement, if filed at least five (5) business days prior
to the beginning of such payroll period. Further, I may change the rate of deductions for future Offering Periods by filing a new Subscription Agreement, and any such change will be effective as of
the beginning of the next Offering Period. In addition, I acknowledge that, unless I discontinue my participation in the Plan as provided in Section 10 of the Plan, my election will continue to
be effective for each successive Offering Period. 

        5.     I
have received a copy of the Company's most recent description of the Plan and a copy of the complete "Movie Gallery, Inc. 2003 Employee Stock Purchase Plan." I
understand that my participation in the Plan is in all respects subject to the terms of the Plan. 

        6.     Shares
purchased for me under the Plan should be issued in the name(s) of (name of employee or employee and spouse
only):

	 	 	 
	 	 	

	 	 	 
	 	 	

	 	 	 

11

 

        7.     In
the event of my death, I hereby designate the following as my beneficiary(ies) to receive all payments and shares due to me under the
Plan:

	NAME: (Please print)	 	 	 	 	 	 
	 	 	

	 	 	(First)	 	(Middle)	 	(Last)
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	
 (Relationship)	 	
 (Address)
	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	

        8.     I
understand that if I dispose of any shares received by me pursuant to the Plan within 2 years after the Offering Date (the first day of the Offering Period
during which I purchased such shares) or within 1 year after the Purchase Date, I will be treated for federal income tax purposes as having received ordinary compensation income at the time of
such disposition in an amount equal to the excess of the fair market value of the shares on the Purchase Date over the price that I paid for the shares, regardless of whether I disposed of the shares
at a price less than their fair market value at the Purchase Date. The remainder of the gain or loss, if any, recognized on such disposition will be treated as capital gain or loss. 

        I hereby agree to notify the Company in writing within 30 days after the date of any such disposition, and I will make adequate provision for federal,
state or other tax withholding obligations, if any, that arise upon the disposition of the Common Stock. The Company may, but will not be obligated to, withhold from my
compensation the amount necessary to meet any applicable withholding obligation including any withholding necessary to make available to the Company any tax deductions or benefits attributable to the
sale or early disposition of Common Stock by me. 

        9.     If
I dispose of such shares at any time after expiration of the 2-year and 1-year holding periods, I understand that I will be treated for federal
income tax purposes as having received compensation income only to the extent of an amount equal to the lesser of (1) the excess of the fair market value of the shares at the time of such
disposition over the purchase price that I paid for the shares under the option, or (2) 15% of the fair market value of the shares on the Offering Date. The remainder of the gain or loss, if
any, recognized on such disposition will be treated as capital gain or loss. 

        I understand that this tax summary is only a summary and is subject to change. I further understand that I should consult a tax advisor
concerning the tax implications of the purchase and sale of stock under the Plan. 

12

 

        10.   I
hereby agree to be bound by the terms of the Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Plan. 

	 	 	 	 	 
	SIGNATURE:	 	 	 	 
	 	 	
	 	 

	 	 	 	 	 
	SOCIAL SECURITY #:	 	 	 	 
	 	 	
	 	 

	 	 	 	 	 
	DATE:	 	 	 	 
	 	 	
	 	 
	 	 	 	 	 
	SPOUSE'S SIGNATURE (necessary

if beneficiary is not spouse):	 	 
	 	 	 	 	 
	 	 	 	 	 
	
 (Signature)	 	 
	 	 	 	 	 
	 	 	 	 	 
	
 (Print name)	 	 

13

 
 
 

MOVIE GALLERY, INC.    
    
    2003 EMPLOYEE STOCK PURCHASE PLAN    
    
    NOTICE OF WITHDRAWAL    
    

        I,                        , hereby elect to withdraw my
participation in the Movie Gallery, Inc. 2003 Employee Stock Purchase Plan (the "Plan") for the Offering
Period that began on                                    ,
            . This withdrawal covers all Contributions credited to my account and is effective on the date designated below. 

        I
understand that all Contributions credited to my account will be paid to me within ten (10) business days of receipt by the Company of this Notice of Withdrawal and that my
option for the current period will automatically terminate, and that no further Contributions for the purchase of shares can be made by me during the Offering Period. 

        I
further understand and agree that I shall be eligible to participate in succeeding offering periods only by delivering to the Company a new Subscription Agreement. 

	Dated:	 	 	 	 
	 	 	
	 	
 Signature of Employee
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	
 Social Security Number

14

 
 
 

AMENDMENT TO THE MOVIE GALLERY, INC.
  2003 EMPLOYEE STOCK PURCHASE PLAN    
    

        This Amendment to the Movie Gallery, Inc. 2003 Employee Stock Purchase Plan (this Amendment") is effective as of this 18th day of September, 2003, with
reference to the following facts: 

        A.    The
stockholders of Movie Gallery, Inc. (the "Company") duly and validly approved the 2003 Employee Stock Purchase Plan of the Company (the "Plan") at the Annual
Meeting of Stockholders of the Company held on June 11, 2003 in Atlanta, Georgia. 

        B.    Subsequent
to the Annual Meeting of Stockholders, the Board of Directors of the Company determined that certain non-material amendments should be made to the
Plan in the best interests of the Company and its stockholders. 

