Exhibit 4.1
ADVANCED PLANT PHARMACEUTICALS, INC.
2004 SECOND INCENTIVE STOCK PLAN
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THIS ADVANCED PLANT PHARMACEUTICALS, INC. 2004 SECOND INCENTIVE STOCK
PLAN (the "Plan") is designed to retain directors, executives and selected
employees and consultants and reward them for making major contributions to the
success of the Company. These objectives are accomplished by making long-term
incentive awards under the Plan thereby providing Participants with a
proprietary interest in the growth and performance of the Company.
1. Definitions.
(a) "Board" - The Board of Directors of the Company.
(b) "Code" - The Internal Revenue Code of 1986, as amended from time to
time.
(c) "Committee" - The Compensation Committee of the Company's Board, or
such other committee of the Board that is designated by the Board to
administer the Plan, composed of not less than two members of the Board
all of whom are disinterested persons, as contemplated by Rule 16b-3
("Rule 16b-3") promulgated under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
(d) "Company" - ADVANCED PLANT PHARMACEUTICALS, INC. and its subsidiaries
including subsidiaries of subsidiaries.
(e) "Exchange Act" - The Securities Exchange Act of 1934, as amended from
time to time.
(f) "Fair Market Value" - The fair market value of the Company's issued and
outstanding Stock as determined in good faith by the Board or
Committee.
(g) "Grant" - The grant of any form of stock option, stock award, or stock
purchase offer, whether granted singly, in combination or in tandem, to
a Participant pursuant to such terms, conditions and limitations as the
Committee may establish in order to fulfill the objectives of the Plan.
(h) "Grant Agreement" - An agreement between the Company and a Participant
that sets forth the terms, conditions and limitations applicable to a
Grant.
(i) "Option" - Either an Incentive Stock Option, in accordance with Section
422 of Code, or a Nonstatutory Option, to purchase the Company's Stock
that may be awarded to a Participant under the Plan. A Participant who
receives an award of an Option shall be referred to as an "Optionee."
(j) "Participant" - A director, officer, employee or consultant of the
Company to whom an Award has been made under the Plan.
(k) "Restricted Stock Purchase Offer" - A Grant of the right to purchase a
specified number of shares of Stock pursuant to a written agreement
issued under the Plan.
(l) "Securities Act" - The Securities Act of 1933, as amended from time to
time.
(m) "Stock" - Authorized and issued or unissued shares of common stock of
the Company.
(n) "Stock Award" - A Grant made under the Plan in stock or denominated in
units of stock for which the Participant is not obligated to pay
additional consideration.
2. Administration. The Plan shall be administered by the Board, provided
however, that the Board may delegate such administration to the
Committee. Subject to the provisions of the Plan, the Board and/or the
Committee shall have authority to (a) grant, in its discretion,
Incentive Stock Options in accordance with Section 422 of the Code, or
Nonstatutory Options, Stock Awards or Restricted Stock Purchase Offers;
(b) determine in good faith the fair market value of the Stock covered
by any Grant; (c) determine which eligible persons shall receive Grants
and the number of shares, restrictions, terms and conditions to be
included in such Grants; (d) construe and interpret the Plan; (e)
promulgate, amend and rescind rules and regulations relating to its
administration, and correct defects, omissions and inconsistencies in
the Plan or any Grant; (f) consistent with the Plan and with the
consent of the Participant, as appropriate, amend any outstanding Grant
or amend the exercise date or dates thereof; (g) determine the duration
and purpose of leaves of absence which may be granted to Participants
without constituting termination of their employment for the purpose of
the Plan or any Grant; and (h) make all other determinations necessary
or advisable for the Plan's administration. The interpretation and
construction by the Board of any provisions of the Plan or selection of
Participants shall be conclusive and final. No member of the Board or
the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Grant made thereunder.
3. Eligibility.
(a) General: The persons who shall be eligible to receive Grants shall be
directors, officers, employees or consultants to the Company. The term
consultant shall mean any person, other than an employee, who is
engaged by the Company to render services and is compensated for such
services. An Optionee may hold more than one Option. Any issuance of a
Grant to an officer or director of the Company subsequent to the first
registration of any of the securities of the Company under the Exchange
Act shall comply with the requirements of Rule 16b-3.
(b) Incentive Stock Options: Incentive Stock Options may only be issued to
employees of the Company. Incentive Stock Options may be granted to
officers or directors, provided they are also employees of the Company.
Payment of a director's fee shall not be sufficient to constitute
employment by the Company.
