Exhibit 99.1
1995 STOCK OPTION PLAN
OF SPECTRUM ORGANIC PRODUCTS, INC.,
a California corporation
I. PURPOSE.
The purpose of this 1995 STOCK OPTION PLAN (the "Plan") of SPECTRUM ORGANIC
PRODUCTS, INC., a California corporation (the "Company") is to encourage
ownership in the Company by one or more key employees whose long-term employment
is considered essential to the Company's continued progress and thus to provide
such employee or employees with a further incentive to continue in the employ of
the Company. The purpose of the Plan is to be carried out by issuing stock
options ("Options") pursuant to the Plan. The purpose of the Plan is to be
carried out by issuing incentive stock options and nonqualified options pursuant
to the Plan (hereinafter referred to as "Options") to one or more key employees
of the Company. It is intended that to the maximum extent permissible under the
Plan, Options shall constitute incentive stock options ("Incentive Stock
Options") within the meaning of Section 422 of the internal Revenue Code (the
"Code") and that to the extent not so permissible, such Options shall not
constitute Incentive Stock Options ("Nonqualified Stock Options"). For purposes
of the Plan, all references to a subsidiary or subsidiaries shall include only
wholly-owned subsidiaries of the Company.
II. ADMINISTRATION.
1. Stock Option Committee. The Plan shall be administered by the Board of
Directors of the Company (the "Board") sitting as a Stock Option Committee (the
"Committee").
2. Duties and Powers of Committee. The committee shall conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall from time to time at its discretion determine to whom Options shall be
issued, whether such options shall `be Incentive Stock Options, Nonqualified
Stock Options or both, the amount of stock to be optioned in each case, and the
terms and conditions pursuant to which each Option shall be granted. The
Committee shall have the power to interpret the Plan and the Options and to
adopt such rules for the administration, interpretation and application of the
Plan as are consistent therewith and to interpret, amend or revoke any such
rules. Any such interpretations and rules shall be consistent with a purpose of
the Plan to grant "incentive stock options" within the meaning of Section 422 of
the Code to the maximum extent permissible under Section 422. The interpretation
and construction by the Committee of any provisions of the Plan or of any Option
shall be final.
3. Majority Rule. The Committee shall act by a majority of its members in
office either by vote at a meeting or by a memorandum or other written
`instrument signed by a majority of the Committee.
4. Compensation; Professional Assistance; Good Faith Actions. Members of
the Committee shall not receive compensation for their services as members but
all expenses and liabilities they incur in connection with the administration of
the Plan shall be borne by the Company. The Committee may, with the approval of
the Board, employ attorneys, consultants, accountants, appraisers, brokers or
other persons. The Committee, the Company and its officers and directors shall
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be entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options and all members of the Committee
shall be fully protected by the Company in respect to any such action,
determination or interpretation.
III. MANDATORY REQUIREMENTS FOR STOCK OPTIONS.
Each Option shall be authorized by action of the Committee and shall be
evidenced by a written agreement in such form as the Committee shall from time
to time approve and shall comply with the following terms and conditions:
1. Stock Option Plan, Stock, Eligibility, and Shareholder Approval.
a. Stock Option Plan. Options shall be granted pursuant to the Plan.
b. Stock. The stock subject to the Options shall be shares of the
Company's authorized but unissued or reacquired Common Stock, no par value
("Common Stock"). The aggregate number of shares which may be issued under
Options shall not exceed Four Million Five Hundred Thousand (4,500,000) shares
of Common Stock. The limitation established by the preceding sentence shall be
subject to adjustment as provided in paragraph 4 of Article IV of the Plan. If
any outstanding Option for any reason expires or is terminated, the shares of
Common Stock allocable to the unexercised portion of such Option may again be
subjected to an Option.
c. Eligibility.
(i) The persons who shall be eligible to receive Incentive Stock
Options ("ISO Eligible Individuals") shall be such key employees of the Company
as the Committee shall select from time to time. The holder of an Incentive
Stock Option (an "Incentive Stock Optionee") may hold more than one Option, but
only on the terms and subject to the restrictions hereinafter set forth.
(ii) The persons who shall be eligible to receive Nonqualified
Stock Options shall be such individuals whose participation the Committee
determines is in the best interests of the Company.
d. Shareholder Approval. The Plan shall not take effect until
approved by the holders of a majority of the outstanding shares of capital stock
of the Company, which approval must occur within the period beginning twelve
months before and ending twelve months after the date the Plan is approved by
the Board.
