Exhibit 10.7

 

GLYCOGENESYS, INC.

2003 OMNIBUS INCENTIVE PLAN

 

1. Purpose. The purpose of the GlycoGenesys, Inc. 2003 Omnibus Incentive Plan
(the “Plan”) is to provide (i) officers and key employees of GlycoGenesys, Inc.
(the “Company”) and its subsidiaries, (ii) certain consultants and advisors who
perform services for the Company or its subsidiaries, and (iii) members of the
Board of Directors of the Company (the “Board”), with the opportunity to acquire
shares of the Common Stock of the Company (“Common Stock”) or receive monetary
payments based on the value of such shares or upon the satisfaction of other
performance criteria intended to enhance the value of such shares. The Company
believes that the Plan will enhance the incentive for Participants (as defined
in Section 3) to contribute to the growth of the Company, thereby benefiting the
Company and the Company’s shareholders, and will align the economic interests of
the Participants with those of the shareholders.

 

2. Administration.

 

(a) Committee. The Plan shall be administered and interpreted by a compensation
committee (the “Committee”). The Committee may consist of two or more members of
the Board who are “outside directors” as defined under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”) and “non-employee
directors” as defined under Rule 16b-3 under the Securities Exchange Act of
1934, as amended (the “Exchange Act”), or such other members of the Board.

 

(b) Authority of Committee. The Committee has the sole authority, subject to the
provisions of the Plan, to (i) select the employees and other individuals to
receive Awards (as defined in Section 4) under the Plan, (ii) determine the
type, size and terms of the Awards to be made to each individual selected, (iii)
determine the time when the Awards will be granted and the duration of any
applicable exercise and vesting period, including the criteria for
exercisability and vesting and the acceleration of exercisability and vesting
with respect to each individual selected, and (iv) deal with any other matter
arising under the Plan. The Committee is authorized to interpret the Plan and
the Awards granted under the Plan, to establish, amend and rescind any rules and
regulations relating to the Plan, and to make any other determination that it
deems necessary or desirable for the administration of the Plan. The Committee
may correct any defect or supply any omission or reconcile any inconsistency in
the Plan or in any Award in the manner and to the extent the Committee deems
necessary or desirable. Any decision of the Committee in the interpretation and
administration of the Plan shall lie within its sole and absolute discretion and
shall be final, conclusive and binding on all parties concerned. All powers of
the Committee shall be executed in its sole discretion and need not be uniform
as to similarly situated individuals. Any act of the Committee with respect to
the Plan may only be undertaken and executed with the affirmative consent of at
least two-thirds of the members of the Committee.

 

(c) Responsibility of Committee. No member of the Board, no member of the
Committee and no employee of the Company shall be liable for any act or failure
to act hereunder, except in circumstances involving his or her bad faith, gross
negligence or willful

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misconduct, or for any act or failure to act hereunder by any other member of
the Committee or employee of the Company. The Company shall indemnify members of
the Committee and any employee of the Company against any and all liabilities or
expenses to which they may be subjected by reason of any act or failure to act
with respect to their duties under the Plan, except in circumstances involving
his or her bad faith, gross negligence or willful misconduct.

 

(d) Delegation of Authority. The Board may delegate to the President of the
Company the authority to (i) make grants under the Plan to employees of the
Company and its subsidiaries who are not subject to the restrictions of Section
16(b) of the Exchange Act and who are not expected to be subject to the
limitations of Section 162(m) of the Code, and (ii) execute and deliver
documents or take any other ministerial actions on behalf of the Committee with
respect to Awards. The grant of authority under this Subsection 2(d) shall be
subject to such conditions and limitations as may be determined by the Board (as
required under applicable law). If the President makes grants pursuant to the
delegated authority under this Subsection 2(d), references in the Plan to the
“Committee” as they relate to making such grants shall be deemed to refer to the
President.

 

3. Participants. All employees, officers and directors of the Company and its
subsidiaries (including members of the Board who are not employees), as well as
consultants and advisors to the Company or its subsidiaries, are eligible to
participate in the Plan. Consistent with the purposes of the Plan, the Committee
shall have exclusive power to select the employees, officers, directors and
consultants and advisors who may participate in the Plan (“Participants”).
Eligible individuals may be selected individually or by groups or categories, as
determined by the Committee in its discretion, and designation as a person to
receive Awards in any year shall not require the Committee to designate such a
person as eligible to receive Awards in any other year.

