INCODE TECHNOLOGIES CORP. 2005 Employee Incentive Plan

 

                                                         EXHIBIT 4.1

 

                          INCODE TECHNOLOGIES CORP.

 

                        2005 Employee Incentive Plan

 

Article 1. Establishment and Purpose

 

    1.1   Establishment of the Plan.   Incode Technologies Corp., a

Nevada corporation (the "Company" or "Incode Technologies"), hereby

establishes an incentive compensation plan (the "Plan"), as set forth in

this document.

 

    1.2   Purpose of the Plan.   The purpose of the Plan is to promote

the success and enhance the value of the Company by linking the personal

interests of Participants to those of the Company's shareholders, and by

providing Participants with an incentive for outstanding performance. The

Plan is further intended to attract and retain the services of Participants

upon whose judgment, interest, and special efforts the successful operation

of Incode Technologies and its subsidiaries is dependent.

 

    1.3   Effective Date of the Plan.   The Plan shall become effective

on May 26, 2005.

 

Article 2. Definitions

 

    Whenever used in the Plan, the following terms shall have the

meanings set forth below and, when the meaning is intended, the initial

letter of the word is capitalized:

 

    (a)   "Award" means, individually or collectively, a grant   under

this Plan of Stock, Nonqualified Stock Options, Incentive Stock Options,

Restricted Stock, or Performance Shares.

 

    (b)   "Award Agreement" means an agreement which may be   entered

into by each Participant and the Company, setting   forth the terms and

provisions applicable to Awards granted   to Participants under this Plan.

 

    (c)   "Board" or "Board of Directors" means the Company's Board of

Directors.

 

    (d)   "Cause" shall mean willful and gross misconduct on the part of

an Eligible Person that is materially and demonstrably   detrimental to

the Company or any Subsidiary as determined by the Committee in its sole

discretion.

 

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    (e)   "Change in Control" shall be deemed to have occurred if (i)

any "person" (as such term is used in Sections 13(d) and 14(d) of the

Exchange Act), other than (A) a person who on May 26, 2005 was the

beneficial owner of more than 25% of the outstanding Shares, (B) a

trustee or other fiduciary holding securities under an employee benefit

plan of the Company or (C) a corporation owned directly or indirectly   by

the shareholders of the Company in substantially the same proportions as

their ownership of stock of the Company, is   or becomes the "beneficial

owner" (as defined in Rule 13d-3 under said Act), directly or indirectly,

of securities of the Company representing fifty percent (50%) or more of

the total voting power represented by the Company's then   outstanding

voting securities, or (ii) during any period of two (2) consecutive

years, individuals who at the beginning of such period constitute the

Board of Directors of the   Company and any new Director whose election by

the Board of   Directors or nomination for election by the Company's

shareholders was approved by a vote of at least two-thirds   (2/3) of the

Directors then still in office who either were   Directors at the

beginning of the period or whose election or nomination for election was

previously so approved, cease   for any reason to constitute a majority

thereof, or (iii) the shareholders of the Company approve a merger or

consolidation of the Company with any other corporation, other than a

merger or consolidation which would result in   the voting securities of

the Company outstanding immediately prior thereto continuing to represent

(either by remaining outstanding or by being converted into voting

securities of   the surviving entity) at least fifty-five percent (55%) of

the   total voting power represented by the voting securities of the

Company or such surviving entity outstanding immediately   after such

merger or consolidation, or the shareholders of   the Company approve a

plan of complete liquidation of the   Company or an agreement for the sale

or disposition by the   Company of all or substantially all the Company's

assets.

 

    (f)   "Code" means the Internal Revenue Code of 1986, as amended

from time to time.

 

    (g)   "Committee" means the committee or committees, as specified

in Article 3, appointed by the Board to administer   the Plan with respect

to grants of Awards.

 

    (h) "Consultant" means a natural person under contract with the

Company to provide bona fide services to the Company which are not in

connection with the offer or sale of securities in a capital-raising

transaction and do not directly or indirectly promote or maintain a

market for the Company's securities.

 

    (i)   "Director" means any individual who is a member of the Incode

Technologies Board of Directors.

 

    (j)   "Disability" shall mean the Participant's inability to perform

the Participant's normal Employment functions due to any medically

determinable physical or mental disability,   which can last or has lasted

12 months or is expected to result in death.

 

    (k) "Eligible Person" means an Employee, Director or Consultant.

 

    (l)   "Employee" means any officer or employee of the Company or of

one of the Company's Subsidiaries.   Directors who are not otherwise

employed by   the Company shall not be considered Employees under this

Plan.

