Document:

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.

  

 

2

 

	

  (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.

 

3

 

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 

  

 

4

 

	

   

  	

  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.

 

5EXHIBIT

10.27

 

HAUSER, INC.

1999 STOCK INCENTIVE PLAN

 

1.        Purpose

 

The purpose of the Plan is to provide a means through

which the Company may attract able persons to enter and remain in the employ of

the Company and its Subsidiaries and to provide a means whereby they can

acquire and maintain Common Stock ownership, thereby strengthening their

commitment to the welfare of the Company and promoting an identity of interest

between stockholders of the Company and these employees and consultants.

 

So that the appropriate incentive can be provided, the

Plan allows for granting Incentive Stock Options and Nonqualified Stock

Options, or any combination of thereof to employees, directors and consultants,

and stock grants to directors who are not employees of the Company or a

Subsidiary.

 

2.        Definitions

 

The following definitions shall be applicable

throughout the Plan.

 

(a)           “Board”

means the Board of Directors of the Company.

 

(b)           “Cause”

means the Company or a Subsidiary (as the case may be) having cause to terminate

an Optionee’s employment or service in accordance with the provisions of any

existing employment, consulting or any other agreement between the Optionee and

the Company or a Subsidiary (as the case may be) or, in the absence of such an

employment, consulting or other agreement, upon (i) the determination by the

Company or a Subsidiary (as the case may be) that the Optionee (A) has

committed an act of personal dishonesty, embezzlement, gross negligence or

gross misconduct in the course of employment or service with the Company or a

Subsidiary (as the case may be), (B) has ceased to perform his duties to the

Company or a Subsidiary (as the case may be)(other than as a result of his

incapacity due to physical or mental illness or injury), which failure amounts

to intentional and extended neglect of his duties, (C) has engaged in or is

about to engage in conduct materially injurious to the Company or a Subsidiary

(unless when informed that proposed conduct would be so injurious he

immediately ceases and corrects such proposed conduct), or (D) has willfully

failed to follow the lawful directions of the Board or a superior officer of

the Company or a Subsidiary (as the case may be) (without the same being

corrected upon five (5) days notice); or (ii) the Optionee having pled no

contest or guilty to a criminal charge or having been convicted of a crime

(other than a minor traffic violation) which could reasonably be expected to

have a material adverse impact on the reputation and standing of the Company or

a Subsidiary in the community or in its business relationships.  For purposes of the Plan, the Committee

shall determine whether Cause exists. 

No Option may be exercised during any cure period provided above unless

the cure has been accomplished.

 

(c)           “Code”

means the Internal Revenue Code of 1986, as amended.  Reference in the Plan to any section of the Code shall be deemed

to include any amendments or successor provisions to such section and any

regulations under such section.

 

 

(d)           “Committee”

means a committee of at least two members appointed by the Board to administer

the Plan, each of whom shall be both a Non-Employee Director and an Outside

Director.

 

(e)           “Common

Stock” means the common stock, par value $0.001 per share, of the Company.

 

(f)            “Company”

means Hauser, Inc., a corporation organized under the laws of the State of

Colorado.

 

(g)           “Disability”

means an Optionee’s disability within the meaning of Section 22(e)(3) of the

Code.

 

(h)           “Eligible

Person” means any (i) person regularly employed by the Company or a Subsidiary;

provided, however, that no such employee covered by a collective bargaining

agreement shall be an Eligible Person unless and to the extent that such

eligibility is set forth in such collective bargaining agreement or in an

agreement or instrument relating thereto; or (ii) member of the Board.

 

(i)            “Exchange

Act” means the Securities Exchange Act of 1934.

 

(j)            “Fair

Market Value” on a given date means (i) if the Common Stock is listed on a

national securities exchange, the closing sales prices of the Stock reported as

having occurred on the primary exchange with which the Stock is listed and

traded on the date prior to such date, or, if there is no such sale on that

date, then on the last preceding date on which such a sale was reported; or

(ii) if the Common Stock is not listed on any national securities exchange but

is quoted in the National Market System of the National Association of

Securities Dealers Automated Quotation System the average between the high and

low sales price of the Common Stock on the date prior to such date, or, if

there is no such sale on that date, then on the last preceding date on which a

sale was reported; or (iii) if the Common Stock is not listed on a national

securities exchange nor quoted in the National Market System of the National

Association of Securities Dealers Automated Quotation System on a last sale

basis, the amount determined by the Committee to be the fair market value based

upon a good faith attempt to value the Stock accurately.

 

(k)           “Incentive

Stock Option” means an Option granted by the Committee to an Optionee under the

Plan which is designated by the Committee as an “incentive stock option” within

the meaning of Section 422 of the Code.