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The Company shall not grant an Incentive Stock Option under
the Plan to any employee if such Grant would result in such employee
holding the right to exercise for the first time in any one calendar
year, under all Incentive Stock Options granted under the Plan or any
other plan maintained by the Company, with respect to shares of Stock
having an aggregate fair market value, determined as of the date of the
Option is granted, in excess of $100,000. Should it be determined that
an Incentive Stock Option granted under the Plan exceeds such maximum
for any reason other than a failure in good faith to value the Stock
subject to such option, the excess portion of such option shall be
considered a Nonstatutory Option. To the extent the employee holds two
(2) or more such Options which become exercisable for the first time in
the same calendar year, the foregoing limitation on the exercisability
of such Option as Incentive Stock Options under the Federal tax laws
shall be applied on the basis of the order in which such Options are
granted. If, for any reason, an entire Option does not qualify as an
Incentive Stock Option by reason of exceeding such maximum, such Option
shall be considered a Nonstatutory Option.
(c) Nonstatutory Option: The provisions of the foregoing Section 3(b) shall
not apply to any Option designated as a "Nonstatutory Option" or which
sets forth the intention of the parties that the Option be a
Nonstatutory Option.
(d) Stock Awards and Restricted Stock Purchase Offers: The provisions of
this Section 3 shall not apply to any Stock Award or Restricted Stock
Purchase Offer under the Plan.
4. Stock.
(a) Authorized Stock: Stock subject to Grants may be either unissued or
reacquired Stock.
(b) Number of Shares: Subject to adjustment as provided in Section 5(i) of
the Plan, the total number of shares of Stock which may be purchased or
granted directly by Options, Stock Awards or Restricted Stock Purchase
Offers, or purchased indirectly through exercise of Options granted
under the Plan shall not exceed Fifteen Million (15,000,000). If any
Grant shall for any reason terminate or expire, any shares allocated
thereto but remaining unpurchased upon such expiration or termination
shall again be available for Grants with respect thereto under the Plan
as though no Grant had previously occurred with respect to such shares.
Any shares of Stock issued pursuant to a Grant and repurchased pursuant
to the terms thereof shall be available for future Grants as though not
previously covered by a Grant.
(c) Reservation of Shares: The Company shall reserve and keep available at
all times during the term of the Plan such number of shares as shall be
sufficient to satisfy the requirements of the Plan. If, after
reasonable efforts, which efforts shall not include the registration of
the Plan or Grants under the Securities Act, the Company is unable to
obtain authority from any applicable regulatory body, which
authorization is deemed necessary by legal counsel for the Company for
the lawful issuance of shares hereunder, the Company shall be relieved
of any liability with respect to its failure to issue and sell the
shares for which such requisite authority was so deemed necessary
unless and until such authority is obtained.
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(d) Application of Funds: The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Options or rights under Stock
Purchase Agreements will be used for general corporate purposes.
(e) No Obligation to Exercise: The issuance of a Grant shall impose no
obligation upon the Participant to exercise any rights under such
Grant.
5. Terms and Conditions of Options. Options granted hereunder shall be
evidenced by agreements between the Company and the respective
Optionees, in such form and substance as the Board or Committee shall
from time to time approve. The form of Incentive Stock Option Agreement
attached hereto as Exhibit A and the three forms of a Nonstatutory
Stock Option Agreement for employees, for directors and for
consultants, attached hereto as Exhibit B-1, Exhibit B-2 and Exhibit
B-3, respectively, shall be deemed to be approved by the Board. Option
agreements need not be identical, and in each case may include such
provisions as the Board or Committee may determine, but all such
agreements shall be subject to and limited by the following terms and
conditions:
(a) Number of Shares: Each Option shall state the number of shares to
which it pertains.
(b) Exercise Price: Each Option shall state the exercise price, which
shall be determined as follows:
(i) Any Incentive Stock Option granted to a person who at the time
the Option is granted owns (or is deemed to own pursuant to
Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power or value of
all classes of stock of the Company ("Ten Percent Holder")
shall have an exercise price of no less than 110% of the Fair
Market Value of the Stock as of the date of grant; and
(ii) Incentive Stock Options granted to a person who at the time
the Option is granted is not a Ten Percent Holder shall have
an exercise price of no less than 100% of the Fair Market
Value of the Stock as of the date of grant.
For the purposes of this Section 5(b), the Fair Market Value
shall be as determined by the Board in good faith, which determination
shall be conclusive and binding; provided however, that if there is a
public market for such Stock, the Fair Market Value per share shall be
the average of the bid and asked prices (or the closing price if such
stock is listed on the NASDAQ National Market System or Small Cap Issue
Market) on the date of grant of the Option, or if listed on a stock
exchange, the closing price on such exchange on such date of grant.
