XXXXXXX LABORATORIES, INC.
1993 INCENTIVE STOCK OPTION PLAN
1. DEFINITIONS. As used herein, the following terms shall have the
meanings hereinafter set forth unless the context clearly indicates to the
contrary:
1.1 AGREEMENT. The agreement between the Company and the Optionee
under which the Optionee may purchase Stock pursuant to the Plan.
1.2 BOARD. The Board of Directors of the Company.
1.3 COMMITTEE. A committee of two (2) or more members of the Board
appointed by the Board to administer the Plan.
1.4 COMPANY. Xxxxxxx Laboratories, Inc., a California corporation.
1.5 CODE. The United States Internal Revenue Code of 1986, as
amended.
1.6 ELIGIBLE PERSON. Any person who is a full-time employee of the
Company, a Parent or a Subsidiary, including full-time executive officers or key
employees thereof, as determined by the Board or the Committee, as the case may
be. As used herein, "full-time" shall mean employment on a regular and
continuing basis.
1.7 FAIR MARKET VALUE. The per share fair market value of the
Stock of the Company with respect to which Options may be granted pursuant to
the Plan, determined without regard to any restriction upon the Stock other
than a restriction which, by its terms, will never lapse. For purposes of
determining whether a restriction upon the Stock will never lapse,
limitations imposed by applicable registration requirements of state or
federal securities or similar laws imposed with respect to resales or other
dispositions of securities shall be disregarded. If the Stock of the Company
is publicly traded on a national securities exchange or in the
over-the-counter market such per share fair market value shall be equal to
the per share composite closing price for such Stock on such national
securities exchange, or, in the case of Stock sold in the over-the-counter
market, shall be determined by the Committee or the Board, as the case may
be, in accordance with Internal Revenue Code Section 422A(b)(4); provided,
however, that the fair market value of such Stock shall
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not be less than the per share closing bid price nor greater than the per
share closing asked price for such Stock on the date an Option is granted
under the Plan or, in the absence of any reported sales on such date, the
first preceding date on which there were such sales. If the Stock of the
Company is not publicly traded, such fair market value shall be determined by
and in accordance with such valuation procedures and methods as are
established from time to time by the Committee or the Board, as the case may
be, in good faith and in accordance with the provisions of the Code and any
regulations promulgated thereunder.
1.8 ISO. An option to purchase Stock of the Company pursuant to the
provisions of the Plan, which option at the time of grant is defined by, and
intended to qualify as an incentive stock option pursuant to, Section 422 of the
Code.
1.9 OPTION. An ISO granted pursuant to the provisions of the Plan.
1.10 OPTIONEE. The Eligible Person to whom an Option has been granted
pursuant to the provisions of the Plan.
1.11 OPTION PRICE. The per share exercise price of the Stock with
respect to which an Option has been granted under the Plan.
1.12 PARENT. Any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, at the time of the granting of
an Option, each of the corporations other than the Company owns securities
possessing fifty percent (50%) or more of the total combined voting power of all
classes of securities in one of the other corporation in such chain.
1.13 PLAN. The Company's 1993 Incentive Stock Option Plan, the terms
of which are set forth herein.
1.14 STOCK. The common stock of the Company.
1.15 SUBSIDIARY. Any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
granting of an Option, each of the corporations other than the last corporation
in the unbroken chain owns securities possessing fifty percent (50%) or more of
the total combined voting power of all classes of securities in one of the other
corporations in such chain.
2. ESTABLISHMENT AND PURPOSE OF PLAN.
2.1 ESTABLISHMENT OF PLAN. The Company hereby establishes the Plan
for the benefit of those Eligible Persons who are
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primarily responsible for the future growth, development and financial
success of the Company.
2.2 PURPOSE OF PLAN. The purpose of the Plan is to advance the
interests of the Company and its shareholders by affording to Eligible Persons
an opportunity to acquire or increase their proprietary interests in the Company
by the grant to such Eligible Persons of Options to purchase Stock in the
Company pursuant to the terms of the Plan. By encouraging such Eligible Persons
to become owners of shares of Stock in the Company, the Company seeks to
motivate, retain and attract those highly competent individuals upon whose
judgment, initiative, leadership and continued efforts the success of the
Company in large measure depends.