        C.    At
a duly noticed meeting of the Board of Directors held on September 18, 2003, at which a quorum of Directors was present, the Board of Directors voted
unanimously to amend the Plan as set forth herein. 

        The
Plan is hereby amended as follows: 

	1.
	Section 8. Section 8 of the Plan is hereby deleted in its entirety and replaced with the following: 

"Exercise of Option. Unless a participant withdraws from the Plan as provided in Section 10, his or her option for the purchase of Shares will be
exercised automatically on each Purchase Date of an Offering Period, and the maximum number of Shares subject to the option (including, if necessary, fractional Shares) will be purchased at the
applicable Purchase Price with the full amount of the accumulated Contributions in his or her account. The Shares purchased upon exercise of an option hereunder shall be deemed to be transferred to
the participant on the Purchase Date. During his or her lifetime, a participant's option to purchase Shares hereunder is exercisable only by him or her." 

	 	 	MOVIE GALLERY, INC.
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	 	/s/  S. PAGE TODD      
 Name:  S. Page Todd

Title:    Executive Vice President

15

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MOVIE GALLERY, INC. 2003 EMPLOYEE STOCK PURCHASE PLAN

MOVIE GALLERY, INC. 2003 EMPLOYEE STOCK PURCHASE PLAN SUBSCRIPTION AGREEMENT

MOVIE GALLERY, INC. 2003 EMPLOYEE STOCK PURCHASE PLAN NOTICE OF WITHDRAWAL

AMENDMENT TO THE MOVIE GALLERY, INC. 2003 EMPLOYEE STOCK PURCHASE PLANExhibit 10.1

 

bebe stores, inc.

1997 STOCK PLAN

 

(As amended and restated
Effective June 13, 2003)

 

 

 

TABLE
OF CONTENTS

 

	
  1.

  	
  Establishment and Purpose.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Administration.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Committees of the
  Board of Directors.

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Authority of the
  Board of Directors.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Eligibility.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  General Rule.

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Ten-Percent Shareholders.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Stock Subject to Plan.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Basic Limitation.

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Additional Shares.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Terms
  and Conditions of Stock Purchase Awards or Sales.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Stock Purchase Agreement.

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Duration
  of Offers and Nontransferability of Rights.

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Purchase Price.

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Withholding Taxes.

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Restrictions
  on Transfer of Shares and Vesting.

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Accelerated Vesting.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Terms and Conditions of
  Options.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Stock Option Agreement.

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Number of Shares.

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Exercise Price.

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Withholding Taxes.

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Exercisability.

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Accelerated
  Vesting and Exercisability.

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Basic
  Term.

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Nontransferability of ISOs.

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
  Termination
  of Service (Except by Death or for Cause.)

  	
   

  	
   

  	
   

  
	
   

  	
  (j)

  	
  Leaves of Absence.

  	
   

  	
   

  	
   

  
	
   

  	
  (k)

  	
  Death of Optionee.

  	
   

  	
   

  	
   

  
	
   

  	
  (l)

  	
  Termination for Cause.

  	
   

  	
   

  	
   

  
	
   

  	
  (m)

  	
  No Rights as a Shareholder.

  	
   

  	
   

  	
   

  
	
   

  	
  (n)

  	
  Modification,
  Extension and Assumption of Options.

  	
   

  	
   

  	
   

  
	
   

  	
  (o)

  	
  Restrictions
  on Transfer of Shares and Vesting.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Terms
  and Conditions of Restricted Stock Units.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Restricted Stock Units
  Agreement.

  	
   

  	
   

  	
   

  

 

i

 

	
   

  	
  (b)

  	
  Purchase Price.

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Vesting.

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Voting.

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Effect of
  Termination of Service.

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Settlement of
  Restricted Stock Unit Award.

  	
   

  	
   

  	
   

  
	
   

  	
  (g)

  	
  Accelerated
  Vesting and Settlement of Restricted Stock Unit Awards.

  	
   

  	
   

  	
   

  
	
   

  	
  (h)

  	
  Restrictions
  on Transfer of Restricted Stock Unit Awards.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Payment for Shares.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  General Rule.

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Surrender of Stock.

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Services Rendered.

  	
   

  	
   

  	
   

  
	
   

  	
  (d)

  	
  Promissory Note.

  	
   

  	
   

  	
   

  
	
   

  	
  (e)

  	
  Exercise/Sale.

  	
   

  	
   

  	
   

  
	
   

  	
  (f)

  	
  Exercise/Pledge.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Adjustment of Shares.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  General.

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Mergers and Consolidations.

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Reservation of Rights.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Securities Law
  Requirements.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  General.

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Financial Reports.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  No Retention Rights.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Duration and Amendments.

  	
   

  	
   

  	
   

  
	
   

  	
  (a)

  	
  Term of the Plan.

  	
   

  	
   

  	
   

  
	
   

  	
  (b)

  	
  Right to Amend or
  Terminate the Plan.

  	
   

  	
   

  	
   

  
	
   

  	
  (c)

  	
  Effect of Amendment
  or Termination.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Definitions.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Execution.

  	
   

  	
   

  	
   

  

 

 

ii

 

bebe stores, inc.