(c) Medium and Time of Payment: The exercise price shall become
immediately due upon exercise of the Option and shall be paid in
cash or check made payable to the Company. Should the Company's
outstanding Stock be registered under Section 12(g) of the
Exchange Act at the time the Option is exercised, then the
exercise price may also be paid as follows:
(i) in shares of Stock held by the Optionee for the requisite
period necessary to avoid a charge to the Company's earnings
for financial reporting purposes and valued at Fair Market
Value on the exercise date, or
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(ii) through a special sale and remittance procedure pursuant to
which the Optionee shall concurrently provide irrevocable
written instructions (a) to a Company designated brokerage
firm to effect the immediate sale of the purchased shares and
remit to the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment
taxes required to be withheld by the Company by reason of such
purchase and (b) to the Company to deliver the certificates
for the purchased shares directly to such brokerage firm in
order to complete the sale transaction.
At the discretion of the Board, exercisable either at the time
of Option grant or of Option exercise, the exercise price may also be
paid (i) by Optionee's delivery of a promissory note in form and
substance satisfactory to the Company and permissible under the
Securities Rules of the State of New York and bearing interest at a
rate determined by the Board in its sole discretion, but in no event
less than the minimum rate of interest required to avoid the imputation
of compensation income to the Optionee under the Federal tax laws, or
(ii) in such other form of consideration permitted by the New York
corporations law as may be acceptable to the Board.
(d) Term and Exercise of Options: Any Option granted to an employee of the
Company shall become exercisable over a period of no longer than five
(5) years, and no less than twenty percent (20%) of the shares covered
thereby shall become exercisable annually. No Option shall be
exercisable, in whole or in part, prior to one (1) year from the date
it is granted unless the Board shall specifically determine otherwise,
as provided herein. In no event shall any Option be exercisable after
the expiration of ten (10) years from the date it is granted, and no
Incentive Stock Option granted to a Ten Percent Holder shall, by its
terms, be exercisable after the expiration of five (5) years from the
date of the Option. Unless otherwise specified by the Board or the
Committee in the resolution authorizing such Option, the date of grant
of an Option shall be deemed to be the date upon which the Board or the
Committee authorizes the granting of such Option.
Each Option shall be exercisable to the nearest whole share, in
installments or otherwise, as the respective Option agreements may
provide. During the lifetime of an Optionee, the Option shall be
exercisable only by the Optionee and shall not be assignable or
transferable by the Optionee, and no other person shall acquire any
rights therein. To the extent not exercised, installments (if more than
one) shall accumulate, but shall be exercisable, in whole or in part,
only during the period for exercise as stated in the Option agreement,
whether or not other installments are then exercisable.
(e) Termination of Status as Employee, Consultant or Director: If
Optionee's status as an employee shall terminate for any reason other
than Optionee's disability or death, then Optionee (or if the Optionee
shall die after such termination, but prior to exercise, Optionee's
personal representative or the person entitled to succeed to the
Option) shall have the right to exercise the portions of any of
Optionee's Incentive Stock Options which were exercisable as of the
date of such termination, in whole or in part, not less than 30 days
nor more than three (3) months after such termination (or, in the event
of "termination for good cause" as that term is defined in New York
case law related thereto, or by the terms of the Plan or the Option
Agreement or an employment agreement, the Option shall automatically
terminate as of the termination of employment as to all shares covered
by the Option).
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With respect to Nonstatutory Options granted to employees,
directors or consultants, the Board may specify such period for
exercise, not less than 30 days (except that in the case of
"termination for cause" or removal of a director, the Option shall
automatically terminate as of the termination of employment or services
as to shares covered by the Option, following termination of employment
or services as the Board deems reasonable and appropriate. The Option
may be exercised only with respect to installments that the Optionee
could have exercised at the date of termination of employment or
services. Nothing contained herein or in any Option granted pursuant
hereto shall be construed to affect or restrict in any way the right of
the Company to terminate the employment or services of an Optionee with
or without cause.
(f) Disability of Optionee: If an Optionee is disabled (within the meaning
of Section 22(e)(3) of the Code) at the time of termination, the three
(3) month period set forth in Section 5(e) shall be a period, as
determined by the Board and set forth in the Option, of not less than
six months nor more than one year after such termination.
