Issuer has outstanding 10,000 shares of common stock and 5,000 shares of preferred stock, convertible, on a one-to-one basis, into common stock. It now wishes to establish a stock option plan qualifying for the Rule 701 exemption. p. 291Assuming no securities have been sold in reliance on Rule 701 in the last 12 months, what limits does Rule 701 place on the size of the stock option plan? 

What if the convertible preferred stock had previously been sold in an offering exempt under Rule 701?