EXHIBIT

10.26




 




HAUSER,

INC.




1992

INCENTIVE STOCK OPTION PLAN




 




Article 1 — Purpose




 




This 1992 Incentive Stock Option Plan (the

“Plan”) is intended to provide incentives to key employees of HAUSER, INC. (the

“Company”), and its present and future subsidiaries [as defined in Section

425(f) of the Internal Revenue Code of 1986, as amended (the “Code”)], by

providing them with opportunities to purchase stock in the Company pursuant to

the exercise of options.  The Company

intends options granted under the Plan to be “incentive stock options”

complying with, and subject to, the terms and conditions of Section 422A of the

Code; and therefore, this Plan shall be interpreted in accordance with that

Section of the Code and the rules and regulations promulgated from time to time

under that Section, or other related sections of the Code.




 




Article 2 — Administration of the Plan




 




The Plan shall be administered by a committee

appointed by the Board of Directors of the Company (the “Committee”).  The Committee shall consist of not less than

two members of the Company’s Board of Directors, which members shall be

“disinterested persons”, as that term is defined is Rule 16b-3, as in effect

from time to time, under the Securities Exchange Act of 1934, as amended.  The Board of Directors may from time to time

remove members from, or add members to, the Committee.  Vacancies on the Committee, however caused,

shall be filled by the Board of Directors. 

The committee shall select one of its members as Chairman, and shall

hold meetings at such times and places as it may determine.  Acts by a majority of the Committee, or acts

reduced to or approved in writing by a majority of the members of the

Committee, shall be the valid acts of the Committee.




 




The interpretation and construction of any

provision of the Plan and the adoption of rules and regulations for

administering the Plan will be made by the Committee, subject, however, at all

times to the final jurisdiction which shall rest in the Board.  Determinations made by the Committee and approved

by the Board with respect to any matter or provision contained in the Plan will

be final, conclusive and binding upon the Company and upon all participants,

their heirs or legal representatives. 

No member of the Board of Directors or the committee shall be liable for

any action or determination made in good faith with respect to the Plan or any

option granted under it.  No member of

the Committee shall be eligible to participate in the Plan while serving as a

member of the Committee.




 




Article 3 — Eligible Persons




 




Options may be granted only to officers and

other key employees of the Company or its subsidiaries (as defined in Section

425(f) of the Code).  The granting of

any option to a person shall neither entitle that person to, nor disqualify him

from, participation in any other grant of options pursuant to this Plan or any

other plans.  Directors who are not

employees or officers of the Company or its subsidiaries are not eligible to

receive option under the Plan.




 





























 




Article 4 — Stock




 




The stock subject to the options granted

under this Plan shall be either shares of the Company’s authorized but unissued

shares of Common Stock, $.001 par value, or shares of Common Stock reacquired

by the Company (“Common Stock”).  The

maximum number of shares that are hereby reserved for issuance, and may be

issued pursuant to this Plan, is 200,000, subject to adjustment as provided in

Article 13.  In the event that any

option granted under the Plan shall expire, terminate or be cancelled for any

reason without having been exercised in full, or shall cease for any reason to

be exercisable in whole or in part, the unpurchased shares, to the extent that

the option ceases to be exercisable, shall be available again under the Plan.




 




Article 5 — Grant of Options




 




Options may be granted to eligible persons

for any number of shares, and at any time during the term of the Plan, as the

Board shall determine, except that the aggregate fair market value (determined

at the time the option is granted) of shares with respect to which options

become exercisable for the first time during any calendar year (under the Plan

and all other incentive stock option plans of the Company and its parent and

subsidiary corporations) shall not exceed $100,000.




 




Article 6 — Minimum Price of Options




 




The price-per-share specified in each option

granted under the Plan shall not in any event be less than 100% (or 110% in the

case of a 10% shareholder as defined in Section 422A(b)(6) and related sections

of the Code) of the fair market value per share of Common Stock on the date the

option is granted.




 




Article 7 — Duration of Options




 




Subject to termination earlier as provided in

Articles 9 and 10, each option shall expire on the date specified by the Board,

but not more than ten (10) years (or five (5) years in the case of a 10%

shareholder as defined in Section 422A(b)(6) and related sections of the Code)

from its date of grant.  The Board may

extend the term of any previously granted option if that option, as extended,

expires less than ten (10) years (or five (5) years, in the case of a 10%

shareholder as so defined) from its original date of grant as provided above.