(g) Death of Optionee: If an Optionee dies while employed by, engaged as a
consultant to, or serving as a Director of the Company, the portion of
such Optionee's Option which was exercisable at the date of death may
be exercised, in whole or in part, by the estate of the decedent or by
a person succeeding to the right to exercise such Option at any time
within (i) a period, as determined by the Board and set forth in the
Option, of not less than six (6) months nor more than one (1) year
after Optionee's death, which period shall not be more, in the case of
a Nonstatutory Option, than the period for exercise following
termination of employment or services, or (ii) during the remaining
term of the Option, whichever is the lesser. The Option may be so
exercised only with respect to installments exercisable at the time of
Optionee's death and not previously exercised by the Optionee.
(h) Nontransferability of Option: No Option shall be transferable by the
Optionee, except by will or by the laws of descent and distribution.
(i) Recapitalization: Subject to any required action of shareholders, the
number of shares of Stock covered by each outstanding Option, and the
exercise price per share thereof set forth in each such Option, shall
be proportionately adjusted for any increase or decrease in the number
of issued shares of Stock of the Company resulting from a stock split,
stock dividend, combination, subdivision or reclassification of shares,
or the payment of a stock dividend, or any other increase or decrease
in the number of such shares affected without receipt of consideration
by the Company; provided, however, the conversion of any convertible
securities of the Company shall not be deemed to have been "effected
without receipt of consideration" by the Company.
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In the event of a proposed dissolution or liquidation of the
Company, a merger or consolidation in which the Company is not the
surviving entity, or a sale of all or substantially all of the assets
or capital stock of the Company (collectively, a "Reorganization"),
unless otherwise provided by the Board, this Option shall terminate
immediately prior to such date as is determined by the Board, which
date shall be no later than the consummation of such Reorganization. In
such event, if the entity which shall be the surviving entity does not
tender to Optionee an offer, for which it has no obligation to do so,
to substitute for any unexercised Option a stock option or capital
stock of such surviving of such surviving entity, as applicable, which
on an equitable basis shall provide the Optionee with substantially the
same economic benefit as such unexercised Option, then the Board may
grant to such Optionee, in its sole and absolute discretion and without
obligation, the right for a period commencing thirty (30) days prior to
and ending immediately prior to the date determined by the Board
pursuant hereto for termination of the Option or during the remaining
term of the Option, whichever is the lesser, to exercise any unexpired
Option or Options without regard to the installment provisions of
Paragraph 6(d) of the Plan; provided, that any such right granted shall
be granted to all Optionees not receiving an offer to receive
substitute options on a consistent basis, and provided further, that
any such exercise shall be subject to the consummation of such
Reorganization.
Subject to any required action of shareholders, if the Company
shall be the surviving entity in any merger or consolidation, each
outstanding Option thereafter shall pertain to and apply to the
securities to which a holder of shares of Stock equal to the shares
subject to the Option would have been entitled by reason of such merger
or consolidation.
In the event of a change in the Stock of the Company as
presently constituted, which is limited to a change of all of its
authorized shares without par value into the same number of shares with
a par value, the shares resulting from any such change shall be deemed
to be the Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock
or securities of the Company, such adjustments shall be made by the
Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided in this Section 5(i), the
Optionee shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of any
stock dividend or any other increase or decrease in the number of
shares of stock of any class, and the number or price of shares of
Stock subject to any Option shall not be affected by, and no adjustment
shall be made by reason of, any dissolution, liquidation, merger,
consolidation or sale of assets or capital stock, or any issue by the
Company of shares of stock of any class or securities convertible into
shares of stock of any class.
The Grant of an Option pursuant to the Plan shall not affect
in any way the right or power of the Company to make any adjustments,
reclassifications, reorganizations or changes in its capital or
business structure or to merge, consolidate, dissolve, or liquidate or
to sell or transfer all or any part of its business or assets.
(j) Rights as a Shareholder: An Optionee shall have no rights as a
shareholder with respect to any shares covered by an Option until the
effective date of the issuance of the shares following exercise of such
Option by Optionee. 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 expressly provided in
Section 5(i) hereof.
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(k) Modification, Acceleration, Extension, and Renewal of Options: Subject
to the terms and conditions and within the limitations of the Plan, the
Board may modify an Option, or, once an Option is exercisable,
accelerate the rate at which it may be exercised, and may extend or
renew outstanding Options granted under the Plan or accept the
surrender of outstanding Options (to the extent not theretofore
exercised) and authorize the granting of new Options in substitution
for such Options, provided such action is permissible under Section 422
of the Code and the New York Securities Rules. Notwithstanding the
provisions of this Section 5(k), however, no modification of an Option
shall, without the consent of the Optionee, alter to the Optionee's
detriment or impair any rights or obligations under any Option
theretofore granted under the Plan.
