EXHIBIT 99.1
MEDICAL COMPOSITE TECHNOLOGY, INC.
1989 STOCK OPTION PLAN
Adopted July 15, 1989
Amended December 16, 1992
1. PURPOSE.
(a) The purpose of the Plan is to provide a means by which selected
key employees and directors (if declared eligible under paragraph 4) of and
consultants to Medical Composite Technology, Inc., a California corporation
(the "Company"), and its Affiliates, as defined in subparagraph 1(b), may
be given an opportunity to purchase stock of the Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company, as those terms are
defined in Sections 425(e) and (f), respectively, of the Internal Revenue
Code of 1986, as amended from time to time (the "Code").
(c) The Company, by means of the Plan, seeks to retain the services
of persons now employed by or serving as consultants or directors to the
Company, to secure and retain the services of new employees/persons capable
of filling such positions, and to provide incentives for such persons to
exert maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan shall,
in the discretion of the Board of Directors of the Company (the "Board") or
any committee to which responsibility for administration of the Plan has
been delegated pursuant to subparagraph 2(c), be either incentive stock
options as that term is used in Section 422 of the Code ("Incentive Stock
Options"), or options which do not qualify as incentive stock options
("Supplemental Stock Options"). All options shall be separately designated
Incentive Stock Options or Supplemental Stock Options at the time of grant,
and in such form as issued pursuant to paragraph 5, and a separate
certificate or certificates shall be issued for shares purchased on
exercise of each type of option. An option designated as a Supplemental
Stock Option shall not be treated as an incentive stock option.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a committee, as provided in subparagraph
2(c). Whether or not the Board has delegated administration, the Board
shall have the final power to determine all questions of policy and
expediency that may arise in the administration of the Plan.
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons eligible
under the Plan shall be granted options; when and how the option shall be
granted; whether the option will be an Incentive Stock Option or a
Supplemental Stock Option; the provisions of each option granted (which
need not be identical), including the time or times during the term of each
option within which all or portions of such option may be exercised; and
the number of shares for which an option shall be granted to each such
person.
(2) To construe and interpret the Plan and options granted under it,
and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any option agreement,
in a manner and to the extent it shall deem necessary or expedient to make
the Plan fully effective.
(3) To amend the Plan as provided in paragraph 10.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the
members of which Committee shall be disinterested persons, if required and
as defined by the provisions of subparagraph 2(d). If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
subject, however, to such resolutions, not inconsistent with the provisions
of the Plan, as may be adopted from time to time by the Board. The Board
may abolish the Committee at any time and revest in the Board the
administration of the Plan. Additionally, and notwithstanding anything to
the contrary contained herein, the Board may expressly determine that the
requirement that the Committee be composed of two (2) members be waived and
may delegate administration of the Plan to any person or persons and the
term "Committee" shall apply to any person or persons to whom such
authority has been delegated.
(d) The term "disinterested person," as used in this Plan, shall mean
an administrator of the Plan, whether a member of the Board or of any
Committee to which responsibility for administration of the Plan has been
delegated pursuant to subparagraph 2(c): (i) who was not during the one
(1) year prior to service as an administrator of the Plan granted or
awarded equity securities pursuant to the Plan or any other plan of the
Company or any of its affiliates entitling the participants therein to
acquire equity securities of the Company or any of its affiliates except as
permitted by Rule 16b-3(c)(2)(i) promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") ("Rule 16b-3(c)(2)(i)"); or
(ii) who is otherwise considered to be a "disinterested person" in
accordance with Rule 16b-3(c)(2)(i) or any other applicable rules,
regulations or interpretations of the Securities and Exchange Commission.
Any such person shall otherwise comply with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
(e) Any requirement that an administrator of the Plan be a
"disinterested person" shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or the Committee expressly declares that
such requirement shall not apply.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options
granted under the Plan shall not exceed in the aggregate four hundred
thousand (400,000) shares of the Company's common stock. If any option
granted under the Plan shall for any reason expire or otherwise terminate
without having been exercised in full, the stock not purchased under such
option shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an eligible person
under the Plan only if the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to which incentive
stock options (as defined in the Code) granted after 1986 are exercisable
for the first time by such optionee during any calendar year under all
incentive stock option plans of the Company and its Affiliates does not
exceed one hundred thousand dollars ($100,000). Should it be determined
that an option granted under the Plan exceeds such maximum for any reason
other than the failure of a good faith attempt to value the stock subject
to the option, such option shall be considered a Supplemental Stock Option
to the extent, but only to the extent, of such excess; provided, however,
that should it be determined that an entire option or any portion thereof
does not qualify for treatment as an incentive stock option by reason of
exceeding such maximum, such option or the applicable portion shall be
considered a Supplemental Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to key employees
(including officers) of the Company or its Affiliates. A director of the
Company shall not be eligible to receive Incentive Stock Options unless
such director is also a key employee (including an officer) of the Company
or any Affiliate. Supplemental Stock Options may be granted only to key
employees (including officers) of, directors of or consultants to the
Company or its Affiliates. A director of the Company shall not be eligible
for a Supplemental Stock Option unless such director is also an employee
(including an officer) of or consultant to the Company or Affiliate.