 




Article 8 — Exercise of Options




 




Subject to the provisions of Articles 9

through 12, each option granted under the Plan shall be exercisable as follows:




 




	

  (a)


  	

  The option either shall be exercisable

  fully at the time of grant or shall become exercisable in installments, as

  the Board determines.  Installments

  may be cumulative or noncumulative, as the Board determines.


  
	

   


  	

   


  
	

  (b)


  	

  Once an installment becomes exercisable, it

  shall remain exercisable until expiration or termination of the option,

  unless specified otherwise by the Board.


  





 




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  (c)


  	

  Each option may be exercised from time to

  time, in whole or in part, for no more than the total number of shares

  available for exercise.


  
	

   


  	

   


  
	

  (d)


  	

  The Board may accelerate the date of

  exercise of any installment for any reason.


  





 




Article 9 — Termination of Employment




 




Whenever an optionee ceases to be employed by

the Company or any subsidiary for any reason other than death or disability

(within the meaning of Section 22(e)(3) of the Internal Revenue Code), his

options shall terminate on the date he ceased to be so employed, and no further

installments of those options will become exercisable.  The Board may, in its sole discretion, allow

the exercise of options, but only to the extent they were exercisable at the

time of termination of employment, for a period of up to one (1) month after

the termination of employment (but not later than the specified expiration

date).  The Board shall determine

conclusively whether authorized leaves of absence or absence on military or

governmental service may constitute employment for the purposes of the

Plan.  Nothing in the Plan, or in any

option granted under the Plan, shall be deemed to give any optionee the right

to continue in the employ of the Company or any of its subsidiaries or shall be

deemed to interfere in any way with the right of the Company to terminate any optionee’s

employment at any time and for any reason. 

Options granted under the Plan shall not be affected by any change of

employment among the Company and its subsidiaries so long as the optionee

continues to be an employee of the Company or one of its subsidiaries.




 




Article 10 — Disability; Death




 




	

  (a)


  	

  If an optionee becomes disabled (within the

  meaning of Section 22(e)(3) of the Code), his options may be exercised to the

  extent that they were exercisable on the date he ceased to be employed by the

  Company or any subsidiary for a period of six (6) months from the date of

  termination of employment (but not later than its specified expiration date).


  
	

   


  	

   


  
	

  (b)


  	

  If an optionee dies while employed by the

  Company or during the one-month period referred to in Article 9 or the

  six-month period referred to above in this Article 10, his options may be

  exercised to the extent that they were exercisable on the date of his death

  or cessation of his employment, whichever occurred first, by his estate, or

  duly appointed representative, or beneficiary who acquires the options by

  will or by the laws of descent and distribution, but no further installments

  of his options will become exercisable and each of his options shall

  terminate on the first anniversary of the date of his death (but not later

  than the specified expiration dates).


  





 




Article 11 — Assignability




 




No option shall be assignable or transferable

by the optionee except by will or by the laws of descent and distribution and,

during the lifetime of the optionee, each option shall be exercisable only by

him.




 




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Article 12 — Terms and Conditions of Options




 




Options shall be evidenced by instruments,

which need not be identical, in such form as the Board approves.  Those instruments shall conform to the terms

and conditions set forth in Articles 6 through 11 and may contain any other

provisions not inconsistent with the Plan, including restrictions applicable to

shares of Common Stock issuable upon exercise of options granted under the

Plan, as the Board deems advisable, if those provisions would not cause any

option to fail to qualify as an incentive stock option under Section 422A of

the Code.  The Company shall not be

obligated to deliver any shares unless and until in the opinion of the

company’s counsel, all applicable federal, state, and other laws and

regulations have been complied with. 

Without limiting the generality of the foregoing, the Company may

require from the optionee any investment representation, restrictive legend on

any stock certificate or other agreement that counsel for the Company considers

necessary in order to comply with the Securities Act of 1933.




