HERITAGE WORLDWIDE, INC.
2004 Stock Option Plan
Adopted July 12, 2004
1. Purpose of the Plan . The
Heritage Worldwide Inc. 2004 Stock Option Plan (the "Plan") is
intended to advance the interests of Heritage worldwide, Inc. (the
"Company"), by inducing individuals, and eligible entities (as
hereinafter provided) of outstanding ability and potential to join
and remain with, or provide consulting or advisory services to, the
Company, by encouraging and enabling eligible employees,
non-employee Directors, consultants, and advisors to acquire
proprietary interests in the Company, and by providing the
participating employees, non-employee Directors, consultants, and
advisors with an additional incentive to promote the success of the
Company. This is accomplished by providing for the granting of
"Options", which term as used herein includes both "Incentive Stock
Options" and "Nonstatutory Stock Options" (as hereinafter defined)
to employees, non-employee Directors, consultants, and
advisors.
2. Administration . The Plan
shall be administered by the Board of Directors of the Company (the
"Board of Directors") or by a committee (the "Committee") chosen by
the Board of Directors. Except as herein specifically provided, the
interpretation and construction by the Board of Directors or the
Committee of any provision of the Plan or of any Option granted
under it shall be final and conclusive. The receipt of Options by
Directors, or any members of the Committee, shall not preclude
their vote on any matters in connection with the administration or
interpretation of the Plan.
3. Shares Subject to the Plan .
The stock subject to Options granted under the Plan shall be shares
of the Company's Common Stock, par value $.001 per share (the
"Common Stock"), whether authorized but unissued or held in the
Company's treasury, or shares purchased from stockholders expressly
for use under the Plan. The maximum number of shares of Common
Stock which may be issued pursuant to Options granted under the
Plan shall not exceed in the aggregate Two Million (2,000,000)
shares, plus such number of Common Stock shares issuable upon the
exercise of Reload Options (as hereinafter defined) granted under
the Plan, subject to adjustment in accordance with the provisions
of Section 13 hereof. The Company shall at all times while the Plan
is in force reserve such number of shares of Common Stock as will
be sufficient to satisfy the requirements of all outstanding
Options granted under the Plan. In the event any Option granted
under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be
exercisable in whole or in part, the un-purchased shares subject
thereto shall again be available for Options under the
Plan.
4. Participation .
The class of individual or entity that shall be eligible to receive
Options under the Plan shall be (a) with respect to Incentive Stock
Options described in Section 6 hereof, all employees (including
officers) of either the Company or any subsidiary corporation of
the Company, and (b) with respect to Nonstatutory Stock Options
described in Section 7 hereof, all employees (including officers)
and non-employee Directors of, or consultants and advisors to,
either the Company or any subsidiary corporation of the Company;
provided, however, that Nonstatutory Stock Options shall not be
granted to any such consultants and advisors unless (i) bona
fide services have been or are to be rendered by such
consultant or advisor and (ii) such services are not in connection
with the offer or sale of securities in a capital raising
transaction. For purposes of the Plan, for an entity to be an
eligible entity, it must be included in the definition of
"employee" for purposes of a Form S-8 Registration Statement filed
under the Securities Act of 1933, as amended (the "Act"). The Board
of Directors or the Committee, in its sole discretion, but subject
to the provisions of the Plan, shall determine the employees and
non-employee Directors of, and the consultants and advisors to, the
Company and its subsidiary corporations to whom Options shall be
granted, and the number of shares to be covered by each Option,
taking into account the nature of the employment or services
rendered by the individuals or entities being considered, their
annual compensation, their present and potential contributions to
the success of the Company, and such other factors as the Board of
Directors or the Committee may deem relevant.
5. Stock Option Agreement . Each
Option granted under the Plan shall be authorized by the Board of
Directors or the Committee, and shall be evidenced by a Stock
Option Agreement which shall be executed by the Company and by the
individual or entity to whom such Option is granted. The Stock
Option Agreement shall specify the number of shares of Common Stock
as to which any Option is granted, the period during which the
Option is exercisable, the option price per share thereof, and such
other terms and provisions not inconsistent with this
Plan.
