Document:

Exhibit 4.3

 

CERTIFICATE

OF DETERMINATION

OF

SERIES C NON-VOTING CONVERTIBLE REDEEMABLE PREFERRED STOCK

OF

MISSION COMMUNITY BANCORP

a California corporation

 

                The undersigned, Anita M.

Robinson and Roxanne M. Carr, hereby certify that:

                A.   They are the duly elected and acting President and Secretary,

respectively, of Mission Community Bancorp, a California corporation (the

“Company”).

                B.   The authorized number of shares of preferred stock is

1,000,000.  The number of shares of

Series A Non-Voting Convertible Redeemable Preferred Stock is 100,000, all of

which has been issued.  The number of

shares of Series B Non-Voting Preferred Stock is 20,500 all of which have been

issued.  The number of shares of Series

C Non-Voting Convertible Redeemable Preferred Stock is 50,000, none of which

has been issued.

                C. Pursuant to authority given

by said Company’s Articles of Incorporation, the Board of Directors of the

Company duly has adopted the following recitals and resolutions:

“WHEREAS, the Articles of Incorporation of

the Company authorize a class of preferred stock comprising 1,000,000 shares

issuable from time to time in one or more series; and

WHEREAS, the Board of Directors of the

Company is authorized to fix or alter the rights, preferences, privileges and restrictions

granted to or imposed upon any wholly unissued series of preferred stock

including but not limited to the dividends rights, dividend rates, conversion

rights, voting rights, and the liquidation preferences, and the number of

shares constituting any such series and the designation thereof, or any of

them; and

WHEREAS, the Company heretofore has not

designated any series of preferred stock, except for the 100,000 shares of

Series A Non-Voting Convertible Redeemable Preferred Stock and except for the

20,500 shares of Series B Non-Voting Preferred Stock and it is the desire of

the Board of Directors of the Company, pursuant to its authority as aforesaid,

to fix the rights, preferences, privileges and restrictions and other matters

relating to Series C Non-Voting Convertible Redeemable Preferred Stock and the

number of shares constituting such series;

NOW, THEREFORE, BE IT HEREBY RESOLVED, that

the Board of Directors of the Company hereby fixes and determines the

designation of, the number of shares constituting, and the rights, preferences,

privileges and restrictions relating to, this series of preferred stock as

follows:

                1. DESIGNATION AND NUMBER OF

SHARES. This series of Preferred Stock shall be designated “Series C Non-Voting

Convertible Redeemable Preferred Stock” (the “Series C 

 

 

 

Preferred

Stock”), and the number of shares which shall constitute such series shall be

50,000. The stated value of the Series C Preferred Stock shall be $10.00 per

share.

                2. VOTING RIGHTS. The holders of

Series C Preferred Stock shall not, by virtue of their ownership thereof, be

entitled to vote on any matter, except as otherwise required by the California

Corporations Code.

                3. REDEMPTION.

                                (a) Subject to

the receipt of any required regulatory approval, the Series C Preferred Stock

shall be automatically redeemable, in whole or in part, at any time upon the

request of the holder of the Series C Preferred Stock, in cash at the price of

$10.00 per share, without further action on the part of the Company, upon and after

a finding by the Community Development Financial Institutions Fund (“CDFI”), or

its successor agency or entity, that the Company is in default under any

Community Development Financial Institutions Program Assistance Agreement for

Equity Investments in Regulated Institutions, or any successor agreement, to

which the Company is a party or by which it is bound.

                                (b) No sinking

fund will be established for the redemption of shares of the Series C Preferred

Stock.

                4. DIVIDENDS.

                                (a) No dividend

(except a dividend payable solely in Common Stock of the Company) shall be paid

to the holders of Common Stock at any time unless concurrently dividends are

paid or declared and set apart for payment with respect to all outstanding

shares of the Series C Preferred Stock in an amount for each share of Series C

Preferred Stock equal to the amount of the dividend that would be payable on

the shares of Common Stock. The Series C Preferred Stock shall not be entitled

to any fixed rate of return.

                                (b) No dividend

shall be paid or declared and set apart for payment on the Series C Preferred

Stock unless full dividends (which shall be cumulative with respect to shares

of Prior Stock [as hereinafter defined] which by their terms bear cumulative

dividends from the date from and after which dividends thereon are cumulative)

have been or contemporaneously are paid or declared and set apart for payment

on all Prior Stock. No dividend shall be paid or declared and set apart for

payment on the Series C Preferred Stock to the exclusion of any Parity Stock

(as hereinafter defined).

                5. LIQUIDATION.

                                (a) In the event

of any liquidation, dissolution or winding up of the Company, either voluntary

or involuntary, the holders of the Series C Preferred Stock shall not be

entitled to receive, from any of the assets or surplus funds of the Company

legally available for distribution, any payment or distribution until payment

in full of all preferential amounts provided for in Prior Stock of the Company.

                                (b) In the event

of any liquidation, dissolution or winding up of the Company, either voluntary

or involuntary, after all creditors of the Company shall have been paid in full

and

 

 

 holders of Prior Stock shall have received

payment in full of the preferential amounts to which they are entitled, the

holders of the Series C Preferred Stock shall be entitled to receive, prior and

in preference to any distribution of any of the assets or surplus funds of the

Company legally available for distribution to the holders of the Common Stock

or any Junior Stock, the amount of $10.00 per share (as adjusted for any stock

dividends, combinations or splits with respect to such shares) plus all

declared but unpaid dividends on such shares. If the assets and funds available

for distribution to the holders of the Series C Preferred Stock and any Parity

Stock shall be insufficient to pay the stated preferential amounts in full,

then the entire assets and funds of the Company legally available for

distribution shall be distributed to the holders of the Series C Preferred

Stock and the Parity Stock in proportion to the preferential amount each such

holders is otherwise entitled to receive.

                                (c) After

payment in full of the preferential amounts to the holders of the Series C

Preferred Stock, any Prior Stock, any Parity Stock and any Junior Stock, the

holders of the Common Stock shall be entitled to receive the amount of $10.00

per share (as adjusted for any stock dividends, combination or splits with

respect to such shares), plus all declared but unpaid dividends on such shares.

If the assets and funds available for distribution to the holders of the Common

Stock shall be insufficient to pay the stated preferential amount in full, then

the entire remaining assets and funds of the Company legally available for distribution

shall be distributed ratably to the holders of the Common Stock.

                                (d) After

payment in full of the preferential amounts has made to the holders of the

Series C Preferred Stock, any Prior Stock, any Parity Stock, any Junior Stock

and the Common Stock as set forth above, all remaining assets of the Company

legally available for distribution shall be distributed ratably among holders

of the Common Stock and the Series C Preferred Stock and any Parity Stock in

proportion to the number of shares of Common Stock held by them and issuable

upon conversion of the Series C Stock and Parity Stock held by them.

