EXHIBIT 4.1
1996 EMPLOYEE INCENTIVE STOCK OPTION PLAN
of
MISONIX, INC.
1. PURPOSES OF THE PLAN.
This stock option plan (the "Plan") is designed to provide an incentive
to key employees (including directors and officers who are key
employees) of MISONIX, INC., a New York corporation (the "Company"),
and its present and future subsidiary corporations, as defined in
Paragraph 19 ("Subsidiaries"), and to offer an additional inducement in
obtaining the services of such individuals. The Plan provides for the
grant of "incentive stock options" ("ISOs") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), but the Company makes no warranty as to the qualification of
any option as an "incentive stock option" under the Code.
2. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Paragraph 12, the aggregate number of
shares of Common Stock, $.01 par value per share, of the Company
("Common Stock") for which options may be granted under the Plan shall
not exceed 300,000. Such shares of Common Stock may, in the discretion
of the Board of Directors of the Company (the "Board of Directors"),
consist either in whole or in part of authorized but unissued shares of
Common Stock or shares of Common Stock held in the treasury of the
Company. 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 Plan. Subject to
the provisions of Paragraph 13, any shares of Common Stock subject to
an option which for any reason expires, is canceled or is terminated
unexercised or which ceases for any reason to be exercisable shall
again become available for the granting of options under the Plan.
3. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a committee of the Board of Directors
(the "Committee") consisting of not less than three Directors, each of
whom shall be a "Non-Employee Director" within the meaning of Rule
16b-3 (or any successor rule or regulation) promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). A
majority of the members of the Committee shall constitute a quorum, and
the acts of a majority of the members present at any meeting at which a
quorum is present, and any acts approved in writing by all members
without a meeting, shall be the acts of the Committee.
Subject to the express provisions of the Plan, the Committee shall have
the authority, in its sole discretion, to determine the key employees
who shall receive options; the times when they shall receive options;
the number of shares of Common Stock to be subject to
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each option; the term of each option; the date each option shall become
exercisable; whether an option shall be exercisable in whole, in part
or in installments, and, if in installments, the number of shares of
Common Stock to be subject to each installment; whether the
installments shall be cumulative; the date each installment shall
become exercisable and the term of each installment; whether to
accelerate the date of exercise of any installment; whether shares of
Common Stock may be issued on exercise of an option as partly paid,
and, if so, the dates when future installments of the exercise price
shall become due and the amounts of such installments; the exercise
price of each option; the form of payment of the exercise price; the
amount, if any, necessary to satisfy the Company's obligation to
withhold taxes; whether to restrict the sale or other disposition of
the shares of Common Stock acquired upon the exercise of an option and
to waive any such restriction; whether to subject the exercise of all
or any portion of an option to the fulfillment of contingencies as
specified in the contract referred to in Paragraph 11 (the "Contract"),
including, without limitation, contingencies relating to entering into
a covenant not to compete with the Company and its Parent and
Subsidiaries, to financial objectives for the Company, a Subsidiary, a
division, a product line or other category, and/or the period of
continued employment of the optionee with the Company, its Parent or
its Subsidiaries, and to determine whether such contingencies have been
met; to construe the respective Contracts and the Plan; with the
consent of the optionee, to cancel or modify an option, provided such
option as modified would be permitted to be granted on such date under
the terms of the Plan; to prescribe, amend and rescind rules and
regulations relating to the Plan; and to make all other determinations
necessary or advisable for administering the Plan. The determinations
of the Committee on the matters referred to in this Paragraph 3 shall
be conclusive.
4. ELIGIBILITY.
The Committee may, consistent with the purposes of the Plan, grant
options from time to time, to key employees (including directors and
officers who are key employees) of the Company or any of its
Subsidiaries. Options granted shall cover such number of shares of
Common Stock as the Committee may determine; provided, however, that
the aggregate market value (determined at the time the option is
granted) of the shares of Common Stock for which any eligible person
may be granted ISOs under the Plan or any other plan of the Company, or
of a Parent or a Subsidiary of the Company, which are exercisable for
the first time by such optionee during any calendar year shall not
exceed $100,000. The $100,000 ISO limitation shall be applied by taking
ISOs into account in the order in which they were granted. Any option
(or the portion thereof) granted in excess of such amount shall be
treated as a nonqualified stock option.
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5. EXERCISE PRICE.
The exercise price of the shares of Common Stock under each option
shall be determined by the Committee; provided, however, that the
exercise price shall not be less than 100% of the fair market value of
the Common Stock subject to such option on the date of grant; and
further provided, that if, at the time an ISO is granted, the optionee
owns (or is deemed to own under Section 424(d) of the Code) stock
possessing more than 10% of the total combined voting power of all
classes of stock of the Company, of any of its Subsidiaries or of a
Parent, the exercise price of such ISO shall not be less than 110% of
the fair market value of the Common Stock subject to such ISO on the
date of grant.