2. Term of Plan. Subject to Section 9 hereof, Incentive Stock Options may
be granted pursuant to the Plan from time to time within ten (10) years from the
date the Plan is approved by the Board, or the date the Plan is approved by the
holders of a majority of the outstanding shares of capital stock of the Company,
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whichever is earlier. Nonqualified Stock Options may be granted pursuant to the
Plan at any time, and the Plan shall not have any fixed termination date with
respect to Nonqualified Stock Options.
3. Commencement of Exercisability. Options shall become exercisable at such
times and in such installments (which may be cumulative), if any, as the
Committee shall provide in the terms of each individual Option; provided,
however, that:
a. By a resolution adopted after an Option is granted the Committee
may, on such terms and conditions as it may determine to be appropriate,
accelerate the time at which such Option or any portion thereof may be
exercised.
b. Unless an Option specifically provides to the contrary, such Option
shall immediately become exercisable in full in the event of the consummation of
any of the following transactions:
(i) merger or acquisition in which the Company is not the
surviving entity;
(ii) The sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
(iii) Any merger in which the Company is the surviving entity but
in which fifty percent (50%) or more of the Company's outstanding voting stock
is issued to holders different from those who held the stock immediately prior
to such merger.
4. Expiration of Option.
a. No Option may be exercised to any extent by anyone after the first
to occur of the following events:
(i) The expiration of ten years after the date the Option was
granted;
(ii) Except in the case of any of any Optionee who is Permanently
Disabled (as defined below), the expiration of three months after the date of
the Optionee's Termination of Employment (as defined below) for any reason other
than such Optionee's death unless the optionee dies within such three-month
period;
(iii) In the case of an Optionee who is Permanently Disabled, the
expiration of one year after the date of the Optionee's Termination of
Employment for any reason other than such Optionee's death unless the Optionee
dies within such one-year period;
(iv) The expiration of one year after the date of the Optionee's
death.
b. Subject to the foregoing provisions of this paragraph 4, the
Committee shall provide, in the terms of each individual Option, when such
option expires and becomes unexercisable; provided that the Committee may
provide in the terms of such individual option that said Option expires
immediately upon a Termination of Employment for any reason.
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c. "Termination of Employment" shall mean the time when the
employee-employer relationship between the Optionee and the Company or a
subsidiary is terminated for any reason, including, but not by a way of
limitation, a termination by resignation, discharge, death or retirement, but
excluding terminations where there is a simultaneous reemployment by the Company
or a subsidiary. The Committee, in its absolute discretion, shall determine the
effect of all other matters and questions relating to Termination of Employment,
including, but not by way of limitation, the question of whether a termination
of Employment resulted from a discharge for good cause, and all questions of
whether particular leaves of absence constitute Terminations of Employment;
provided, however, that a leave of absence shall constitute a Termination of
Employment if, and to the extent that, such leave of absence interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under such section.
d. "Permanently Disabled" shall mean the inability of the Optionee,
while in the employ of the Company and under the age of sixty-five (65) years,
to perform the Optionee's duties as such employee of the Company by reason of
sickness or accident for a continuous period of more than nine (9) months.
5. Option Agreement. Each option shall be evidenced by a written stock
option agreement, which shall be executed by the Optionee and an authorized
officer of the Company and which shall contain such terms and conditions as the
Committee shall determine, consistent with the Plan.
6. Option Price.
a. Each Option shall state the purchase price of each share of Common
Stock subject to the Option (the "Option Price"). The Option Price with respect
to any Incentive Stock Option shall be not less than 100% of the fair market
value of each share of Common Stock of the Company on the date such Incentive
Stock Option is granted. Subject to the foregoing, the Committee shall have full
authority and discretion to fix the Option Price.
b. For the purpose of this paragraph 6, the fair market value of a
share of Common stock of the Company on the date of delivery to the Company's
Secretary at his office shall be: (i) the closing price of a share of such class
of Stock on the principal exchange on which shares of such class of Stock are
then trading, if any, on such date, or, if such shares were not traded on such
date, then on the next preceding trading day during which a sale occurred; or
(ii) if such class of stock is not traded on an exchange but quoted on NASDAQ or
a successor quotation system, (1) the last sale price (if the stock is then
listed as a National market Issue under the NASD National Market System) or (2)
the mean between the closing representative bid and asked prices (in all other
cases) for the stock on such date as reported by NASDAQ or such successor
quotation system; (iii) if such stock is not publicly traded on an exchange and
not quoted on NASDAQ or a successor quotation system, the mean between the
closing bid and asked prices for the stock on such date as determined in good
faith by the committee; or (iv) if such stock is not publicly traded, the fair
market value established by the Committee.