                                (e) For purposes

of this Paragraph 5, a liquidation, dissolution or winding up of the Company

shall be deemed to include the Company’s sale of all or substantially all of

its assets. Neither the purchase nor redemption by the Company of shares of any

class of stock in any manner permitted by the articles of incorporation or

California law, nor the merger or consolidation of the Company with or into any

other corporation or corporations, shall be deemed to be a liquidation,

dissolution or winding up of the Company for the purposes of this Paragraph 5.

                6. CONVERSION.

                The holders of the Series C

Preferred Stock shall have conversion rights as follows (the “Conversion

Rights”):

                                (a) RIGHT TO

CONVERT. Each share of Series C Preferred Stock shall be convertible, at the

option of the holder thereof, at any time at or after the sale, transfer or

other disposition (whether or not for value) by CDFI (other than to an

affiliate of CDFI) of such shares of Series C Preferred Stock, at the office of

the Company or any transfer agent for such stock into such number of fully paid

and nonassessable shares of Common Stock as is determined by dividing $10.00 by

the then effective Conversion Price. The initial Series C Preferred Stock

Conversion Price is $10.00. The Conversion Price is subject to adjustment as

provided in this Paragraph 6.

                                (b) MECHANICS OF

CONVERSION. No fractional shares of Common Stock 

 

 

 

shall

be issued upon conversion of the Series C Preferred Stock. In lieu of any

fractional shares to which the holder would otherwise be entitled, the Company

shall pay cash equal to such fraction multiplied by the then fair value of a

share. Conversion of the Series C Preferred Stock at the option of the holder

shall be effected by delivery, to the office of the Company or to any transfer

agent for such shares, of duly endorsed certificates for the shares being

converted and of written notice to the Company that the holder elects to

convert such shares. Conversion shall be deemed to occur immediately prior to

the close of business on the date the shares and notice are delivered. Holders

entitled to receive Common Stock upon conversion of Series C Preferred Stock shall

be treated for all purposes as the record holders of such shares of Common

Stock on the date conversion is deemed to occur. The Company shall not be

obligated to issue certificates evidencing shares of Common Stock issuable upon

conversion of Series C Preferred Stock unless the certificates evidencing such

shares being converted are either delivered to the Company or its transfer

agent as provided above, or the holder notifies the Company or its transfer

agent that such certificates have been lost, stolen or destroyed and executes

an agreement, and at the Company’s election provides a surety bond or other

security, satisfactory to the Company to indemnify the Company from any loss

incurred by it in connection with such certificates. The Company shall, as soon

as practicable after such delivery, or such agreement and indemnification in

the case of a lost certificate, issue and deliver at such office to the holder

of the Series C Preferred Stock being converted, a certificate or certificates

for the number of shares of Common Stock to which the holder is entitled and a

check payable to the holder for any cash due with respect to fractional shares.

                                (c) ADJUSTMENTS

OF CONVERSION PRICE FOR CERTAIN DILUTING ISSUES.

                                (i) SPECIAL

DEFINITIONS. For purposes of this Paragraph 6, the following definitions shall

apply:

                                (1) “OPTIONS”

shall mean rights, options or warrants to subscribe for, purchase or otherwise

acquire Common Stock or Convertible Securities.

                                (2) “ORIGINAL

ISSUE DATE” shall mean the date on which the first share of Series C Preferred

Stock was issued.

                                (3) “CONVERTIBLE

SECURITIES” shall mean instruments of indebtedness or securities convertible

into or exchangeable for Common Stock.

                                (4) ADDITIONAL

SHARES OF COMMON STOCK shall mean all shares of Common Stock issued (or

pursuant to Paragraph 6(c)(iii), deemed to be issued) by the Company after the

Original Issue Date, other than Common Stock issued or issuable:

(A)                               upon conversion of Series C Preferred

Stock;

(B)                                 to officers, directors, employees of and

service providers to the Company pursuant to plans and arrangements approved by

the Board of Directors;

(C)                                 as a dividend or other distribution on

the Series A Preferred Stock or on the Series C Preferred Stock or any event

for which adjustment is made pursuant to Paragraph 6(d), (e) or (f);

(D)                                upon the exercise or conversion of

outstanding options or warrants; or

 

 

 

(E)                                  by way of dividend or other

distributions on securities referred to in these clauses (A), (B), (C), (D) and

(E).

                                (ii) NO ADJUSTMENT

OF CONVERSION PRICE. No adjustment in the Conversion Price shall be made in

respect of the issuance of Additional Shares of Common Stock unless the

consideration per share for an Additional Share of Common Stock issued or

deemed to be issued by the Company is less than the Conversion Price in effect

immediately prior to such issue.

                                (iii) DEEMED

ISSUE OF ADDITIONAL SHARES OF COMMON STOCK. If the Company at any time after

the Original Issue Date shall issue any Options or Convertible Securities or shall

fix a record date for the determination of any holders of any class of

securities entitled to receive any such Options or Convertible Securities, then

the maximum number of shares (as set forth in the instrument relating thereto

without regard to any provisions contained therein for a subsequent adjustment

of such number) of Common Stock issuable upon the exercise of such Options or,

in the case of Convertible Securities and Options for Convertible Securities,

the conversion or exchange of such Convertible Securities, shall be deemed to

be Additional Shares of Common Stock issued as of the time of such issue or, in

case such a record date shall have been fixed, as of the close of business on

such record date, provided that in any such case in which Additional Shares of

Common Stock are deemed to be issued:

(A)                                             

no further adjustment in the Conversion Price shall be made upon the subsequent

issue of Convertible Securities or shares of Common Stock issued upon the

exercise of such Options or conversion or exchange of such Convertible

Securities;

(B)                                                if

such Options or Convertible Securities by their terms provide, with the passage

of time or otherwise, for any increase or decrease in the consideration payable

to the Company, or increase or decrease in the number of shares of Common Stock

issuable, upon the exercise, conversion or exchange thereof, the Conversion

Price computed upon the original issue thereof (or upon the occurrence of a

record date with respect thereto), and any subsequent adjustments based

thereon, shall, upon any such increase or decrease, becoming effective, be

recomputed to reflect such increase or decrease insofar as it affects such

Options or the rights of conversion or exchange under such Convertible

Securities;

(C)                                                upon

the expiration of any such Options or any rights of conversion or exchange

under such Convertible Securities which shall not have been exercised, the

Conversion Price computed upon the original issue thereof (or upon the

occurrence of a record date with respect thereto), and any subsequent

adjustments based thereon, shall, upon such expiration, be recomputed as if:

                                (i) in the case

of Convertible Securities or Options for Common Stock, the only additional

shares of Common Stock issued were shares of Common Stock, if any, actually

issued upon the exercise of such Options or the conversion or exchange of such

Convertible Securities, and the consideration received therefor was the

consideration actually received by the Company for the issue of all such

Options, whether or not exercised, plus the consideration actually received by

the Company upon such exercise, or for the issue of all such Convertible

Securities which were actually converted or exchanged, plus the additional

consideration, if any, actually 

 

 