1997 STOCK PLAN

1.             Establishment and Purpose.

The purpose of the Plan is to offer selected
individuals an opportunity to acquire a proprietary interest in the success of
the Company, or to increase such interest, by purchasing Shares of the
Company’s Stock.  The Plan provides for
the direct award or sale of Shares, the grant of Options to purchase Shares and
the grant of Restricted Stock Units. 
Options granted under the Plan may include Nonstatutory Options (“NSOs”)
as well as Incentive Stock Options (“ISOs”) intended to qualify under
Section 422 of the Code.

Capitalized terms are defined in Section 13.

2.             Administration.

(a)           Committees of the Board of Directors.  The Plan may be administered by one or more Committees.  Each Committee shall consist of two or more
members of the Board of Directors who have been appointed by the Board of
Directors.  Each Committee shall have
such authority and be responsible for such functions as the Board of Directors
has assigned to it.  If no Committee has
been appointed, the entire Board of Directors shall administer the Plan.  Any reference to the Board of Directors in
the Plan shall be construed as a reference to the Committee (if any) to whom
the Board of Directors has assigned a particular function.

(b)           Authority of the Board of Directors.  Subject to the provisions of the Plan, the Board of Directors
shall have full authority and discretion to take any actions it deems necessary
or advisable for the administration of the Plan.  All decisions, interpretations and other actions of the Board of
Directors shall be final and binding on all Purchasers, all Optionees, all
Participants and all persons deriving their rights from a Purchaser, Optionee
and Participant.

(c)           Administration with Respect to
Insiders.  With respect to
participation by Insiders in the Plan, at any time that any class of equity
security of the Company is registered pursuant to Section 12 of the Exchange
Act, the Plan shall be administered in compliance with the requirements, if
any, of Rule 16b-3.

(d)           Committee Complying with Section
162(m).  If the Company (or any
Parent or Subsidiary) is a “publicly held corporation” within the meaning of
Section 162(m), the Board of Directors may establish a committee of “outside
directors” within the meaning of Section 162(m) to approve any grants under the
Plan which might reasonably be anticipated to result in the payment of employee
remuneration that would otherwise exceed the limit on employee remuneration
deductible for income tax purposes pursuant to Section 162(m).

3.             Eligibility.

(a)           General Rule.  Only Employees, Outside Directors and Consultants shall be
eligible for the grant of Options, the direct award or sale of Shares and the
grant of Restricted 

 

1

 

Stock Units. 
For purposes of the foregoing sentence, “Employees,” “Outside Directors”
and “Consultants” shall include prospective Employees, prospective Outside
Directors and prospective Consultants to whom Options or Shares are granted in
connection with written offers of an employment or other service relationship
with the Company (or any Parent or Subsidiary).  Only Employees shall be eligible for the grant of ISOs.

(b)           Ten-Percent Shareholders.  An individual who owns more than 10% of the total combined voting
power of all classes of outstanding stock of the Company, its Parent or any of
its Subsidiaries shall not be eligible to be granted an ISO unless (i) the
Exercise Price is at least 110% of the Fair Market Value of a Share on the date
of grant, and (ii) the ISO, by its terms is not exercisable after the
expiration of five years from the date of grant.  For purposes of this Subsection (b), in determining stock
ownership, the attribution rules of Section 424(d) of the Code shall be
applied.

4.             Stock
Subject to Plan.

(a)           Basic Limitation.  The aggregate number of Shares that may be issued under the Plan
(upon exercise of Options, Stock Purchase rights, Restricted Stock Units or
other rights to acquire Shares) shall not exceed four million three hundred
thirty thousand (4,330,000) Shares, subject to adjustment pursuant to
Section 9. The number of Shares that are subject to Options or other
rights outstanding at any time under the Plan shall not exceed the number of
Shares that then remain available for issuance under the Plan.  The Company, during the term of the Plan,
shall at all times reserve and keep available sufficient Shares to satisfy the
requirements of the Plan.

(b)           Additional Shares.  In the event that any outstanding Option, Stock Purchase right,
Restricted Stock Units or other right for any reason expires or is canceled or
otherwise terminated, the Shares allocable to the unexercised portion of such
Option or other right shall again be available for the purposes of the
Plan.  In the event that Shares issued
under the Plan are reacquired by the Company pursuant to any forfeiture
provision, right of repurchase or right of first refusal, such Shares shall
again be available for the purposes of the Plan, except that the aggregate
number of Shares which may be issued upon the exercise of ISOs shall in no
event exceed four million three hundred thirty thousand (4,330,000) Shares
(subject to adjustment pursuant to Section 9).

5.             Terms and Conditions of Stock
Purchase Awards or Sales.

(a)           Stock Purchase Agreement.  Each award or sale of Shares pursuant to Section 5 shall be
evidenced by a Stock Purchase Agreement between the Purchaser and the
Company.  Such award or sale shall be
subject to all applicable terms and conditions of the Plan and may be subject
to any other terms and conditions which are not inconsistent with the Plan and
which the Board of Directors deems appropriate for inclusion in a Stock
Purchase Agreement.  The provisions of
the various Stock Purchase Agreements entered into under the Plan need not be
identical.