 

4. Types of Awards. Awards under the Plan may be granted in any one or a
combination of (a) Stock Options, (b) Stock Appreciation Rights, (c) Restricted
Stock Awards, (d) Deferred Stock Units, and (e) Performance Awards (each as
described below, and collectively, “Awards”). Awards may constitute
Performance–Based Awards, as described in Section 10. Each Award shall be
evidenced by a written agreement between the Company and the Participant (an
“Agreement”), which need not be identical between Participants or among Awards,
in such form as the Committee may from time to time approve; provided, however,
that in the event of any conflict between the provisions of the Plan and any
Agreement, the provisions of the Plan shall prevail.

 

5. Common Stock Available under the Plan. The aggregate number of shares of
Common Stock that may be subject to Awards shall be 1,825,000 shares of Common
Stock, which may be authorized and unissued or treasury shares, subject to any
adjustments made in accordance with Section 12 hereof. The maximum number of
shares of Common Stock with respect to which Awards may be granted to any
individual Participant in any one calendar year shall be 300,000 shares. Any
share of Common Stock subject to an Award that for any reason is cancelled or
terminated without having been exercised or vested shall again be available for
Awards under the Plan; provided, however, that any such availability shall apply
only for purposes of determining the aggregate number of shares of Common Stock
subject to Awards and shall not apply for purposes of determining the maximum
number of shares subject to Awards that any individual Participant may receive.

 

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6. Stock Options. Stock Options will enable a Participant to purchase shares of
Common Stock upon set terms and at a fixed purchase price. Stock Options may be
treated as (i) “incentive stock options” within the meaning of Section 422(b) of
the Code (“Incentive Stock Options”), or (ii) Stock Options which do not
constitute Incentive Stock Options (“Nonqualified Stock Options”). Each Stock
Option shall be subject to the terms, conditions and restrictions consistent
with the Plan as the Committee may impose, subject to the following limitations:

 

(a) Exercise Price. The exercise price per share (the “Exercise Price”) of
Common Stock subject to a Stock Option shall be determined by the Committee and
may be equal to, greater than, or less than the Fair Market Value (as defined in
Section 16) of a share of Common Stock on the date the Stock Option is granted.

 

(b) Payment of Exercise Price. The Exercise Price may be paid in cash or, in the
discretion of the Committee, by the delivery of shares of Common Stock that have
been owned by the Participant for at least six months, or by a combination of
these methods. In the discretion of the Committee, payment may also be made by
delivering a properly executed exercise notice to the Company together with a
copy of irrevocable instructions to a broker to deliver promptly to the Company
the amount of sale or loan proceeds to pay the Exercise Price. To facilitate the
foregoing, the Company may enter into agreements for coordinated procedures with
one or more brokerage firms. The Committee may also prescribe any other method
of paying the Exercise Price that it determines to be consistent with applicable
law and the purpose of the Plan, including, without limitation, in lieu of the
exercise of a Stock Option by delivery of shares of Common Stock of the Company
then owned by the Participant, providing the Company with a notarized statement
attesting to the number of shares owned for at least six months, where upon
verification by the Company, the Company would issue to the Participant only the
number of incremental shares to which the Participant is entitled upon exercise
of the Stock Option.

 

(c) Exercise Period. Stock Options shall be exercisable at such time or times
and subject to such terms and conditions as shall be determined by the
Committee; provided, however, that no Stock Option shall be exercisable later
than ten years after the date it is granted. All Stock Options shall terminate
at such earlier times and upon such conditions or circumstances as the Committee
shall determine, as set forth in the related Agreement.