 

received

by the Company upon such conversion, or exchange, and

                                (ii) in the case

of Options for Convertible Securities, only the Convertible Securities, if any,

actually issued upon the exercise thereof were issued at the time of issue of

such Options and the consideration received by the Company for the Additional

Shares of Common Stock deemed to have been then issued was the consideration

actually received by the Company for the issue of all such Options, whether or

not exercised, plus the consideration deemed to have been received by the

Company upon the issue of the Convertible Securities with respect to which such

Options were actually exercised;

(A)                              no readjustment pursuant to clause (B) or

(C) above shall have the effect of increasing the Conversion Price to an amount

which exceeds the lower of (i) the Conversion Price on the original adjustment

date, or (ii) the Conversion Price that would have resulted from any issuance

of Additional Shares of Common Stock between the original adjustment date and

such readjustment date, and no readjustment shall affect Common Stock issued on

conversion of Series C Preferred Stock prior to such readjustment; and

(B)                                in the case of any Options which expire

by their terms not more than 90 days after the date of issue thereof, no

adjustment of the Conversion Price shall be made until the expiration or

exercise of all such Options.

                                (iv) ADJUSTMENT

OF CONVERSION PRICE UPON ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. If the

Company issues Additional Shares of Common Stock (including Additional Shares

of Common Stock deemed to be issued pursuant to Paragraph 6(c)(iii)) without

consideration or for a consideration per share less than the Conversion Price

in effect immediately prior to such issue, then and in such event, such Conversion

Price shall be reduced, concurrently with such issue, to a price equal to the

Effective Price (as defined below) of such Additional Shares of Common Stock.

The “Effective Price” of Additional Shares of Common Stock shall mean the

quotient determined by dividing the total number of Additional Shares of Common

Stock issued or sold, or under Paragraph 6(c)(iii) deemed to have been issued

or sold, into the aggregate consideration received, or under Paragraph

6(c)(iii) deemed to have been received, by the Company for such Additional

Shares of Common Stock.

                                (v)

DETERMINATION OF CONSIDERATION. For purposes of this Paragraph  6(c), the consideration received by the

Company for the issue of any Additional Shares of Common Stock shall be

computed as follows:

                                (1) CASH AND

PROPERTY: Such consideration shall:

(A)                              insofar as it consists of cash, be

computed at the aggregate amount of cash received by the Company prior to

amounts paid or payable for accrued interest or accrued dividends and prior to

any commissions or expenses paid by the Company;

(B)                                insofar as it consists of property other

than cash, be computed at the fair value thereof at the time of such issue, as

determined in good faith by the Board of Directors; and

 

 

 

(C)                              if Additional

Shares of Common Stock are issued together with other shares or securities or

other assets of the Company for consideration which covers both, be the

proportion of such consideration so received, computed as provided in clauses

(A) and (B) above, as determined in good faith by the Board of Directors.

                                (2) OPTIONS AND

CONVERTIBLE SECURITIES. The consideration per share received by the Company for

Additional Shares of Common Stock deemed to have been issued pursuant to

Paragraph 6(c)(iii), relating to Options and Convertible Securities, shall be

determined by dividing

                                (x) the total

amount, if any, received or receivable by the Company as consideration for the

issue of such Options or Convertible Securities, plus the minimum aggregate

amount of additional consideration (as set forth in the instruments relating

thereto, without regard to any provision contained therein for a subsequent

adjustment of such consideration) payable to the Company upon the exercise of

such Option or the conversion or exchange of such Convertible Securities, or in

the case of Options for Convertible Securities, the exercise of such Options

for Convertible Securities and the conversion or exchange of such Convertible

Securities by

                                (y) the maximum

number of shares of Common Stock (as set forth in the instruments relating

thereto, without regard to any provision contained therein for a subsequent

adjustment of such number) issuable upon the exercise of such Options or the

conversion or exchange of such Convertible Securities.

                                (d) ADJUSTMENTS

FOR STOCK DIVIDENDS, COMBINATIONS OR SPLITS. If the outstanding shares of

Common Stock are subdivided, by stock split or otherwise, into a greater number

of shares of Common Stock, or if the Company shall declare or pay any dividend

on the Common Stock payable in shares of Common Stock, then the Conversion

Price in effect prior to such event shall be proportionately decreased upon the

occurrence of such event. If the outstanding shares of Common Stock are

combined or consolidated, by reclassification, reverse stock split or

otherwise, into a lesser number of shares of Common Stock, then the Conversion

Price in effect prior to such event shall be proportionately increased upon the

occurrence of such event.

                                (e) ADJUSTMENTS

FOR OTHER DISTRIBUTIONS. If the Company fixes a record date for the

determination of holders of Common Stock entitled to receive any distribution

payable in securities of the Company other than shares of Common Stock

(excluding any distribution in which the Series C Preferred Stock participates on

an as-converted basis, and any distribution for which adjustment is otherwise

made pursuant to this Paragraph 6), then in each such case provision shall be

made so that the holders of Series C Preferred Stock receive upon conversion,

in addition to the Common Stock issuable upon conversion of their shares, the

property or other securities of the Company which they would have received had

their shares of Series C Preferred Stock been converted into Common Stock

immediately prior to such event and had they thereafter retained such

securities, subject to all other adjustments called for during such period

under this Paragraph 6.

                                (f) ADJUSTMENTS

FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock is changed

into the same or different number of shares 

 

 

 

of

any other class or series of stock, whether by capital reorganization,

reclassification or otherwise (other than an event treated under Paragraph 5 as

a liquidation, dissolution or winding up, and other than a stock dividend,

combination, split or other event for which adjustment is made pursuant to

Paragraph 6(d)), the Conversion Price then in effect shall, concurrently with

the effectiveness of such reorganization or reclassification, be adjusted such

that the Series C Preferred Stock shall be convertible into, in lieu of the

Common Stock which the holders would otherwise have been entitled to receive, a

number of shares of such other class or series of stock equivalent to the

number of shares of Common Stock that the holders would have been entitled to

receive upon conversion of their Series C Preferred Stock immediately prior to

such reclassification or capital reorganization.

                                (g) NO

IMPAIRMENT. The Company will not, by amendment of its Articles of Incorporation

or through any reorganization, transfer of assets, consolidation, merger,

dissolution, issue or sale of securities or any other voluntary action, avoid

or seek to avoid the observance or performance of any of the terms to be

observed or performed hereunder by the Company but will at all times in good

faith assist in the carrying out of all the provisions of this Paragraph 6 and

in the taking of all such action as may be necessary or appropriate in order to

protect the Conversion Rights of the holders of the Series C Preferred Stock

against impairment.