 




Article 13 — Adjustments




 




	

  (a)


  	

  Upon the happening of any of the following

  described events (the “Events of Adjustment”), an optionee’s rights under

  options granted under this Plan shall be adjusted as provided below:


  
	

   


  	

   


  
	

   


  	

  (1)


  	

  If the Company shall, at any time prior to

  the termination date of the Plan, change its Common Stock into a greater

  number of shares of stock through a stock dividend or split-up of shares, the

  number of shares of Common Stock deliverable with respect to each payment of

  the specified option price per share in connection with each exercise of an

  option after the record or effective date of such stock dividend or split-up

  of shares shall be proportionately increased.  Conversely, if the Common Stock shall, at any time within such

  period, be combined into a smaller number of shares of stock through a

  reverse stock split, the number of shares of Common Stock deliverable with

  respect to each payment of the specified option price per share in connection

  with the exercise of an option after the record or effective date of such

  combination of shares shall be proportionately reduced.


  
	

   


  	

   


  	

   


  
	

   


  	

  (2)


  	

  If within the duration of an option there

  shall be a corporate merger, consolidation, acquisition of assets, or other

  reorganization and if such transaction shall affect the optioned stock, the

  employee shall thereafter be entitled to receive upon exercise of his option

  those shares or securities that he would have received had the option been

  exercised prior to such transaction and the employee had been a stockholder

  of the Company with respect to such shares.


  
	

   


  	

   


  	

   


  
	

  (b)


  	

  Upon the happening of any of the Events of

  Adjustment, the class and aggregate number of shares set forth in Article 4

  of this Plan that are reserved for issuance pursuant to the Plan, or are

  subject to options that previously have been or 


  





 




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  hereafter may be granted under the Plan,

  also shall be adjusted appropriately to reflect the Events of Adjustment.


  
	

   


  	

   


  
	

  (c)


  	

  The Board shall determine the adjustments

  to be made under this Article 13, and its determination shall be conclusive

  and binding on all interested parties.


  
	

   


  	

   


  
	

  (d)


  	

  Notwithstanding anything in this Plan to

  the contrary, in connection with any corporate transaction to which Section

  425(a) of the Code is applicable, there may be a substitution of a new option

  for an old option granted under this Plan or an assumption of an old option

  granted under this Plan.  Any optionee

  who has a new option substituted for an old option granted under this Plan

  shall, in connection with the corporate transaction, lose his rights under

  the old option.  Nothing in the terms

  of the assumed or substituted option shall confer on the optionee more or

  less favorable benefits than he had under the old option.


  





 




Article 14 — Exercise of Options




 




An option (or any part or installment of an

option) shall be exercised by giving written notice to the Company at its

principal office address, identifying the option being exercised, specifying

the number of shares for which it is being exercised, and accompanied by full

payment of the purchase price either (1) in United States Dollars, in cash or

by certified or bank check, or (2) in shares of Common Stock of the Company

owned by the optionee having a fair market value on the business day

immediately preceding the day on which the option is exercised equal to, or a

fraction of a share less than, the purchase price, or (3) in a combination of

Common Stock and Dollars.  Unless the

Board determines otherwise, the holder of an option shall not have any rights

of a shareholder with respect to the shares covered by his option until the

issuance of a stock certificate to him for his shares.  Unless the Board determines otherwise, no

adjustment will be made for dividends or similar rights when the record date

occurs after the exercise of the option but prior to the date the stock certificate

is issued.  In no case may a fraction of

a share be purchased, or issued under the Plan.




 




Article 15 — Termination and Amendments to

Plan




 




The Plan was adopted by the Board of

Directors in May 1991, will become effective upon shareholder approval at the

next annual meeting of the Company.  The

Plan will expire ten (10) years thereafter (except as to options outstanding on

that date).  The Board may terminate, or

amend, the Plan in any respect at any time, except that, without the approval

of the shareholders, (a) the total number of shares that may be issued under

the Plan may not be increased (except by adjustment pursuant to Article 13);

(b) the provisions of Article 3, regarding eligibility, may not be modified,

(c) the provisions of Article 6, regarding the exercise price at which shares

may be offered pursuant to options, may not be modified (except by adjustment

pursuant to Article 13); and (d) the expiration date of the Plan may not be

extended.  However, no action of the

Board, or shareholders, may, without the consent of an optionee, impair

substantially his rights under any option granted to him previously, and no

amendment may cause any options granted previously, or to be granted, under the

Plan to cease to qualify as incentive stock options in accordance with the

terms and conditions of the Plan.




 




Article 16 — Governmental Regulation




 




The Plan and the grant and exercise of

options under it, and the Company’s obligation to sell and deliver shares of

the Company’s Common Stock under those options, shall be subject to all

applicable laws (including tax laws), rules and regulations.




 




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