2.3 EFFECTIVE DATE OF PLAN. The effective date of the Plan shall be
February 4, 1993; provided, however, that Options granted pursuant to the Plan
shall not be exercisable until the Plan shall have been: (i) adopted (or
corporate action taken) by the Board; and (ii) approved by shareholders holding
a majority of all outstanding voting securities of the Company. Such
shareholder approval shall be obtained within twelve (12) months before or after
the date on which the Plan is so adopted by the Board. Such shareholder
approval shall comply with all applicable provisions of the Articles of
Incorporation and Bylaws of the Company and applicable California state law
prescribing the method and degree of share-holder approval required for the
Plan.
2.4 EXPIRATION OF PLAN. The Plan shall terminate ten (10) years from
its effective date as provided by Section 2.3 of the Plan, or such earlier date
as the Board may determine pursuant to Section 7 of the Plan, and no Option
shall be granted after such date.
2.5 CONTROLLING PROVISIONS. Except as otherwise provided in the
Plan, each provision thereof shall apply to the grant, administration and
exercise of all Options subject thereto. No such provisions shall be
interpreted or applied in a manner inconsistent or otherwise at variance with
the requirements of Section 422 of the Code with respect to qualification of
ISOs as incentive stock options
3. STOCK SUBJECT TO PLAN.
3.1 LIMITATIONS. Subject to adjustment pursuant to the provisions of
Section 3.2 hereof, the aggregate number of shares of Stock of the Company which
may be issued and sold under the Plan shall not exceed 100,000 shares. During
the term of the Plan, the Company shall reserve and keep available or otherwise
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have authorized a sufficient number of shares to comply with the requirements
of the Plan.
3.2 ADJUSTMENTS. In the event that the outstanding shares of Stock
of the Company are hereafter changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation by
reason of merger, consolidation, reorganization, recapitalization,
reclassification, combination of shares, stock dividend, stock split or reverse
stock split, the following adjustments shall be made:
3.2.1 NUMBER AND KIND OF SHARES. The aggregate number and kind
of shares with respect to which Options may be granted hereunder shall be
appropriately adjusted.
3.2.2 OUTSTANDING OPTIONS. The rights of an Optionee holding
outstanding Options granted under the Plan both as to the number of shares and
the Option Price shall be appropriately adjusted.
3.2.3 NONSURVIVAL OF COMPANY. Where dissolution or liquidation
of the Company or any merger or combination in which the Company is not a
surviving corporation is involved, each Option granted hereunder shall terminate
as of the effective date of such liquidation, dissolution, merger or combination
to the extent that such outstanding Options are not assumed by the surviving
corporation or replaced by equivalent options granted by the surviving
corporation; provided, however, that the Optionee shall have the right, for a
period of thirty (30) days immediately prior to the consummation of such
liquidation, dissolution, merger or combination, to exercise his Option, to the
extent that such Option shall not have been previously exercised, subject to any
installment exercise provisions, provided that such Option is not assumed by, or
replaced by equivalent options granted by, the surviving corporation in such
liquidation, dissolution, merger or combination.
3.3 EFFECT OF EXERCISE OR TERMINATION OF OPTION. Shares of Stock
with respect to which an Option granted under the Plan shall have been exercised
shall not again be available for grant under the Plan. If Options granted under
the Plan shall terminate for any reason without being wholly exercised, new
Options may be granted under the Plan covering that number of shares of Stock
with respect to which such termination relates.
4. ADMINISTRATION OF THE PLAN.
4.1 ADMINISTRATION BY BOARD OR COMMITTEE. Subject to the provisions
of the Plan, the Plan shall be administered by the Board. At any time during
the existence of the Plan, the Board
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may appoint a Committee to administer the Plan, in which event the Plan shall
be administered by the Committee until such time as the Committee is
disbanded by the Board.