                                (h) CERTIFICATE

AS TO ADJUSTMENTS. The Company shall promptly compute each Conversion Price

adjustment and provide each holder of the Series C Preferred Stock a

certificate describing such adjustment and showing in detail the facts upon

which such adjustment is based. If requested in writing by any holder of Series

C Preferred Stock, the Company shall provide such holder a certificate

describing any Conversion Price adjustments, the current Conversion Price and

the amount of Common Stock or other property issuable upon conversion. (i)

NOTICES OF RECORD DATE. If the Company shall propose at any time:

                                (i) to declare

any dividend or distribution upon its Common Stock other than a distribution

payable solely in Common Stock;

                                (ii) to offer

for subscription pro rata to the holders of any class or series of its stock

any additional shares of stock of any class or series or other rights;

                                (iii) to effect

any reclassification or recapitalization of its Common Stock; or

                                (iv) to merge or

consolidate with or into any other corporation, or sell, lease or convey all or

substantially all its property or business, or to liquidate, dissolve or wind

up; then, in connection with each such event, the Company shall send to the

holders of the Series C Preferred Stock:

                                (1) at least 20

days’ prior written notice of the date on which a record shall be taken for

such dividend, distribution or subscription rights (and specifying the date on

which the holders of Common Stock shall be entitled thereto) or for determining

rights to vote in respect of the matters referred to in (iii) and (iv) above;

and

                                (2) in the case

of the matters referred to in (iii) and (iv) above, at least 20 days’ prior

written notice of the date when the same shall take place (and specifying the

date on which the holders of Common Stock shall be entitled to exchange their

Common Stock for securities or other property deliverable upon the occurrence

of such event).

 

 

 

                                Each such

written notice shall be delivered personally or given by first class mail,

postage prepaid, addressed to the holders of Series C Preferred Stock at the

address for each such holder as shown on the books of this Company.

                7. NO REISSUANCE. No shares of

Series C Preferred Stock acquired by the Company by reason of redemption,

purchase or otherwise shall be reissued, and all such shares shall be canceled,

retired and eliminated from the shares which the Company shall be authorized to

issue.

                8. DEFINITIONS. As used in this

Resolution, the following terms have the following meanings:

                                (a) The term

“Common Stock” shall mean the class of stock designated as the common stock of

the Company at the date of the adoption of this Resolution or any other class

of stock resulting from successive changes or reclassifications of the common

stock.

                                (b) The term

“Parity Stock” means (y) as used in Paragraph 4, above, the Series A Non-Voting

Convertible Redeemable Preferred Stock, the Series B Non-Voting Preferred

Stock, any class or series of stock of the Company hereafter authorized or

issued ranking on a parity with the Series C Preferred Stock in the payment of

dividends, and (z) as used in Paragraph 5, above, any class or series of stock

of the Company hereafter authorized or issued ranking on a parity with the

Series C Preferred Stock in the distribution of assets on any liquidation,

dissolution or winding up of the Company.

                                (c) The term

“Prior Stock” means (y) as used in Paragraph 4, above, any class or series of

stock of the Company hereafter authorized or issued which has preference or

priority in the payment of dividends over the Series C Preferred Stock, and (z)

as used in Paragraph 5, above, any class or series of stock of the Company

hereafter authorized or issued which has preference or priority over the Series

C Preferred Stock in the distribution of assets on any liquidation, dissolution

or winding up of the Company.

                                (d) The term

“Junior Stock” means, as used in Paragraph 5, above, any class or series of

stock of the Company (other than the Common Stock) hereafter authorized or

issued over which the Series C Preferred Stock has preference or priority in

the distribution of assets on any liquidation, dissolution or winding up of the

Company.

RESOLVED FURTHER, that the President and the

Secretary are hereby authorized and directed to execute and file a Certificate

of Determination in accordance with the foregoing resolutions and provisions of

California law.”

                IN WITNESS WHEREOF, the

undersigned have executed this certificate this       day of August,  2002.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Anita M. Robinson,

  President

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Roxanne M. Carr, Secretary

  

 

 

 

                The undersigned declare under

penalty of perjury that the matters set forth in the foregoing Certificate of

Determination are true and correct of their own knowledge.

 

                Executed at San Luis Obispo,

California on August   , 2002.

 

	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Anita M. Robinson

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

  Roxanne M. CarrEXHIBIT 10.1

 

MONACO COACH CORPORATION

 

1993 INCENTIVE STOCK OPTION PLAN

 

(as amended and restated May 16, 2002 and further

amended October 23, 2002)

 

1.                                       Purposes

of the Plan.  The purposes of this

Stock Plan are:

 

•                                          to

attract and retain the best available personnel for positions of substantial

responsibility,

 

•                                          to

provide additional incentive to Employees, Directors and Consultants, and

 

•                                          to

promote the success of the Company’s business.

 

Options granted under the Plan may be Incentive Stock Options or Nonstatutory

Stock Options, as determined by the Administrator at the time of grant.  Stock Purchase Rights may also be granted

under the Plan.

 

2.                                       Applicability

of May 2002 Amendments.  Options or,

as the case may be, Restricted Stock granted on or prior to May 16, 2002 shall

not be subject to Section 11(e) of the Plan. 

Options or, as the case may be, Restricted Stock granted subsequent to

May 16, 2002 shall be Subject to Section 11(e) of the Plan.

 

3.                                       Definitions.  As used herein, the following definitions

shall apply:

 

(a)                                  “Administrator”

means the Board or any of its Committees as shall be administering the Plan, in

accordance with Section 5 of the Plan.

 

(b)                                 “Applicable

Laws” means the requirements relating to the administration of stock option

plans under U.S. state corporate laws, U.S. federal and state securities laws,

the Code, any stock exchange or quotation system on which the Common Stock is

listed or quoted and the applicable laws of any foreign country or jurisdiction

where Options or Stock Purchase Rights are, or will be, granted under the Plan.

 

(c)                                  “Board”

means the Board of Directors of the Company.

 

(d)                                 “Change

in Control” means the occurrence of any of the following events:

 

(i)                                     Any

“person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)

becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act),

directly or indirectly, of securities of the Company representing fifty percent

(50%) or more of the total voting power represented by the Company’s then outstanding

voting securities; or

 

(ii)                                  The

consummation of the sale or disposition by the Company of all or substantially

all of the Company’s assets;

 

 

(iii)                               A

change in the composition of the Board occurring within a two-year period, as a

result of which fewer than a majority of the directors are Incumbent

Directors.  “Incumbent Directors” means

directors who either (A) are Directors as of the effective date of the

Plan, or (B) are elected, or nominated for election, to the Board with the

affirmative votes of at least a majority of the Incumbent Directors at the time

of such election or nomination (but will not include an individual whose

election or nomination is in connection with an actual or threatened proxy

contest relating to the election of directors to the Company); or

 

(iv)                              The

consummation of a merger or consolidation of the Company with any other

corporation, other than a merger or consolidation which would result in the

voting securities of the Company outstanding immediately prior thereto continuing

to represent (either by remaining outstanding or by being converted into voting

securities of the surviving entity or its parent) at least fifty percent (50%)

of the total voting power represented by the voting securities of the Company

or such surviving entity or its parent outstanding immediately after such

merger or consolidation.

 

(e)                                  “Code”

means the Internal Revenue Code of 1986, as amended.