(b) A director shall in no event be eligible for the benefits of the
Plan unless at the time discretion is exercised in the selection of the
director as a person to whom options may be granted, or in the
determination of the number of shares which may be covered by options
granted to the directors: (i) the Board has delegated its discretionary
authority over the Plan to a Committee which consists solely of
"disinterested persons" as defined in subparagraph 2(d); or (ii) the Plan
otherwise complies with the requirements of Rule 16b-3 promulgated under
the Exchange Act, as from time to time in effect. The Board shall
otherwise comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, as from time to time in effect. This subparagraph 4(b) shall
not apply (i) prior to the date of the first registration of an equity
security of the Company under Section 12 of the Exchange Act or (ii) if the
Board or the Committee expressly declares that it shall not apply.
(c) No person shall be eligible for the grant of an option under the
Plan if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or of any of its Affiliates unless the exercise price of such
option is at least one hundred ten percent (110%) of the fair market value
of such stock at the date of grant and the term of the option does not
exceed five (5) years from the date of grant.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain
such terms and conditions as the Board or the Committee shall deem
appropriate. The provisions of separate options need not be identical, but
each option shall include (through incorporation of provisions hereof by
reference in the option or otherwise) the substance of each of the
following provisions:
(a) The term of any option shall not be greater than ten (10) years
from the date it was granted.
(b) The exercise price of each Incentive Stock Option shall be not
less than one hundred percent (100%) of the fair market value of the stock
subject to the option on the date the option is granted. The exercise
price of each Supplemental Stock Option shall be not less than eighty-five
percent (85%) of the fair market value of the stock subject to the option
on the date the option is granted.
(c) The purchase price of stock acquired pursuant to an option shall
be paid, to the extent permitted by applicable statutes and regulations,
either (i) in cash at the time the option is exercised, or (ii) at the
discretion of the Board or the Committee, either at the time of the grant
or exercise of the option, (A) by delivery to the Company of other common
stock of the Company, (B) according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to
whom the option is granted or to whom the option is transferred pursuant to
subparagraph 5(d), or (C) in any other form of legal consideration that may
be acceptable to the Board or the Committee.
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.
(d) An option shall not be transferable except by will or by the laws
of descent and distribution, and shall be exercisable during the lifetime
of the person to whom the option is granted only by such person.
(e) The total number of shares of stock subject to an option may, but
need not, be allotted in periodic installments (which may, but need not, be
equal). From time to time during each of such installment periods, the
option may become exercisable ("vest") with respect to some or all of the
shares allotted to that period, and may be exercised with respect to some
or all of the shares allotted to such period and/or any prior period as to
which the option was not fully exercised. During the remainder of the term
of the option (if its term extends beyond the end of the installment
periods), the option may be exercised from time to time with respect to any
shares then remaining subject to the option. The provisions of this
subparagraph 5(e) are subject to any option provisions governing the
minimum number of shares as to which an option may be exercised.
(f) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 5(d), as a condition of exercising
any such option, (1) to give written assurances satisfactory to the Company
as to the optionee's knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably satisfactory
to the Company who is knowledgeable and experienced in financial and
business matters, and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of
exercising the option; and (2) to give written assurances satisfactory to
the Company stating that such person is acquiring the stock subject to the
option for such person's own account and not with any present intention of
selling or otherwise distributing the stock. These requirements, and any
assurances given pursuant to such requirements, shall be inoperative if
(i) the issuance of the shares upon the exercise of the option has been
registered under a then currently effective registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), or (ii) as
to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under
the then applicable securities laws.
(g) An option shall terminate three (3) months after termination of
the optionee's employment or relationship as a consultant or director with
the Company or an Affiliate, unless (i) such termination is due to such
person's permanent and total disability, within the meaning of Section
422(c)(6) of the Code, in which case the option may, but need not, provide
that it may be exercised at any time within one (1) year following such
termination of employment or relationship as a consultant or director; or
(ii) the optionee dies while in the employ of or while serving as a
consultant or director to the Company or an Affiliate, or within not more
than three (3) months after termination of such relationship, in which case
the option may, but need not, provide that it may be exercised at any time
within eighteen (18) months following the death of the optionee by the
person or persons to whom the optionee's rights under such option pass by
will or by the laws of descent and distribution; or (iii) the option by its
terms specifies either (a) that it shall terminate sooner than three (3)
months after termination of the optionee's employment or relationship as a
consultant or director or (b) that it may be exercised more than three (3)
months after termination of the relationship with the Company or an
Affiliate. This subparagraph 5(g) shall not be construed to extend the
term of any option or to permit anyone to exercise the option after
expiration of its term, nor shall it be construed to increase the number of
shares as to which any option is exercisable from the amount exercisable on
the date of termination of the optionee's employment or relationship as a
consultant or director.