(l) Exercise Before Exercise Date: At the discretion of the Board, the
Option may, but need not, include a provision whereby the Optionee may
elect to exercise all or any portion of the Option prior to the stated
exercise date of the Option or any installment thereof. Any shares so
purchased prior to the stated exercise date shall be subject to
repurchase by the Company upon termination of Optionee's employment as
contemplated by Section 5(n) hereof prior to the exercise date stated
in the Option and such other restrictions and conditions as the Board
or Committee may deem advisable.
(m) Other Provisions: The Option agreements authorized under the Plan shall
contain such other provisions, including, without limitation,
restrictions upon the exercise of the Options, as the Board or the
Committee shall deem advisable. Shares shall not be issued pursuant to
the exercise of an Option, if the exercise of such Option or the
issuance of shares thereunder would violate, in the opinion of legal
counsel for the Company, the provisions of any applicable law or the
rules or regulations of any applicable governmental or administrative
agency or body, such as the Code, the Securities Act, the Exchange Act,
the New York Securities Rules, New York corporation law, and the rules
promulgated under the foregoing or the rules and regulations of any
exchange upon which the shares of the Company are listed. Without
limiting the generality of the foregoing, the exercise of each Option
shall be subject to the condition that if at any time the Company shall
determine that (i) the satisfaction of withholding tax or other similar
liabilities, or (ii) the listing, registration or qualification of any
shares covered by such exercise upon any securities exchange or under
any state or federal law, or (iii) the consent or approval of any
regulatory body, or (iv) the perfection of any exemption from any such
withholding, listing, registration, qualification, consent or approval
is necessary or desirable in connection with such exercise or the
issuance of shares thereunder, then in any such event, such exercise
shall not be effective unless such withholding, listing registration,
qualification, consent, approval or exemption shall have been effected,
obtained or perfected free of any conditions not acceptable to the
Company.
(n) Repurchase Agreement: The Board may, in its discretion, require as a
condition to the Grant of an Option hereunder, that an Optionee execute
an agreement with the Company, in form and substance satisfactory to
the Board in its discretion ("Repurchase Agreement"), (i) restricting
the Optionee's right to transfer shares purchased under such Option
without first offering such shares to the Company or another
shareholder of the Company upon the same terms and conditions as
provided therein; and (ii) providing that upon termination of
Optionee's employment with the Company, for any reason, the Company (or
another shareholder of the Company, as provided in the Repurchase
Agreement) shall have the right at its discretion (or the discretion of
such other shareholders) to purchase and/or redeem all such shares
owned by the Optionee on the date of termination of his or her
employment at a price equal to: (A) the fair value of such shares as of
such date of termination; or (B) if such repurchase right lapses at 20%
of the number of shares per year, the original purchase price of such
shares, and upon terms of payment permissible under the New York
securities rules; provided that in the case of Options or Stock Awards
granted to officers, directors, consultants or affiliates of the
Company, such repurchase provisions may be subject to additional or
greater restrictions as determined by the Board or Committee.
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6. Stock Awards and Restricted Stock Purchase Offers.
(a) Types of Grants.
(i) Stock Award. All or part of any Stock Award under the Plan may
be subject to conditions established by the Board or the
Committee, and set forth in the Stock Award Agreement, which
may include, but are not limited to, continuous service with
the Company, achievement of specific business objectives,
increases in specified indices, attaining growth rates and
other comparable measurements of Company performance. Such
Awards may be based on Fair Market Value or other specified
valuation. All Stock Awards will be made pursuant to the
execution of a Stock Award Agreement substantially in the form
attached hereto as Exhibit C.
(ii) Restricted Stock Purchase Offer. A Grant of a Restricted Stock
Purchase Offer under the Plan shall be subject to such (i)
vesting contingencies related to the Participant's continued
association with the Company for a specified time and (ii)
other specified conditions as the Board or Committee shall
determine, in their sole discretion, consistent with the
provisions of the Plan. All Restricted Stock Purchase Offers
shall be made pursuant to a Restricted Stock Purchase Offer
substantially in the form attached hereto as Exhibit D.