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7. Restrictions on Transfer.
a. An Option shall not be transferable by the Optionee otherwise than
by will or the laws of descent and distribution, and is exercisable, during such
Optionee's lifetime, only by such Optionee. If an Optionee shall die while in
the employ of the Company and shall not have fully exercised any Option, such
Option may be exercised, subject to the condition that no Option shall be
exercisable after the expiration of ten years from the date it is granted, to
the extent that such Optionee's right to exercise such Option had accrued at the
time of his death and had not previously been exercised, at any time within one
year after such Optionee's death, by the executors or administrators of such
Optionee or by any person or persons who shall have acquired the Option directly
from the Optionee by bequest or inheritance.
b. The Committee, in its absolute discretion, may impose such
restrictions on the transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate.
8. Certain Shareholders Not ISO Eligible Individuals. The term "ISO
Eligible Individual" shall not include an individual who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of its parent or any subsidiary corporation. This paragraph 8 of Article III
shall not apply if at the time such Incentive Stock Option is granted the Option
Price is at least one hundred ten percent (110%) of the fair market value of the
Common Stock subject to the Incentive Stock Option and such Incentive Stock
Option is by its terms not exercisable after the expiration of five (5) years
from the date such Incentive Stock Option is granted. For purposes of
determining whether an Optionee owns more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of its parent or
any subsidiary corporation, stock owned by other persons and entities shall be
attributed to such Optionee by operation of Section 424(d) of the code.
9. Limitations on Aggregate Fair Market Value. The aggregate fair market
value (determined as of the time an Incentive Stock Option is granted) of the
Common Stock with respect to which Incentive Stock Options are exercisable for
the first time for any ISO Eligible Individual shall not exceed $100,000 during
any calendar year, provided that notwithstanding any other provision of the
Plan, if the foregoing limitation is exceeded for any calendar year, then the
Options first exercisable during such calendar year in excess of such limitation
shall be Nonqualified Options.
IV. ADDITIONAL TERMS AND CONDITIONS.
The Options shall comply with and be subject to the following additional
terms and conditions:
1. Number of Shares. Each Option shall state the number of shares to which
it pertains.
2. Partial Exercise. At any time and from time to time prior to the time
when any exercisable Option or exercisable portion thereof becomes unexercisable
under paragraph 4 of Article III or paragraph 4 of this Article IV, such Option
or portion thereof may be exercised in whole or in part; provided, however, that
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the Company shall not be required to issue fractional shares and the Committee
may, by the terms of the Option, require any partial exercise to be with respect
to a specified minimum number of shares.
3. Manner of Exercise.
a. An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Company's Secretary or his office of all of
the following prior to the time when such Option or such portion becomes
unexercisable under paragraph 4 of Article III or paragraph 4 of this Article
IV:
(i) Notice in writing signed by the Optionee or other person when
entitled to exercise such Option or portion, stating that such Option or portion
is exercised, such notice complying with all applicable rules established by the
Committee;
(ii) Full payment (in cash or by check) for the shares with
respect to which such Option or portion is thereby exercised, or shares of
Common Stock owned by the Optionee or other person then entitled to exercise
such option or portion, duly endorsed for transfer to the Company with a fair
market value (as determined under paragraph 6.b of Article III) on the date of
delivery equal to the aggregate Option Price of the shares with respect to which
such Option or portion is thereby exercised;
(iii) Such representations and additional documents as the
Committee, in its absolute discretion, deems necessary or advisable to effect
compliance with all applicable provisions of the Securities Act of 1933, as
amended, and any other federal or state securities laws or regulations. The
Committee may, in its absolute discretion, also take whatever additional actions
it deems appropriate to effect such compliance including, without limitation,
placing legends on share certificates and issuing stop-transfer orders to
transfer agents and registrars; and
(iv) In the event that the Option or portion thereof shall be
exercised pursuant to paragraph 7 of Article III by any person or persons other
than the Optionee, appropriate proof of the right of such person or persons to
exercise the Option or portion thereof.
b. For the purpose of this paragraph 3, the fair market value of a
share of Common Stock on the date of delivery to the Company's Secretary or his
office shall be determined in accordance with Article III, Section 6.b.