4.2 POWERS AND DUTIES. Subject to the provisions of the Plan, the
Board or Committee, as the case may be, shall have sole discretion and authority
to determine the Eligible Persons to whom Options shall be granted, the number
of shares of Stock to be covered by any such Option and the time or times at
which any Option may be granted or exercised. The Board or Committee, as the
case may be, shall also have complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the details and provisions of each Agreement executed pursuant to the
Plan and to make all other determinations necessary or advisable in the
administration of the Plan.
4.3 QUORUM AND MAJORITY RULE. The majority of the then members of
the Board or Committee, as the case may be, shall constitute a quorum and any
action taken by a majority present at a meeting at which a quorum is present or
any action taken without a meeting evidenced by a writing executed by all of the
members of the Board or Committee, as the case may be, shall constitute the
action of the Board or Committee.
4.4 PARTICIPATION BY MEMBERS OF BOARD OR COMMITTEE. Any member of the
Board or Committee, as the case may be, shall not be disqualified from receiving
an Option by virtue of the fact that he is a member of the Board or Committee;
provided, however, that no grant of an Option to a member of the Board or
Committee shall take place without the approval or consent of either a majority
of the entire Board, a majority of which and a majority of whose members acting
in the matter are disinterested persons, or a majority of the Committee, all of
the members of which are disinterested persons. For purposes of this Section
4.4, a "disinterested person" shall mean an administrator of the Plan who is not
at the time he exercises discretion in administering the Plan an Eligible Person
and has not at any time within one (1) year prior thereto been an Eligible
Person under the Plan or any other plan of the Company or any Parent or
Subsidiary entitling the participants therein to acquire stock, stock options or
stock appreciation rights of the Company or any Parent or Subsidiary.
4.5 LIABILITY OF BOARD OR COMMITTEE. No member of the Board or
Committee, as the case may be, shall be liable for any action, determination or
interpretation under any provision of the Plan or otherwise if such action,
determination or interpretation was done or made in good faith by such member of
the Board or Committee.
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5. OPTIONS GRANTED UNDER THE PLAN.
5.1 GRANT OF OPTIONS. ISOs may be granted to Eligible Persons under
the Plan. No Option shall be granted under the Plan on a date more than ten
(10) years from the earlier of the date the Plan is: (i) adopted by the Board;
or (ii) approved by the shareholders of the Company as provided by Section 2.3
of the Plan. An Eligible Person may be granted one or more Options. Each
Option granted under the Plan shall be evidenced by an Agreement dated as of the
date such Option is granted by the Board or Committee, as the case may be. The
Agreement shall contain such terms and conditions as shall be determined by the
Board or Committee, as the case may be, consistent with the Plan. Each ISO
granted under the Plan shall designate, at the time of grant, that such Option
shall be subject to, and treated as an incentive stock option pursuant to,
Section 422 of the Code. As a further condition to the grant of an Option, but
without limitation of an Optionee's rights as a shareholder, the Board or
Committee, as the case may be, may require an Optionee to enter into a buy-sell
agreement with the Company concerning the Stock subject to such Option
concurrently with such Optionee's first exercise of the Option. Such condition
may be a term of the Agreement. The Board or Committee, as the case may be, may
provide the Optionee with a form of such buy-sell agreement upon execution and
delivery of the Agreement.
5.2 OPTION PRICE. The Option Price shall be determined by the
Board or Committee, as the case may be; provided, however, that the per share
Option Price shall not be less than one hundred percent (100%) of the Fair
Market Value of the Stock on the date the ISO is granted; and provided
further, however, that if the Optionee owns securities possessing more than
ten percent (10%) of the total combined voting power of all classes of
securities of the Company, a Parent or a Subsidiary, including indirect
ownership of securities as determined by Section 424(d) of the Code, at the
time an ISO is granted to him, the Option Price of such ISO shall not be less
than one hundred ten percent (110%) of the Fair Market Value of the Stock on
the date the ISO is granted to him.