(b) Conditions and Restrictions. Shares of Stock which Participants may
receive as a Stock Award under a Stock Award Agreement or Restricted
Stock Purchase Offer under a Restricted Stock Purchase Offer may
include such restrictions as the Board or Committee, as applicable,
shall determine, including restrictions on transfer, repurchase rights,
right of first refusal, and forfeiture provisions. When transfer of
Stock is so restricted or subject to forfeiture provisions it is
referred to as "Restricted Stock". Further, with Board or Committee
approval, Stock Awards or Restricted Stock Purchase Offers may be
deferred, either in the form of installments or a future lump sum
distribution. The Board or Committee may permit selected Participants
to elect to defer distributions of Stock Awards or Restricted Stock
Purchase Offers in accordance with procedures established by the Board
or Committee to assure that such deferrals comply with applicable
requirements of the Code including, at the choice of Participants, the
capability to make further deferrals for distribution after retirement.
Any deferred distribution, whether elected by the Participant or
specified by the Stock Award Agreement, Restricted Stock Purchase
Offers or by the Board or Committee, may require the payment be
forfeited in accordance with the provisions of Section 6(c). Dividends
or dividend equivalent rights may be extended to and made part of any
Stock Award or Restricted Stock Purchase Offers denominated in Stock or
units of Stock, subject to such terms, conditions and restrictions as
the Board or Committee may establish.
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(c) Cancellation and Rescission of Grants. Unless the Stock Award Agreement or
Restricted Stock Purchase Offer specifies otherwise, the Board or
Committee, as applicable, may cancel any unexpired, unpaid, or deferred
Grants at any time if the Participant is not in compliance with all other
applicable provisions of the Stock Award Agreement or Restricted Stock
Purchase Offer, the Plan and with the following conditions:
(i) A Participant shall not render services for any organization
or engage directly or indirectly in any business which, in the
judgment of the chief executive officer of the Company or
other senior officer designated by the Board or Committee, is
or becomes competitive with the Company, or which organization
or business, or the rendering of services to such organization
or business, is or becomes otherwise prejudicial to or in
conflict with the interests of the Company. For Participants
whose employment has terminated, the judgment of the chief
executive officer shall be based on the Participant's position
and responsibilities while employed by the Company, the
Participant's post-employment responsibilities and position
with the other organization or business, the extent of past,
current and potential competition or conflict between the
Company and the other organization or business, the effect on
the Company's customers, suppliers and competitors and such
other considerations as are deemed relevant given the
applicable facts and circumstances. A Participant who has
retired shall be free, however, to purchase as an investment
or otherwise, stock or other securities of such organization
or business so long as they are listed upon a recognized
securities exchange or traded over-the-counter, and such
investment does not represent a substantial investment to the
Participant or a greater than ten percent (10%) equity
interest in the organization or business.
(ii) A Participant shall not, without prior written authorization
from the Company, disclose to anyone outside the Company, or
use in other than the Company's business, any confidential
information or material, as defined in the Company's
Proprietary Information and Invention Agreement or similar
agreement regarding confidential information and intellectual
property, relating to the business of the Company, acquired by
the Participant either during or after employment with the
Company.
(iii) A Participant, pursuant to the Company's Proprietary
Information and Invention Agreement, shall disclose promptly
and assign to the Company all right, title and interest in any
invention or idea, patentable or not, made or conceived by the
Participant during employment by the Company, relating in any
manner to the actual or anticipated business, research or
development work of the Company and shall do anything
reasonably necessary to enable the Company to secure a patent
where appropriate in the United States and in foreign
countries.
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(iv) Upon exercise, payment or delivery pursuant to a Grant, the
Participant shall certify on a form acceptable to the
Committee that he or she is in compliance with the terms and
conditions of the Plan. Failure to comply with all of the
provisions of this Section 6(c) prior to, or during the six
months after, any exercise, payment or delivery pursuant to a
Grant shall cause such exercise, payment or delivery to be
rescinded. The Company shall notify the Participant in writing
of any such rescission within two years after such exercise,
payment or delivery. Within ten days after receiving such a
notice from the Company, the Participant shall pay to the
Company the amount of any gain realized or payment received as
a result of the rescinded exercise, payment or delivery
pursuant to a Grant. Such payment shall be made either in cash
or by returning to the Company the number of shares of Stock
that the Participant received in connection with the rescinded
exercise, payment or delivery.
(d) Nonassignability.
(i) Except pursuant to Section 6(e)(iii) and except as set forth
in Section 6(d)(ii), no Grant or any other benefit under the
Plan shall be assignable or transferable, or payable to or
exercisable by, anyone other than the Participant to whom it
was granted.
