Document:

Cost Plus, Inc. 1996 Director Option Plan

 Exhibit 10.1 
  
 COST PLUS, INC. 
  
 1996 DIRECTOR OPTION PLAN 
 (Amended June 19, 1997) 
 (Amended June 15, 1999) 
 (Amended
June 22, 2000) 
 (Amended June 27, 2002) 
 (Amended July 1, 2004) 
 (Amended June 29, 2005) 
  
 1. Purposes of the Plan. The purposes of this 1996 Director Option
Plan are to attract and retain the best available personnel for service as Outside Directors (as defined herein) of the Company, to provide additional incentive to the Outside Directors of the Company to serve as Directors, and to encourage their
continued service on the Board. 
  
 All options
granted hereunder shall be nonstatutory stock options. 
  
 2.
Definitions. As used herein, the following definitions shall apply: 
  
 (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
of the Company. 
  
 (d)
“Committee” means a committee appointed by the Board to administer the Plan and to perform the functions set forth herein, or, if no such committee is appointed, the Board. 
  
 (e) “Company” means Cost Plus, Inc., a
California corporation. 
  
 (f)
“Director” means a member of the Board. 
  
 (g) “Employee” means any person, including officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. The payment of a Director’s fee by the Company shall not be
sufficient in and of itself to constitute “employment” by the Company. 
  
 (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended. 
  
 (i) “Fair Market Value” means, as of any
date, the value of Common Stock determined as follows: 
  
 (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall
be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the 

  

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day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; 
  
 (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination, as reported in The Wall Street
Journal or such other source as the Board deems reliable, or; 
  
 (iii) In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Board. 
  
 (j) “Inside Director” means a Director who is an Employee. 
  
 (k) “Option” means a stock option granted
pursuant to the Plan. 
  
 (l) “Optioned
Stock” means the Common Stock subject to an Option. 
  
 (m) “Optionee” means a Director or an entity that holds an Option. 
  
 (n) “Outside Director” means a Director who is not an Employee. 
  
 (o) “Parent” means a “parent
corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. 
  
 (p) “Plan” means this 1996 Director Option Plan. 
  
 (q) “Representative Director” means a Director who is a member of the Board as the
representative for an entity that employs such Director. The determination of whether an Outside Director is a Representative Director shall be determined by the representations of such Director and such determination may be changed at any time by
such Director. 
  
 (r) “Share”
means a share of the Common Stock, as adjusted in accordance with Section 10 of the Plan. 
  
 (s) “Subsidiary” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section
424(f) of the Internal Revenue Code of 1986. 
  
 3. Stock
Subject to the Plan. Subject to the provisions of Section 10 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is 503,675 Shares of Common Stock. The Shares may be authorized, but unissued, or
reacquired Common Stock. 
  
 If an Option expires
or becomes unexercisable without having been exercised in full, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated). Shares that have actually been issued
under the Plan shall not be returned to the Plan and shall not become available for future distribution under the Plan. 
  

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 4. Administration and Grants of Options under the Plan. 
  
 (a) The Plan shall be administered by the Committee which
shall hold meetings at such times as may be necessary for the proper administration of the Plan. The Committee shall keep minutes of its meetings. Except as otherwise provided in the Company’s Articles of Incorporation or By-Laws, a quorum
shall consist of a majority of the members of the Committee and a majority of a quorum may authorize any action. Except as otherwise provided in the Company’s Articles of Incorporation or Bylaws, any decision or determination reduced to writing
and signed by the requisite number of the members of the Committee shall be as fully effective as if made by the vote of the requisite number of members at a meeting duly called and held. 
  
 (b) The Committee shall be composed of the Board of
Directors or a committee appointed by the Board. 
  
