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Exhibit 10.10(3)
Halsey Drug Co., INC.
1996 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
ARTICLE 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan. Halsey Drug Co., Inc., a New York
corporation (the "Company"), hereby establishes a plan to be known as the
"Halsey Drug Co., Inc. 1996 Non-Employee Director Stock Option Plan" (the
"Plan"), as set forth in this document. The Plan permits the grant of
Nonqualified Stock Options to Non-Employee Directors, subject to the terms and
provisions set forth herein.
Upon approval by the Board of Directors of the Company, and subject to
ratification by an affirmative vote of the Company's shareholders, the Plan
shall become effective as of October 17, 1996 (the "Effective Date"), and shall
remain in effect as provided in Section 1.3 herein.
1.2 Purpose of the Plan. The purpose of the Plan is to provide
compensation in the form of an equity participation in the Company to
Non-Employee Directors. The Plan is intended to promote the success and enhance
the value of the Company by linking the personal interests of Non-Employee
Directors to those of Company shareholders.
1.3 Duration of the Plan. The Plan shall commence on October 17, 1996 and
shall remain in effect, subject to the right of the Board of Directors to
terminate the Plan at any time pursuant to Article 7 herein, until all Shares
subject to it shall have been purchased or acquired according to the Plan's
provisions. However, in no event may an Option be granted under the Plan on or
after October 16, 2006.
ARTICLE 2. Definitions
Whenever used in the Plan, the following terms shall have the meanings set
forth below:
2.1 "Award" means an Option granted under the Plan.
2.2 "Award Agreement" means an agreement entered into by and between the
Company and a Non-Employee Director, setting forth the terms and provisions
applicable to an Award granted under the Plan.
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2.3 "Board" or "Board of Directors" means the Board of Directors of the
Company.
2.4 "Code" means the Internal Revenue Code of 1986, as amended from time
to time.
2.5 "Company" means Halsey Drug Co., Inc., a New York corporation, or any
successor thereto as provided in Section 9.5 herein.
2.6 "Committee" means the Compensation Committee of the Board.
2.7 "Date of Termination" means the effective date on which an individual
ceases to be a member of the Board of Directors of the Company.
2.8 "Director" means any individual who is a member of the Board of
Directors of the Company.
2.9 "Employee" means any employee of the Company, or any of its
subsidiaries or affiliates. For purposes of the Plan, an individual whose only
employment relationship with the Company is as a Director, shall not be deemed
to be an Employee.
2.10 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
2.11 "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
2.12 "Fair Market Value" means (a) the mean of the high and low sales
prices of Shares on the principal exchange or electronic inter-dealer quotation
system on which the Shares are traded on the Grant Date, as hereinafter defined,
or, (b) if there have been no sales on any such day, the mean of the high and
low sales prices of Shares on said exchange or in said system on the last
preceding date on which such sales were made, or, (c) if on any day the Shares
shall not be quoted on an exchange or in said system, the mean of the highest
bid and lowest asked prices on such day in the over-the-counter market as
reported by National Quotation Bureau Incorporated, or any similar successor
organization. If at any time the Shares are not listed on any national
securities exchange or quoted in any electronic inter-dealer quotation system or
in the over-the-counter market, the fair
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market value of the Shares underlying Options to be granted hereunder shall be
the fair market value thereof as of such Grant Date, determined in good faith by
the Board of Directors.
2.13 "Grant Date" shall mean the date on which Options are granted under
the Plan. There shall be one Grant Date during the final quarter of each fiscal
year of the Plan, commencing with the fiscal year beginning January 1, 1996.
2.14 "Non-Employee Director" means any individual who is a Director of the
Company, but who is not otherwise an Employee.
2.15 "Nonqualified Stock Option" or "NQSO" means an Option to purchase
Shares, granted under Article 6 herein.
2.16 "Option" means a Nonqualified Stock Option granted under the Plan.
2.17 "Option Price" means the price at which a Share may be purchased
under an Option.
2.18 "Participant" means a Non-Employee Director of the Company who has
been awarded an Option.
2.19 "Rule 16b-3" means Rule 16b-3 as promulgated and amended from time to
time by the Securities and Exchange Commission pursuant to Section 16 of the
Exchange Act.