5.3 OPTION TERM. The term during which any Option granted under the
Plan may be exercised shall be determined by the Board or Committee, as the case
may be; provided, however, that in no instance shall the term during which any
Option may be exercised exceed ten (10) years from the date of grant of the
Option; and provided further, however, that no ISO granted to an Optionee who
then owns securities possessing more than ten percent (10%) of the total
combined voting power of all classes of securities of the Company, a Parent or a
Subsidiary, including indirect ownership of securities as determined by Section
424(d)
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of the Code, at the date the ISO is granted, may be exercisable after the
expiration of five (5) years from the date such ISO is granted.
5.4 OPTION EXERCISE. An Option granted pursuant to the Plan may be
exercised at any time or times prior to the termination of said Option, as
provided by Section 5.8 of the Plan, by delivery by the Optionee of written
notice to the Company specifying the number of shares of Stock to be purchased,
accompanied by full payment for such shares of Stock. The Board or Committee,
as the case may be, may provide the Optionee with a form of such written notice
upon execution of the Agreement. Payment upon exercise shall be made in cash.
No Option shall be exercisable for a fraction of a share of Stock. No such
payment shall be made in full or in part with shares of Stock acquired by an
Optionee through the prior exercise of an ISO where such shares shall not have
been held by such Optionee within the requirements of Section 422(a)(l) of the
Code.
5.5 OPTION EXERCISABILITY. The exercisability of any Option granted
under the Plan shall be determined by the Board or Committee, as the case may
be; provided, however, that at least twenty percent (20%) of the shares of Stock
covered by any Option shall become exercisable as of the end of each full year
of the term of such option. The right of exercise shall be cumulative.
5.6 OPTION EXERCISE LIMITATION UPON QUALIFICATION. The extent to
which any Option granted under the Plan shall be exercisable shall generally be
determined by the Board or Committee, as the case may be. As a limitation upon
the foregoing, and in accordance with Section 422(d) of the Code, to the extent
the aggregate Fair Market Value of the Stock with respect to which: (i) ISOs
granted under the Plan; and (ii) incentive stock options granted under all other
plans of the Company, a Parent or a Subsidiary (determined without regard to
Section 422(d) of the Code), are exercisable for the first time by any
individual during any calendar year of all such plans (inclusive of the Plan)
shall exceed one hundred thousand dollars ($100,000), then all such options
(inclusive of the ISOs granted under the Plan) shall be treated as options for
Stock which are not ISOs. The limitations of the preceding sentence shall be
applied by taking all such options (inclusive of the ISOs granted under the
Plan) in the order in which such options shall have been granted. The aggregate
Fair Market Value of the Stock covered by any such option (inclusive of Stock
covered by ISOs granted and the Plan) shall be determined in accordance with
Section 1.7 of the Plan, or under a similar method with respect to any such
option, as the product of the per share Fair Market Value of the Stock covered
thereby times the number of shares of Stock covered thereby, determined as of
the time such option is granted.
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5.7 NONTRANSFERABILITY OF ISOs. No ISO granted pursuant to the Plan
may be transferred by an Optionee otherwise than by will or by the laws of
descent and distribution. During the lifetime of an Optionee, an ISO shall be
exercisable only by him.
5.8 TERMINATION OF OPTION.
5.8.1 EXPIRATION OR TERMINATION OF EMPLOYMENT. Except as
specifically provided in Sections 5.8.2 and 5 8.3 of the Plan, each Option
granted under the Plan, and all rights thereunder, shall terminate as of the
close of business on the earlier of the date of the expiration of the term of
the Option stated in the Agreement or the expiration of ninety (90) days
after the date that the Optionee's employment with the Company, a Parent or a
Subsidiary terminates for any reason. For this purpose, the employment
relationship of such Optionee shall be deemed as continuing while the
Optionee is on military, sick leave or other bona fide leave of absence, such
as temporary employment by the government, if the period of such leave does
not exceed three (3) months, or, if longer, so long as the right of such
Optionee to re-employment by the Company, a Parent or a Subsidiary is
guaranteed either by law or by an employment contract.