4. Adjustments in Outstanding Options.
a. If the outstanding shares of the capital stock of the Company are
increased, decreased, or changed into, or exchanged for a different number or
kind of shares or securities of the Company through reorganization, merger,
recapitalization, reclassification, stock split, stock dividend, stock
consolidation, or otherwise, or the Company spins off to its shareholders a
material amount of its assets, the Committee shall make an appropriate and
proportionate adjustment in the number and kind of shares as to which Options
may be granted. The Committee shall make a corresponding adjustment changing the
number or kind of shares and the exercise price per share allocated to
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unexercised Options or portions thereof, which shall have been granted prior to
any such change. Any such adjustment, however, in an outstanding Option shall be
made without change in the total price applicable to the unexercised portion of
the Option (except for any change in the aggregate price resulting from
rounding-off of share quantities or prices) but with a corresponding adjustment
in the price for each share covered by the Option. Any such adjustment made by
the Committee shall be final and binding upon all Optionees, the Company and all
other interested persons.
b. Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger, or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of all or substantially all of the assets of the Company to
another corporation, the Plan shall terminate, and any Option theretofore
granted hereunder shall terminate, unless provision in made in connection with
such transaction for the assumption of Options theretofore granted, or the
substitution for such Options of new options covering the stock of a successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to number and kind of shares and prices; and the Committee may, in its absolute
discretion and on such terms and conditions as it deems appropriate, provide,
either by the terms of such Option or by a resolution adopted prior to the
occurrence of such dissolution, liquidation, reorganization, merger,
consolidation or sale of assets, that, for some period of time prior to such
event, such Option shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in paragraphs 3 and 4 of Article III or
any installment provisions of such Option.
c. Adjustments under this paragraph 4 shall be made by the Committee,
whose determination as to what adjustments shall be made and the extent thereof
shall be final, binding, and conclusive; provided that no Incentive Stock Option
shall be adjusted in a manner which causes such Incentive Stock Option to fail
to qualify as an incentive stock option within the meaning of Section 422 of the
Code.
5. Rights as a Shareholder. An Optionee or transferee of an Option shall
have no rights as a shareholder with respect to any shares covered by his Option
until the date of the issuance of a stock certificate to him for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in
cash, securities or other property) or distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in paragraph 4 of this Article IV.
6. Modification, Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of the Plan, the Committee may modify,
extend or renew outstanding Options granted under the Plan (subject to the
condition that no Incentive Stock Option shall be exercisable after the
expiration of ten years from the date it is granted), or accept the surrender of
outstanding Options (to the extent not theretofore exercised) and authorize the
granting of new Options in substitution therefor. The Committee shall not,
however, modify any outstanding Option so as to specify a lower price or accept
the surrender of any outstanding Option and authorize the granting of a new
Option in substitution therefor specifying a lower price. Notwithstanding the
foregoing, however, no modification of an Option shall, without the consent of
the Optionee, alter or impair any rights or obligations under any Option
theretofore granted under the Plan.
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7. Investment Purpose. Each Option under the Plan shall be granted on the
condition that the purchase of Common Stock thereunder shall be for investment
purposes only, and not with a view to resale or for sale in connection with any
distribution except that in the event the Common Stock subject to such Option is
registered under the Securities Act of 1933 as amended, or in the event a resale
of such Common Stock without such registration would otherwise be permissible,
such condition shall be inoperative if in the opinion of counsel for the Company
such condition is not required under the Securities Act of 1933 or any other
applicable law, regulation, or rule of any governmental agency.
8. Consent of Commissioner of Corporations. No shares shall be issued upon
exercise of any Option unless and until the Company shall obtain from the
Commissioner of Corporations of the state of California such permit, if any, as
may be required authorizing such issuance of shares. The Company shall at all
times during the term of the Plan reserve and keep available such number of
shares of Common Stock as will be sufficient to satisfy the requirements of the
Options, shall pay all original issue and transfer taxes with respect to issue
and transfer of shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and shall from time
to time use its best efforts to comply with all laws and regulations which, in
the opinion of counsel for the Company, shall be applicable thereto.
