EXHIBIT 4
PUREPAC, INC.
1994 Stock Option Plan
1. Purpose of the Plan. The Purepac, Inc. 1994 Stock Option Plan
(the "Plan") is intended to advance the interests of Purepac, Inc., a
Delaware corporation (the "Company"), by inducing persons of outstanding
ability and potential to join and remain with the Company, by encouraging
and enabling employees to acquire proprietary interests in the Company,
and by providing the participating employees with an additional incentive to
promote the success of the Company. This is accomplished by providing for
the granting of "Options" (which term as used herein includes both "Incentive
Stock Options" and "Nonstatutory Stock Options," as later defined) to
qualified employees and non-employee Directors and consultants.
2. Administration. The Plan shall be administered by the Board of
Directors of the Company (the "Board of Directors") or by a committee
(the "Committee") consisting of at least two persons chosen by the Board
of Directors. Except as herein specifically provided, the interpretation
and construction by the Board of Directors or the Committee of any
provision of the Plan or of any Option granted under it shall be final
and conclusive. The receipt of Options by Directors, or any members of
the Committee, shall not preclude their vote on any matters in connection
with the administration or interpretation of the Plan, except as otherwise
provided by law.
3. Shares Subject to the Plan. The stock subject to grant under
the Plan shall be shares of the Company's common stock, $.01 par value
(the "Common Stock"), whether authorized but unissued or held in the
Company's treasury or shares purchased from shareholders expressly for
use under the Plan. The maximum number of shares of Common Stock which
may be issued pursuant to Options granted under the Plan shall not exceed
one million (1,000,000) shares, subject to adjustment in accordance with
the provisions of Section 12 hereof. The Company shall at all times
while the Plan is in force reserve such number of shares of Common Stock
as will be sufficient to satisfy the requirements of all outstanding
Options granted under the Plan. In the event any Option granted under
the Plan shall expire or terminate 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 subject thereto
shall again be available for Options under the Plan.
4. Participation. The class of persons which shall be eligible to
receive Options under the Plan shall be (i) with respect to Incentive
Stock Options described in Section 6 hereof, all key employees (including
officers) of either the Company or any subsidiary corporation of the Company,
and (ii) with respect to Nonstatutory Stock Options described in Section 7
hereof, any key employee (including any officer) of, any non-employee
Director of, or any non-employee consultant to, either the Company or any
subsidiary corporation of the Company. The Board of Directors or the
Committee, in its sole discretion, but subject to the provisions of the Plan,
shall determine the employees and non-employee Directors and non-employee
consultants to the Company or any subsidiary corporation of the Company to
whom Options shall be granted and the number of shares to be covered by each
Option taking into account the nature of the employment or services rendered
by the individuals being considered, their annual compensation, their present
and potential contributions to the success of the Company and such other
factors as the Board of Directors or the Committee may deem relevant.
5. Stock Option Agreement. Each Option granted under the Plan shall
be authorized by the Board of Directors or the Committee and shall be
evidenced by a Stock Option Agreement which shall be executed by the Company
and by the person to whom such Option is granted. The Stock Option Agreement
shall specify the number of shares of Common Stock as to which any Option is
granted, the period during which the Option is exercisable and the option
price per share thereof.
6. Incentive Stock Options. The Board of Directors or the Committee
may grant Options under the Plan which are intended to meet the requirements
of Section 422A of the Internal Revenue Code of 1986 (the "Code") (such an
Option referred to herein as an "Incentive Stock Option"), and which are
subject to the following terms and conditions and any other terms and
conditions as may at any time be required by Section 422A of the Code:
(a) No Incentive Stock Option shall be granted to individuals other
than key employees of the Company or of a subsidiary corporation
of the Company.
(b) Each Incentive Stock Option under the Plan must be granted prior
to August 15, 2004, which is within ten years from the date
the Plan was adopted by the Board of Directors.
(c) The option price of the shares subject to any Incentive Stock
Option shall not be less than the fair market value of the
Common Stock at the time such Incentive Stock Option is granted;
provided, however, if an Incentive Stock Option is granted to an
individual who owns, at the time the Incentive Stock Option is
granted, more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or of a subsidiary
corporation of the Company, the option price of the shares
subject to the Incentive Stock Option shall be at least one
hundred ten percent (110%) of the fair market value of the Common
Stock at the time the Incentive Stock Option is granted.
