EXHIBIT 4.1
SANGUI BIOTECH INTERNATIONAL, INC.
2004 EMPLOYEE STOCK INCENTIVE PLAN
AS ADOPTED APRIL 28, 2004
1. Purpose.
The purpose of
this Plan is to provide incentives to attract, retain and
motivate eligible persons whose present and
potential contributions are
important to the success of the Company,
its Parent and Subsidiaries, by
offering them an opportunity to participate
in the Company's future performance
through Awards of Options, Restricted Stock
and Stock Bonuses. Capitalized terms
not defined in the text are defined in
Section 2.
2. Definitions.
As used in this
Plan, the following terms will have the following meanings:
2.1 "Award"
means any award under this Plan, including any Option,
Restricted Stock or Stock Bonus.
2.2 "Award
Agreement" means, with respect to each Award, the signed
written
agreement between the Company and the
Participant setting forth the terms and
conditions of the Award.
2.3 "Board"
means the Board of Directors of the Company.
2.4 "Cause"
means any cause, as defined by applicable law, for the
termination of a Participant's employment
with the Company or a Parent or
Subsidiary of the Company.
2.5 "Code" means
the Internal Revenue Code of 1986, as amended.
2.6 "Company"
means Sangui Biotech International, Inc., a Colorado
Corporation, or any successor
corporation.
2.7 "Disability"
means a disability, whether temporary or permanent,
partial or total, as determined by the
Board.
2.8 "Exchange
Act" means the Securities Exchange Act of 1934, as amended.
2.9 "Exercise
Price" means the price at which a holder of an Option may
purchase the Shares issuable upon exercise
of the Option.
2.10 "Fair
Market Value" means, as of any date, the value of a share of
the
Company's Common Stock determined as
follows:
(a) if such Common Stock is publicly traded and is then listed on
a
national securities exchange, its closing price on the date of
determination on the principal national securities exchange on
which
the Common Stock is listed or admitted to trading as reported in
The
Wall Street Journal;
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(b) if such Common Stock is quoted on the NASDAQ National Market,
its
closing price on the NASDAQ National Market on the date of
determination as reported in The Wall Street Journal;
(c) if such Common Stock is publicly traded but is not listed
or
admitted to trading on a national securities exchange, the average
of
the closing bid and asked prices on the date of determination
as
reported by the Pink Sheets or OTC Bulletin Board, as the case may
be;
(d) in the case of an Award made on the Effective Date, the price
per
share at which shares of the Company's Common Stock are
initially
offered for sale to the public by the Company's underwriters in
the
initial public offering of the Company's Common Stock pursuant to
a
Registration Statement filed with the SEC under the Securities Act;
or
(e) if none of the foregoing is applicable, by the Board in
good
faith.
2.11 "Incentive
Stock Option" means an Option intended to be an "incentive
stock option" within the meaning of Section
422 of the Code.
2.12 "Insider"
means an officer or director of the Company or any other
person whose transactions in the Company's
Common Stock are subject to Section
16 of the Exchange Act.
2.13
"Nonqualified Stock Option" means a stock option not intended
to
qualify as either a Qualified Stock Option
or an Incentive Stock Option as those
terms are defined by applicable provisions
of the code.
2.14 "Option"
means an award of an option to purchase Shares pursuant to
Section 6.
2.15
"Participant" means a person who receives an Award under this
Plan.
2.16
"Performance Factors" means the factors selected by the Board, in
its
sole and absolute discretion, from among
the following measures to determine
whether the performance goals applicable to
Awards have been satisfied:
(a) Net revenue and/or net revenue growth;
(b)
Earnings before income taxes and amortization and/or earnings
before income taxes and amortization growth;
(c) Operating income and/or operating income growth;
(d) Net income and/or net income growth;
(e) Earnings per
share and/or earnings per share growth;
(f) Total stockholder return and/or total stockholder return
growth;
(g) Return on equity;
(h) Operating cash flow return on income;
(i) Adjusted operating cash flow return on income;
(j) Economic value added; and
(k) Individual confidential business objectives.
2.17
"Performance Period" means the period of service determined by
the
Board, not to exceed five years, during
which years of service or performance is
to be measured for Restricted Stock Awards
or Stock Bonuses.
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2.18 "Plan"
means this Sangui Biotech International, Inc., 2004 Employee
Stock Incentive Plan, as amended from time
to time.
2.19 "Restricted
Stock Award" means an award of Shares pursuant to Section
7.
2.20 "SEC" means
the Securities and Exchange Commission.
2.21 "Securities
Act" means the Securities Act of 1933, as amended.
2.22 "Shares"
means shares of the Company's Common Stock reserved for
issuance under this Plan, as adjusted
pursuant to Sections 3 and 19, and any
successor security.
2.23 "Stock
Bonus" means an award of Shares, or cash in lieu of Shares,
pursuant to Section 8 of the Plan.
2.24
"Subsidiary" or "Subsidiaries" means a corporation or corporations
in
which the Company owns, directly or
indirectly, stock possessing fifty percent
(50%) or more of the total combined voting
power of all classes of stock.