5.8.2 DEATH OF OPTIONEE. In the event that an Optionee dies, his
Option may be exercised by the Optionee's executors, administrators, heirs or
legatees within one (l) year after the Optionee's death provided such death
shall have occurred during the Optionee's employment with the Company, a Parent
or a Subsidiary or within ninety (90) days following the termination of
Optionee's employment with the Company, a Parent or a Subsidiary. Such Option
may be so exercised by the Optionee's executors, administrators, heirs and
legatees to the extent that it was exercisable but not exercised as of the date
of the death of the Optionee, but in no event may the Option be exercised at any
time after the expiration of the term of the Option stated in the Agreement.
Such exercise shall be made pursuant to the terms of the Option, and any change
in the terms of an ISO shall be subject to the rules of Section 424(h) of the
Code. If so exercised, any such ISO shall be treated as an incentive stock
option under Section 422 of the Code, notwithstanding whether such executor,
administrator, heir, or legatee is then employed by the Company, provided the
Optionee shall have met the foregoing employment requirement at the Optionee's
death.
5.8.3 PERMANENT AND TOTAL DISABILITY. In the event that the
employment of an Optionee shall have terminated by reason of such Optionee
becoming permanently and totally disabled within the meaning of Section 22(e)(3)
of the Code, the Optionee shall have the right, during the period ending one
hundred eighty (180) days after the date of such termination of employment, to
8
exercise his Option to the extent that it was exercisable but not exercised
at the date of his termination of employment with the Company, a Parent or a
Subsidiary. Such Option may be so exercised by the Optionee or by the
conservator of the Optionee's estate only with respect to that number of
shares of Stock which the Optionee had an Option to purchase but had not
theretofore exercised as of the date that the Optionee became permanently and
totally disabled, and in no event shall such Option be exercised at any time
after the expiration of the term of the Option stated in the Agreement.
5.9 RIGHTS AS SHAREHOLDER. An Optionee or permitted transferee of an
Option shall have no rights as a shareholder of the Company with respect to any
shares of Stock covered thereby prior to his purchase of such shares of Stock by
exercise of such Option as provided in the Plan. Such Optionee or permitted
transferee shall thereafter be deemed to have substantially all of the rights of
ownership to the shares of Stock in respect of which such exercise shall be
made.
5.10 RIGHT OF COMPANY TO TERMINATE EMPLOYMENT. Nothing contained in
the Plan (including the provisions of the succeeding sentence) or any Option
granted under the Plan shall confer on an Optionee any right to be continued in
the employ of the Company, a Parent or a Subsidiary or interfere in any way with
the right of the Company, a Parent or a Subsidiary to terminate an Optionee's
employment with it at any time for any reason. If requested by the Board or the
Committee, as the case may be, an Optionee shall agree in writing as a condition
of the granting of an Option to remain in the employ of the Company following
the date of grant of an Option for a period specified by the Board or Committee.
5.11 DELIVERY OF FINANCIAL STATEMENTS TO OPTIONEE. Within three (3)
months after the end of each fiscal year of the Company, the Company shall
deliver to each Optionee a complete set of the Company's financial statements as
of the end of such fiscal year. Said financial statements shall include a
balance sheet and the related statements of income and cash flow for the fiscal
year in question.
6. DELIVERY OF STOCK CERTIFICATES. The Company shall not be required to
issue or deliver any certificate for shares of Stock purchased upon the exercise
of all or any portion of any Option granted under the Plan prior to the
fulfillment of all of the following conditions:
6.1 LISTING OF SHARES. If applicable, the admission of such shares
of Stock to listing on all stock exchanges on which the Stock of the Company is
then listed.
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6.2 REGISTRATION AND/OR QUALIFICATION OF SHARES. If applicable, the
completion of any registration or other qualification of such shares of Stock
under any federal or state securities laws or under the regulations promulgated
by the Securities and Exchange Commission or any other federal or state
governmental regulatory body, which the Board or Committee, as the case may be,
shall deem necessary or advisable.
6.3 APPROVAL OF CLEARANCE. The obtaining of any approval or
clearance from any federal or state governmental agency which the Board or
Committee, as the case may be, shall determine to be necessary or advisable.