 (c) Subject to the express terms and conditions set forth herein, the Committee shall have the power from time to time: 
  
 (i) to determine those individuals to whom Options shall be granted under the Plan and the number of Shares subject to each Option to be
granted, to prescribe the terms and conditions (which need not be identical) of each such Option, including the Fair Market Value on any date, and to make any amendment or modification to any option agreement, including the acceleration of vesting,
consistent with the terms of the Plan; 
  
 (ii)
to construe and interpret the Plan and the Options granted hereunder and to establish, amend and revoke rules and regulations for the administration of the Plan, including, but not limited to, correcting any defect or supplying any omission, or
reconciling any inconsistency in the Plan or in any Agreement, in the manner and to the extent it shall deem necessary or advisable so that the Plan complies with applicable law, and otherwise to make the Plan fully effective. All decisions and
determinations by the Committee in the exercise of this power shall be final, binding and conclusive upon the Company, its Subsidiaries, the Optionees, and all other persons having any interest therein; 
  
 (iii) to exercise its discretion with respect to the powers
and rights granted to it as set forth in the Plan; and 
  
 (iv) generally, to exercise such powers and to perform such acts as are deemed necessary or advisable to promote the best interests of the Company with respect to the Plan. 
  
 (d) Procedure for Grants. The terms of an Option granted hereunder shall be as follows: 

 
 (i) the term of the Option shall be up to ten (10) years.

  

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 (ii) subject to Sections 8 and 10 hereof, the Option shall be exercisable: 
  
 (A) in the event of an Option held directly by an Outside
Director, only while the Outside Director remains a Director of the Company. 
  
 (B) in the event of an Option held by an entity pursuant to Section 5(b) hereof, only while the Representative Director remains a Director of the Company. 
  
 (iii) the exercise price per Share shall be 100% of the Fair Market Value per Share on the date of grant of
the Option. In the event that the date of grant of the Option is not a trading day, the exercise price per Share shall be the Fair Market Value on the next trading day immediately following the date of grant of the Option. 
  
 (iv) subject to Section 10 hereof, the Option shall become
exercisable as determined by the Committee at the time of grant of the Option. 
  
 5. Eligibility. 
  
 (a) Except as provided in Section 5(b) hereof, Options may be granted only to Outside Directors. 
  
 (b) In the event an Outside Director is a Representative Director, Options shall be granted in the name of the entity employing such
Representative Director and such Representative Director shall not personally receive any option grants in the Representative Director’s own name. 
  
 (c) The Plan shall not confer upon any Outside Director any right with respect to continuation of service as a Director or nomination to
serve as a Director, nor shall it interfere in any way with any rights which the Director or the Company may have to terminate the Director’s relationship with the Company at any time. 
  
 6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the Company as described in Section 16 of the Plan. It shall continue in effect until March 31, 2016 unless sooner terminated under Section 11 of the Plan. 
  
 7. Form of Consideration. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall consist of (i) cash, (ii) check, (iii) other shares which (x) in the case of Shares acquired upon exercise of an Option, have been owned by the Optionee for more than
six (6) months on the date of surrender, and (y) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised, (iv) delivery of a properly executed exercise notice
together with such other documentation as the Company and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale or loan proceeds required to pay the exercise price, or (v) any
combination of the foregoing methods of payment. 
  

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 8. Exercise of Option. 
  
 (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted hereunder shall be
exercisable at such times as are set forth in Section 4 hereof. 
  
 An Option may not be exercised for a fraction of a Share. 
  
 An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms
of the Option by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company. Full payment may consist of any consideration and method of payment allowable
under Section 7 of the Plan. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. A share certificate for the number of Shares so acquired shall be issued to the Optionee as soon as
practicable after exercise of the Option. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan. 
  
 Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. 
  
 (b) Termination of Continuous Status as a Director.
Subject to Section 10 hereof, in the event an Optionee’s status as a Director terminates (other than the Optionee’s death or total and permanent disability (as defined in Section 22(e)(3) of the Code)), the Optionee may exercise his or her
Option, but only within six (6) months following the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an Option on the date of such termination, and to the extent that the Optionee does not exercise such Option (to the extent otherwise so entitled) within the time specified herein,
the Option shall terminate. 
  
 (c) Disability
of Optionee. In the event an Optionee’s status as a Director terminates as a result of total and permanent disability (as defined in Section 22(e)(3) of the Code), the Optionee may exercise his or her Option, but only within twelve (12)
months following the date of such termination, and only to the extent that the Optionee was entitled to exercise it on the date of such termination (but in no event later than the expiration of its ten (10) year term). To the extent that the
Optionee was not entitled to exercise an Option on the date of termination, or if the Optionee does not exercise such Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate. 
  