 

2

 

(b)           Duration of Offers and
Nontransferability of Rights.  Any right to acquire Shares pursuant to Section 5 shall
automatically expire if not exercised by the Purchaser within 30 days
after the grant of such right was communicated to the Purchaser by the Company
in writing.  Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.

(c)           Purchase Price.  The Purchase Price of Shares to be offered pursuant to Section 5
shall not be less than 85% of the Fair Market Value of such Shares.  Subject to the preceding sentence, the
Purchase Price shall be determined by the Board of Directors at its sole
discretion.  The Purchase Price shall be
payable in a form described in Section 8.

(d)           Withholding Taxes.  As a condition to the purchase of Shares, the Purchaser shall
make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such purchase.

(e)           Restrictions on Transfer of Shares
and Vesting.  Any Shares awarded or sold under the Plan shall be subject to
such special forfeiture conditions, rights of repurchase, rights of first
refusal and other transfer restrictions as the Board of Directors may
determine.  Such restrictions shall be
set forth in the applicable Stock Purchase Agreement and shall apply in
addition to any restrictions that may apply to holders of Shares generally.

(f)            Accelerated Vesting.  Unless the applicable Stock Purchase Agreement provides
otherwise, any right to repurchase a Purchaser’s Shares at the original
Purchase Price (if any) upon termination of the Purchaser’s Service shall lapse
and all of such Shares shall become vested if (i) the Company is subject
to a Change in Control and (ii) the repurchase right is not assigned to
the entity that employs the Purchaser immediately after the Change in Control
or to its parent or subsidiary.

6.             Terms and Conditions of Options.

(a)           Stock Option Agreement.  Each
grant of an Option under the Plan shall be evidenced by a Stock Option
Agreement between the Optionee and the Company.  Such Option shall be subject to all applicable terms and
conditions of the Plan and may be subject to any other terms and conditions
which are not inconsistent with the Plan and which the Board of Directors deems
appropriate for inclusion in a Stock Option Agreement.  The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical.

(b)           Number of Shares.  Each Stock Option Agreement shall specify the number of Shares
that are subject to the Option and shall provide for the adjustment of such
number in accordance with Section 9. The Stock Option Agreement shall also
specify whether the Option is an ISO or an NSO.

(c)           Exercise Price.  Each Stock Option Agreement shall specify the Exercise
Price.  The Exercise Price of an ISO
shall not be less than 100% of the Fair Market Value of a Share on the date of
grant, and a higher percentage may be required by Section 3(b).  The 

 

3

 

Exercise Price of an NSO shall not be less than 85 %
of the Fair Market Value of a Share on the date of grant.  Subject to the preceding two sentences, the
Exercise Price under any Option shall be determined by the Board of Directors
at its sole discretion.  The Exercise
Price shall be payable in a form described in Section 8.

(d)           Withholding Taxes.  As a condition to the exercise of an Option, the Optionee shall
make such arrangements as the Board of Directors may require for the
satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise.  The Optionee shall also make such
arrangements as the Board of Directors may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.

(e)           Exercisability.  Each Stock Option Agreement shall specify the date when all or
any installment of the Option is to become exercisable.  The exercisability provisions of any Stock
Option Agreement shall be determined by the Board of Directors at its sole
discretion.

(f)            Accelerated Vesting and
Exercisability.  Unless the applicable Stock Option Agreement provides otherwise,
all of an Optionee’s Options shall become exercisable and vested in full if
(i) the Company is subject to a Change in Control, (ii) such Options
are not assumed by the surviving corporation or its parent and (iii) the
surviving corporation or its parent does not substitute options with
substantially the same terms for such Options. 
Any options which are not assumed or substituted for in connection with
the Change in Control shall, to the extent not exercised as of the date of the
Change in Control, terminate and cease to be outstanding effective as of the
date of the Change in Control.

(g)           Basic Term.  The Stock Option Agreement shall specify the term of the
Option.  The term of an ISO shall not
exceed 10 years from the date of grant, and a shorter term may be required
by Section 3(b).  Subject to the
preceding sentence, the Board of Directors at its sole discretion shall
determine when an Option is to expire.

(h)           Nontransferability of ISOs.  No Option shall be transferable by the Optionee other than by
beneficiary designation, will or the laws of descent and distribution.  An Option may be exercised during the lifetime
of the Optionee only by the Optionee or by the Optionee’s guardian or legal
representative.  No Option or interest
therein may be transferred, assigned, pledged or hypothecated by the Optionee
during the Optionee’s lifetime, whether by operation of law or otherwise, or be
made subject to execution, attachment or similar process.  Notwithstanding the foregoing, an NSO shall
be assignable or transferable to the extent permitted by the Board of Directors
and set forth in the Stock Option Agreement evidencing such Option.

(i)            Termination of Service (Except by
Death or for Cause).  Unless otherwise specified in the Stock Option Agreement, if an
Optionee’s Service terminates for any reason other than the Optionee’s death or
for Cause (as defined below), then the Optionee’s Options shall expire on the
earliest of the following occasions:

(i)            The
expiration date determined pursuant to Subsection (g) above;

 

4

 

(ii)           The
date three months after the termination of the Optionee’s Service for any
reason other than Disability; or

(iii)          The
date six months after the termination of the Optionee’s Service by reason of
Disability.