 

(l)            “Non-Employee

Director” means a “non-employee director” within the meaning of Rule 16b-3 of

the Exchange Act or any successor rule or regulation.

 

(m)          “Nonqualified

Stock Option” means an Option granted under the Plan which is not designated as

an Incentive Stock Option.

 

(n)           “Normal

Termination” means termination of employment or service with the Company or a

Subsidiary:

 

2

 

(i)                                     Upon

retirement pursuant to the retirement plan of the Company or a Subsidiary (as

the case may be), as may be applicable at the time to the Optionee in question;

 

(ii)                                  On

account of Disability;

 

(iii)                               By

the Company or a Subsidiary (as the case may be) without Cause; or

 

(iv)                              With

the specific written consent of the Committee.

 

(o)           “Option”

means the right and option granted hereunder to purchase any one share of Stock

from the Company, at the per share Option Price.

 

(p)           “Optionee”

means the holder of an Option.

 

(q)           “Option

Agreement” means the agreement between the Company and an Optionee who has been

granted an Option which defines the rights and obligations of the parties with

respect to such Option.

 

(r)            “Option

Period” means the period of time set by the Committee after which time an

Option will expire.

 

(s)           “Option

Price” means the exercise price set for an Option.

 

(t)            “Outside

Director” means an “outside director” within the meaning of Section 162(m) of

the Code.

 

(u)           “Plan”

means the Company’s 1999 Stock Incentive Plan.

 

(v)           “Stock”

means the Common Stock or such other authorized shares of stock of the Company

as from time to time may be authorized for use under the Plan.

 

(w)          “Subsidiary”

means a corporation which is a “subsidiary corporation” of the Company as

defined in Section 424 of the Code.

 

3.        Effective Date, Duration

 

The Plan is effective as of December 8, 1999, being

after approval of the Plan by the shareholders.

 

The expiration date of the Plan, after which no

Options may be granted hereunder, shall be July 26, 2009; provided, however,

that the administration of the Plan shall continue in effect until all matters

relating to the settlement of Options previously granted have been settled.

 

4.        Administration

 

The Board or the Committee shall administer the

Plan.  The Company shall take into

account that under current law Options will not be exempt from the application

of Section 162(m) of the Code unless granted by the Committee serving as a

Compensation Committee as provided in Section 162(m)(4)(C) of the Code.  All references in the Plan to the

“Committee” shall be deemed to refer to the Board whenever the Board is

discharging the powers and 

 

3

 

responsibilities of administering the Plan.  The majority of the members of the Committee shall constitute a

quorum.  The acts of a majority of the

members present at any meeting at which a quorum is present or acts approved in

writing by a majority of the Committee shall be deemed the acts of the

Committee.

 

Subject to the provisions of the Plan, the Committee

shall have exclusive power to:

 

(a)           Select the Eligible

Persons to participate in the Plan;

 

(b)           Determine the nature

and extent of the Options to be granted to each Optionee;

 

(c)           Determine the time

or times when Options will be granted to Optionees;

 

(d)           Determine the

duration of each Option Period;

 

(e)           Determine the Option

Price for each Option and reprice any outstanding Option;

 

(f)            Determine the

vesting schedule, if any, for each Option and accelerate the vesting for any

outstanding Option;

 

(g)           Determine all

conditions to which Options may be subject;

 

(h)           Prescribe the form

of Option Agreement;

 

(i)            Make stock grants

pursuant to Section 9 to members of the Board who are not employees of the

Company or a Subsidiary, determine the amount and terms of such grants, and

modify such terms;

 

(j)            Provide for the

transferability of Nonqualified Stock Options, (but not Incentive Stock Options

except as provided in Section 7(d)(ii));

 

(k)           Cause records to be

established in which there shall be entered, from time to time as Options are

granted to Optionees, the date of each Option grant, the number of Incentive

Stock Options or Nonqualified Stock Options granted by the Committee to each

Optionee, the expiration date and the duration of each Option Period and the

number of shares of Stock underlying each Option; and

 

(l)            At any time prior

to, after, or  in connection with, any

termination of employment or service of an Optionee with the Company or its

Subsidiaries, provide for a longer post-termination exercise or survival period

with respect to any Option (not to exceed three years) or modify any forfeiture

provisions with respect to any Option; except to the extent that the ability to

so modify an Option shall cause an Option intended to qualify as

“performance-based” under Section 162(m) of the Code to not so qualify.