 

    (m)   "Employment,"   with reference to an Employee, means the

condition of being an officer or employee of the Company or one of its

Subsidiaries.   "Employment," with reference to a Consultant, means the

condition of being a Consultant.   "Employment," with reference to a

Director, means the condition of being a Director.   The change in status

of an Eligible Person among the categories of Employee, Director and

Consultant shall not be deemed a termination of Employment.

 

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    (n)   "Exchange Act" means the Securities Exchange Act of 1934, as

amended from time to time, or any successor Act thereto.

 

    (o)   "Exercise Price" means the price at which a Share may be

purchased by a Participant pursuant to an Option, as   determined by the

Committee.

 

    (p)   "Fair Market Value" shall mean (i) at such time as there are

closing prices quoted for the Shares, the closing price of   Shares on the

relevant date, or (if there were no sales on such date) the next

preceding trading date, all as reported on the principal market for the

Shares, or (ii) at such time as there is a public market quoted without

closing prices, the mean of the closing high bid and low asked on the

relevant date, as reported on the principal market for the Shares, or

(iii) at such time as there is no public market for the Shares, the value

determined from time to time by the Board of Directors.

 

    (q)   "Incentive Stock Option" or "ISO" means an option to purchase

Shares from Incode Technologies, granted under this Plan, which is

designated as an Incentive Stock Option and is intended to meet the

requirements of Section 422 of the Code.

 

    (r)   "Insider" shall mean an Eligible Person who is, on the

relevant date, an officer, director, or ten percent (10%) beneficial

owner of the Company, as those terms are defined under Section 16 of the

Exchange Act.                        

 

    (s)   "Nonqualified Stock Option" or "NQSO" means the option   to

purchase Shares from Incode Technologies, granted under this Plan, which

is not intended to be an Incentive Stock Option.

 

    (t)   "Option" or "Stock Option" shall mean an Incentive   Stock

Option or a Nonqualified Stock Option.

 

    (u)   "Participant" means a person who holds an outstanding   Award

granted under the Plan.

 

    (v)   "Performance Share" shall mean an Award granted to an Eligible

Person pursuant to Article 8   herein.

 

    (w) "Plan" means this 2005 Employee Incentive Plan.

 

    (x)   "Restricted Stock" means an Award of Stock granted to an

Eligible Person pursuant to Article 7 herein.

 

    (y) "Restriction Period" means the period during which   Shares of

Restricted Stock are subject to restrictions or   conditions under Article 7.

 

    (z)   "Shares" or "Stock" means the shares of common stock of the Company.

 

    (aa) "Subsidiary" shall mean any corporation in which the   Company

owns directly, or indirectly through   subsidiaries, more than fifty

percent (50%) of the total combined voting power of all classes of Stock,

or any other   entity (including, but not limited to,   partnerships and

joint ventures) in which the Company owns more than fifty   percent   (50%)

of the combined equity thereof.

 

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Article 3. Administration

 

    3.1   The Committee.    The Plan and all Awards   hereunder shall be

administered by one or more Committees of the Board as may be appointed

by the Board for this purpose.   The Board may appoint a Committee

specifically responsible for Awards to Insiders (the "Disinterested

Committee") where each Director on such Disinterested Committee is a

"Non-Employee Director" (or any successor   designation for determining

who may administer plans, transactions or awards exempt under Section

16(b) of the   Exchange Act), as that term is used in Rule 16b-3 under the

Exchange Act, as that rule may be modified from time to time.   If no

specific Committee is appointed by the Board, then the Board in its

entirety shall be the Committee.   Any Committee may be replaced by the

Board at any time.

 

    3.2   Authority of the Committee.   The Committee shall have full

power, except as limited by law and subject to the provisions herein, to

select the recipients of Awards; to determine the size and types of

Awards; to determine the terms and conditions of such Awards in a manner

consistent with the Plan; to construe and interpret the Plan and any

agreement or instrument entered into under the Plan; to establish, amend,

or waive rules and regulations for the Plan's administration; and

(subject to the provisions of Article 10 herein) to amend the terms and

conditions of any outstanding Award to the extent such terms and

conditions are within the discretion of the Committee as provided in the

Plan.   Further, the Committee shall make all other determinations which

may be necessary or advisable for the administration of the Plan.

 

    No Award may be made under the Plan after December 31, 2014.

 

    All determinations and decisions made by the Committee pursuant to

the provisions of the Plan and all related orders or resolutions of the

Board shall be final, conclusive, and binding on all persons, including

the Company, its stockholders, Eligible Persons, Participants, and their

estates and beneficiaries.

 

    Subject to the terms of this Plan, the Committee is authorized, and

shall not be limited in its discretion, to use any of the Performance

Criteria specified herein in its determination of Awards under this Plan.