6.4 REASONABLE LAPSE OF TIME. The lapse of such reasonable period of
time following the exercise of the Option as the Board or Committee, as the case
may be, may establish from time to time for reasons of administrative
convenience. The issuance of such certificate shall be evidenced on the books
of the Company with such reasonable period of time.
7. TERMINATION, AMENDMENT AND MODIFICATION OF PLAN. The Board may, upon
recommendation of the Committee, if any, appointed by it to administer the Plan,
terminate the Plan at any time or amend or modify the Plan at any time or from
time to time; provided, however, that no such action of the Board shall do any
of the following:
7.1 INCREASE NUMBER OF SHARES. Except as contemplated in Section 3.2
of the Plan, increase the total number of shares of Stock subject to the Plan
without the approval of shareholders then holding a majority of the outstanding
voting securities of the Company.
7.2 CHANGE OF CLASS OF ELIGIBLE PERSONS. Change the class of
Eligible Persons to whom Options may be granted under the Plan without the
approval of shareholders then holding a majority of the outstanding voting
securities of the Company.
7.3 CHANGE TERMS OF OUTSTANDING OPTIONS. Change the Option Price or
otherwise alter or impair any Option previously granted to an Optionee under the
Plan without the consent of the Optionee.
8. MISCELLANEOUS.
8.1 PLAN BINDING ON THE SUCCESSORS. The Plan shall be binding upon
the successors and assigns of the Company.
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8.2 SECTION HEADINGS. The headings of the Sections of the Plan have
been inserted for convenience only and shall not be used in construing the Plan.
8.3 GENDER AND NUMBER. Whenever used herein, nouns in the singular
shall include the plural and a masculine pronoun shall include the feminine
gender.
8.4 OTHER COMPENSATION PLANS. The adoption of the Plan shall not
affect any other stock option plan, incentive plan or any other compensation
plan in effect for the employees of the Company, nor shall the Plan preclude the
Company from establishing any other form of stock option plan, incentive plan or
any other compensation plan for employees of the Company.
8.5 TAX INFORMATION STATEMENTS. Upon the exercise of any ISO during
any calendar year in which a transfer of Stock to an Optionee shall occur, the
Company shall furnish to the Optionee an information statement pursuant to
Section 6039 of the Code, and the regulations promulgated thereunder, on or
before January 31 of the following calendar year.
[END OF PLAN]
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AMENDMENT NO. 1 TO
XXXXXXX LABORATORIES, INC.
1993 INCENTIVE STOCK OPTION PLAN
_____________________
Section 3.1 of the Xxxxxxx Laboratories, Inc. 1993 Incentive Stock
Option Plan (the "Plan") was amended as of the date hereof to read in its
entirety as follows:
"3.1 LIMITATIONS. Subject to adjustment pursuant to
the provisions of Section 3.2 hereof, the aggregate number
of shares of Stock of the Company which may be issued and
sold under the Plan shall not exceed 300,000 shares (after
taking into account the 2-for-1 split of issued and
outstanding shares of the Stock declared by the Company's
Board of Directors effective on and as of August 15, 1996).
During the term of the Plan, the Company shall reserve and
keep available or otherwise have authorized a sufficient
number of shares to comply with the requirements of the
Plan."
The above-referenced amendment to the Plan was duly adopted by
Xxxxxxx Laboratories, Inc.'s Board of Directors by means of an Action by
Unanimous Written Consent of Board of Directors, dated March 26, 1997.
The above-referenced amendment to the Plan was approved by a
majority of the holders of Xxxxxxx Laboratories, Inc.'s issued and
outstanding common stock at the Company's 1997 Annual Meeting of Shareholders
held April 23, 1997.
Dated: April 23, 1997 XXXXXXX LABORATORIES, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------
Xxxxxx X. Xxxxxx, Chairman of the
Board of Directors (Chief Executive
Officer), President and Treasurer
(Chief Financial Officer)
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxx, Vice President
And Secretary