 

The Committee shall have the authority, subject to the

provisions of the Plan, to establish, adopt, and revise such rules and

regulations and to make all such determinations relating to the Plan as it may

deem necessary or advisable for the administration of the Plan.  The Committee’s interpretation of the Plan

or any documents evidencing Options granted pursuant thereto and all decisions

and determinations by the Committee with respect to the Plan shall be final,

binding, and conclusive on all parties unless otherwise determined by the

Board.

 

4

 

5.        Grant

of Options; Shares Subject to the Plan

 

The Committee may, from time to time, grant one or

more Options to any one or more Eligible Persons; provided, however,

that:

 

(a)             Subject to Section 11, the

aggregate number of shares of Stock made subject to all awards (including

Options and grants of Stock) may not exceed Eight Hundred Fifty Thousand

(850,000);

 

(b)             In the event any unexercised Option

shall be surrendered, terminate, expire, or be forfeited, the share of Stock no

longer subject thereto shall thereupon be released and shall thereafter be

available for new Options under the Plan;

 

(c)             Stock delivered by the Company in

settlement of Options under the Plan may be authorized and unissued Stock or

Stock held in the treasury of the Company or may be purchased on the open

market or by private purchase;

 

(d)             No Eligible Person may receive

Options under the Plan with respect to more than One hundred fifty thousand (150,000)

shares of Stock in any one year; and

 

(e)             The Committee may, in its sole

discretion, require an Optionee to pay consideration for an Option in an amount

and in a manner as the Committee deems appropriate.

 

6.        Fractional

Shares

 

No fractional shares will be issued upon exercise of

any Option and any fractional shares will be rounded down to the nearest whole

share.

 

7.        Option

Terms

 

The Committee is authorized to grant one or more

Incentive Stock Options or Nonqualified Stock Options to any Eligible Person; provided,

however, that no Incentive Stock Options shall be granted to any

Eligible Person who is not an employee of the Company or a Subsidiary.  Each Option so granted shall be subject to

the following conditions, or to such other conditions as may be reflected in

the applicable Option Agreement.

 

(a)           Option price.  The Option Price per share of Stock for each

Option shall be set by the Committee at the time of grant but, shall not be

less than the Fair Market Value of a share of Stock at the date of grant.

 

(b)           Manner of exercise and form of payment.  Options which have become exercisable may be

exercised by delivery of written notice of exercise to the Committee

accompanied by payment of the Option Price. 

The Option Price shall be payable in cash or by certified check or, in

the discretion of the Committee, (i) in shares of Stock, valued at the Fair

Market Value at the time the Option is exercised, in sufficient amount to cover

the aggregate exercise price (provided that such Stock must have been held by

the Optionee for at least six months prior to exercise of the Option), (ii) by

withholding shares of Stock, valued at the Fair Market Value at the time the

Option is exercised, otherwise deliverable upon exercise of the Options, in

sufficient amount to cover the aggregate exercise price; (iii) in other

property having 

 

5

 

a fair market

value on the date of exercise equal to the Option Price, or (iv) by delivering

to the Committee a copy of irrevocable instructions to a stockbroker acceptable

to the Company to deliver promptly to the Company an amount of sale or loan

proceeds sufficient to pay the aggregate exercise price.

 

(c)           Option Period and Vesting.  Options shall vest and become exercisable in

such manner and on such date or dates as shall be determined by the

Committee.  The Committee shall also

establish an Option Period which shall not exceed ten years.  If an Option is exercisable in installments,

exercise of one installment shall not affect the Optionee’s ability to exercise

unexercised installments in accordance with the terms of the Plan and the

applicable Option Agreement.  Unless

otherwise stated in the applicable Option Agreement, the Option shall expire

upon an Optionee’s termination of employment with the Company or a Subsidiary

at such times as are set forth in Section 8.

 

(d)           Other Terms and Conditions.  Options granted under the Plan shall be

evidenced by an Option Agreement, which shall contain such provisions as may be

determined by the Committee and, except as may be specifically stated otherwise

in such Option Agreement, be subject to the following terms and conditions:

 

(i)                                     Each share of Stock purchased through the

exercise of an Option shall be paid for in full at the time of the

exercise.  Each Option shall cease to be

exercisable when the Optionee purchases the underlying share of Stock or when

the Option expires.

 

(ii)                                  Options shall not be transferable by the

Optionee except by will or the laws of descent and distribution and shall be

exercisable during the Optionee’s lifetime only by the Optionee.

 

(iii)                               Subject to any accelerated vesting, each

Option shall vest and become exercisable by the Optionee in accordance with the

vesting schedule established by the Committee and set forth in the Option

Agreement.