(d) No Incentive Stock Option granted under the Plan shall be
exercisable after the expiration of ten (10) years from the
date of its grant. However, if an Incentive Stock Option is
granted to an individual who owns, at the time the Incentive
Stock Option is granted, more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or
of a subsidiary corporation of the Company, such Incentive Stock
Option shall not be exercisable after the expiration of five years
from the date of its grant. Every Incentive Stock Option granted
under the Plan shall be subject to earlier termination as expressly
provided in Sections 10 and 12(c) hereof.
(e) For purposes of determining stock ownership under this Section 6,
the attribution rules of Section 425(d) of the Code shall apply.
(f) For purposes of the Plan, fair market value shall be determined
by the Board of Directors or the Committee and, unless another
reasonable method for determining fair market value is specified
by the Committee, the closing market price of a share of Common
Stock as reported by NASDAQ for the trading date next preceding
the date in question.
7. Nonstatutory Stock Options. The Board of Directors or the
Committee may grant Options under the Plan which are not intended to meet
the requirements of Section 422A of the Code, as well as Options which are
intended to meet the requirements of Section 422A of the Code, but the
terms of which provide that they will not be treated as Incentive Stock
Options (referred to herein as a "Nonstatutory Stock Option"). Nonstatutory
Stock Options which are not intended to meet these requirements shall be
subject to the following terms and conditions:
(a) A Nonstatutory Stock Option may be granted to any person eligible
to receive an Option under the Plan pursuant to Section 4(ii)
hereof, except that no such Option may be granted to any person
who owns stock possessing more than 10% of the total combined
voting power or value of all classes of stock of the Company or
the parent corporation or any subsidiary corporation of the
Company.
(b) The option price of the shares subject to a Nonstatutory Stock
Option shall be determined by the Board of Directors or the
Committee, in its absolute discretion, at the time of the grant
of the Nonstatutory Stock Option.
(c) A Nonstatutory Stock Option granted under the Plan may be of such
duration as shall be determined by the Board of Directors or the
Committee (not to exceed 10 years), and shall be subject to earlier
termination as expressly provided in Sections 10 and 12(c) hereof.
8. Rights of Option Holders. The holder of any Option granted under
the Plan shall have none of the rights of a stockholder with respect to
the shares covered by his Option until such shares shall be issued to him
upon the exercise of his Option.
9. Transferability. No Option granted under the Plan shall be
transferable by the individual to whom it was granted otherwise than by
Will or the laws of descent and distribution, and, during the lifetime of
such individual, shall not be exercisable by any other person, but only
by him.
10. Termination of Employment or Death.
(a) If the employment of an employee by, or the services of either
a non-employee Director of or a non-employee consultant to the Company or
a subsidiary corporation of the Company shall be terminated voluntarily
by the employee, the non-employee Director or the non-employee consultant
or for cause, then his Option shall expire forthwith. Except as provided
in subsections (b) and (c) of this Section 10, if such employment or
services shall terminate for any other reason, then such Option may be
exercised at any time within three months after such termination, subject
to the provisions of subparagraph (d) of this Section 10. For purposes
of the Plan, the retirement of an individual either pursuant to a pension
or retirement plan adopted by the Company or at the normal retirement date
prescribed from time to time by the Company shall be deemed to be termination
of such individual's employment other than voluntarily or for cause.
For purposes of this subparagraph, an employee who leaves the employ of
the Company to become an employee of (i) a subsidiary corporation of the
Company or (ii) of a corporation (or its parent or subsidiary) that has
assumed the Option of the Company as a result of a corporate reorganization,
etc., shall not be considered to have terminated his employment.
(b) If the holder of an Option under the Plan dies (i) while employed
by, or while serving as either a non-employee Director of or a non-employee
consultant to, the Company or a subsidiary corporation of the Company, or
(ii) within three months after the termination of his employment or his
services other than voluntarily or for cause, then such Option may, subject
to the provisions of subparagraph (d) of this Section 10, be exercised by
the estate of the employee, the non-employee Director or
the non-employee consultant or by a person who acquired the right to exercise
such Option by bequest or inheritance or by reason of the death of such
employee, non-employee Director or non-employee consultant at any time within
one year after such death.
(c) If the holder of an Option under the Plan ceases employment because
of permanent and total disability (within the meaning of Section 22(e)(3)
of the Code) while employed by, or while serving as a non-employee Director
of or a non-employee consultant to, the Company or a subsidiary corporation
of the Company, then such Option may, subject to the provisions of
subparagraph (d) of this Section 10, be exercised at any time within one
year after his termination of employment or termination of services due to
the disability.