The fair market value of the Common Stock on any day shall be (a) if
the principal market for the Common Stock is a national securities
exchange, the average between the high and low sales prices of the
Common Stock on such day as reported by such exchange or on a
consolidated tape reflecting transactions on such exchange, (b) if the
principal market for the Common Stock is not a national securities
exchange and the Common Stock is quoted on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ"), and (i) if
actual sales price information is available with respect to the Common
Stock, the average between the high and low sales prices of the Common
Stock on such day on NASDAQ, or (ii) if such information is not
available, the average between the highest bid and the lowest asked
prices for the Common Stock on such day on NASDAQ, or (c) if the
principal market for the Common Stock is not a national securities
exchange and the Common Stock is not quoted on NASDAQ, the average
between the highest bid and lowest asked prices for the Common Stock on
such day as reported on the NASDAQ OTC Bulletin Board Service or by
National Quotation Bureau, Incorporated or a comparable service;
provided that if clauses (a), (b) and (c) of this Paragraph are all
inapplicable, or if no trades have been made or no quotes are available
for such day, the fair market value of the Common Stock shall be
determined by the Committee by any method consistent with applicable
regulations adopted by the Treasury Department relating to stock
options. The determination of the Committee shall be conclusive in
determining the fair market value of the Common Stock.
6. TERM.
The term of each option granted pursuant to the Plan shall be such term
as is established by the Committee, in its sole discretion, at or
before the time such option is granted; provided, however, that the
term of each option granted pursuant to the Plan shall be for a period
not exceeding 10 years from the date of grant thereof, and further,
provided, that if, at the time an option is granted, the optionee owns
(or is deemed to own under Section 424(d) of the Code) stock possessing
more than 10% of the total combined voting power of all classes of
stock of the Company, of any of its Subsidiaries or of a Parent, the
term of the option shall be for a period not exceeding five years from
the date of grant. Options shall be subject to earlier termination as
hereinafter provided.
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7. EXERCISE.
An option (or any part or installment thereof), to the extent then
exercisable, shall be exercised by giving written notice to the Company
at its principal office (at present 1938 New Highway, Farmingdale, New
York 11735, Attn: Employee Stock Option Committee), stating which
option is being exercised, specifying the number of shares of Common
Stock as to which such option is being exercised and accompanied by
payment in full of the aggregate exercise price therefor (or the amount
due on exercise if the Contract permits installment payments) (a) in
cash or by certified check or (b) if the Contract (at the time of
grant) so permits, with previously acquired shares of Common Stock
having an aggregate fair market value, on the date of exercise, equal
to the aggregate exercise price of all options being exercised, or with
any combination of cash, certified check or shares of Common Stock.
A person entitled to receive Common Stock upon the exercise of an
option shall not have the rights of a shareholder with respect to such
shares of Common Stock until the date of issuance of a stock
certificate to him for such shares; provided, however, that until such
stock certificate is issued, any option holder using previously
acquired shares of Common Stock in payment of an option exercise price
shall continue to have the rights of a shareholder with respect to such
previously acquired shares.
In no case may a fraction of a share of Common Stock be purchased or
issued under the Plan.
8. TERMINATION OF EMPLOYMENT.
Any holder of an option whose employment with the Company (and its
Parent and Subsidiaries) has terminated for any reason other than his
death or Disability (as defined in Paragraph 19) may exercise such
option, to the extent exercisable on the date of such termination, at
any time within 90 days after the date of termination, but not
thereafter and in no event after the date the option would otherwise
have expired; provided, however, that if his employment shall be
terminated either (a) for cause, or (b) without the consent of the
Company, said option shall terminate immediately. Options granted under
the Plan shall not be affected by any change in the status of the
holder so long as he continues to be a full-time employee of the
Company, its Parent or any of its Subsidiaries (regardless of having
been transferred from one corporation to another).
For the purposes of the Plan, an employment relationship shall be
deemed to exist between an individual and a corpo ration if, at the
time of the determination, the individual was an employee of such
corporation for purposes of Section 422(a) of the Code. As a result, an
individual on military, sick leave or other bona fide leave of absence
shall continue to be considered an employee for purposes of the Plan
during such leave if the period of the leave does not exceed 90 days,
or, if longer, so long as the individual's right to reemployment with
the Company (or a related corporation) is guaranteed either by statute
or by contract. If the period of leave exceeds 90 days and the
individual's right to re-
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employment is not guaranteed by statute or by contract, the employment
relationship shall be deemed to have terminated on the 91st day of such
leave.