 

(iv)                              Each Option Agreement covering Incentive

Stock Options shall contain a  provision

requiring the Optionee to notify the Company in writing immediately after the

Optionee makes a disqualifying disposition of any Stock acquired pursuant to

the exercise of any such Incentive Stock Option.  A disqualifying disposition is any disposition (including any

sale) of such Stock before the later of (a) two years after the date of grant

of the Incentive Stock Option or (b) one year after the date the Optionee

acquired the Stock by exercising the Incentive Stock Option.

 

(v)                                 Each Option Agreement may contain such

other provisions (whether or  not

applicable to an Option granted to any other Optionee) as the Committee

determines appropriate including, without limitation, provisions to assist the

Optionee in financing the purchase of Stock upon the exercise of Options which

are consistent with applicable state and federal law, provisions for the

forfeiture of shares of Stock or restrictions on resale or other disposition of

shares of Stock acquired under any Option, provisions giving the Company the

right to repurchase shares of

 

6

 

Stock acquired under any

Option in the event the Optionee elects to dispose of such shares or terminates

employment with the Company and its Subsidiaries, and provisions to comply with

Federal and state securities laws and Federal and state tax withholding

requirements.  Any such provisions shall

be reflected in the applicable Option Agreement

 

(e)           Incentive Stock Option Grants to 10%

Stockholders. 

Notwithstanding anything to the contrary in this Section 7, if an

Incentive Stock Option is granted to an Optionee who owns stock representing

more than ten percent of the voting power of all classes of stock of the

Company,  its parent or a subsidiary (as

provided in Section 422(b) of the Code), the Option Period shall not exceed

five years from the date of grant of such Option and the Option Price shall be

at least 110 percent of the Fair Market Value (on the Date of Grant) of the

Stock subject to the Option.

 

(f)            Per Year

Limitation for Incentive Stock Options.  To the extent the aggregate Fair Market Value (determined as of

the date of grant) of Stock for which Incentive Stock Options are exercisable

for the first time by any Optionee during any calendar year (under all plans of

the Company and its Subsidiaries) exceeds $100,000, the portion of the Options

with respect to which such excess arises shall be treated as a Nonqualified

Stock Options.

 

(g)           Voluntary Surrender.  The Committee may permit the voluntary

surrender of any Nonqualified Stock Option to be conditioned upon the granting

to the Optionee of a new Option for the same or a different number of shares as

the Option surrendered or require such voluntary surrender as a condition

precedent to a grant of a new Option to such Optionee.  Such new Option shall be exercisable at an

Option Price, during an Option Period, and in accordance with any other terms

or conditions specified by the Committee at the time the new Option is granted,

all determined in accordance with the provisions of the Plan without regard to

the Option Price, Option Period, or any other terms and conditions of the

Nonqualified Stock Option surrendered.

 

8.        Expiration

of Option upon Termination of Employment

 

Except as otherwise determined by the Committee and

set forth in an Option Agreement, the following provisions will apply to all

Options upon an Optionee’s termination of employment with the Company or a

Subsidiary:

 

(a)           If prior to the end

of the Option Period the Optionee shall undergo a Normal Termination, all

unvested Options then held by such Optionee shall expire on the date of Normal

Termination and all vested Options then held by such Optionee shall expire on

the earlier of the last day of the respective Option Period or the date that is

three months after the date of such Normal Termination.  All vesting with respect to Options shall

cease on the date of Normal Termination and all Options which are vested as of

such date shall remain exercisable by the Optionee until their expiration as

provided above.

 

(b)           If the Optionee dies

prior to the end of the Option Period and while still in the employ or service

of the Company or a Subsidiary or within three months of Normal Termination,

all unvested Options then held by such Optionee shall expire on the date of

death and all other Options then held by such Optionee shall expire on the

earlier of the last day of the respective Option Period or the date that is one

year after the date of death of the Optionee. 

All 

 

7

 

vesting with

respect to Options shall cease on the earlier of the date of Normal Termination

or the date of death and all such Options which are vested as of such date

shall remain exercisable by the beneficiary chosen by the Optionee pursuant to

Section 9(e) or, if none has been chosen, by the person or persons to whom the

Optionee’s rights under the Options pass by will or the applicable laws of

descent and distribution until their expiration as provided above.

 

(c)           If an Optionee

voluntarily ceases employment or service with the Company or a Subsidiary under

circumstances where the Company or the Subsidiary could terminate the Optionee’s

employment or service for Cause or the Company or a Subsidiary terminates

Optionee’s employment or service for Cause, all Options then held by such

Optionee, whether vested or unvested, shall expire immediately upon such

cessation of employment or service.  If

an Optionee voluntarily ceases employment or service with the Company or a

Subsidiary other than as provided in other provisions of Section 8, all

unvested Options then held by such Optionee shall expire on the date of

cessation of employment or service and all vested Options then held by such

Optionee shall expire on the earlier of the last day of the respective Option

Period or the date that is three months after the date of such cessation.