9. Securities Act of 1933.
a. Notwithstanding anything to the contrary herein, each certificate
representing shares issued to an Optionee hereunder, unless they have been
registered under the Securities Act of 1933, as amended, shall bear a legend
reading substantially as follows:
"The shares represented by this certificate have been issued in a
transaction exempt from the provisions of the Securities Act of
1933, as amended, and consequently no sale, offer to sell or
transfer of the shares represented by this certificate shall be
made unless a registration under the federal Securities Act of
1933, as amended, with respect to said shares is then in effect
or, in the opinion of legal counsel for the corporation, an
exemption from registration requirements of such act is then in
effect applicable to such shares."
b. Each Option shall be issued subject to the condition that if at any
time the Committee shall determine, in its discretion, that the registration or
qualification of the shares covered by the Option under any state or federal law
is necessary or desirable, delivery of any shares to the Optionee pursuant to
exercise of the Option shall be deferred until such registration or
qualification shall have been effected. In the event the Committee determines
that such registration or qualification in necessary or desirable, the Company
shall, at its expense, take such action as may be required to effect such
registration or qualification.
10. Other Provisions. Each Option shall contain such other provisions,
including, without limitation, restrictions upon the exercise of the Option, as
the Committee shall deem advisable. Each Incentive Stock Option shall contain
such limitations and restrictions upon the exercise of the Incentive Stock
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Option as shall be necessary in order that such Incentive Stock Option will be
an "incentive stock option" as defined in Section 422 of the Code or to conform
to any change in the law.
V. INDEMNIFICATION OF COMMITTEE.
In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees actually and necessarily incurred in connection with the defense of any
action, suit or proceeding, or in connection with any appeal therein, 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 Option granted thereunder, and
against all amounts paid by them in settlement thereof (provided such settlement
in approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except in relation to matters as to which it shall be adjudged in such action,
suit or proceeding that such Committee member is liable for gross negligence or
misconduct in the performance of his duties; provided that within 60 days after
institution of any such action, suit or proceeding a Committee member shall in
writing offer the Company the opportunity, at its own expense, to handle and
defend the same.
VI. AMENDMENT OF THE PLAN.
The Committee may insofar as permitted by law, from time to time, with
respect to any shares at the time not subject to Options, suspend or discontinue
the Plan or revise or amend it in any respect whatsoever except that, without
approval of the shareholders, no such revision or amendment shall change the
number of shares subject to the Plan, change the designation of the classes of
persons eligible to receive Options, or decrease the price at which Options may
be granted. Furthermore, the Plan may not, without the approval of the
shareholders, be amended in any manner that will cause Incentive Stock Options
issued under it to fail to meet the requirements of incentive stock options as
defined in Section 422 of the Code.
VII. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock pursuant
to Options will be used for general corporate purposes.
VIII. NO OBLIGATION TO EXERCISE OPTION.
The granting of an Option shall impose no obligation upon the Optionee to
exercise such Option.
IX. LIMITATION OF RIGHTS.
1. No Right to An Option. Nothing in the Plan shall be construed to give
any person any right to be granted an Option.
2. No Employment Right. Neither the Plan, nor the granting of an option nor
any other action taken pursuant to the Plan, shall constitute or be evidence of
any agreement or understanding, express or implied, that the Company will employ
an Optionee for any period of time or in any position, or at any particular rate
of compensation.
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3. No Rights Granted. The grant of any Option pursuant to this Plan shall
not affect in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes in its capital or business
structure or to merge, consolidate, dissolve, liquidate, or sell or transfer all
or any part of its assets or business.
X. EFFECT OF PLAN UPON OTHER OPTIONS AND COMPENSATION PLANS.
The adoption of the Plan shall not affect any other compensation or
incentive plans in effect for the Company or any subsidiary of the Company.
Nothing in the Plan shall be construed to limit the right of the Company or any
subsidiary of the Company (a) to establish any other forms of incentives or
compensation for employees of the Company or any subsidiary of the Company or
(b) to grant or assume options otherwise than under the Plan in connection with
any proper corporate purpose, including, but not by way of limitation, the grant
or assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, firm or association.
Article III, Section 1.b, of the 1995 Stock Option Plan was amended on June
24, 1996, to increase the aggregate number of shares which may be issued under
Options to 525,000. It was subsequently amended on February 1, 1997, to increase
the aggregate number of shares which may be issued under Options to 625,000. It
was subsequently amended at a shareholder meeting originally called to order on
August 24, 1999, to increase the aggregate number of shares which may be issued
under Options to 4,500,000.
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