(d) An Option may not be exercised pursuant to this Section 10 except
to the extent that the holder was entitled to exercise the Option at the
time of termination of employment, termination of services, or death, and
in any event may not be exercised after the expiration of the Option.
(e) For purposes of this Section 10, the employment relationship of
an employee of the Company or of a subsidiary corporation of the Company
will be treated as continuing intact while he is on military or sick leave
or other bona fide leave of absence (such as temporary employment by the
Government) if such leave does not exceed ninety days, or, if longer, so
long as his right to reemployment is guaranteed either by statute or by
contract.
11. Exercise of Options.
(a) Unless otherwise provided in the Stock Option Agreement, any
Option granted under the Plan shall be exercisable in whole at any time,
or in part from time to time, prior to expiration. The Board of Directors
or the Committee, in its absolute discretion, may provide in any Stock Option
Agreement that the exercise of any Option granted under the Plan shall be
subject (i) to such condition or conditions as it may impose, including,
but not limited to, a condition that the holder thereof remain in the
employ or service of the Company or a subsidiary corporation of the Company
for such period or periods of time from the date of grant of the Option,
as the Board of Directors or the Committee, in its absolute discretion,
shall determine; and (ii) to such limitations as it may impose, including,
but not limited to, a limitation that the aggregate fair market value of
the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any employee during any calendar year
(under all plans of the Company and its parent and subsidiary corporations)
shall not exceed One Hundred Thousand Dollars ($100,000). In addition,
in the event that under any Stock Option Agreement the aggregate fair
market value of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time by any employee during any
calendar year (under all plans of the Company and its parent and subsidiary
corporations) exceeds One Hundred Thousand Dollars ($100,000), the Board of
Directors or the Committee may, when shares are transferred upon exercise
of such Options, designate those shares which shall be treated as
transferred upon exercise of an Incentive Stock Option and those shares
which shall be treated as transferred upon exercise of a Nonstatutory Stock
Option.
(b) An Option granted under the Plan shall be exercised by the
delivery by the holder thereof to the Company at its principal office
(attention of the Secretary) of written notice of the number of shares with
respect to which the Option is being exercised. Such notice shall be
accompanied by payment of the full option price of such shares, and payment
of such option price shall be made by the holder's delivery of his check
payable to the order of the Company; provided, however, that notwithstanding
the foregoing provisions of this Section 11 or any other terms, provisions
or conditions of the Plan, at the written request of the optionee and upon
approval by the Board of Directors or the Committee, shares acquired
pursuant to the exercise of any Option may be paid for in full at the time
of exercise by the surrender of shares of Common Stock of the Company held
by or for the account of the optionee at the time of exercise to the extent
permitted by subsection (c)(5) of Section 422A of the Code and, with respect
to any person who is subject to the reporting requirements of Section 16(a)
of the Securities Exchange Act of 1934, to the extent permitted by Section
16(b) of that Act and the Rules of the Securities and Exchange Commission,
without liability to the Company. In such case, the fair market value of
the surrendered shares shall be determined by the Board of Directors or
the Committee as of the date of exercise in the same manner as such value
is determined upon the grant of an Incentive Stock Option.
12. Adjustment Upon Change in Capitalization.
(a) In the event that the outstanding Common Stock is hereafter
changed by reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, combination of shares, stock dividends
or the like, an appropriate adjustment shall be made by the Board of
Directors or the Committee in the aggregate number of shares available
under the Plan and in the number of shares and option price per share
subject to outstanding Options. Any adjustment in the number of shares
shall apply proportionately to only the unexercised portion of the Option
granted hereunder. If fractions of a share would result from any such
adjustment, the adjustment shall be revised to the next lower whole number
of shares.
(b) If the Company shall be reorganized, consolidated or merged with
another corporation, or if all or substantially all of the assets of the
Company shall be sold or exchanged, the holder of an Option shall be
entitled to receive upon the exercise of his Option (the timing of which,
as set forth in Section 11, is in the discretion of the Board of Directors
or the Committee) the same number and kind of shares of stock or the same
amount of property, cash or securities as he would have been entitled to
receive upon the happening of any such corporate event as if he had been,
immediately prior to such event, the holder of the number of shares covered
by his Option; provided, however, that in such event the Board of Directors
or the Committee shall have the discretionary power to take any action
necessary or appropriate to prevent any Incentive Stock Option granted
hereunder from being disqualified as an "incentive stock option" under
the then existing provisions of the Code or any law amendatory thereof or
supplemental thereto.