 

9.                                      Stock Grants to Directors.  The Committee may, in its sole discretion,

make grants of Stock to members of the Board who are not also employees of the

Company or a Subsidiary in lieu of cash compensation for their services as

members of the Board.  Grants of Stock under

this Section 9 shall be in such amounts and have such terms as the Committee

deems appropriate at the time of grant.

 

10.                               General

 

(a)           Privileges of Stock Ownership.  Except as otherwise specifically provided in

the Plan, no person shall be entitled to the privileges of stock ownership in

respect of shares of Stock which are subject to Options hereunder until such

shares have been issued to that person.

 

(b)           Government and Other Regulations.  The obligation of the Company to deliver

shares of Stock upon the exercise of Options shall be subject to all applicable

laws, rules, and regulations, and to such approvals by governmental agencies as

may be required.  Notwithstanding any

terms or conditions of any Option to the contrary, the Company shall be under

no obligation to offer to sell or to sell and shall be prohibited from offering

to sell or selling any shares of Stock pursuant to an Option unless such shares

have been properly registered for sale pursuant to the Securities Act with the

Securities and Exchange Commission or unless the Company has received an

opinion of counsel, satisfactory to the Company, that such shares may be

offered or sold without such registration pursuant to an available exemption

therefrom and the terms and conditions of such exemption have been fully

complied with.  The Company shall be

under no obligation to register for sale under the Securities Act any of the

shares of Stock to be offered or sold under the Plan.  If the shares of Stock offered for sale or sold under the Plan are

offered or sold pursuant to an exemption from registration under the Securities

Act, the Company may restrict the transfer of such shares and may legend the

Stock certificates representing such shares in such manner as it deems

advisable to ensure the availability of any such exemption.

 

(c)           Tax Withholding.  Notwithstanding any other provision of the

Plan, the Company or a Subsidiary, as appropriate, shall have the right to

deduct from the number of shares of Stock issued upon the exercise of an Option

such number of shares of Stock, valued at

 

8

 

Fair Market Value

on the date of payment, in an amount necessary to satisfy all Federal, state or

local taxes as required by law to be withheld with respect to such

Options.  In the alternative, at the

sole discretion of the Committee, an Optionee or other person receiving Stock

upon exercise of an Option may be required to pay to the Company or a

Subsidiary, as appropriate, prior to delivery of such Stock, the amount of any

such taxes which the Company or a Subsidiary, as appropriate, is required to

withhold, if any, with respect to such Stock. 

Subject in particular cases to the disapproval of the Committee, the

Company may accept shares of Stock of equivalent Fair Market Value in payment

of such withholding tax obligations if the Optionee elects to make payment in

such manner.  In furtherance of the

foregoing, the Company may require that (i) shares of Stock surrendered have

been owned by the Optionee for at least six months prior to the exercise or (ii)

the Optionee, attesting in writing to the Company ownership of shares of Stock

having a Fair Market Value at the time of attestation equal to such additional

withholding obligations and allowing the Company to withhold from the shares

such Optionee would otherwise receive an equal number of shares of Stock.

 

(d)           Claim to Options,  and Employment Rights.  No employee or other person shall have any

claim or right to be granted an Option under the Plan or, having been selected

for the grant of an Option, to be selected for a grant of any other

Option.  Neither the Plan nor any action

taken hereunder shall be construed as giving any Optionee any right to be

retained in the employ or service of the Company or any Subsidiary. The grant

of an Option does not imply that the Company or any Subsidiary does not

anticipate either a general reduction in force or the termination of the

employment, directorship or consulting position of an Optionee.

 

The grant of a Stock Option does not create a

fiduciary relationship between the Optionee and the Company or any other person

or entitle the Optionee to require the Company or any other person to provide

any information except as required by applicable securities or employee

benefits statutes and rules and regulations issued thereunder. An Optionee

shall have no rights as a shareholder with respect to any shares of Common

Stock subject to an Option.

 

(e)           Designation and Change of Beneficiary.  Each Optionee may file with the Committee a

written designation of one or more persons as the beneficiary who shall be

entitled to exercise the rights with respect to an Option granted under the

Plan upon the Optionee’s death.  An

Optionee may, from time to time, revoke or change his beneficiary designation

without the consent of any prior beneficiary by filing a new designation with

the Committee.  The last such

designation received by the Committee shall be controlling; provided, however,

that no designation, or change or revocation thereof, shall be effective unless

received by the Committee prior to the Optionee’s death, and in no event shall

it be effective as of a date prior to such receipt.