 

 

Article 4. Shares Subject to the Plan

 

    4.1 Number of Shares.   Subject to adjustment as provided in Section

4.3 herein, the number of Shares available for grant under the Plan shall

not exceed three hundred million (300,000,000) Shares.   The Shares

granted under this Plan may be either authorized but unissued or

reacquired Shares.

 

    Without limiting the discretion of the Committee under this

section, unless otherwise provided by the Committee, the following rules

will apply for purposes of the determination of the number of Shares

available for grant under the Plan or compliance with the foregoing

limits:

 

    (a)   The grant of Stock, a Stock Option or a Restricted Stock Award

shall reduce the Shares available for grant under the Plan by the number

of Shares subject to such Award.   However, to   the extent the Participant

uses previously owned Shares to pay the Exercise Price or any taxes, or

Shares are withheld   to pay taxes, these Shares shall be available for

regrant   under the Plan.

 

    (b)   With respect to Performance Shares, the number of   Performance

Shares granted under the Plan shall be deducted   from the number of

Shares available for grant under the Plan. The number of Performance

Shares which cannot be, or   are not, converted into Shares and

distributed to the Participant (after any applicable tax withholding)

following the end of the Performance Period   shall increase the number of

Shares available for regrant   under the Plan by an equal amount.

 

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    4.2 Lapsed Awards.   If any Award granted under this Plan is

canceled, terminates, expires, or lapses for any reason, Shares subject

to such Award shall be again available for the grant of an Award under

the Plan.

 

    4.3 Adjustments in Authorized Plan Shares.   In the event of any

merger, reorganization, consolidation, recapitalization, separation,

liquidation, Stock dividend, split-up, Share combination, or other change

in the corporate structure of the Company affecting the Shares, an

adjustment shall be made in the number and class of Shares which may be

delivered under the Plan, and in the number and class of and/or price of

Shares subject to outstanding Awards granted under the Plan, and/or the

number of outstanding Options, Shares of Restricted Stock, and Performance

Shares constituting outstanding Awards, as may be determined to be

appropriate and equitable by the Committee, in its sole discretion, to

prevent dilution or enlargement of rights.

 

Article 5.   Stock Grant

 

    5.1   Grant of Stock.   Subject to the terms and provisions of the

Plan, the Board of Directors, at any time and from time to time, may

grant Shares of Stock to Eligible Persons in such amounts and upon such

terms and conditions as the Board of Directors shall determine.

 

Article 6. Stock Options

 

    6.1   Grant of Options.   Subject to the terms and provisions of the

Plan, Options may be granted to Eligible Persons at any time and from

time to time, and under such terms and conditions, as shall be determined

by the Committee.   The Committee shall have discretion in determining the

number of Shares subject to Options granted to each Eligible Person.   The

Committee may grant ISOs, NQSOs, or a combination thereof.   ISOs,

however, may be granted only to Employees and only if this Plan is

approved by the shareholders of the Company within one year after it is

adopted by the Board of Directors.

 

    6.2   Form of Issuance.   Each Option grant may be issued in the form

of an Award Agreement and/or may be recorded on the books and records of

the Company for the account of the Participant. If an Option is not

issued in the form of an Award Agreement, then the Option shall be deemed

granted as determined by the Committee.   The terms and conditions of an

Option shall be set forth in the Award Agreement, in the notice of the

issuance of the grant, or in such other documents as the Committee shall

determine.   Such terms and conditions shall include the Exercise Price,

the duration of the Option, the number of Shares to which an Option

pertains (unless otherwise provided by the Committee, each Option may be

exercised to purchase one Share), and such other provisions as the

Committee shall determine, including, but not limited to whether the

Option is intended to be an ISO or a NQSO.

 

    6.3   Exercise Price.  

 

    (a)   Unless a greater Exercise Price is determined by the

Committee, the Exercise Price for each ISO awarded under this Plan shall

be equal to one hundred percent (100%) of the Fair Market Value of a

Share on the date the Option is granted.   If, however, the Eligible

Person 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 subsidiary corporations, then the Exercise Price of an ISO

shall be not less than one hundred ten percent (110%) of the Fair Market

Value of a Share on the date the Option is granted.

 

    (b) The Exercise Price of a NQSO shall be determined by the

Committee in its sole discretion.

 

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    6.4   Duration of Options.   Each Option shall expire at such time as

the Committee shall determine at the time of grant (which duration may be

extended by the Committee); provided, however, that no Option shall be

exercisable later than the tenth (10th) anniversary date of its grant.

If, however, the Eligible Person 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 subsidiary corporations, then no

Option