(c) Notwithstanding the provisions of subsection (b) of this Section
12, if the Common Stock of the Company shall cease to be publicly traded
at any time prior to August 15, 2004, then upon the occurrence of such event,
any Options theretofore granted under the Plan that shall have not as yet
vested shall thereupon automatically lapse in their totality.
13. Further Conditions of Exercise.
(a) Unless prior to the exercise of the Option the shares issuable
upon such exercise have been registered with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended, the notice
of exercise shall be accompanied by a representation or agreement of the
individual exercising the Option to the Company to the effect that such
shares are being acquired for investment and not with a view to the resale
or distribution thereof or such other documentation as may be required by
the Company unless in the opinion of counsel to the Company such
representation, agreement or documentation is not necessary to comply
with such Act.
(b) The Company shall not be obligated to deliver any Common Stock
until it has been listed on each securities exchange on which the Common
Stock may then be listed or until there has been qualification under or
compliance with such state or federal laws, rules or regulations as the
Company may deem applicable. The Company shall use reasonable efforts to
obtain such listing, qualifications and compliance.
14. Effectiveness of the Plan. The Plan was originally adopted by
the Board of Directors on August 16, 1994. The Plan shall be subject to
approval by the affirmative vote of a majority of the outstanding shares
of capital stock of the Company present in person or by proxy at a meeting
of stockholders of the Company convened for such purpose prior to August 15,
1995, which is within one year of adoption of the Plan by the Board of
Directors. In the event such stockholder approval is withheld or otherwise
not received on or before the latter date, the Plan and all Options which
may have been granted thereunder shall become null and void.
15. Termination, Modification and Amendment.
(a) The Plan (but not Options previously granted under the Plan)
shall terminate on August 15, 2004, which is within ten years of the date
of its adoption by the Board of Directors, or sooner as hereinafter provided,
and no Option shall be granted after the termination of the Plan.
(b) The Plan may from time to time be terminated, modified or amended
by the affirmative vote of the holders of a majority of the outstanding
shares of capital stock of the Company present in person or by proxy at a
meeting of stockholders of the Company convened for such purpose.
(c) The Board of Directors may at any time, on or before the termination
date referred to in Section 15(a) hereof, terminate the Plan, or from time
to time make such modifications or amendments to the Plan as it may deem
advisable; provided, however, that the Board of Directors shall not, without
approval by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of the Company present in person or
by proxy at a meeting of stockholders of the Company convened for such
purpose, increase (except as provided by Section 12 hereof) the maximum
number of shares as to which Incentive Stock Options may be granted, or
change the designation of the employees or class of employees eligible to
receive Options or make any other change which would prevent any Incentive
Stock Option granted hereunder which is intended to be an "incentive stock
option" from disqualifying as such under the then existing provisions of
the Code or any law amendatory thereof or supplemental thereto.
(d) No termination, modification or amendment of the Plan may, without
the consent of the individual to whom an Option shall have been previously
granted, adversely affect the rights conferred by such Option.
16. Not a Contract of Employment. Nothing contained in the Plan or
in any Stock Option Agreement executed pursuant hereto shall be deemed to
confer upon any individual to whom an Option is or may be granted hereunder
any right to remain in the employ or service of the Company or a subsidiary
corporation of the Company.
17. Use of Proceeds. The proceeds from the sale of shares pursuant
to Options granted under the Plan shall constitute general funds of the
Company.
18. Indemnification of Board of Directors or Committee. In addition
to such other rights of indemnification as they may have, the members of
the Board of Directors or the Committee, as the case may be, shall be
indemnified by the Company to the extent permitted under applicable law
against all costs and expenses reasonably incurred by them in connection
with any action, suit or proceeding to which they or any of them may be a
party by reason of any action taken or failure to act under or in connection
with the Plan or any rights granted thereunder and against all amounts paid
by them in settlement thereof or paid by them in satisfaction of a judgment
of any such action, suit or proceeding, except a judgment based upon a
finding of bad faith. Upon the institution of any such action, suit or
proceeding, the member or members of the Board of Directors or the
Committee, as the case may be, shall notify the Company in writing, giving
the Company an opportunity at its own cost to defend the same before such
member or members undertake to defend the same on their own behalf.
19. Definitions. For purposes of the Plan, the terms "parent
corporation" and "subsidiary corporation" shall have the same meanings
as set forth in Sections 425(e) and 425(f) of the Code, respectively,
and the masculine shall include the feminine and the neuter as the context
requires.
20. Governing Law. The Plan shall be governed by, and all questions
arising hereunder shall be determined in accordance with, the laws of the
State of New Jersey.