Einstein Bros 2006 Annual Report Download - page 62

http://www.sec.gov/Archives/edgar/data/949373/000104746907001622/a2176540z10-k.htm[9/11/2014 10:12:36 AM]
stock. The Board can redeem the rights at $0.001 per right at any time before any person acquires 15% or more of the outstanding common stock.
In the event an individual (the "Acquiring Person") acquires 15% or more of the outstanding common stock, each right will entitle its holder to
purchase, at the right's exercise price, one one-hundredth of a share of Series A junior participating preferred stock, which is convertible into
common stock at one-half of the then value of the common stock, or to purchase such common stock directly if there are a sufficient number of
shares of common stock authorized. Our Board has the ability to exclude any Acquiring Person from the provision of the stockholders rights plan,
resulting in such Acquiring Person's purchase of our
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common stock not triggering the plan. Rights held by the Acquiring Person are void and will not be exercisable to purchase shares at the bargain
purchase price. If we are acquired in a merger or other business combination transaction, each right will entitle its holder to purchase, at the right's
then-current exercise price, a number of the acquiring company's common shares having a market value at that time of twice the right's exercise
price.
16. STOCK OPTION AND WARRANT PLANS
1994 and 1995 Plans
Our 1994 Stock Plan (1994 Plan) provided for the granting to employees of incentive stock options and for the granting to employees and
consultants of non-statutory stock options and stock purchase rights. On November 21, 2003, the board of directors terminated the authority to
issue any additional options under the 1994 Plan. At January 2, 2007, options to purchase 17 shares of common stock at an exercise price of
$210.71 per share and a remaining contractual life of 0.48 years remained outstanding under this plan.
Our 1995 Directors' Stock Option Plan (Directors' Option Plan) provided for the automatic grant of non-statutory stock options to non-
employee directors of the Company. On December 19, 2003, our board of directors terminated the authority to issue any additional options under
the Directors' Option Plan. At January 2, 2007, options to purchase 2,324 shares of common stock at a weighted average exercise price of $32.43
per share and a weighted average remaining contractual life of 5.66 years remained outstanding under this plan.
2003 Executive Employee Incentive Plan
On November 21, 2003, our board of directors adopted the Executive Employee Incentive Plan, amended on December 19, 2003 and March 1,
2005 (2003 Plan). The 2003 Plan provides for granting incentive stock options to employees and granting non-statutory stock options to
employees and consultants. Unless terminated sooner, the 2003 Plan will terminate automatically in December 2013. The board of directors has the
authority to amend, modify or terminate the 2003 Plan, subject to any required approval by our stockholders under applicable law or upon advice of
counsel. No such action may affect any options previously granted under the 2003 Plan without the consent of the holders. There are 1,150,000
shares issuable pursuant to options granted under the 2003 Plan. Options are generally granted with an exercise price equal to the fair market value
on the date of grant, have a contractual life of ten years and typically vest over a three-year service period. Generally, 50% of options granted vest
based solely upon the passage of time. We recognize compensation costs for these awards using a graded vesting attribution method over the
requisite service period. The remaining 50% of options granted vest based on service and performance conditions. Options that do not vest due to
the failure to achieve specific financial performance criteria are forfeited. Options to purchase approximately 196,976 shares of our common stock,
which are not yet exercisable, are subject to company performance conditions. We recognize compensation costs for performance based options
over the requisite service period when conditions for achievement become probable. While our operating performance improved substantially
during fiscal 2006, we did not achieve all internal benchmarks necessary to earn 100% of the performance based awards. Accordingly, 74,707 of
the outstanding options, or 50%, that were to vest based upon 2006 performance were cancelled. We expect that all of the non-vested awards at
January 2, 2007 will vest based on future company performance. As of January 2, 2007, there were 295,957 shares reserved for future issuance
under the 2003 Plan.
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2004 Stock Option Plan for Independent Directors
On December 19, 2003, our board of directors adopted the Stock Option Plan for Independent Directors, effective January 1, 2004, amended
on March 1, 2005 (2004 Directors' Plan). Our board of directors may amend, suspend, or terminate the 2004 Directors' Plan at any time, provided,
however, that no such action may adversely affect any outstanding option without the option holders consent. A total of 200,000 shares of common