2.20 "Shares" means shares of common stock of the Company.
ARTICLE 3. Administration
3.1 The Board of Directors. The Plan shall be administered by the
Committee. The members of the Committee shall be appointed from time to time by,
and shall serve at the discretion of, the Board.
3.2 Administration by the Committee. The Committee shall have the full
power, discretion, and authority to interpret and administer the Plan in a
manner which is consistent with the Plan's provisions.
3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan, and all related orders or
resolutions of the Committee shall be final, conclusive, and binding on all
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persons, including the Company, its shareholders, employees, Participants, and
their estates and beneficiaries.
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ARTICLE 4. Shares Subject to the Plan
4.1 Number of Shares. Subject to the adjustment as provided in Section 4.3
herein, the total number of Shares available for issuance upon the exercise of
Options granted under the Plan may not exceed 100,000. These Shares may be
either authorized but unissued or reacquired Shares.
4.2 Lapsed Awards. If any Option granted under the Plan is canceled,
expires, or lapses for any reason, any Shares subject to such Option again shall
be available for grant of an Option under the Plan.
4.3 Adjustments in Authorized Shares. In the event of any merger,
reorganization, consolidation, recapitalization, separation, liquidation, stock
dividend, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares, the Board may make such
adjustments to outstanding Awards as may be determined to be appropriate and
equitable by the Committee, in its sole discretion, to prevent dilution or
enlargement of rights.
ARTICLE 5. Eligibility and Participation
5.1 Eligibility. Persons eligible to participate in the Plan are limited
to Non-Employee Directors who are serving on the Board on the date of each grant
under the Plan. No Option will be granted to a Non-Employee Director, if
immediately after the grant of such option such Non-Employee Director would
beneficially own Shares amounting to more than five percent of the voting power
of the Company's outstanding Shares, including Shares subject to outstanding
options held by him.
5.2 Actual Participation. All eligible Non-Employee Directors shall
receive grants of Options pursuant to the terms and provisions set forth in
Article 6 herein.
ARTICLE 6. Nonqualified Stock Options
6.1 Grants of Options. On the initial Grant Date, which date shall occur
during the final quarter of the fiscal year ending December 31, 1996, each
eligible Non-Employee Director, as set forth in Section 5.1, shall be granted an
Option to purchase _______ Shares. Thereafter, during the final quarter of each
subsequent fiscal year prior to the termination of the Plan, each Non-Employee
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Director shall automatically be issued an Option pursuant to the Plan to
purchase ______ Shares. The specific terms and provisions of such Options shall
be incorporated in Award Agreements, executed pursuant to Section 6.3 of the
Plan.
6.2 Limitation on Grant of Options. Other than those grants of Options set
forth in Section 6.1, no additional Options shall be granted under the Plan.
6.3 Option Award Agreement. Each Option grant shall be evidenced by an
Award Agreement that shall specify the Option Price, the duration of the Option,
the number of Shares available for purchase under the Option, and such other
provisions as the Committee shall determine.
6.4 Option Price. The purchase price per Share available for purchase
under an Option shall equal the Fair Market Value of a Share on the respective
Grant Date.
6.5 Duration of Options. Each Option shall expire on the tenth anniversary
date of its grant.
6.6 Vesting of Shares Subject to Option. Each Option granted under this
Plan shall be exercisable immediately as of its Grant Date with respect to 25%
of the Shares subject to the Option and with respect to an additional 25% at the
end of each fiscal year subsequent to the fiscal year in which the Grant Date
occurs. All or any part of the Shares with respect to which the right to
purchase has vested may be purchased at the time of such vesting or at any time
or times thereafter prior to the tenth anniversary of their respective Options'
Grant Dates.
6.7 Termination of Directorship. In the event a Participant ceases to be a
Director for any reason, all outstanding Options, to the extent such Options are
exercisable at the Date of Termination, shall remain exercisable for one year
following the Date of Termination, or until the expiration date of such Options,
whichever period is shorter. Options to which the right of exercise has not
vested shall terminate effective the Date of Termination.