 

(f)                                    “Committee”

means a committee of Directors appointed by the Board in accordance with

Section 5 of the Plan.

 

(g)                                 “Common

Stock” means the common stock of the Company.

 

(h)                                 “Company”

means Monaco Coach Corporation, a Delaware corporation.

 

(i)                                     “Consultant”

means any natural person, including an advisor, engaged by the Company or a

Parent or Subsidiary to render services to such entity.

 

(j)                                     “Director”

means a member of the Board.

 

(k)                                  “Disability”

means total and permanent disability as defined in Section 22(e)(3) of the

Code.

 

(l)                                     “Employee”

means any person, including Officers and Directors, employed by the Company or

any Parent or Subsidiary of the Company. 

A Service Provider shall not cease to be an Employee in the case of

(i) any leave of absence approved by the Company or (ii) transfers

between locations of the Company or between the Company, its Parent, any

Subsidiary, or any successor.  For

purposes of Incentive Stock Options, no such leave may exceed ninety days,

unless reemployment upon expiration of such leave is guaranteed by statute or

contract.  If reemployment upon

expiration of a leave of absence approved by the Company is not so guaranteed,

then three (3) months following the 91st day of such leave any

Incentive Stock Option held by the Optionee shall cease to be treated as an

Incentive Stock Option and shall be treated for tax purposes as a Non­statutory

Stock Option.  Neither service as a

Director nor payment of a director’s fee by the Company shall be sufficient to

constitute “employment” by the Company.

 

(m)                               “Exchange

Act” means the Securities Exchange Act of 1934, as amended.

 

(n)                                 “Fair

Market Value” means, as of any date, the 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

 

2

 

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 on the 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 day of deter­mination, as reported in The Wall Street Journal or

such other source as the Administrator deems reliable; or

 

(iii)                               In

the absence of an established market for the Common Stock, the Fair Market

Value shall be determined in good faith by the Administrator.

 

(o)                                 “Incentive

Stock Option” means an Option intended to qualify as an incentive stock

option within the meaning of Section 422 of the Code and the regulations

promulgated there­under.

 

(p)                                 “Limited

Number” means a number of Shares not to exceed 10% of the total shares

authorized for issuance under the Plan.

 

(q)                                 “Nonstatutory

Stock Option” means an Option not intended to qualify as an Incentive Stock

Option.

 

(r)                                    “Notice

of Grant” means a written or electronic notice evidencing certain terms and

conditions of an individual Option or Stock Purchase Right grant.  The Notice of Grant is part of the Option

Agreement.

 

(s)                                  “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.

 

(t)                                    “Option”

means a stock option granted pursuant to the Plan.

 

(u)                                 “Option

Agreement” means an agreement between the Company and an Optionee

evidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the terms

and conditions of the Plan.

 

(v)                                 “Option

Exchange Program” means a program whereby outstanding Options are repriced

or surrendered in exchange for other Options.

 

(w)                               “Optioned

Stock” means the Common Stock subject to an Option or Stock Purchase Right.

 

(x)                                   “Optionee”

means the holder of an outstanding Option or Stock Purchase Right granted under

the Plan.

 

(y)                                 “Parent”

means a “parent corporation,” whether now or hereafter existing, as defined in

Section 424(e) of the Code.

 

(z)                                   “Plan”

means this 1993 Incentive Stock Option Plan, as amended.

 

(aa)                            “Restricted

Stock” means shares of Common Stock acquired pursuant to a grant of Stock

Purchase Rights under Section 12 of the Plan.

 

3

 

(bb)                          “Restricted

Stock Purchase Agreement” means a written agreement between the Company and

the Optionee evidencing the terms and restrictions applying to stock purchased

under a Stock Purchase Right.  The

Restricted Stock Purchase Agreement is subject to the terms and conditions of

the Plan and the Notice of Grant.

 

(cc)                            “Retirement”

means a Service Provider who retires from the Company on or after age sixty-two

(62) and such Service Provider has at least five (5) years of service with the

Company at the date of retirement; provided, that, the Administrator,

notwithstanding the foregoing, has the discretion to determine when a Service

Provider retires so long as such determination is not less favorable than

provided for in the foregoing definition.

 

(dd)                          “Rule

16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3,

as in effect when discretion is being exercised with respect to the Plan.

 

(ee)                            “Section 16(b)”

means Section 16(b) of the Exchange Act.

 

(ff)                                “Service

Provider” means an Employee, Director (excluding members of the Board who

are “outside directors”) or Consultant, in all cases excluding Directors who

are not Employees.

 

(gg)                          “Share”

means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

 

(hh)                          “Stock

Purchase Right” means the right to purchase Common Stock pursuant to

Section 12 of the Plan, as evidenced by a Notice of Grant.

 

(ii)                                  “Subsidiary”

means a “subsidiary corporation”, whether now or hereafter exist­ing, as

defined in Section 424(f) of the Code.

 

4.                                       Stock Subject to the Plan.  Subject to the provisions of Section 14 of the Plan, the maximum aggregate

number of Shares that may be optioned and sold under the Plan is 3,257,813 Shares.  The Shares may be authorized, but unissued,

or reacquired Common Stock.

 

If an Option or

Stock Purchase Right expires or becomes unexercisable without having been

exercised in full, or is surrendered pursuant to an Option Exchange Program,

the unpurchased Shares which were subject thereto shall become available for

future grant or sale under the Plan (unless the Plan has terminated); provided,

however, that Shares that have actually been issued under the Plan, whether

upon exercise of an Option or Right, shall not be returned to the Plan and

shall not become available for future distribution under the Plan, except that

if Shares of Restricted Stock are repurchased by the Company at their original

purchase price, such Shares shall become available for future grant under the

Plan.

 

5.                                       Administration

of the Plan.

 

(a)                                  Procedure.

 

(i)                                     Multiple

Administrative Bodies.  Different

Committees with respect to different groups of Service Providers may administer

the Plan.

 

(ii)                                  Section 162(m).  To the extent that the Administrator

determines it to be desirable to qualify Options granted hereunder as

“performance-based compensation” within the meaning of

 

4

 

Section 162(m) of

the Code, the Plan shall be administered by a Committee of two or more “outside

directors” within the meaning of Section 162(m) of the Code.

 

(iii)                               Rule

16b-3.  To the extent desirable to

qualify transactions hereunder as exempt under Rule 16b-3, the transactions

contemplated hereunder shall be structured to satisfy the requirements for

exemption under Rule 16b-3.

 

(iv)                              Other

Administration.  Other than as

provided above, the Plan shall be administered by (A) the Board or (B) a

Committee, which committee shall be constituted to satisfy Applicable Laws.