 

(d) Limitations on Incentive Stock Options. Incentive Stock Options may be
granted only to Participants who, at the time of the grant, are employees of the
Company or a parent or subsidiary of the Company, and only at an Exercise price
that is not less than the Fair Market Value of a share of Common Stock on the
date of the grant. The aggregate Fair Market Value of the Common Stock
(determined as of the date of the grant) with respect to which Incentive Stock
Options are exercisable for the

 

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first time by a Participant during any calendar year (under all option plans of
the Company) shall not exceed $100,000. For purposes of the preceding sentence,
Incentive Stock Options will be taken into account in the order in which they
are granted. Incentive Stock Options may not be granted to a Participant who, at
the time of grant, owns stock possessing (after the application of the
attribution rules of Section 424(d) of the Code) more than 10% of the total
combined voting power of all outstanding classes of stock of the Company or any
subsidiary of the Company, unless the option price is fixed at not less than
110% of the Fair Market Value of the Common Stock on the date of grant and the
exercise of such Incentive Stock Option is prohibited by its terms after the
expiration of five years from its date of grant.

 

(e) Termination of Employment, Disability or Death.

 

(1) Except as provided below or in an Agreement, a Stock Option may only be
exercised while the Participant is employed by, or providing service to, the
Company, as an employee, member of the Board or advisor or consultant. In the
event that a Participant ceases to be employed by, or provide service to, the
Company for any reason other than Disability (as defined in Paragraph (5)
below), death or termination for Cause (as defined in Paragraph (5) below), any
Stock Option which is otherwise exercisable by the Participant shall terminate
unless exercised within 90 days after the date on which the Participant ceases
to be employed by, or provide service to, the Company, but in any event no later
than the date of expiration of the Stock Option. Except as otherwise provided by
the Committee, any Stock Options which are not otherwise exercisable as of the
date on which the Participant ceases to be employed by, or provide service to,
the Company shall terminate as of such date.

 

(2) In the event the Participant ceases to be employed by, or provide service
to, the Company on account of a termination for Cause by the Company, any Stock
Option held by the Participant shall terminate as of the date the Participant
ceases to be employed by, or provide service to, the Company. In addition,
notwithstanding any other provisions of this Section 6, if the Committee
determines that the Participant has engaged in conduct that constitutes Cause at
any time while the Participant is employed by, or providing service to, the
Company, or after the Participant’s termination of employment or service, any
Stock Option held by the Participant shall immediately terminate. In the event
the Committee determines that the Participant has engaged in conduct that
constitutes Cause, in addition to the immediate termination of all Stock
Options, the Participant shall automatically forfeit all shares underlying any
exercised portion of a Stock Option for which the Company has not yet delivered
the share certificates, upon refund by the Company of the Exercise Price paid by
the Participant for such shares (subject to any right of setoff by the Company).

 

(3) In the event the Participant ceases to be employed by, or provide service
to, the Company because the Participant is Disabled, any Stock Option which is
otherwise exercisable by the Participant shall terminate unless exercised within
one year after the date on which the Participant ceases to be employed by, or
provide service to, the Company, but in any event no later than the date of
expiration of the Stock Option.

 

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(4) If the Participant dies while employed by, or providing service to, the
Company, any Stock Option which is otherwise exercisable by the Participant
shall terminate unless exercised within one year after the date on which the
Participant ceases to be employed by, or provide service to, the Company, but in
any event no later than the date of expiration of the Stock Option.

 

(5) For purposes of this Section 6(e):

 

(A) The term “Company” shall mean the Company and its subsidiary corporations.

 

(B) “Disability” or “Disabled” shall mean a Participant’s becoming disabled
within the meaning of Section 22(e)(3) of the Code.

 

(C) “Cause” shall mean, except to the extent specified otherwise by the
Committee, a finding by the Committee that the Participant has breached any
provision of his or her terms of employment or service contract with the
Company, including without limitation covenants against competition, or has
engaged in disloyalty to the Company, including, without limitation, fraud,
embezzlement, theft, commission of a felony or proven dishonesty in the course
of his or her employment or service, or has disclosed trade secrets or
confidential information of the Company to persons not entitled to receive such
information.