 

(f)            Payments to

Persons Other Than Optionees. 

If the Committee shall find that any person entitled to exercise an

Option granted under the Plan is unable to care for his affairs because of

illness or accident, or is a minor, then the delivery of shares of Stock due to

such person or his estate upon such exercise (unless a prior claim therefor has

been made by a duly appointed legal representative) may, if the Committee so

directs the Company, be made to his spouse, child, relative, an institution

maintaining or having custody of such person, or any other person deemed by the

Committee to be a proper recipient on behalf of such person otherwise entitled

to delivery.  Any such delivery shall be

a complete discharge of the liability of the Committee and the Company

therefor.

 

9

 

(g)           Time of Exercise.  Unless an earlier time is determined by the

Committee, all exercises of Options during or within ten (10) days after the

end of employment or service, may be processed by the Company five (5) days

after notice of exercise is given by the Optionee.  If prior to the processing of any Option exercise the Company

determines that it had as of the time of the end of employment or service or

has as of the time of processing grounds to terminate the Option under Section

8(c), the Option may be canceled without exercise.

 

(h)           No Liability of Company or Committee

Members.  No member of the

Committee shall be personally liable by reason of any contract or other

instrument executed by such member or on his behalf in his capacity as a member

of the Committee nor for any mistake of judgment made in good faith, and the

Company shall indemnify and hold harmless each member of the Committee and each

other employee, officer or director of the Company to whom any duty or power

relating to the administration or interpretation of the Plan may be allocated

or delegated, against any cost or expense (including counsel fees) or liability

(including any sum paid in settlement of a claim) arising out of any act or

omission to act in connection with the Plan unless arising out of such person’s

own fraud or willful bad faith; provided, however, that approval

of the Board shall be required for the payment of any amount in settlement of a

claim against any such person.  The

foregoing right of indemnification shall not be exclusive of any other rights

of indemnification to which such persons may be entitled under the Company’s

Articles of Incorporation or By-Laws, as a matter of law, or otherwise, or any

power that the Company may have to indemnify them or hold them harmless.  The Company, Subsidiaries, the Board and the

Committee shall have no liability to the Optionee, or the Optionee’s estate or

transferee if:  (i) an Option intended

to be an Incentive Stock Option does not at any time qualify as an incentive

stock option under the Code; (ii) an Option grant or exercise, or the

subsequent sale of securities received on such exercise, does not qualify as

exempt from the application of Section 16(b) of the Exchange Act; or (iii) an

Option grant or exercise, or the subsequent sale of securities received on such

exercise, is subject to Section 162(m) or 280G of the Code; in each case even

if the Optionee, estate to transferee was informed it would qualify or not be

so subject.

 

(i)            Governing

law.  The Plan shall be

governed by and construed in accordance with the internal laws of the State of

Delaware applicable to contracts made and performed within such state, without

regard to the principles of conflicts of law thereof, except as such laws may

be supplanted by the federal laws of the United States of America, which laws

shall then govern its effect and its construction to the extent they supplant

Delaware law.

 

(j)            Reliance on

Reports.  Each member of the

Committee and each member of the Board shall be fully justified in relying,

acting or failing to act, and shall not be liable for having so relied, acted

or failed to act in good faith, upon any report made by the independent public

accountant of the Company and its Subsidiaries and upon any other information

furnished in connection with the Plan by any person or persons other than

himself.

 

(k)           Relationship to Other Benefits.  No payment under the Plan shall be taken

into account in determining any benefits under any pension, retirement, profit

sharing, group insurance or other benefit plan of the Company except as

otherwise specifically provided in such other plan.

 

(l)            Expenses.  The expenses of administering the Plan shall

be borne by the Company.

 

10

 

(m)          Pronouns.  Masculine pronouns and other words of

masculine gender shall refer to both men and women.

 

(n)           Titles and Headings.  The titles and headings of the sections in

the Plan are for convenience of reference only, and in the event of any

conflict, the text of the Plan, rather than such titles or headings shall

control.