 (d) Death of Optionee. In the event of an
Optionee’s death, the person or entity designated as beneficiary in writing by the Optionee, or, if no such person or entity has been designated as beneficiary by the Optionee, the Optionee’s estate or a person who acquired the right to
exercise the Option by bequest or inheritance may exercise the Option, but only within twelve (12) months following 

  

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the date of death, and only to the extent that the Optionee was entitled to exercise it on the date of death (but in no event later than the expiration of
its ten (10) year term). To the extent that the Optionee was not entitled to exercise an Option on the date of death, and to the extent that the Optionee’s estate or a person who acquired the right to exercise such Option does not exercise such
Option (to the extent otherwise so entitled) within the time specified herein, the Option shall terminate. 
  
 9. Non-Transferability of Options. The Option may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee. 
  
 10. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale. 
  
 (a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the
number of Shares covered by each outstanding Option, the number of Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per Share covered by each such outstanding Option 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, or any other increase or decrease in the number of issued 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.” Except as expressly provided herein, no issuance 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) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, to the extent that an
Option has not been previously exercised, it shall terminate immediately prior to the consummation of such proposed action. 
  
 (c) Merger or Asset Sale. In the event of a merger of the Company with or into another corporation or the sale of substantially all
of the assets of the Company, outstanding Options may be assumed or equivalent options may be substituted by the successor corporation or a Parent or Subsidiary thereof (the “Successor Corporation”). If an Option is assumed or substituted
for, the Option or equivalent option shall continue to be exercisable as provided in Section 4 hereof for so long as the Optionee (or, in the case of an entity Optionee, such Optionee’s Representative Director) serves as a Director or a
director of the Successor Corporation. Following such assumption or substitution, if the Optionee’s (or, in the case of an entity Optionee, such Optionee’s Representative Director’s) status as a Director or director of the Successor
Corporation, as applicable, is terminated other than upon a voluntary resignation by the Optionee (or, in the case of an entity Optionee, such Optionee’s Representative Director), the Option or option shall become fully exercisable, including
as to Shares for which it would not otherwise be exercisable. Thereafter, the Option or option shall remain exercisable in accordance with Sections 8(b) through (d) above. 
  

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 If the Successor Corporation does not assume an outstanding Option or substitute for it an equivalent
option, the Option shall become fully vested and exercisable, including as to Shares for which it would not otherwise be exercisable. In such event the Board shall notify the Optionee that the Option shall be fully exercisable for a period of thirty
(30) days from the date of such notice, and upon the expiration of such period the Option shall terminate. 
  
 For the purposes of this Section 10(c), an Option shall be considered assumed if, following the merger or sale of assets, the Option confers the right to
purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by
holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares). 
  
 11. Amendment and Termination of the Plan. 
  
 (a) Amendment and Termination. Except as set forth in
Section 4, the Board may at any time amend, alter, suspend, or discontinue the Plan, but no amendment, alteration, suspension, or discontinuation shall be made which would impair the rights of any Optionee under any grant theretofore made, without
such Optionee’s consent. In addition, to the extent necessary and desirable to comply with any other applicable law or regulation (including any rule of a stock exchange or automated stock quotation system upon which the shares are traded), the
Company shall obtain shareholder approval of any Plan amendment in such a manner and to such a degree as required. 
  
 (b) Effect of Amendment or Termination. Any such amendment or termination of the Plan shall not affect Options already granted and
such Options shall remain in full force and effect as if this Plan had not been amended or terminated. 
  
 12. Time of Granting Options. The date of grant of an Option shall, for all purposes, be the date determined in accordance with Section 4 hereof.

  
 13. Conditions Upon Issuance of Shares. Shares shall
not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act
of 1933, as amended, the Exchange Act, the rules and regulations promulgated thereunder, state 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 relevant provisions of law. 
  

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 Inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to
which such requisite authority shall not have been obtained. 
  
 14. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 
  
 15. Option Agreement. Options shall be evidenced by written option
agreements in such form as the Board shall approve. 
  

 - 8 -Form of Amendment of Option Agreement

 Exhibit 10.1 
  
 [FORM OF AMENDMENT OF OPTION AGREEMENT] 
  
 Dear [Name of Optionee]: 
  
 Captaris, Inc. (the “Company”) has determined that it is advisable to accelerate vesting of all of its outstanding and otherwise unvested stock option grants
with exercise prices that are greater than or equal to the Company’s closing price on the Nasdaq National Market (“Nasdaq”) as of September 1, 2005 (other that those held by non-employee directors). Subject to the condition set forth
below, this accelerated vesting will apply to all stock options that have been granted to you by the Company under its 1989 Restated Stock Option Plan or 2000 Non-Officer Employee Stock Compensation Plan (the “Plans”) with exercise prices
that are greater than or equal to the Company’s closing price on the Nasdaq as of September 1, 2005 that are outstanding and otherwise unvested as of the date of this letter (your “Outstanding Options”). 
  