(ii) Where a Participant terminates employment and retains a Grant
pursuant to Section 6(e)(ii) in order to assume a position
with a governmental, charitable or educational institution,
the Board or Committee, in its discretion and to the extent
permitted by law, may authorize a third party (including but
not limited to the trustee of a "blind" trust), acceptable to
the applicable governmental or institutional authorities, the
Participant and the Board or Committee, to act on behalf of
the Participant with regard to such Awards.
(e) Termination of Employment. If the employment or service to the Company of a
Participant terminates, other than pursuant to any of the following
provisions under this Section 6(e), all unexercised, deferred and unpaid
Stock Awards or Restricted Stock Purchase Offers shall be cancelled
immediately, unless the Stock Award Agreement or Restricted Stock Purchase
Offer provides otherwise:
(i) Retirement Under a Company Retirement Plan. When a
Participant's employment terminates as a result of retirement
in accordance with the terms of a Company retirement plan, the
Board or Committee may permit Stock Awards or Restricted Stock
Purchase Offers to continue in effect beyond the date of
retirement in accordance with the applicable Grant Agreement
and the exercisability and vesting of any such Grants may be
accelerated.
(ii) Rights in the Best Interests of the Company. When a
Participant resigns from the Company and, in the judgment of
the Board or Committee, the acceleration and/or continuation
of outstanding Stock Awards or Restricted Stock Purchase
Offers would be in the best interests of the Company, the
Board or Committee may (i) authorize, where appropriate, the
acceleration and/or continuation of all or any part of Grants
issued prior to such termination and (ii) permit the exercise,
vesting and payment of such Grants for such period as may be
set forth in the applicable Grant Agreement, subject to
earlier cancellation pursuant to Section 9 or at such time as
the Board or Committee shall deem the continuation of all or
any part of the Participant's Grants are not in the Company's
best interest.
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(iii) Death or Disability of a Participant.
(1) In the event of a Participant's death, the
Participant's estate or beneficiaries shall have a
period up to the expiration date specified in the
Grant Agreement within which to receive or exercise
any outstanding Grant held by the Participant under
such terms as may be specified in the applicable
Grant Agreement. Rights to any such outstanding
Grants shall pass by will or the laws of descent and
distribution in the following order: (a) to
beneficiaries so designated by the Participant; if
none, then (b) to a legal representative of the
Participant; if none, then (c) to the persons
entitled thereto as determined by a court of
competent jurisdiction. Grants so passing shall be
made at such times and in such manner as if the
Participant were living.
(2) In the event a Participant is deemed by the Board or
Committee to be unable to perform his or her usual
duties by reason of mental disorder or medical
condition which does not result from facts which
would be grounds for termination for cause, Grants
and rights to any such Grants may be paid to or
exercised by the Participant, if legally competent,
or a committee or other legally designated guardian
or representative if the Participant is legally
incompetent by virtue of such disability.
(3) After the death or disability of a Participant, the
Board or Committee may in its sole discretion at any
time (1) terminate restrictions in Grant Agreements;
(2) accelerate any or all installments and rights;
and (3) instruct the Company to pay the total of any
accelerated payments in a lump sum to the
Participant, the Participant's estate, beneficiaries
or representative; notwithstanding that, in the
absence of such termination of restrictions or
acceleration of payments, any or all of the payments
due under the Grant might ultimately have become
payable to other beneficiaries.
(4) In the event of uncertainty as to interpretation of
or controversies concerning this Section 6, the
determinations of the Board or Committee, as
applicable, shall be binding and conclusive.
7. Investment Intent. All Grants under the Plan are intended to be exempt
from registration under the Securities Act provided by Rule 701
thereunder. Unless and until the granting of Options or sale and
issuance of Stock subject to the Plan are registered under the
Securities Act or shall be exempt pursuant to the rules promulgated
thereunder, each Grant under the Plan shall provide that the purchases
or other acquisitions of Stock thereunder shall be for investment
purposes and not with a view to, or for resale in connection with, any
distribution thereof. Further, unless the issuance and sale of the
Stock have been registered under the Securities Act, each Grant shall
provide that no shares shall be purchased upon the exercise of the
rights under such Grant unless and until (i) all then applicable
requirements of state and federal laws and regulatory agencies shall
have been fully complied with to the satisfaction of the Company and
its counsel, and (ii) if requested to do so by the Company, the person
exercising the rights under the Grant shall (i) give written assurances
as to knowledge and experience of such person (or a representative
employed by such person) in financial and business matters and the
ability of such person (or representative) to evaluate the merits and
risks of exercising the Option, and (ii) execute and deliver to the
Company a letter of investment intent and/or such other form related to
applicable exemptions from registration, all in such form and substance
as the Company may require. If shares are issued upon exercise of any
rights under a Grant without registration under the Securities Act,
subsequent registration of such shares shall relieve the purchaser
thereof of any investment restrictions or representations made upon the
exercise of such rights.