 

7. Stock Appreciation Rights. Stock Appreciation Rights shall provide a
Participant with the right to receive a payment, in cash, Common Stock or a
combination thereof, in an amount equal to the excess of (i) the Fair Market
Value, or other specified valuation, of a specified number of shares of Common
Stock on the date the right is exercised, over (ii) the Fair Market Value of
such shares on the date of grant, or other specified valuation (which shall be
no less than the Fair Market Value on the date of grant). Each Stock
Appreciation Right shall expire no more than ten years from its date of grant,
and shall be subject to such other terms and conditions as the Committee shall
deem appropriate, including, without limitation, provisions for the forfeiture
of the Stock Appreciation Right for no consideration upon termination of
employment.

 

8. Restricted Stock Awards. Restricted Stock Awards shall consist of Common
Stock issued or transferred to Participants with or without other payments
therefor as additional compensation for services to the Company. Restricted
Stock Awards may be subject to such terms and conditions as the Committee
determines appropriate, including, without limitation, restrictions on the sale
or other disposition of such shares and the right of the Company to reacquire
such shares for no consideration upon termination of the Participant’s
employment within specified periods or prior to becoming vested. The Committee
may require the Participant to deliver a duly signed stock power, endorsed in

 

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blank, relating to the Common Stock covered by a Restricted Stock Award. The
Committee may also require that the stock certificates evidencing such shares be
held in custody or bear restrictive legends until the restrictions thereon shall
have lapsed. The Restricted Stock Award shall specify whether the Participant
shall have, with respect to the shares of Common Stock subject to a Restricted
Stock Award, all of the rights of a holder of shares of Common Stock of the
Company, including the right to receive dividends and to vote the shares.

 

9. Deferred Stock Units. Deferred Stock Units shall provide a Participant with
the right to receive a specified number of shares of Common Stock at the end of
a specified period. The Committee shall have complete discretion in determining
the number, vesting and time of payment of Common Stock with respect to Deferred
Stock Units granted to each Participant, as set forth in the Agreement. The
Committee may condition the vesting or payment of Deferred Stock Units upon the
attainment of specific performance goals, or subject Deferred Stock Units to
such other terms and conditions as the Committee deems appropriate and as set
forth in the Agreement, including, without limitation, provisions for the
forfeiture of Deferred Stock Units (and the Common Stock payable thereunder) for
no consideration upon termination of the Participant’s employment prior to the
end of a specified period.

 

10. Performance Awards. Performance Awards shall provide a Participant with the
right to receive a specified number of shares of Common Stock or cash at the end
of a specified period. The Committee shall have complete discretion in
determining the number, amount and timing of Performance Awards granted to each
Participant. The Committee may condition the vesting or payment of Performance
Awards upon the attainment of specific performance goals or such other terms and
conditions as the Committee deems appropriate, including, without limitation,
provisions for the forfeiture of such payment for no consideration upon
termination of the Participant’s employment prior to the end of a specified
period.

 

11. Performance-Based Awards. Certain Awards granted under the Plan may be
granted in a manner such that they qualify for the performance based
compensation exemption from Section 162(m) of the Code (“Performance-Based
Awards”). As determined by the Committee in its sole discretion, either the
granting, vesting or payment of such Performance-Based Awards are to be based
upon one or more of the following factors: net sales; pretax income before
allocation of corporate overhead and bonus; budget; earnings per share; net
income; division, group or corporate financial goals; return on stockholders’
equity; return on assets; attainment of strategic and operational initiatives;
appreciation in and/or maintenance of the price of the Common Stock or any other
publicly-traded securities of the Company; market share; gross profits; earnings
before interest and taxes; earnings before interest, taxes, depreciation and
amortization; economic value-added models and comparisons with various stock
market indices; reductions in costs; or any combination of the foregoing. With
respect to Performance-Based Awards that are not Stock Options or Stock
Appreciation Rights based solely on the appreciation in the Fair Market Value of
Common Stock after the grant of the Award, (i) the Committee shall establish in
writing (x) the objective performance-based goals applicable to a given period
and (y) the individual employees or class of employees to which such
performance-based goals apply, no later than 90 days after the commencement of
such fiscal period (but in no event after 25% of such period has elapsed),

 

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(ii) no Performance-Based Awards shall be payable to or vest with respect to, as
the case may be, any Participant for a given fiscal period until the Committee
certifies in writing that the objective performance goals (and any other
material terms) applicable to such period have been satisfied, and (iii) the
Committee may reduce or eliminate the number of shares of Common Stock or cash
granted or the number of shares of Common Stock vested upon the attainment of
such performance goal. After establishment of a performance goal, the Committee
shall not revise such performance goal or increase the amount of compensation
payable thereunder (as determined in accordance with Section 162(m) of the Code)
upon the attainment of such performance goal.