2.25 "Termination" or
"Terminated" means, for purposes of this Plan with
respect to a Participant, that the
Participant has for any reason ceased to
provide services as an employee, officer,
director, consultant, independent
contractor, or advisor to the Company or a
Parent or Subsidiary of the Company.
An employee will not be deemed to have
ceased to provide services in the case of
(i) sick leave, (ii) military leave, or
(iii) any other leave of absence
approved by the Company, provided that such
leave is for a period of not more
than 90 days, unless reemployment upon the
expiration of such leave is
guaranteed by contract or statute or unless
provided otherwise pursuant to a
formal policy adopted from time to time by
the Company and issued and
promulgated to employees in writing. In the
case where an employee is on an
approved leave of absence, the Board may
make such provisions respecting
suspension of vesting the Award, while on
leave from the employ of the Company
or a Subsidiary as it may deem appropriate,
except that in no event may an
Option be exercised after the expiration of
the term set forth in the Option
Agreement. The Board will have sole
discretion to determine whether a
Participant has ceased to provide services
and the effective date on which the
Participant ceased to provide services (the
"Termination Date").
2.26 "Unvested
Shares" means "Unvested Shares" as defined in the Award
Agreement.
2.27 "Vested
Shares" means "Vested Shares" as defined in the Award
Agreement.
3. Administration.
3.1 Board
Authority. This Plan will be administered by the Board. Subject
to the general purposes, terms and
conditions of this Plan, the Board will have
full power to implement and carry out this
Plan. Without limitation, the Board
will have the authority to:
(a) construe and interpret this Plan, any Award Agreement and
any
other agreement or document executed pursuant to this Plan;
(b) prescribe, amend and rescind rules and regulations relating
to
this Plan or any Award;
(c) select persons to receive Awards;
(d) determine the form and terms of Awards;
(e) determine the number of Shares or other consideration subject
to
Awards;
(f) determine whether Awards will be granted singly, in
combination
with, in tandem with, in replacement of, or as alternatives to,
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other Awards under this Plan or any other incentive or
compensation plan of the Company or any Parent or Subsidiary of
the Company;
(g) grant waivers of Plan or Award conditions;
(h) determine the vesting, ability to exercise and payment of
Awards;
(i) correct any defect, supply any omission or reconcile any
inconsistency in this Plan, any Award or any Award Agreement;
(j) determine whether an Award has been earned; and
(k) make all other determinations necessary or advisable for
the
administration of this Plan.
3.2 Board
Discretion. Any determination made by the Board with respect to
any Award will be made at the time of grant
of the Award or, unless in
contravention of any express term of this
Plan or Award, at any later time, and
such determination will be final and
binding on the Company and on all persons
having an interest in any Award under this
Plan. The Board may delegate to one
or more officers of the Company the
authority to grant an Award under this Plan
to Participants who are not Insiders of the
Company.
4. Shares Subject to Plan
4.1 Number of
Shares Available. Subject to Sections 4.2 and 19, the total
aggregate number of Shares reserved and
available for grant and issuance
pursuant to this Plan will be 1,000,000
plus Shares that are subject to: (a)
issuance upon exercise of an Option but
cease to be subject to such Option for
any reason other than exercise of such
Option; (b) an Award granted hereunder
but forfeited or repurchased by the Company
at the original issue price; and (c)
an Award that otherwise terminates without
Shares being issued. At all times the
Company shall reserve and keep available a
sufficient number of Shares as shall
be required to satisfy the requirements of
all outstanding Options granted under
this Plan and all other outstanding but
unvested Awards granted under this Plan.
4.2 Adjustment
of Shares. In the event that the number of outstanding
shares is changed by a stock dividend,
recapitalization, stock split, reverse
stock split, subdivision, combination,
reclassification or similar change in the
capital structure of the Company without
consideration, then (a) the number of
Shares reserved for issuance under this
Plan, (b) the Exercise Prices of and
number of Shares subject to outstanding
Options, and (c) the number of Shares
subject to other outstanding Awards will be
proportionately adjusted, subject to
any required action by the Board or the
stockholders of the Company and in
compliance with applicable securities laws;
provided, however, that fractions of
a Share will not be issued but will either
be replaced by a cash payment equal
to the Fair Market Value of such fraction
of a Share or will be rounded up to
the nearest whole Share, as determined by
the Board.
4.3 Reacquired
Shares. If any Award granted under the Plan terminates
without having been exercised in full
(including an Award which terminates by
agreement between the Company and the
Participant), or if shares of Common Stock
are reacquired by the Company upon the
rescission of an exercise of an Award,
the number of shares of Common Stock as to
which an Award has not been exercised
prior to termination, or has been
reacquired upon the rescission of an Award,
shall be available for future grant within
the limits set forth in Section 4.1.
4.4 Type of
Shares. Common Stock delivered by the Company under the Plan
may be authorized but unissued Common Stock
or previously issued Common Stock
acquired by the Company. No fractional
shares of Common Stock will be delivered
under the Plan.
4.5 Limit on
Shares for Stock Awards. No more than twenty percent (20%) of
the Authorized Shares may be issued
pursuant to Stock Awards.