The Optionee may exercise all or part of the Optionee’s
Options at any time before the expiration of such Options under the preceding
sentence, but only to the extent that such Options had become exercisable
before the Optionee’s Service terminated (or became exercisable as a result of
the termination) and the underlying Shares had vested before the Optionee’s
Service terminated (or vested as a result of the termination).  The balance of such Options shall lapse when
the Optionee’s Service terminates.  In
the event that the Optionee dies after the termination of the Optionee’s
Service but before the expiration of the Optionee’s Options, all or part of
such Options may be exercised (prior to expiration) by the executors or
administrators of the Optionee’s estate or by any person who has acquired such
Options directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that such Options had become exercisable
before the Optionee’s Service terminated (or became exercisable as a result of
the termination) and the underlying Shares had vested before the Optionee’s
Service terminated (or vested as a result of the termination).

(j)            Leaves of Absence.  For purposes of Subsection (i) above, Service shall be
deemed to continue while the Optionee is on a bona fide leave of absence, if
such leave was approved by the Company in writing and if continued crediting of
Service for this purpose is expressly required by the terms of such leave or by
applicable law (as determined by the Company).

(k)           Death of Optionee.  Unless otherwise specified in the Stock Option Agreement, if an
Optionee dies while the Optionee is in Service, then the Optionee’s Options
shall expire on the earlier of the following dates:

(i)            The
expiration date determined pursuant to Subsection (g) above;

or

(ii)           The
date 12 months after the Optionee’s death.

All or part of the Optionee’s Options may be exercised
at any time before the expiration of such Options under the preceding sentence
by the executors or administrators of the Optionee’s estate or by any person
who has acquired such Options directly from the Optionee by beneficiary
designation, bequest or inheritance, but only to the extent that such Options
had become exercisable before the Optionee’s death or became exercisable as a
result of the death.  The balance of
such Options shall lapse when the Optionee dies.

(l)            Termination for Cause.   Unless otherwise specified in the Stock Option Agreement, if an
Optionee’s Service is terminated for Cause, the Option shall terminate and
cease to be exercisable immediately upon such termination of Service.  Unless otherwise defined by the
Optionee’s Stock Option Agreement or contract of employment or service, for
purposes of 

 

5

 

this Section 6(l) “Cause” shall
mean any of the following: (1) the Optionee’s theft, dishonesty, or
falsification of any Company documents or records; (2) the Optionee’s
improper use or disclosure of a the Company’s confidential or proprietary
information; (3) any action by the Optionee which has a material
detrimental effect on the Company’s reputation or business; (4) the
Optionee’s failure or inability to perform any reasonable assigned duties after
written notice from the Company of, and a reasonable opportunity to cure, such
failure or inability; (5) any material breach by the Optionee of any
employment or service agreement between the Optionee and the Company, which
breach is not cured pursuant to the terms of such agreement; (6) the
Optionee’s conviction (including any plea of guilty or nolo contendere) of any
criminal act which impairs the Optionee’s ability to perform his or her duties
with the Company; or (7) Optionee’s conviction for a violation of any
securities law.

(m)          No Rights as a Shareholder.  An Optionee, or a transferee of an Optionee, shall have no rights
as a shareholder with respect to any Shares covered by the Optionee’s Option
until such person becomes entitled to receive such Shares by filing a notice of
exercise and paying the Exercise Price pursuant to the terms of such Option.

(n)           Modification, Extension and
Assumption of Options.  Within the limitations of the Plan, the Board of Directors may
modify, extend or assume outstanding Options or may accept the cancellation of
outstanding Options (whether granted by the Company or another issuer) in
return for the grant of new Options for the same or a different number of
Shares and at the same or a different Exercise Price.  The foregoing notwithstanding, no modification of an Option
shall, without the consent of the Optionee, impair the Optionee’s rights or
increase the Optionee’s obligations under such Option.

(o)           Restrictions on Transfer of Shares
and Vesting.  Any Shares issued upon exercise of an Option shall be subject to
such special forfeiture conditions, rights of repurchase, rights of first
refusal and other transfer restrictions as the Board of Directors may
determine.  Such restrictions shall be
set forth in the applicable Stock Option Agreement and shall apply in addition
to any restrictions that may apply to holders of Shares generally.

7.             Terms and Conditions of Restricted
Stock Units.

(a)           Restricted Stock Units Agreement.  Each
Restricted Stock Units award pursuant to Section 7 shall be evidenced by a
Restricted Stock Units Agreement between the Participant and the Company.  Such award shall be subject to all
applicable terms and conditions of the Plan and may be subject to any other
terms and conditions which are not inconsistent with the Plan and which the
Board of Directors deems appropriate for inclusion in a Restricted Stock Units
Agreement.  The provisions of the various
Restricted Stock Units Agreements entered into under the Plan need not be
identical.

(b)           Purchase Price.   No
monetary payment (other than applicable tax withholding, if any) shall be
required as a condition of receiving a Restricted Stock Units award, the
consideration for which shall be services actually rendered to the Company, a
Parent or Subsidiary, or for its benefit.

 

6

 

(c)           Vesting.    Restricted
Stock Units may or may not be made subject to vesting conditions based upon the
satisfaction of such Service requirements, conditions or restrictions, as shall
be established by the Board of Directors and set forth in the Restricted Stock
Units Agreement.