Nothing in the Plan or in any option granted under the Plan shall
confer on any individual any right to continue in the employ of the
Company, its Parent or any of its Subsidiaries, or interfere in any way
with the right of the Company, its Parent or any of its Subsidiaries to
terminate the employee's employment at any time for any reason
whatsoever without liability to the Company, its Parent or any of its
Subsidiaries.
9. DEATH OR DISABILITY OF AN OPTIONEE.
If an optionee dies (a) while he is employed by the Company, its Parent
or any of its Subsidiaries, (b) within 90 days after the termination of
his employment (unless such termination was for cause or without the
consent of the Company) or (c) within one year following the
termination of his employment by reason of Disability, the option may
be exercised, to the extent exercisable on the date of his death, by
his executor, administrator or other person at the time entitled by law
to his rights under such option, at any time within one year after
death, but not thereafter and in no event after the date the option
would otherwise have expired.
Any optionee whose employment has terminated by reason of Disability
may exercise his option, to the extent exercisable upon the effective
date of such termination, at any time within one year after such date,
but not thereafter and in no event after the date the option would
otherwise have expired.
10. COMPLIANCE WITH SECURITIES LAWS.
The Committee may require, in its discretion, as a condition to the
exercise of any option that either (a) a Registration Statement under
the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the shares of Common Stock to be issued upon such exercise
shall be effective and current at the time of exercise, or (b) there is
an exemption from registration under the Securities Act for the
issuance of shares of Common Stock upon such exercise. Nothing herein
shall be construed as requiring the Company to register shares subject
to any option under the Securities Act.
The Committee may require the optionee to execute and deliver to the
Company his representation and warranty, in form and substance
satisfactory to the Committee, that the shares of Common Stock to be
issued upon the exercise of the option are being acquired by the
optionee for his own account, for investment only and not with a view
to the resale or distribution thereof. In addition, the Committee may
require the optionee to represent and warrant in writing that any
subsequent resale or distribution of shares of Common Stock by such
optionee will be made only pursuant to (i) a Registration Statement
under the Securities Act which is effective and current with respect to
the shares of Common Stock being sold, or (ii) a specific exemption
from the registration requirements of the Securities Act, but in
claiming such exemption, the optionee shall prior to any offer of sale
or sale of such shares of Common Stock provide the Company with a
favorable written
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opinion of counsel, in form and substance satisfactory to the Company,
as to the applicability of such exemption to the proposed sale or
distribution.
In addition, if at any time the Committee shall determine in its
discretion that the listing or qualification of the shares of Common
Stock subject to such option on any securities exchange or under any
applicable law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition to, or in
connection with, the granting of an option or the issue of shares of
Common Stock thereunder, such option may not be exercised in whole or
in part unless such listing, qualification, consent or approval shall
have been effected or obtained free of any conditions not acceptable to
the Committee.
11. STOCK OPTION CONTRACTS.
Each option shall be evidenced by an appropriate Contract which shall
be duly executed by the Company and the optionee, and shall contain
such terms and conditions not inconsistent herewith as may be
determined by the Committee.
12. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
Notwithstanding any other provisions of the Plan, in the event of any
change in the outstanding Common Stock by reason of a stock dividend,
recapitalization, merger or consolidation in which the Company is the
surviving corporation, split-up, combination or exchange of shares or
the like, the aggregate number and kind of shares subject to the Plan,
the aggregate number and kind of shares subject to each outstanding
option and the exercise price thereof shall be appropriately adjusted
by the Board of Directors, whose determination shall be conclusive.
In the event of (a) the liquidation or dissolution of the Company, (b)
a merger or consolidation in which the Company is not the surviving
corporation, or (c) any other capital reorganization in which more than
50% of the shares of Common Stock of the Company entitled to vote are
exchanged, any outstanding options shall vest in their entirety and
become exercisable within the period of thirty (30) days commencing
upon the date of the action of the shareholders (or the Board of
Directors if shareholders' action is not required) is taken to approve
the transaction and upon the expiration of that period all options and
all rights thereto shall automatically terminate, unless other
provision is made therefor in the transaction.
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13. AMENDMENTS AND TERMINATION OF THE PLAN.
The Plan was adopted by the Board of Directors on March 27, 1996. No
option may be granted under the Plan after March 26, 2006. The Board of
Directors, without further approval of the Company's shareholders, may
at any time suspend or terminate the Plan, in whole or in part, or
amend it from time to time in such respects as it may deem advisable,
including, without limitation, in order that options granted hereunder
meet the requirements for "incentive stock options" under the Code, to
comply with applicable requirements of the Securities Act and the
Exchange Act, and to conform to any change in applicable law or to
regulations or rulings of administrative agencies; provided, how ever,
that no amendment shall be effective without the requisite prior or
subsequent shareholder approval which would (a) except as contemplated
in Paragraph 12, increase the maximum number of shares of Common Stock
for which options may be granted under the Plan, (b) materially
increase the benefits to participants under the Plan or (c) change the
eligibility requirements for individuals entitled to receive options
hereunder. No termination, suspension or amendment of the Plan shall,
without the consent of the holder of an existing option affected
thereby, adversely affect his rights under such option. The power of
the Committee to construe and administer any options granted under the
Plan prior to the termination or suspension of the Plan nevertheless
shall continue after such termination or during such suspension.