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4.6 Limit on
Shares for Performance Awards. No more than 2,000,000 shares
may be allocated to the Performance Awards
that are granted to any individual
Participant during any 12-month period.
This limit shall not be adjusted by the
cancellation, forfeiture, termination,
expiration, or lapse of any Performance
Award prior to its payment.
5. Eligibility.
5.1 The Board
will select Participants from among those key employees of,
and consultants and advisors to, the
Company or its Subsidiaries who, in the
opinion of the Board, are in a position to
make a significant contribution to
the success of the Company and its
Subsidiaries. Eligibility for Incentive Stock
Options is limited to employees (including
officers and directors who are
employees) of the Company or of a "parent
corporation" or "subsidiary
corporation" of the Company as those terms
are defined in Section 424 of the
Code. All other Awards may be granted to
employees, officers, directors,
consultants, independent contractors and
advisors of the Company or any Parent
or Subsidiary of the Company; provided such
consultants, contractors and
advisors render bona fide services not in
connection with the offer and sale of
securities in a capital-raising transaction
or the promotion of the Company.
6. Options.
6.1 Board
Determination of Grants. The Board may grant Options to
eligible
persons and will determine whether such
Options will be Incentive Stock Options
within the meaning of the Code ("ISO") or
Nonqualified Stock Options ("NQSO"),
the number of Shares subject to the Option,
the Exercise Price of the Option,
the period during which the Option may be
exercised, and all other terms and
conditions of the Option, subject to the
following:
6.2 Form of
Option Grant. Each Option granted under this Plan will be
evidenced by an Award Agreement that will
expressly identify the Option as an
ISO or an NQSO (hereinafter referred to as
the "Stock of Agreement"), and will
be in such form and will contain such
provisions (which need not be the same for
each Participant) as the Board may from
time to time approve, and which will
comply with and be subject to the terms and
conditions of this Plan.
6.3 Date of
Grant. The date of grant of an Option will be the date on which
the Board makes the determination to grant
such Option, unless otherwise
specified by the Board. The Stock Option
Agreement and a copy of this Plan will
be delivered to the Participant within a
reasonable time after the granting of
the Option.
6.4 Exercise
Period. Options may be exercisable within the times or upon
the events determined by the Board as set
forth in the Stock Option Agreement
governing such Options; provided, however,
that no Option will be exercisable
after the expiration of ten (10) years from
the date the Option is granted; and
provided further that no ISO granted to a
person who directly or by attribution
owns more than ten percent (10%) of the
total combined voting power of all
classes of stock of the Company or of any
Parent or Subsidiary of the Company
("Ten Percent Stockholder") will be
exercisable after the expiration of five (5)
years from the date the ISO is granted. The
Board also may provide for Options
to become exercisable at one time or from
time to time, periodically or
otherwise, in such number of Shares or
percentage of Shares as the Board
determines.
6.5 Exercise
Price. The Exercise Price of an Option will be determined by
the Board when the Option is granted and
may be not less than 85% of the Fair
Market Value of the Shares on the date of
grant; provided that: (a) the Exercise
Price of an ISO will be not less than 100%
of the Fair Market Value of the
Shares on the date of grant; and (b) the
Exercise Price of any ISO granted to a
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Ten Percent Stockholder will not be less
than 110% of the Fair Market Value of
the Shares on the date of grant. Payment
for the Shares purchased may be made in
accordance with Section 9 of this Plan.
6.6 Method of
Exercise. Options may be exercised only by delivery to the
Company of a written stock option exercise
agreement (the "Exercise Agreement")
in a form approved by the Board, (which
need not be the same for each
Participant), stating the number of Shares
being purchased, the restrictions
imposed on the Shares purchased under such
Exercise Agreement, if any, and such
representations and agreements regarding
Participant's investment intent and
access to information and other matters, if
any, as may be required or desirable
by the Company to comply with applicable
securities laws, together with payment
in full of the Exercise Price for the
number of Shares being purchased.
6.7 Termination.
Notwithstanding the exercise periods set forth in the
Stock Option Agreement, exercise of an
Option will always be subject to the
following:
(a) If the Participant's service is Terminated for any reason
except
death or
Disability, then the Participant may exercise such
Participant's
Options only to
the extent that such Options would have been exercisable
upon the
Termination Date no later than three (3) months after the
Termination Date
(or such shorter or longer time period not exceeding five
(5) years as may
be determined by the Board, with any exercise beyond three
(3) months after
the Termination Date deemed to be an NQSO), but in any
event, no later
than the expiration date of the Options.
(b) If the Participant's service is Terminated because of
Participant's
death or Disability (or the Participant dies within three (3)
months after a
Termination other than for Cause or because of Participant's
Disability),
then Participant's Options may be exercised only to the extent
that such
Options would have been exercisable by Participant on the
Termination Date
and must be exercised by Participant [or Participant's
legal
representative or authorized assignee] no later than twelve
(12)
months after the
Termination Date [or such shorter or longer time period
not exceeding
five (5) years as may be determined by the Board,