(d)           Voting.  Participant
shall have no voting rights with respect to shares of Stock represented by
Restricted Stock Units until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company).

(e)           Effect of Termination of Service.  Unless
otherwise provided by the Board of Directors in the grant of Restricted Stock
Units and set forth in the Restricted Stock Units Agreement, if a Participant’s
Service terminates for any reason, whether voluntary or involuntary (including
the Participant’s death or disability), then the Participant shall forfeit to
the Company any Restricted Stock Units which remain subject to vesting
conditions as of the date of the Participant’s termination of Service.

(f)            Settlement of Restricted Stock Unit
Award.  The Company shall issue to the Participant as soon as practicable
following the date of termination of the Participant’s Service, a number of
whole shares of Stock equal to the number of whole Restricted Stock Units as
set forth in and subject to the Restricted Stock Units Agreement which are no
longer subject to vesting conditions, subject to withholding of applicable
taxes, if any.

(g)           Accelerated Vesting and Settlement
of Restricted Stock Unit Awards.  Unless the applicable Restricted Stock Units Agreement provides
otherwise, all of a Participant’s Restricted Stock Units shall become vested in
full if (i) the Company is subject to a Change in Control, (ii) such
Restricted Stock Units do not remain outstanding, (iii) such Restricted
Stock Units are not assumed by the surviving corporation or its parent and
(iv) the surviving corporation or its parent does not substitute a
substantially equivalent award. 
The  Restricted Stock Units shall
be settled in accordance with Section 7(f) immediately prior to the effective
date of the Change in Control to the extent the Restricted Stock Units are
neither assumed or substituted for in connection with the Change in Control.

(h)           Restrictions on Transfer of
Restricted Stock Unit Awards.  Prior
to the issuance of shares of Stock in settlement of a Restricted Stock Unit
award, the award shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or garnishment by
creditors of the Participant or the Participant’s beneficiary, except by will
or by the laws of descent and distribution.

8.             Payment for Shares.

(a)           General Rule.  The entire Purchase Price or Exercise Price of Shares issued
under the Plan shall be payable in cash or cash equivalents at the time when
such Shares are purchased, except as otherwise provided in this Section 8.

 

7

 

(b)           Surrender of Stock.  To the extent that a Stock Option Agreement so provides, payment
may be made all or in part with Shares owned by the Optionee or the Optionee’s
representative.  Such Shares shall be
surrendered to the Company in good form for transfer and shall be valued at
their Fair Market Value on the date when the Option is exercised.  This Subsection (b) shall not apply to
the extent that acceptance of Shares in payment of the Exercise Price would
cause the Company to recognize compensation expense with respect to the Option
for financial reporting purposes.

(c)           Services Rendered.  At the discretion of the Board of Directors, Shares may be
awarded under the Plan in consideration of services rendered to the Company, a
Parent or a Subsidiary prior to the award.

(d)           Exercise/Sale.  To the extent that a Stock Option Agreement so provides, and if
Stock is publicly traded, payment may be made all or in part by the delivery
(on a form prescribed by the Company) of an irrevocable direction to a securities
broker approved by the Company to sell Shares and to deliver all or part of the
sales proceeds to the Company in payment of all or part of the Exercise Price
and any withholding taxes.

(e)           Exercise/Pledge.  To the extent that a Stock Option Agreement so provides, and if
Stock is publicly traded, payment may be made all or in part by the delivery
(on a form prescribed by the Company) of an irrevocable direction to pledge
Shares to a securities broker or lender approved by the Company, as security for
a loan, and to deliver all or part of the loan proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.

9.             Adjustment of Shares.

(a)           General.  In the event of a subdivision of the outstanding Stock, a
declaration of a dividend payable in Shares, a declaration of an extraordinary
dividend payable in a form other than Shares in an amount that has a material
effect on the Fair Market Value of the Stock, a combination or consolidation of
the outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of
Shares available for future grants under Section 4, (ii) the number
of Shares covered by each outstanding Option and Restricted Stock Unit award or
(iii) the Exercise Price under each outstanding Option.  Notwithstanding the foregoing, any fractional
shares resulting from an adjustment pursuant to this Section 9 shall be rounded
down to the nearest whole number, and no any event may the exercise price be
decreased to an amount less than the par value, if any, of the Stock.

(b)           Mergers and Consolidations.  In the event that the Company is a party to a merger or
consolidation, outstanding Options, Stock Purchase rights and Restricted Stock
Units shall be subject to the agreement of merger or consolidation.  Such agreement, without the Optionees’,
Purchasers’ or Participants’ consent, may provide for:

(i)            The
continuation of such outstanding Options, Stock Purchase right or Restricted
Stock Units by the Company (if the Company is the surviving corporation);

 

8

 

(ii)           The
assumption of the Plan and such outstanding Options, Stock Purchase rights or
Restricted Stock Units by the surviving corporation or its parent;

(iii)          The
substitution by the surviving corporation or its parent of options, stock
purchase rights or restricted stock units 
with substantially the same terms for such outstanding Options, Stock
Purchase rights or Restricted Stock Units; or

(iv)          The
cancellation of such outstanding Options without payment of any consideration.