 

12. Adjustments to Awards. In the event of any change in the outstanding Common
Stock of the Company by reason of any stock split, stock dividend, split-up,
split-off, spin-off, recapitalization, merger, consolidation, reorganization,
combination or exchange of shares, a sale by the Company of all or part of its
assets, or in the event of any distribution to stockholders of other than a
normal cash dividend, or other extraordinary or unusual event, if the Committee
shall determine, in its discretion, that such change equitably requires an
adjustment to the terms of any Awards or the number of shares of Common Stock
that are subject to Awards, such adjustment shall be made by the Committee and
shall be final, conclusive and binding for all purposes of the Plan.

 

13. Change in Control.

 

(a) Effect. In its sole discretion, the Committee may determine that, upon the
occurrence of a Change in Control (as defined below), all or a portion of each
outstanding Award shall become exercisable or payable in full (if applicable,
and whether or not then exercisable), either upon the Change of Control or at
such other date or dates that the Committee may determine, and that any
forfeiture and vesting restrictions thereon shall lapse on such date or dates.
In its sole discretion, the Committee may also determine that, upon the
occurrence of a Change in Control, each outstanding Stock Option and Stock
Appreciation Right shall terminate within a specified number of days after
notice to the Participant thereunder, and each such Participant shall receive,
with respect to each share of Common Stock subject to such Stock Option or Stock
Appreciation Right, an amount equal to the excess of the Fair Market Value of
such shares immediately prior to such Change in Control over the exercise price
per share of such Stock Option or Stock Appreciation Right; such amount shall be
payable in cash, in one or more kinds of property (including the property, if
any, payable in the transaction) or a combination thereof, as the Committee
shall determine in its sole discretion.

 

(b) Defined. For purposes of this Plan, a Change in Control shall be deemed to
have occurred if:

 

(1) a tender offer (or series of related offers) shall be made and consummated
for the ownership of 30% or more of the outstanding voting securities of the
Company;

 

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(2) the Company shall be merged or consolidated with another corporation and as
a result of such merger or consolidation less than 50% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of the Company, any employee benefit plan
of the Company or its subsidiaries, and their affiliates;

 

(3) the Company shall sell substantially all of its assets to another
corporation that is not wholly owned by the Company; or

 

(4) a Person (as defined below) shall acquire 30% or more of the outstanding
voting securities of the Company (whether directly, indirectly, beneficially or
of record).

 

For purposes of this Section 13(b), ownership of voting securities shall take
into account and shall include ownership as determined by applying the
provisions of Rule 13d-3(d)(I)(i) (as in effect on the date hereof) under the
Exchange Act. Also for purposes of this Subsection 13(b), Person shall have the
meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof; however, a Person shall not include (1) the
Company or any of its subsidiaries; (2) a trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any of its
subsidiaries; (3) an underwriter temporarily holding securities pursuant to an
offering of such securities; or (4) a corporation owned, directly or indirectly,
by the shareholders of the Company in substantially the same proportion as their
ownership of stock of the Company.

 

14. Transferability of Awards. Except as provided below, a Participant’s rights
under an Award may not be transferred or encumbered, except by will or by the
laws of descent and distribution or, in the case of Awards other than Incentive
Stock Options, pursuant to a qualified domestic relations order (as defined
under Section 414(p) the Code). The Committee may provide, in an Agreement for a
Nonqualified Stock Option or Restricted Stock Award, for its transferability as
a gift to family members, one or more trusts for the benefit of family members,
or one or more partnerships of which family members are the only partners,
according to such terms as the Committee may determine; provided that the
Participant receives no consideration for the transfer and the transferred
Nonqualified Stock Option or Restricted Stock Award shall continue to be subject
to the same terms and conditions as were applicable to the Nonqualified Stock
Option or Restricted Stock Award immediately before the transfer.