 This accelerated vesting of your Outstanding Options is conditioned, however, on your
agreement that you will not sell, transfer, assign, pledge or otherwise dispose of, alienate, or encumber, either voluntarily, or involuntarily, any shares that you acquire on exercising the accelerated portion of your Outstanding Options (other
than shares required to cover the exercise price and to satisfy withholding taxes and shares transferred by will or by the applicable laws of descent and distribution) at any time before that portion of your Outstanding Options would have vested
according to its original vesting schedule under the terms of the applicable Plan or award agreement (without giving effect to this acceleration, but including any possible acceleration of vesting that would otherwise occur following a change in
control or other circumstances causing accelerated vesting as set forth in the applicable Plan and award agreement or any other agreement between you and the Company, such vesting for purposes of this agreement to continue regardless of whether your
employment or service with the Company terminates). Except as provided herein, any sale or transfer, or purported sale or transfer, of any such shares or any interest therein prior to that vesting date shall be null and void. Any shares sold to
cover the exercise price or to satisfy withholding taxes shall be deemed to come, first, from the portion of your Outstanding Option that is vested according to its original vesting schedule, and then from the portions of your outstanding option
scheduled to vest in the future in the order of such scheduled vesting. 
  
 If you
decide to exercise the accelerated portion of your Outstanding Options prior to the time that portion of your Outstanding Options would have otherwise vested (including accelerated vesting set forth in the applicable Plan or award agreement or any
other agreement between you and the Company), the Company will issue shares only in certificate form evidencing the shares you acquire on exercise with the following legend and such other legends as may be required or appropriate under applicable
law: 
  
 THE OWNERSHIP OF THIS CERTIFICATE AND THE SHARES OF

 STOCK EVIDENCED HEREBY AND ANY INTEREST THEREIN ARE 
 SUBJECT TO SUBSTANTIAL RESTRICTIONS ON TRANSFER UNDER 
 AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER

 AND CAPTARIS, INC. A COPY OF SUCH AGREEMENT IS ON FILE IN 
 THE OFFICE OF THE SECRETARY OF CAPTARIS, INC. 

 You understand and agree that, in order to ensure compliance with the restrictions referred to above, the Company may
instruct its transfer agent not to transfer the shares you acquire until the restrictions on transfer lapse (i.e., until the accelerated portion of your Outstanding Options would have otherwise vested). Promptly after the transfer restrictions on
any such shares have lapsed, and upon and subject to your delivery of the legended certificates, as directed by the Company, to the Company or its transfer agent, the Company will cause to be delivered to you a certificate or certificates, free of
the restrictive legend described above, evidencing such shares. 
  
 Upon the
occurrence of a stock split, reverse stock split, stock dividend or any other change in capitalization, reorganization, merger or similar event affecting the Company’s common stock, the transfer restrictions set forth above applicable to any
stock that you may have acquired upon exercise of an option will continue in effect with respect to any consideration or other securities received in respect of such stock. 
  
 By executing this agreement, you and the Company agree that this letter agreement amends, and supersedes any inconsistent provisions of, the
award agreements evidencing your Outstanding Options. Except as provided herein, all other terms of the Outstanding Options shall remain in full force and effect. 
  
 This letter agreement will be governed by and construed in accordance with the laws of the State of Washington. 
  
 Please acknowledge your agreement with the foregoing by signing the enclosed copy of this
letter agreement where indicated below. Return the executed copy to the Company care of [Name], [Title]. You should return the letter so that it is received by the Company no later than
                                 , 2005. If you have any questions, please
call [Name] at (        )         -            . 
  

			
	 Sincerely,

	
	 
	 [Name]

	 [Title]

  

			
	 Acknowledged and Agreed:

		
	Signature:	 	 
	 	 	 [Name of Optionee]

			
		
	 Dated:
	 	 __________________________________

  

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