14. NON-TRANSFERABILITY OF OPTIONS.
No option granted under the Plan shall be transferable otherwise than
by will or the laws of descent and distribution or a qualified domestic
relations order ("QDRO") as defined by the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder, and options may be exercised, during the lifetime of
the holder thereof, only by him or his legal representatives or
pursuant to a QDRO. Except to the extent provided above, options may
not be assigned, transferred, pledged, hypothecated or disposed of in
any way (whether by operation of law or otherwise) and shall not be
subject to execution, attachment or similar process.
15. WITHHOLDING TAXES.
The Company may withhold cash and/or shares of Common Stock to be
issued with respect thereto having an aggregate fair market value equal
to the amount which it determines is necessary to satisfy its
obligation to withhold Federal, state and local income taxes or other
taxes incurred by reason of the grant or exercise of an option, its
disposition, or the disposition of the underlying shares of Common
Stock. Alternatively, the Company may require the holder to pay to the
Company such amount, in cash, promptly upon demand. The Company shall
not be required to issue any shares of Common Stock pursuant to any
such option until all required payments have been made. Fair market
value of the shares of Common Stock shall be determined in accordance
with Paragraph 5.
16. LEGENDS; PAYMENT OF EXPENSES.
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The Company may endorse such legend or legends upon the certificates
for shares of Common Stock issued upon exercise of an option under the
Plan and may issue such "stop transfer" instructions to its transfer
agent in respect of such shares as it determines, in its discretion, to
be necessary or appropriate to (a) prevent a violation of, or to
perfect an exemption from, the registration requirements of the
Securities Act, (b) implement the provisions of the Plan or any
agreement between the Company and the optionee with respect to such
shares of Common Stock, or (c) permit the Company to determine the
occurrence of a "disqualifying disposition," as described in Section
421(b) of the Code, of the shares of Common Stock transferred upon the
exercise of an option granted under the Plan.
The Company shall pay all issuance taxes with respect to the issuance
of shares of Common Stock upon the exercise of an option granted under
the Plan, as well as all fees and expenses incurred by the Company in
connection with such issuance.
17. USE OF PROCEEDS.
The cash proceeds from the sale of shares of Common Stock pursuant to
the exercise of options under the Plan shall be added to the general
funds of the Company and used for such corporate purposes as the Board
of Directors may determine.
18. SUBSTITUTIONS AND ASSUMPTIONS OF OPTIONS OF CERTAIN CONSTITUENT
CORPORATIONS.
Anything in this Plan to the contrary notwithstanding, the Board of
Directors may, without further approval by the shareholders, substitute
new options for prior options of a Constituent Corporation (as defined
in Paragraph 19) or assume the prior options of such Constituent
Corporation.
19. DEFINITIONS.
a. Subsidiary. The term "Subsidiary" shall have the same
definition as "subsidiary corporation" in Section 424(f) of
the Code.
b. Parent. The term "Parent" shall have the same definition as
"parent corporation" in Section 424(e) of the Code.
c. Constituent Corporation. The term "Constituent Corporation"
shall mean any corporation which engages with the Company, its
Parent or any Subsidiary in a transaction to which Section
424(a) of the Code applies (or would apply if the option
assumed or substituted were an ISO), or any Parent or any
Subsidiary of such corporation.
d. Disability. The term "Disability" shall mean a permanent and
total disability within the meaning of Section 22(e)(3) of the
Code.
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20. GOVERNING LAW.
The Plan, such options as may be granted hereunder and all related
matters shall be governed by, and construed in accordance with, the
laws of the State of New York.
21. PARTIAL INVALIDITY.
The invalidity or illegality of any provision herein shall not affect
the validity of any other provision.
22. SHAREHOLDER APPROVAL.
The Plan shall be subject to approval by the holders of a majority of
the Company's stock outstanding and entitled to vote thereon at the
next meeting of its shareholders. No options granted hereunder may be
exercised prior to such approval, provided that the date of grant of
any options granted hereunder shall be determined as if the Plan had
not been subject to such approval. Notwithstanding the foregoing, if
the Plan is not approved by a vote of the shareholders of the Company
on or before March 26, 1997, the Plan and any options granted hereunder
shall terminate.
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