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8. Amendment, Modification, Suspension or Discontinuance of the Plan. The
Board may, insofar as permitted by law, from time to time, with respect
to any shares at the time not subject to outstanding Grants, suspend or
terminate the Plan or revise or amend it in any respect whatsoever,
except that without the approval of the shareholders of the Company, no
such revision or amendment shall (i) increase the number of shares
subject to the Plan, (ii) decrease the price at which Grants may be
granted, (iii) materially increase the benefits to Participants, or
(iv) change the class of persons eligible to receive Grants under the
Plan; provided, however, no such action shall alter or impair the
rights and obligations under any Option, or Stock Award, or Restricted
Stock Purchase Offer outstanding as of the date thereof without the
written consent of the Participant thereunder. No Grant may be issued
while the Plan is suspended or after it is terminated, but the rights
and obligations under any Grant issued while the Plan is in effect
shall not be impaired by suspension or termination of the Plan.
In the event of any change in the outstanding Stock by reason of a
stock split, stock dividend, combination or reclassification of shares,
recapitalization, merger, or similar event, the Board or the Committee may
adjust proportionally (a) the number of shares of Stock (i) reserved under
the Plan, (ii) available for Incentive Stock Options and Nonstatutory
Options and (iii) covered by outstanding Stock Awards or Restricted Stock
Purchase Offers; (b) the Stock prices related to outstanding Grants; and
(c) the appropriate Fair Market Value and other price determinations for
such Grants. In the event of any other change affecting the Stock or any
distribution (other than normal cash dividends) to holders of Stock, such
adjustments as may be deemed equitable by the Board or the Committee,
including adjustments to avoid fractional shares, shall be made to give
proper effect to such event. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization
or liquidation, the Board or the Committee shall be authorized to issue or
assume stock options, whether or not in a transaction to which Section
424(a) of the Code applies, and other Grants by means of substitution of
new Grant Agreements for previously issued Grants or an assumption of
previously issued Grants.
9. Tax Withholding. The Company shall have the right to deduct applicable
taxes from any Grant payment and withhold, at the time of delivery or
exercise of Options, Stock Awards or Restricted Stock Purchase Offers or
vesting of shares under such Grants, an appropriate number of shares for
payment of taxes required by law or to take such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. If Stock is used to satisfy tax withholding,
such stock shall be valued based on the Fair Market Value when the tax
withholding is required to be made.
10. Availability of Information. During the term of the Plan and any additional
period during which a Grant granted pursuant to the Plan shall be
exercisable, the Company shall make available, not later than one hundred
and twenty (120) days following the close of each of its fiscal years, such
financial and other information regarding the Company as is required by the
bylaws of the Company and applicable law to be furnished in an annual
report to the shareholders of the Company.
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11. Notice. Any written notice to the Company required by any of the provisions
of the Plan shall be addressed to the chief personnel officer or to the
chief executive officer of the Company, and shall become effective when it
is received by the office of the chief personnel officer or the chief
executive officer.
12. Indemnification of Board. In addition to such other rights or
indemnifications as they may have as directors or otherwise, and to the
extent allowed by applicable law, the members of the Board and 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 claim, action, suit or proceeding, or in
connection with any appeal thereof, 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 Grant granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by
them in satisfaction of a judgment in any such claim, action, suit or
proceeding, except in any case in relation to matters as to which it shall
be adjudged in such claim, action, suit or proceeding that such Board or
Committee member is liable for negligence or misconduct in the performance
of his or her duties; provided that within sixty (60) days after
institution of any such action, suit or Board proceeding the member
involved shall offer the Company, in writing, the opportunity, at its own
expense, to handle and defend the same.
13. Governing Law. The Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by the Code or the
securities laws of the United States, shall be governed by the law of the
State of New York and construed accordingly.
14. Effective and Termination Dates. The Plan shall become effective on the
date it is approved by the holders of a majority of the shares of Stock
then outstanding. The Plan shall terminate ten years later, subject to
earlier termination by the Board pursuant to Section 8.
The foregoing 2004 Incentive Stock Plan (consisting of 14 pages,
including this page) was duly adopted and approved by the Board of Directors on
June 2, 2004.
ADVANCED PLANT
PHARMACEUTICALS, INC.
a Delaware corporation
By:
----------------------------------------
David Lieberman
Its: Chief Executive Officer
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