 

11.      Changes

in Capital Structure

 

Options granted under the Plan and any agreements

evidencing such Options shall be subject to equitable adjustment or

substitution, as determined by the Committee in its sole discretion, as to the

number of shares, the exercise price, the price or kind of a share of Stock or

other consideration subject to such Options (i) in the event of changes in the

outstanding Common Stock or in the capital structure of the Company by reason

of stock dividends, stock splits, reverse stock splits, recapitalizations,

reorganizations, mergers, consolidations, combinations, exchanges, spinoffs,

split-ups or other relevant changes in capitalization occurring after the date

of grant of any such Option, (ii) in the event of any change in applicable laws

or any change in circumstances which results in or would result in any

substantial dilution or enlargement of the rights granted to, or available for,

Optionees in the Plan, or (iii) upon the occurrence of any other event which

otherwise warrants equitable adjustment because it interferes with the intended

operation of the Plan.  In addition,

upon any such event, the aggregate number of shares of Stock available under

the Plan and the maximum number of shares of Stock with respect to which any

one person may be granted in connection with Options during any year, if

applicable, shall be appropriately adjusted by the Committee, whose

determination shall be conclusive.  With

respect to Options intended to qualify as “performance-based compensation”

under Section 162(m) of the Code, such adjustments or substitutions shall be

made only to the extent that the Committee determines that such adjustments or

substitutions may be made without a loss of deductibility for such Options

under Section 162(m) of the Code.  The

Company shall give each Optionee notice of an adjustment hereunder and, upon

notice, such adjustment shall be conclusive and binding for all purposes.

 

Notwithstanding the above, in the event of any of the

following:

 

(a)           The Company is merged or consolidated

with another corporation or entity and, in connection therewith, consideration

is received by shareholders of the Company in a form other than stock or other

equity interests of the surviving entity;

 

(b)           All or substantially all of the

assets of the Company are acquired by another person; or

 

(c)           The reorganization or liquidation of

the Company;

 

then the Committee may, in its sole discretion and upon at least 10

days advance notice to the affected persons, immediately prior to and subject

to the consummation of such event cancel any particular or all outstanding

Options (vested or unvested) and pay to the Optionees thereof, in cash, the

value of such Options vested as of such cancellation (taking into account any

acceleration of vesting as a result of such event) based upon the price per

share of Stock received 

 

11

 

or to be received by other shareholders of the Company in the

event.  The terms of this Section 10 may

be varied by the Committee in any particular Option Agreement.

 

12.                               Change in Control

 

(a)           Except to the extent

reflected in a particular Option Agreement, in the event of a “Change in

Control” (as defined below), notwithstanding any vesting schedule with respect

to any Options, all then unexercised and unexpired Options shall become

immediately vested and exercisable.

 

(b)           For purposes of the

Plan, Change in Control shall, unless the Board otherwise directs by resolution

adopted prior thereto or, in the case of a particular Option, the particular

Option Agreement states otherwise, be deemed to occur if:

 

(i)       Any person, entity or group (within the meaning of

Section 13(d)(3) of the Exchange Act, other than Zuellig Group, N.A.(“ZGNA”)

and/or its affiliates, becomes, directly or indirectly, by way of merger,

consolidation or other business combination, or otherwise, the “beneficial

owner” (as defined in Rule 13d-3 under the Exchange Act) of the capital stock

of the Company entitled to more than 50% of the aggregate votes represented by

the capital stock of all classes of common stock of the Company entitled to

vote generally in the election of directors (“Outstanding Voting Securities”); provided,

however, that the following acquisitions will not constitute a Change in

Control: (i) any acquisition by any employee benefit plan (or related trust)

sponsored or maintained by the Company or any Subsidiary (ii) any acquisition

by any corporation pursuant to a reorganization, merger or consolidation, if,

following such reorganization, merger or consolidation, the conditions

described in clauses (A) and (B) of clause (iii) of this definition are

satisfied or (iii)  ZGNA and/or its

affiliates becomes directly or indirectly, by way of merger, consolidation or

other business combination, or otherwise, the beneficial owner of more than 50%

of the Outstanding Voting Securities otherwise than solely because of the

issuance of Outstanding Voting Securities of the Company  pursuant to the Agreement for Option to

Acquire Powders Business from Zuellig Botanicals, Inc. between the Company and

Zuellig Botanicals, Inc., (“ZBI) dated June 11, 1999, as amended or superseded

from time to time.