6.8 Payment. Options shall be exercised by the delivery of a written
notice of exercise to the Company, setting forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares. The Option Price upon exercise of any Option
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shall be payable to the Company in full in cash or by check acceptable to the
Company.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to the Participant, in the
Participant's name, Share certificates in an appropriate amount based upon the
number of Shares purchased pursuant to the exercise of the Option.
The Company may make such provisions as it deems appropriate for the
withholding by the Company pursuant to federal or state income tax laws of such
amounts as the Company determines it is required to withhold in connection with
any Award. The Company may require a Participant to satisfy any relevant tax
requirements before authorizing any issuance of Shares to such Participant upon
exercise of an Option hereunder. Any such settlement shall be in the form of
cash, check or such other form of consideration as is reasonably satisfactory to
the Committee.
6.9 Restrictions on Share Transferability. The Committee shall impose such
restrictions on any Shares acquired pursuant to the exercise of an Option under
the Plan, as it may deem advisable, including, without limitation, restrictions
under applicable Federal securities laws, under the requirements of any stock
exchange or market upon which such Shares are then listed and/or traded, and
under any blue sky or state securities laws applicable to such Shares.
6.10 Limited Transferability of Options. The Committee may provide that an
Option granted under the Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated (collectively, a "Transfer"), provided that
any such Transfer is to a member of the Optionee's immediate family, a trust or
similar entity of which the Optionee or a member of the Optionee's immediate
family is a beneficiary, or a charitable organization under the Code.
ARTICLE 7. Amendment, Modification, and Termination
7.1 Amendment, Modification, and Termination. Subject to the terms set
forth in this Section 7.1, the Board may terminate, amend, or modify the Plan at
any time and from time to time.
Without the approval of the shareholders of the Company (to the extent
required by the Code, by Rule 16b-3, by any national securities exchange or
system on which the Shares
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are then listed or reported, or by a regulatory body having jurisdiction with
respect hereto), no such termination, amendment, or modification may:
(a) Materially increase the total number or value of Shares which
may be available for grants of Awards under the Plan, except as provided
in Section 4.3 herein; or
(b) Materially change the class of Participants eligible to
participate in the Plan; or
(c) Materially increase the benefits accruing to Participants.
7.2 Awards Previously Granted. Unless required by law, no termination,
amendment, or modification of the Plan shall in any manner adversely affect any
Award previously granted under the Plan, without the written consent of the
Participant holding the Award.
7.3 Section 16(b) Compliance. The Plan and the grant of Awards hereunder
are intended to comply with the conditions of Rule 16b-3 and to qualify for the
exemption from Section 16(b) of the Exchange Act provided thereunder. Should any
provision hereof not be necessary in order to comply with the requirements of
Rule 16b-3 or should any additional provisions be necessary in order so to
comply, the Board of Directors may amend the Plan accordingly, without the
necessity of obtaining the approval of the Company's shareholders.
ARTICLE 8. Beneficiary Designation
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in the event of his death (and/or
who may exercise the Participant's vested Options following his death). Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Board, and will be effective only when filed by the
Participant in writing with the Board during his lifetime. In the absence of any
such designation, benefits remaining unpaid at the Participant's death shall be
paid to the Participant's estate (and, subject to the terms and provisions of
the Plan, any unexercised vested Options may be exercised by the administrator
or executor of the Participant's estate).
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ARTICLE 9. Miscellaneous
9.1 Gender and Number. Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine; the plural shall
include the singular and the singular shall include the plural.
9.2 Severability. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
9.3 No Right or Nomination. Nothing in the Plan shall be deemed to create
any obligation on the part of the Board to nominate any Director for reelection
by the Company's shareholders.
9.4 Successors. All obligations of the Company under the Plan, with
respect to Awards granted hereunder, shall be binding on any successor to the
Company, whether the existence of such successor is the result of a direct or
indirect purchase, merger, consolidation, or otherwise, of all or substantially
all of the business and/or assets of the Company.
9.5 Requirements of Law. The granting of Awards under the Plan shall be
subject to all applicable laws, rules, and regulations, and to such approvals by
any governmental agencies or national securities exchanges or systems as may be
required.
9.6 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of New York.