1. (a) The total number of securities (which may be expressed as a specific number of securities or as a percentage of the total number of securities outstanding from time to time) which may be issued and the persons eligible to receive options to purchase these securities.
2. (b) An exercise period of not more than 120 months from the date the option is granted.
3. (c) The non-transferability of the options, provided that the plan or agreement may permit transfer by will, by the laws of descent and distribution, to a revocable trust, or as permitted by Rule 701 of the Securities Act of 1933, as amended (17 C.F.R. 230.701).
4. (d) The proportionate adjustment of the number of securities purchasable and the exercise price thereof under the option in the event of a stock split, reverse stock split, stock dividend, recapitalization, combination, reclassification or other distribution of the issuer's equity securities without the receipt of consideration by the issuer, of or on the issuer's class or series of securities underlying the option.

5. (e) Unless employment is terminated for cause as defined by applicable law, the terms of the plan or option grant or a contract of employment, the right to exercise in the event of termination of employment, to the extent that the optionee is entitled to exercise on the date employment terminates, continues until the earlier of the option expiration date or:

   1. (1) At least 6 months from the date of termination if termination was caused by death or disability.
   2. (2) At least 30 days from the date of termination if termination was caused by other than death or disability.
6. (f) Options must be granted within 10 years from the date the plan or agreement is adopted or the date the plan or agreement is approved by the issuer's security holders, whichever is earlier.
7. (g) The plan or agreement must be approved by a majority of the outstanding securities entitled to vote by the later of (1) within 12 months before or after the date the plan is adopted or the date the agreement is entered into or (2) prior to or within 12 months of the granting of any option or issuance of any security under the plan or agreement in this state. Any option granted to any person in this state that is exercised before security holder approval is obtained must be rescinded if security holder approval is not obtained in the manner described in the preceding sentence. Such securities shall not be counted in determining whether such approval is obtained. A foreign private issuer, as defined by Rule 3b-4 of the Securities Exchange Act of 1934, as amended (17 C.F.R. 240.3b-4), shall not be required to comply with this subsection provided that the aggregate number of persons in this state granted options under all option plans and agreements and issued securities under all purchase and bonus plans and agreements does not exceed 35.
8. (h) Compliance with Section 260.140.46 of these rules regarding the information required to be received by security holders.

Options granted to employees [including insurance agents who are employees for purposes of Rule 701(c) under the Securities Act of 1933, as amended (17 C.F.R. 230.701(c)], officers, directors, general partners, trustees (where the issuer is a business trust), managers, advisors or consultants of the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer's parent as part of a compensatory benefit plan shall be pursuant to a plan or agreement that provides for all of the following:

Note: Authority cited: Section 25610, Corporations Code. Reference: Sections 25102, 25110, 25140, 25610 and 25612.5, Corporations Code.

History

1. Amendment of subsection (b) filed 7-19-72; effective thirtieth day thereafter (Register 72, No. 30).

2. Amendment filed 5-3-83; effective thirtieth day thereafter (Register 83, No. 19).

3. Amendment filed 12-5-91; operative 1-6-92 (Register 92, No. 9).

4. Amendment of first paragraph and subsections (a), (f), (g) and (k), repealer of subsections (k)(1) and (k)(2), and new subsection (l) filed 1-15-97; operative 1-15-97 pursuant to Government Code section 11343.4(d) (Register 97, No. 3).

5. Amendment of subsection (d) filed 12-30-98; operative 1-29-99 (Register 99, No. 1).

6. Amendment of first paragraph and subsections (a)-(b), (e), (h)-(i) and (k)(1)-(l) filed 12-28-2000 as an emergency; operative 1-1-2001 (Register 2000, No. 52). A Certificate of Compliance must be transmitted to OAL by 5-1-2001 or emergency language will be repealed by operation of law on the following day.

7. Amendment of first paragraph and subsections (a)-(b), (e), (h)-(i) and (k)(1)-(l) refiled 5-2-2001 as an emergency; operative 5-2-2001 (Register 2001, No. 18). A Certificate of Compliance must be transmitted to OAL by 8-30-2001 or emergency language will be repealed by operation of law on the following day.

8. Amendment of first paragraph and subsections (a)-(b), (e), (h)-(i) and (k)(1)-(l) refiled 8-30-2001 as an emergency; operative 8-30-2001 (Register 2001, No. 35). A Certificate of Compliance must be transmitted to OAL by 12-28-2001 or emergency language will be repealed by operation of law on the following day.

9. Certificate of Compliance as to 8-30-2001 order, including further amendment of section heading and section, transmitted to OAL 12-27-2001 and filed 2-7-2002 (Register 2002, No. 6).

10. Amendment of section heading, section and Note filed 7-9-2007; operative 7-9-2007 pursuant to Government Code section 11343.4 (Register 2007, No. 28).