 

(ii)       individuals who, as of the effective date of the Plan,

constitute the Board of Directors of the Company (the “Incumbent Board”) cease

for any reason to constitute at least a majority of the Company’s Board of

Directors; provided, however, that any individual becoming a director

subsequent to the effective date of the Plan whose election, or nomination for

election by the Company’s shareholders was approved by a vote of at least a

majority of the directors then comprising the Incumbent Board or pursuant to

the Governance Agreement between the Company, ZGNA and ZBI, dated June 11,

1999, will be considered as though such individual were a member of the

Incumbent Board; or

 

12

 

(iii)      The occurrence of a reorganization, merger or

consolidation, in each case, unless, following such reorganization,

merger or consolidation, (A) more than 50% of, respectively, the then

outstanding shares of common stock of the corporation resulting from such

reorganization, merger or consolidation and the combined voting power of the

then outstanding voting securities of such corporation entitled to vote

generally in the election of directors is then beneficially owned, directly or

indirectly, by all or substantially all of the individuals and entities who

were the beneficial owners, respectively, of the Outstanding Voting Securities

immediately prior to such reorganization, merger or consolidation in

substantially the same proportions as their ownership, immediately prior to

such reorganization, merger or consolidation, of the Outstanding Voting

Securities, and (B) at least a majority of the members of the board of directors

of the corporation resulting from such reorganization, merger or consolidation

were members of the Board at the time of the execution of the initial agreement

providing for such reorganization, merger or consolidation;

 

(iv)      Approval by the shareholders of the Company of (A) a

complete liquidation or dissolution of the Company, as applicable, or (B) the

sale or other disposition of all or substantially all of the assets of the

Company, other  than to a corporation, with respect to which

following such sale or other disposition, (1) more than 50% of, respectively,

the then outstanding shares of common stock of such corporation and the

combined voting power of the then outstanding voting securities of such

corporation entitled to vote generally in the election of directors is then

beneficially owned, directly or indirectly, by all or substantially all of the

individuals and entities who were the beneficial owners, respectively of the

Outstanding Voting Securities immediately prior to such sale or other disposition,

in substantially the same proportion as their ownership immediately prior to

such sale or other disposition, of the Outstanding Voting Securities, and (2)

at least a majority of the members of the board of directors of such

corporation were members of the Board at the time of the execution of the

initial agreement or action of the Board providing for such sale or other

disposition of assets of the Company; provided, however, that no transaction

resulting in the disposition of one or more subsidiaries or other business

units of the Company will be treated as substantially all of the assets of the

Company unless the assets so disposed of comprise more than 70% of all

corporate assets. or

 

(v)                                 The occurrence of a reorganization,

consolidation, merger, sale of stock or other event in which ZGNA owns less

than 50% of the Outstanding Voting Securitiies that it held as of December 31,

1999.

 

13

 

13.                               Nonexclusivity of the Plan

 

Neither the adoption of this Plan by the Board nor the

submission of this Plan to the stockholders of the Company for approval shall

be construed as creating any limitations on the power of the Board to adopt

such other incentive arrangements as it may deem desirable, including, without limitation,

the granting of stock options otherwise than under this Plan, and such

arrangements may be either applicable generally or only in specific cases.

 

14.                               Amendments and Termination

 

The Board may at any time terminate the Plan.  With the express written consent of an

individual Optionee, the Board or the Committee may cancel or reduce or

otherwise alter outstanding Options. 

The Board or the Committee may, at any time, or from time to time, amend

or suspend and, if suspended, reinstate, the Plan in whole or in part;

provided, however, that no amendment which requires stockholder approval in

order for Options granted pursuant to the Plan to be exempt from the

application of Section 162(m) of the Code or for Options which are Incentive

Stock Options to continue to meet the requirements of Section 422 of the Code,

shall be effective unless the same shall be approved by the requisite vote of

the stockholders of the Company.

 

15.                               Effect of Section 162(m) of the Code

 

The Plan, and all Options issued thereunder, are

intended to be exempt from the application of Section 162(m) of the Code, which

restricts under certain circumstances the Federal income tax deduction for

compensation paid by a publicly held corporation to named executives in excess

of $1 million per year.  One of the

requirements for such exemption is that the Plan be approved by the

stockholders of the Company.  To the

extent that the Committee determines as of the date of grant of an Option that

(i) the Option is intended to comply with Section 162(m) of the Code and (ii)

the exemption described above is not available with respect to such Option

because the stockholders have not approved the Plan, such Option shall not be

effective until such stockholder approval required under Section 162(m) of the

Code has been obtained.

 

Options may be granted prior to the date of such stockholder approval

made subject to stockholder approval. 

In such event and prior to such grant, the Committee shall consult with

the Company’s accountants as to the accounting implications thereof and, if

Incentive Stock Options are to be granted, the Company’s legal counsel as to

the requirements for such grants.

 

	

   

  	

  *

  	

  *

  	

  *

  	

   

  

 

	

  As adopted by the Board of Directors of

  	

   

  
	

  Hauser, Inc. as of

  	

   

  
	

  July 26, 1999

  	

   

  
	

   

  	

   

  
	

  By:

  	

   

  	

   

  
			

 

14

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