(c)           Reservation of Rights.  Except as provided in this Section 9, an Optionee, Purchaser
or Participant shall have no rights by reason of (i) any subdivision or
consolidation of shares of stock of any class, (ii) the payment of any
dividend or (iii) any other increase or decrease in the number of shares
of stock of any class.  Any issuance by
the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares
subject to an Option.  The grant of an
Option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.

10.           Securities Law Requirements.

(a)           General.  Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares comply with (or are exempt from) all applicable requirements
of law, including (without limitation) the Securities Act of 1933, as amended,
the rules and regulations promulgated thereunder, state securities laws and
regulations, and the regulations of any stock 
exchange or other securities market on which the Company’s securities
may then be traded.

(b)           Financial Reports.  Each Optionee, Purchaser and Participant shall be given access to
information concerning the Company equivalent to that information generally
made available to the Company’s common shareholders.

11.           No Retention Rights.

Nothing in the Plan or in any right, Option or
Restricted Stock Unit granted under the Plan shall confer upon the Purchaser,
Optionee, or Participant any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the
Purchaser, Optionee or Participant) or of the Purchaser, Optionee or
Participant which rights are hereby expressly reserved by each, to terminate
his or her Service at any time and for any reason, with or without cause.

12.           Duration and Amendments.

(a)           Term of the Plan.  The Plan, as set forth herein, shall become effective on the date
of its adoption by the Board of Directors, subject to the approval of the
Company’s 

 

9

 

shareholders. 
In the event that the shareholders fail to approve the Plan within
12 months after its adoption by the Board of Directors, any grants of
Options or sales or awards of Shares that have already occurred shall be
rescinded, and no additional grants, sales or awards shall be made thereafter
under the Plan.  The Plan shall continue
in effect until the earlier of its termination by the Board or the date on
which all of the Shares available for issuance under the Plan have been issued
and all restrictions on such Shares under the terms of the Plan and the
agreements evidencing Options and awards granted under the Plan have
lapsed.  However, all ISOs shall be
granted, if at all, within ten (10) years from the earlier of the date the Plan
is adopted by the Board of Directors or the date the Plan is duly approved by
the shareholders of the Company. 
Notwithstanding the foregoing, if the maximum number of Shares issuable
pursuant to the Plan as provided in Section 4 has been increased at any time
(other than pursuant to Section 9), all ISOs shall be granted, if at all,
within ten (10) years from the earlier of (i) the date on which the latest such
increase in the maximum number of Shares issuable under the Plan was approved
by the shareholders of the Company or (ii) the date such amendment was adopted
by the Board of Directors.

(b)           Right to Amend or Terminate the Plan.  The Board of Directors may amend, suspend or terminate the Plan
at any time and for any reason; provided, however, that any amendment of the
Plan which increases the number of Shares available for issuance under the Plan
(except as provided in Section 9), or which materially changes the class
of persons who are eligible for the grant of ISOs, shall be subject to the
approval of the Company’s shareholders. 
Shareholder approval shall not be required for any other amendment of
the Plan.

(c)           Effect of Amendment or Termination.  No Shares shall be issued or sold under the Plan after the
termination thereof, except in settlement of Restricted Stock Unit awards and
upon exercise of an Option granted prior to such termination.  The termination of the Plan, or any
amendment thereof, shall not affect any Share previously issued or any Option
previously granted under the Plan.

13.           Definitions.

(a)           “Board
of Directors” shall mean the Board of Directors of the Company, as
constituted from time to time.

(b)           “Change
in Control” shall mean:

(i)            The
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, unless 50% or more of the
combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were shareholders of the Company
immediately prior to such merger, consolidation or other reorganization, in
substantially the same proportions as their ownership of Company stock prior to
the transaction ; or

(ii)           The
sale, transfer or other disposition of all or substantially all of the
Company’s assets.

 

10

 

A transaction shall not constitute a Change in Control
if its sole purpose is to change the state of the Company’s incorporation or to
create a holding company that will be owned in substantially the same
proportions by the persons who held the Company’s securities immediately before
such transaction.

(c)           “Code”
shall mean the Internal Revenue Code of 1986, as amended.

(d)           “Committee”
shall mean a committee of the Board of Directors, as described in
Section 2(a).

(e)           “Company”
shall mean bebe stores, inc., a California corporation.

(f)            “Consultant”
shall mean an individual who performs bona fide services for the Company, a
Parent or a Subsidiary as a consultant or advisor, excluding Employees and
Outside Directors.

(g)           “Disability”
shall mean that the Optionee is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.

(h)           “Employee”
shall mean any individual who is a common-law employee of the Company, a Parent
or a Subsidiary.

(i)            “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

(j)            “Exercise
Price” shall mean the amount for which one Share may be purchased upon
exercise of an Option, as specified by the Board of Directors in the applicable
Stock Option Agreement.