 

(b)                                 Powers

of the Administrator.  Subject to

the provisions of the Plan, and in the case of a Committee, subject to the

specific duties delegated by the Board to such Committee, the Administrator

shall have the authority, in its discre­tion:

 

(i)                                     to

determine the Fair Market Value;

 

(ii)                                  to

select the Service Providers to whom Options and Stock Purchase Rights may be

granted hereunder;

 

(iii)                               to

determine the number of shares of Common Stock to be covered by each Option and

Stock Purchase Right granted hereunder;

 

(iv)                              to

approve forms of agreement for use under the Plan;

 

(v)                                 to

determine the terms and conditions, not inconsistent with the terms of the

Plan, of any Option or Stock Purchase Right granted hereunder.  Such terms and conditions include, but are

not limited to, the exercise price, the time or times when Options or Stock

Purchase Rights may be exercised (which may be based on performance criteria),

any vesting acceleration or waiver of forfeiture restrictions, and any

restriction or limitation regarding any Option or Stock Purchase Right or the

shares of Common Stock relating thereto, based in each case on such factors as

the Administrator, in its sole discretion, shall determine;

 

(vi)                              to

construe and interpret the terms of the Plan and awards granted pursuant to the

Plan;

 

(vii)                           to

prescribe, amend and rescind rules and regulations relating to the Plan,

including rules and regulations relating to sub-plans established for the

purpose of satisfying applicable foreign laws;

 

(viii)                        to modify

or amend each Option or Stock Purchase Right (subject to Section 16(c) of the Plan), including the

discretionary authority to extend the post-termination exercisability period of

Options longer than is otherwise provided for in the Plan;

 

(ix)                                to

allow Optionees to satisfy withholding tax obligations by electing to have the

Company withhold from the Shares to be issued upon exercise of an Option or

Stock Purchase Right that number of Shares having a Fair Market Value equal to

the minimum amount required to be withheld. 

The Fair Market Value of the Shares to be withheld shall be determined

on the date that the amount of tax to be withheld is to be determined.  All elections by an Optionee to have Shares

withheld for this purpose shall be made in such form and under such conditions

as the Administrator may deem necessary or advisable;

 

5

 

(x)                                   to

authorize any person to execute on behalf of the Company any instru­ment

required to effect the grant of an Option or Stock Purchase Right previously

granted by the Administrator;

 

(xi)                                to

make all other determinations deemed necessary or advisable for administering

the Plan.

 

(c)                                  Effect

of Administrator’s Decision. 

The Administrator’s decisions, determina­tions and interpretations shall

be final and binding on all Optionees and any other holders of Options or Stock

Purchase Rights.

 

(d)                                 Administrator’s

Discretion.  Notwithstanding any

contrary provision of the Plan, the Administrator may, in its sole and absolute

discretion, (i) grant a Limited Number of Options or Restricted Stock that do

not conform to the requirements of general limitation imposed by the Plan (such

as the term of the Option, the lapse of any restriction right or the exercise

price or purchase price) provided such Options or Restricted Stock are granted

by a committee composed entirely of Directors who are not Employees; (ii)

implement an Option Exchange Program provided such program is authorized by a

committee composed entirely of Directors who are not Employees, such program is

rarely used (and then only to maintain option value due to circumstances beyond

the Company’s control), and such program is limited to a Limited Number of

Shares.

 

6.                                       Eligibility.  Nonstatutory Stock Options and Stock

Purchase Rights may be granted to Service Providers.  Incentive Stock Options may be granted only to Employees.

 

7.                                       Limitations.

 

(a)                                  Each

Option shall be designated in the Option Agreement as either an Incentive Stock

Option or a Nonstatutory Stock Option. 

However, notwithstanding such designa­tion, to the extent that the

aggregate Fair Market Value of the Shares with respect to which Incentive Stock

Options are exercisable for the first time by the Optionee during any calendar

year (under all plans of the Company and any Parent or Subsidiary) exceeds

$100,000, such Options shall be treated as Nonstatutory Stock Options.  For purposes of this Section 7(a),

Incentive Stock Options shall be taken into account in the order in which they

were granted.  The Fair Market Value of

the Shares shall be determined as of the time the Option with respect to such

Shares is granted.

 

(b)                                 Neither

the Plan nor any Option or Stock Purchase Right shall confer upon an Optionee

any right with respect to continuing the Optionee’s relationship as a Service

Provider with the Company, nor shall they interfere in any way with the

Optionee’s right or the Company’s right to terminate such relationship at any

time, with or without cause.

 

(c)                                  The

following limitations shall apply to grants of Options:

 

(i)                                     No

Service Provider shall be granted, in any fiscal year of the Company, Options

to purchase more than 100,000 Shares.

 

(ii)                                  The

foregoing limitations shall be adjusted proportionately in connection with any

change in the Company’s capitalization as described in Section 14.

 

(iii)                               If

an Option is cancelled in the same fiscal year of the Company in which it was

granted (other than in connection with a transaction described in Section 14), the cancelled Option will be

counted against the limits set forth in subsections (i) and (ii) above.  For this purpose, if the exercise price of 

 

6

 

an Option is reduced, the

transaction will be treated as a cancellation of the Option and the grant of a

new Option.

 

8.                                       Term

of Plan.  Subject to Section 20  of the Plan, the Plan shall become

effective upon its adoption by the Board. 

It shall continue in effect for a term of ten (10) years unless

terminated earlier under Section 16  of

the Plan.

 

9.                                       Term

of Option.  The term of each Option

shall be stated in the Option Agreement. 

In the case of an Incentive Stock Option, the term shall be ten (10)

years from the date of grant or such shorter term as may be provided in the

Option Agreement.  Moreover, in the case

of an Incentive Stock Option granted to an Optionee who, at the time the

Incentive Stock Option is granted, owns stock representing more than ten

percent (10%) of the total combined voting power of all classes of stock of the

Company or any Parent or Subsidiary, the term of the Incentive Stock Option

shall be five (5) years from the date of grant or such shorter term as may be

provided in the Option Agreement.

 

10.                                 Option

Exercise Price and Consideration.

 

(a)                                  Exercise

Price.  The per share exercise price

for the Shares to be issued pursuant to exercise of an Option shall be

determined by the Administrator, subject to the following:

 

(i)                                     In

the case of an Incentive Stock Option

 

(A)                              granted

to an Employee who, at the time the Incentive Stock Option is granted, owns

stock representing more than ten percent (10%) of the voting power of all

classes of stock of the Company or any Parent or Subsidiary, the per Share

exercise price shall be no less than 110% of the Fair Market Value per Share on

the date of grant.

 

(B)                                granted

to any Employee other than an Employee described in paragraph (A) immediately

above, the per Share exercise price shall be no less than 100% of the Fair

Market Value per Share on the date of grant.

 

(ii)                                  In

the case of a Nonstatutory Stock Option, the per Share exercise price shall not

be less than 100% of the Fair Market Value per Share on the date of grant;

provided, however, that options may be granted with an exercise price equal to

or greater than 85% of the Fair Market Value on the date of grant provided such

“discount” is granted in lieu of a reasonable amount of cash compensation or

cash bonus payable by the Company to a Service Provider.  In the case of a Nonstatutory Stock Option

intended to qualify as “performance-based compensation” within the meaning of

Section 162(m) of the Code, the per Share exercise price shall be no less

than 100% of the Fair Market Value per Share on the date of grant.