(h) The option may, but need not, include a provision whereby the
optionee may elect at any time during the term of his or her employment or
relationship as a consultant or director with the Company or any Affiliate
to exercise the option as to any part or all of the shares subject to the
option prior to the stated vesting date of the option or of any installment
or installments specified in the option. Any shares so purchased from any
unvested installment or option may be subject to a repurchase right in
favor of the Company or to any other restriction the Board or the Committee
determines to be appropriate.
(i) To the extent provided by the terms of an option, the optionee
may satisfy any federal, state or local tax withholding obligation relating
to the exercise of such option by any of the following means or by a
combination of such means: (1) tendering a cash payment; (2) authorizing
the Company to withhold from the shares of the common stock otherwise
issuable to the participant as a result of the exercise of the stock option
a number of shares having a fair market value less than or equal to the
amount of the withholding tax obligation; or (3) delivering to the Company
owned and unencumbered shares of the common stock having a fair market
value less than or equal to the amount of the withholding tax obligation.
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the Plan, the
Company shall keep available at all times the number of shares of stock
required to satisfy such options.
(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the options
granted under the Plan; provided, however, that this undertaking shall not
require the Company to register under the Securities Act either the Plan,
any option granted under the Plan or any stock issued or issuable pursuant
to any such option. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which
counsel for the Company deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such options unless and
until such authority is obtained.
7. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options
granted under the Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
(a) Neither an optionee nor any person to whom an option is
transferred under subparagraph 5(d) shall be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares subject
to such option unless and until such person has satisfied all requirements
for exercise of the option pursuant to its terms.
(b) Throughout the term of any option granted pursuant to the Plan,
the Company shall make available to the holder of such option, not later
than one hundred twenty (120) days after the close of each of the Company's
fiscal years during the option term, upon request, such financial and other
information regarding the Company as comprises the annual report to the
shareholders of the Company provided for in the bylaws of the Company.
(c) Nothing in the Plan or any instrument executed or option granted
pursuant thereto shall confer upon any eligible employee or optionee any
right to continue in the employ of the Company or any Affiliate (or to
continue acting as a consultant or director) or shall affect the right of
the Company or any Affiliate to terminate the employment or consulting
relationship or directorship of any eligible employee or optionee with or
without cause. In the event that an optionee is permitted or otherwise
entitled to take a leave of absence, the Company shall have the unilateral
right to (i) determine whether such leave of absence will be treated as a
termination of employment for purposes of paragraph 5(g) hereof and
corresponding provisions of any outstanding options, and (ii) suspend or
otherwise delay the time or times at which the shares subject to the option
would otherwise vest.
9. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any option granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend
in property other than cash, stock split, liquidating dividend, combination
of shares, exchange of shares, change in corporate structure or otherwise),
the Plan and outstanding options will be appropriately adjusted in the
class(es) and maximum number of shares subject to the Plan and the
class(es) and number of shares and price per share of stock subject to
outstanding options.
(b) In the event of: (1) a merger or consolidation in which the
Company is not the surviving corporation; or (2) a reverse merger in which
the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of
securities, cash or otherwise then to the extent permitted by applicable
law: (i) any surviving corporation shall assume any options outstanding
under the Plan or shall substitute similar options for those outstanding
under the Plan, or (ii) such options shall continue in full force and
effect. In the event any surviving corporation refuses to assume or
continue such options, or to substitute similar options for those
outstanding under the Plan, then, with respect to options held by persons
then performing services as employees or as consultants or directors for
the Company, as the case may be, the time during which such options may be
exercised shall be accelerated and the options terminated if not exercised
prior to such event.
10. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in paragraph 9 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
shareholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(i) Increase the number of shares reserved for options under the
Plan;
(ii) Modify the requirements as to eligibility for participation in
the Plan (to the extent such modification requires shareholder approval in
order for the Plan to satisfy the requirements of Section 422(b) of the
Code); or
(iii) Modify the Plan in any other way if such modification
requires shareholder approval in order for the Plan to satisfy the
requirements of Section 422(b) of the Code or to comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act.
(b) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide optionees
with the maximum benefits provided or to be provided under the provisions
of the Code and the regulations promulgated thereunder relating to employee
incentive stock options and/or to bring the Plan and/or incentive stock
options granted under it into compliance therewith.
(c) Rights and obligations under any option granted before amendment
of the Plan shall not be altered or impaired by any amendment of the Plan
unless (i) the Company requests the consent of the person to whom the
option was granted and (ii) such person consents in writing.
11. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate December 15, 2002. No options
may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom the option was
granted.
12. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the
Board, but no options granted under the Plan shall be exercised unless and
until the Plan has been approved by the shareholders of the Company, and,
if required, an appropriate permit has been issued by the Commissioner of
Corporations of the State of California.