(k)           “Fair
Market Value” shall mean, as of any date, the value of a Share as
determined by the Board of Directors, in its sole discretion, subject to the
following:

(i)            If,
on such date, there is a public market for the Stock, the Fair Market Value of
a Share shall be the closing sale price of a Share (or the mean of the closing
bid and asked prices of a Share if the Stock is so quoted instead) as quoted on
the Nasdaq National Market, the Nasdaq Small-Cap Market or such other national
or regional securities exchange or market system constituting the primary
market for the Stock, as reported in the Wall Street Journal or such
other source as the Company deems reliable. 
If the relevant date does not fall on a day on which the Stock has
traded on such securities exchange or market system, the date on which the Fair
Market Value shall be established shall be the next day on which the Stock was
so traded following the relevant date, or such other appropriate day as shall
be determined by the Board of Directors, in its sole discretion.

(ii)           If,
on such date, there is no public market for the Stock, the Fair Market Value of
a Share shall be as determined by the Board of Directors in good faith.

 

11

 

(l)            “Insider”
shall mean an officer or a director of the Company or any other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.

(m)          “ISO”
shall mean an employee incentive stock option described in Section 422(b)
of the Code.

(n)           “NSO”
shall mean a stock option not described in Sections 422(b) or 423(b) of
the Code.

(o)           “Option”
shall mean an ISO or an NSO granted under the Plan and entitling the holder to
purchase Shares.

(p)           “Optionee”
shall mean an individual who holds an Option.

(q)           “Outside
Director” shall mean a member of the Board of Directors who is not an
Employee.

(r)            “Parent” shall mean any
corporation (other than the Company) in an unbroken chain of corporations
ending with the Company, if each of the corporations other than the Company
owns stock possessing 50% or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.

(s)           “Plan”
shall mean this bebe stores, inc. 1997 Stock Plan.

(t)            “Participant”
shall mean an individual to whom the Board of Directors has granted a
Restricted Stock Unit pursuant to Section 7.

(u)           “Purchase
Price” shall mean the consideration for which one Share may be acquired
under the Plan (other than upon exercise of an Option), as specified by the
Board of Directors.

(v)           “Purchaser”
shall mean an individual to whom the Board of Directors has offered the right
to acquire Shares under the Plan (other than upon exercise of an Option).

(w)          “Restricted
Stock Unit” shall mean a bookkeeping entry representing a right granted to
a Participant pursuant to Section 7 of the Plan to receive a share of Stock on
a date determined in accordance with the provisions of Section 7 and the
Participant’s Restricted Stock Units Agreement.

(x)            “Restricted
Stock Units Agreement” shall mean a written agreement between the Company
and a Participant who is granted Restricted Stock Units under the Plan which
contains the terms, conditions and restrictions pertaining to the acquisition
of such award.

(y)           “Rule
16b-3” shall mean Rule 16b-3 under the Exchange Act, as amended from time
to time, or any successor rule or regulation.

 

12

 

(z)            “Section
162(m)” shall mean Section 162(m) of the Code.

(aa)         “Service”
shall mean service as an Employee, Outside Director or Consultant.  Service shall not be deemed to have
terminated merely because of a change in the capacity in which an individual
renders Service to the Company (or any Parent or Subsidiary) or a change in the
corporation for which the individual renders such Service, provided that there
is no interruption or termination of the individual’s Service.

(bb)         “Share”
shall mean one share of Stock, as adjusted in accordance with Section 9
(if applicable).

(cc)         “Stock”
shall mean the Common Stock of the Company.

(dd)         “Stock
Option Agreement” shall mean the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to
the Optionee’s Option.

(ee)         “Stock
Purchase Agreement” shall mean the agreement between the Company and a
Purchaser who acquires Shares under the Plan which contains the terms,
conditions and restrictions pertaining to the acquisition of such Shares.

(ff)           “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.  A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.

14.           Execution.

The undersigned hereby certifies that the foregoing is
the bebe stores, inc. 1997 Stock Plan as amended.

	
   

  	
   

  	
  bebe stores, inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title: 

  	
  President

  
					

 

13

 

PLAN HISTORY

 

	
  June 26, 1997

  	
  Plan adopted by the
  Company’s Board of Directors with a share reserve of 1,000,000 shares

  
	
  July 15, 1997

  	
  Plan approved by the Company’s shareholders

  
	
  April 6, 1998

  	
  Plan amended and restated by the Company’s Board of
  Directors (effective upon the effective date of the initial registration by
  the Company of its stock under Section 12 of the Securities Exchange Act of
  1934, as amended (the “Company’s IPO”)

  
	
  April 9, 1998

  	
  Company effected
  a 2.83:1 stock split resulting in a share reserve of 2,830,000 shares

   

  
	
  May 18, 1998

  	
  Amended and Restated Plan approved by the Company’s
  shareholders (effective upon the Company’s IPO)

  
	
  June 16, 1998

  	
  Effective date of the Company’s IPO

  
	
  August 2000

  	
  Increase of the maximum number of shares that may be
  issued to 4,330,000 approved by Board

  
	
  November 2000

  	
  Increase of the maximum number of shares that may be
  issued to 4,330,000 approved by Shareholders

  
	
  March 25, 2003

  	
  Plan amended by the Company’s Board of Directors to
  provide for the grant of Restricted Stock Units.

  
	
  June 13, 2003

  	
  Plan amended to include “a conviction for a
  violation of any securities law” as a part of the definition of “Termination
  for Cause”. 

  

 

14

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