 

(iii)                               Notwithstanding

the foregoing, Options may be granted with a per Share exercise price of less

than 100% of the Fair Market Value per Share on the date of grant pursuant to a

Change in Control.

 

(b)                                 Waiting

Period and Exercise Dates.  At the

time an Option is granted, the Administrator shall fix the period within which

the Option may be exercised and shall determine any con­ditions that must be

satisfied before the Option may be exercised.

 

(c)                                  Form

of Consideration.  The Administrator

shall determine the acceptable form of consideration for exercising an Option,

including the method of payment.  In the

case of an Incentive Stock 

 

7

 

Option, the Administrator

shall determine the acceptable form of consideration at the time of grant.  Such consideration may consist entirely of:

 

(i)                                     cash;

 

(ii)                                  check;

 

(iii)                               promissory

note;

 

(iv)                              other

Shares which, in the case of Shares acquired directly or indirectly from the

Company, (A) have been owned by the Optionee for more than six (6)

months on the date of surrender, and (B) 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;

 

(v)                                 consideration

received by the Company under a cashless exercise program implemented by the

Company in connection with the Plan;

 

(vi)                              a

reduction in the amount of any Company liability to the Optionee, including any

liability attributable to the Optionee’s participation in any Company-sponsored

deferred compensation program or arrangement;

 

(vii)                           any

combination of the foregoing methods of payment; or

 

(viii)                        such other

consideration and method of payment for the issuance of Shares to the extent

permitted by Applicable Laws.

 

11.                                 Exercise

of Option.

 

(a)                                  Procedure

for Exercise; Rights as a Stockholder. 

Any Option granted here­under shall be exercisable according to the

terms of the Plan and at such times and under such conditions as determined by

the Administrator and set forth in the Option Agreement.  Unless the Administrator provides otherwise,

vesting of Options granted hereunder shall be suspended during any unpaid leave

of absence.  An Option may not be

exercised for a fraction of a Share.

 

An Option shall be deemed

exercised when the Company receives: (i) written or electronic notice of

exercise (in accordance with the Option Agreement) from the person entitled to

exercise the Option, and (ii) full payment for the Shares with respect to

which the Option is exercised.  Full

payment may consist of any consideration and method of payment authorized by

the Administrator and permitted by the Option Agreement and the Plan.  Shares issued upon exercise of an Option

shall be issued in the name of the Optionee or, if requested by the Optionee,

in the name of the Optionee and his or her spouse.  Until the Shares are issued (as evidenced by the appropriate

entry on the books of the Company or of a duly authorized transfer agent of the

Company), no right to vote or receive dividends or any other rights as a

stockholder shall exist with respect to the Optioned Stock, notwithstanding the

exercise of the Option.  The Company

shall issue (or cause to be issued) such Shares promptly after the Option is

exercised.  No adjustment will be made

for a dividend or other right for which the record date is prior to the date

the Shares are issued, except as provided in Section 14  of the Plan.

 

Exercising an Option in any manner shall decrease the

number of Shares thereafter 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.

 

8

 

(b)                                 Termination

of Relationship as a Service Provider. 

If an Optionee ceases to be a Service Provider, other than upon the

Optionee’s death, Disability, or Retirement the Optionee may exercise his or

her Option within such period of time as is specified in the Option Agreement

to the extent that the Option is vested on the date of termination (but in no

event later than the expiration of the term of such Option as set forth in the

Option Agreement).  In the absence of a

specified time in the Option Agreement, the Option shall remain exercisable for

three (3) months following the Optionee’s termination.  If, on the date of termination, the Optionee

is not vested as to his or her entire Option, the Shares covered by the

unvested portion of the Option shall revert to the Plan.  If, after termination, the Optionee does not

exercise his or her Option within the time specified by the Administrator, the

Option shall terminate, and the Shares covered by such Option shall revert to

the Plan.

 

(c)                                  Disability

of Optionee.  If an Optionee ceases

to be a Service Provider as a result of the Optionee’s Disability, the Option

granted hereunder to such Optionee shall become vested and exercisable for the

full number of Shares covered by the Option. 

The Optionee may exercise his or her Option at any time within twelve

(12) months from the date of such termination (but in no event later than the

expiration of the term of such Option as set forth in the Notice of

Grant).  If, after termination, the

Optionee does not exercise his or her Option within the time specified herein,

the Option shall terminate, and the Shares covered by such Option shall revert

to the Plan.

 

(d)                                 Death

of Optionee.  If an Optionee dies

while a Service Provider, the Option shall become vested and exercisable for

the full number of Shares covered by the Option.  The Option held by the Optionee at the time of death may be

exercised at any time within twelve (12) months following the date of death of

Optionee by the Optionee’s designated beneficiary, provided such beneficiary

has been designated prior to Optionee’s death in a form acceptable to the

Administrator.  In no event shall an

Option be exercised later than the expiration of the term of the Option, as set

forth in the Option Agreement.  If no

such beneficiary has been designated by the Optionee, then such Option may be

exercised by the personal representative of the Optionee’s estate or by the

person(s) to whom the Option is transferred pursuant to the Optionee’s will or

in accordance with the laws of descent and distribution.  If the Option is not so exercised within the

time specified herein, the Option shall terminate, and the Shares covered by

such Option shall revert to the Plan.

 

(e)                                  Retirement

of Optionee.  In the event of an

Optionee’s Retirement while a Service Provider, the Option shall become vested

and exercisable for the full number of Shares covered by the Option.  The Option held by the Optionee at the time

of Retirement may be exercised at any time within twelve (12) months following

the date of Retirement; provided, however, that (i) this subsection (e) shall

not apply to grants made on or before May 16, 2002, and (ii) this subsection

(e) shall apply to grants made on or after May 17, 2002.  In no event shall an Option be exercised

later than the expiration of the term of the Option, as set forth in the Option

Agreement.  If the Option is not so

exercised within the time specified herein, the Option shall terminate, and the

Shares covered by such Option shall revert to the Plan.

 

12.                                 Stock

Purchase Rights.

 

(a)                                  Rights

to Purchase.  Stock Purchase Rights

may be issued either alone, in addition to, or in tandem with other awards

granted under the Plan and/or cash awards made outside of the Plan.  After the Administrator determines that it

will offer Stock Purchase Rights under the Plan, it shall advise the offeree in

writing or electronically, by means of a Notice of Grant, of the terms,

conditions and restrictions related to the offer, includ­ing the number of

Shares that the offeree shall be entitled to purchase, the price to be paid,

and the time within which the offeree must accept such offer.  The offer shall be accepted by execution of

a Restricted Stock Purchase Agreement in the form determined by the

Administrator.