6. Incentive Stock Options . The
Board of Directors or the Committee may grant Options under the
Plan, which Options are intended to meet the requirements of
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), and which are subject to the following terms and
conditions and any other terms and conditions as may at any time be
required by Section 422 of the Code (referred to herein as an
"Incentive Stock Option"):
(a) No Incentive Stock Option shall be granted
to individuals other than employees of the Company or of a
subsidiary corporation of the Company;
(b) Each Incentive Stock Option under the Plan
must be granted prior to the date which is ten (10) years from the
date the Plan initially was adopted by the Board of Directors of
the Company;
(c) The option price of the shares
of Common Stock subject to any Incentive Stock Option shall not be
less than the fair market value of the Common Stock at the time
such Incentive Stock Option is granted; provided, however, if an
Incentive Stock Option is granted to an individual who owns, at the
time the Incentive Stock Option is granted, more than ten percent
(10%) of the total combined voting power of all classes of stock of
the Company or of a parent or subsidiary corporation of the Company
(a "Principal Stockholder"), the option price of the shares subject
to the Incentive Stock Option shall be at least one hundred ten
percent (110%) of the fair market value of the Common Stock at the
time the Incentive Stock Option is granted;
(d) No Incentive Stock Option granted under the
Plan shall be exercisable after the expiration of ten (10) years
from the date of its grant. However, if an Incentive Stock Option
is granted to a Principal Stockholder, such Incentive Stock Option
shall not be exercisable after the expiration of five (5) years
from the date of its grant. Every Incentive Stock Option granted
under the Plan shall be subject to earlier termination as expressly
provided in Section 12 hereof;
(e) For purposes of determining stock ownership
under this Section 6, the attribution rules of Section 424(d) of
the Code shall apply; and
(f) For purposes of the Plan, and except as
otherwise provided herein, fair market value shall be determined by
the Board of Directors or the Committee. If the Common Stock is
listed on a national securities exchange or traded on the
over-the-counter market, fair market value shall be the closing
selling price or, if not available, the closing bid price or, if
not available, the high bid price of the Common Stock quoted on
such exchange, or on the over-the-counter market as reported by The
NASDAQ Stock Market ("NASDAQ") or, if the Common Stock is not
listed on NASDAQ, then by the National Quotation Bureau,
Incorporated, as the case may be, on the day immediately preceding
the day on which the Option is granted or exercised, as the case
may be, or, if there is no selling or bid price on that day, the
closing selling price, closing bid price, or high bid price on the
most recent day which precedes that day and for which such prices
are available.
7. Nonstatutory Stock Options .
The Board of Directors or the Committee may grant Options under the
Plan which are not intended to meet the requirements of Section 422
of the Code, as well as Options which are intended to meet the
requirements of Section 422 of the Code but the terms of which
provide that they will not be treated as Incentive Stock Options
(referred to herein as a "Nonstatutory Stock Options").
Nonstatutory Stock Options which are not intended to meet those
requirements shall be subject to the following terms and
conditions:
(a) A Nonstatutory Stock Option may be granted
to any individual or entity eligible to receive an Option under the
Plan pursuant to Section 4(b) hereof;
(b) The option price of the shares
of Common Stock subject to a Nonstatutory Stock Option shall be
determined by the Board of Directors or the Committee, in its sole
discretion, at the time of the grant of the Nonstatutory Stock
Option. For purposes of this Section 7(b), fair market value shall
mean, if the Common Stock is publicly traded, the closing trading
price on the day preceding the date of the grant; and
(c) A Nonstatutory Stock Option granted under
the Plan may be of such duration as shall be determined by the
Board of Directors or the Committee (subject to earlier termination
as expressly provided in Section 11 hereof).
8. Reload Feature . The Board of
Directors or the Committee may grant Options with a reload feature.
A reload feature shall only apply when the option price is paid by
delivery of Common Stock (as set forth in Section 13(b)(ii)). The
Stock Option Agreement for the Options containing the reload
feature shall provide that the Option holder shall receive,
contemporaneously with the payment of the option price in shares of
Common Stock, a reload stock option (the "Reload Option") to
purchase that number of shares of Common Stock equal to the sum of
(i) the number of shares of Common Stock used to exercise the
Option, and (ii) with respect to Nonstatutory Stock Options, the
number of shares of Common Stock used to satisfy any tax
withholding requirement incident to the exercise of such
Nonstatutory Stock Option. The terms of the Plan applicable to the
Option shall be equally applicable to the Reload Option with the
following exceptions: (i) the option price per share of Common
Stock deliverable upon the exercise of the Reload Option, (A) in
the case of a Reload Option which is an Incentive Stock Option
being granted to a Principal Stockholder, shall be one hundred ten
percent (110%) of the fair market value of a share of Common Stock
on the date of grant of the Reload Option, and (B) in the case of a
Reload Option which is an Incentive Stock Option being granted to a
person other than a Principal Stockholder or is a Nonstatutory
Stock Option, shall be the fair market value of a share of Common
Stock on the date of grant of the Reload Option; and (ii) the term
of the Reload Option shall be equal to the remaining option term of
the Option (including a Reload Option) which gave rise to the
Reload Option. The Reload Option shall be evidenced by an
appropriate amendment to the Stock Option Agreement for the Option
which gave rise to the Reload Option. In the event the exercise
price of an Option containing a reload feature is paid by check and
not in shares of Common Stock, the reload feature shall have no
application with respect to such exercise.
9. Rights of Option Holders . The
holder of any Option granted under the Plan shall have none of the
rights of a stockholder with respect to the stock covered by his
Option until such stock shall be transferred to him upon the
exercise of his Option and payment for the respective
shares.
10.
Alternate Stock Appreciation Rights .
(a) Concurrently with, or subsequent to, the
award of any Option to purchase one or more shares of Common Stock,
the Board of Directors or the Committee may, in its sole
discretion, subject to the provisions of the Plan and such other
terms and conditions as the Board of Directors or the Committee may
prescribe, award to the optionee, with respect to each share of
Common Stock covered by an Option ("Related Option"), a related
alternate stock appreciation right ("SAR"), permitting the optionee
to be paid the appreciation on the Related Option in lieu of
exercising the Related