 

9

 

(b)                                 Repurchase

Option.  Unless the Administrator

determines otherwise, the Restricted Stock Purchase Agreement shall grant the

Company a repurchase option exercisable upon the voluntary or involuntary

termination of the purchaser’s service with the Company for any reason

(including death or Disability).  The

purchase price for Shares repurchased pursuant to the Restricted Stock Purchase

Agreement shall be the original price paid by the purchaser and may be paid by

cancellation of any indebtedness of the purchaser to the Company.  The repurchase option shall lapse at a rate

determined by the Administrator, but generally such repurchase option shall not

lapse at an annual rate greater than 33% of the total number of number of

Shares subject to the Restricted Stock Purchase Agreement.

 

(c)                                  Other

Provisions.  The Restricted Stock

Purchase Agreement shall contain such other terms, provisions and conditions

not inconsistent with the Plan as may be determined by the Administrator in its

sole discretion.

 

(d)                                 Rights

as a Stockholder.  Once the Stock

Purchase Right is exercised, the purchaser shall have the rights equivalent to

those of a stockholder, and shall be a stockholder when his or her purchase is

entered upon the records of the duly authorized transfer agent of the

Company.  No adjustment will be made for

a dividend or other right for which the record date is prior to the date the

Stock Purchase Right is exercised, except as provided in Section 14 of the Plan.

 

13.                                 Transferability

of Options and Stock Purchase Rights. 

Unless determined otherwise by the Administrator, an Option or Stock

Purchase Right 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.  If the Administrator

makes an Option or Stock Purchase Right transferable, such Option or Stock

Purchase Right shall contain such additional terms and conditions as the

Administrator deems appropriate.

 

14.                                 Adjustments

Upon Changes in Capitalization, Merger or Change in Control.

 

(a)                                  Changes

in Capitalization.  Subject to any

required action by the stockholders of the Company, the number of shares of

Common Stock that have been authorized for issuance under the Plan but as to

which no Options or Stock Purchase Rights have yet been granted or which have

been returned to the Plan upon cancellation or expiration of an Option or Stock

Purchase Right  and the number of shares

of Common Stock as well as the price per share of Common Stock covered by each

such outstanding Option or Stock Purchase Right, shall be proportionately

adjusted for any increase or decrease in the number of issued shares of Common

Stock 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 of Common Stock 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 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 of Common Stock subject to an

Option or Stock Purchase Right.

 

(b)                                 Dissolution

or Liquidation.  In the event of the

proposed dissolution or liquida­tion of the Company, the Administrator shall

notify each Optionee as soon as practicable prior to the effective date of such

proposed transaction.  The Administrator

in its discretion may provide for an Optionee to have the right to exercise his

or her Option until ten (10) days prior to such transaction as to all of the

Optioned Stock covered thereby, including Shares as to which the Option would

not otherwise be exercisable.  In

addition, the Administrator may provide that any Company repurchase option

applicable to any Shares purchased upon 

 

10

 

exercise of an Option or

Stock Purchase Right shall lapse as to all such Shares, provided the proposed

dissolution or liquidation takes place at the time and in the manner

contemplated.  To the extent it has not

been previously exercised, an Option or Stock Purchase Right will terminate

immediately prior to the consummation of such proposed action.

 

(c)                                  Merger

or Change in Control.  In the event

of a merger of the Company with or into another corporation, or a Change in

Control, each outstanding Option and Stock Purchase Right shall be assumed or

an equivalent option or right substituted by the successor corporation or a

Parent or Subsidiary of the successor corporation.

 

In the event that the successor corporation refuses to assume or

substitute for the Option or Stock Purchase Right, the Optionee shall fully

vest in and have the right to exercise the Option or Stock Purchase Right as to

all of the Optioned Stock, including Shares as to which it would not otherwise

be vested or exercisable.  If an Option

or Stock Purchase Right becomes fully vested and exercisable in lieu of assumption

or substitution in the event of a merger or sale of assets, the Administrator

shall notify the Optionee in writing or electronically that the Option or Stock

Purchase Right shall be fully vested and exercisable for a period of fifteen

(15) days from the date of such notice, and the Option or Stock Purchase Right

shall terminate upon the expiration of such period.

 

For the purposes of this subsection (c), the Option or

Stock Purchase Right shall be considered assumed if, following the merger or

Change in Control, the option or right confers the right to purchase or

receive, for each Share of Optioned Stock subject to the Option or Stock

Purchase Right immediately prior to the merger or Change in Control, the

consideration (whether stock, cash, or other securities or property) received

in the merger or Change in Control 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); provided, however, that if such

consideration received in the merger or Change in Control is not solely common

stock of the successor corporation or its Parent, the Administrator may, with

the consent of the successor corporation, provide for the consideration to be

received upon the exercise of the Option or Stock Purchase Right, for each

Share of Optioned Stock subject to the Option or Stock Purchase Right, 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 merger or Change in Control.

 

15.                                 Date

of Grant.  The date of grant of an

Option or Stock Purchase Right shall be, for all purposes, the date on which

the Administrator makes the determination granting such Option or Stock

Purchase Right, or such other later date as is determined by the

Administrator.  Notice of the

determination shall be provided to each Optionee within a reasonable time after

the date of such grant.

 

16.                                 Amendment

and Termination of the Plan.

 

(a)                                  Amendment

and Termination.  The Board may at

any time amend, alter, suspend or terminate the Plan.

 

(b)                                 Stockholder

Approval.  The Company shall obtain

stockholder approval of any Plan amendment to the extent necessary and

desirable to comply with Applicable Laws. 

Notwithstanding the foregoing, the Company shall obtain stockholder

approval of a Plan amendment that would (i) increase the number of securities

that may be issued under the Plan, (ii) materially modify the requirements for

participation in the plan other than amendment that narrows the class of

persons eligible to participate in the Plan and (iii) materially increase the

benefits accruing to participants in the Plan.

 

11

 

(c)                                  Effect

of Amendment or Termination.  No

amendment, alteration, suspension or termination of the Plan shall impair the

rights of any Optionee, unless mutually agreed otherwise between the Optionee

and the Administrator, which agreement must be in writing and signed by the

Optionee and the Company.  Termination

of the Plan shall not affect the Administrator’s ability to exercise the powers

granted to it hereunder with respect to Options granted under the Plan prior to

the date of such termination.

 

17.                                 Conditions

Upon Issuance of Shares.

 

(a)                                  Legal

Compliance.  Shares shall not be

issued pursuant to the exercise of an Option or Stock Purchase Right unless the

exercise of such Option or Stock Purchase Right and the issuance and delivery

of such Shares shall comply with Applicable Laws and shall be further subject

to the approval of counsel for the Company with respect to such compliance.

 

(b)                                 Investment

Representations.  As a condition to

the exercise of an Option or Stock Purchase Right, the Company may require the

person exercising such Option or Stock Purchase Right 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.

 

18.                                 Inability

to Obtain Authority.  The 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.

 

19.                                 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.

 

20.                                 Stockholder

Approval.  The Plan shall be subject

to approval by the stockholders of the Company within twelve (12) months after

the date the Plan is adopted.  Such

stockholder approval shall be obtained in the manner and to the degree required

under Applicable Laws.

 

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