 

15. Market Stand-Off.

 

(a) In connection with any underwritten public offering by the Company of its
equity securities pursuant to an effective registration, if required by the
Committee, a Participant shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to, any Common Stock without the prior written consent
of the Company or its underwriters. Such restriction (the “Market Stand-Off”)
shall be in effect for such period of time from and after the effective date of
the final prospectus for the offering as may be requested by the Company or such
underwriters, but in no event shall such period exceed one hundred eighty (180)
days.

 

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(b) A Participant shall be subject to the Market Stand-Off provided and only if
the officers and directors of the Company are also subject to similar
restrictions.

 

(c) In order to enforce the Market Stand-Off, the Corporation may impose
stop-transfer instructions with respect to the Common Stock until the end of the
applicable stand-off period.

 

16. Fair Market Value. If Common Stock is publicly traded, then the “Fair Market
Value” per share shall be determined as follows: (1) if the principal trading
market for the Common Stock is a national securities exchange or the NASDAQ
SmallCap Market, the last reported sale price thereof on the relevant date or,
if there were no trades on that date, the latest preceding date upon which a
sale was reported, or (2) if the Common Stock is not principally traded on such
exchange or market, the mean between the last reported “bid” and “asked” prices
of Common Stock on the relevant date, as reported on NASDAQ or, if not so
reported, as reported by the National Daily Quotation Bureau, Inc. or as
reported in a customary financial reporting service, as applicable and as the
Committee determines. If the Common Stock is not publicly traded or, if publicly
traded, is not subject to reported transactions or “bid” or “asked” quotations
as set forth above, the Fair Market Value per share shall be as determined by
the Committee.

 

17. Withholding. All distributions or payments made with respect to an Award
shall be net of any amounts required to be withheld pursuant to applicable
federal, state and local tax withholding requirements. The Company may require a
Participant to remit to it or to the subsidiary that employs a Participant an
amount sufficient to satisfy such tax withholding requirements prior to the
delivery of any certificates for Common Stock. In lieu thereof, the Company or
the employing corporation shall have the right to withhold the amount of such
taxes from any other sums due or to become due to the Participant as the Company
shall prescribe. The Committee may, in its discretion and subject to such rules
as it may adopt, permit a Participant to pay all or a portion of the federal,
state and local withholding taxes arising in connection with any Award by
electing to have the Company withhold shares of Common Stock deliverable
thereunder having a Fair Market Value that is not in excess of the amount of tax
to be withheld.

 

18. Shareholder Rights. A Participant shall not have any of the rights or
privileges of a holder of Common Stock for any Common Stock that is subject to
an Award, including any rights regarding voting or the payment of dividends
(except as expressly provided under the terms of the Award), unless and until a
certificate representing such Common Stock has been delivered to the
Participant.

 

19. Tenure. A Participant’s right, if any, to continue to serve the Company or
its subsidiaries as a director, officer, employee, consultant or advisor shall
not be expanded or otherwise affected by his or her designation as a
Participant.

 

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20. No Fractional Shares. No fractional shares of Common Stock shall be issued
or delivered pursuant to the Plan or any Award. The Committee shall determine
whether cash shall be paid in lieu of fractional shares or whether such
fractional shares or any rights thereto shall be forfeited or otherwise
eliminated.

 

21. Duration, Amendment and Termination. No Award may be granted more than ten
years after the Effective Date (as described in Section 23). The Plan may be
amended or terminated in whole or in part at any time and from time to time by
the Board, but no amendment shall be effective unless and until the same is
approved by shareholders of the Company where the amendment would (i) increase
the total number of shares which may be issued under the Plan, (ii) increase the
maximum number of shares which may be issued to any individual Participant in
any one calendar year under the Plan or (iii) otherwise require approval by
shareholders by any applicable self regulatory organization (SRO). No amendment
or termination of the Plan shall adversely affect in a material manner any right
of any Participant with respect to any Award theretofore granted without such
Participant’s written consent.

 

22. Governing Law. This Plan, Awards granted hereunder and actions taken in
connection with the Plan shall be governed by the laws of the State of New York
regardless of the law that might otherwise apply under applicable principles of
conflicts of laws.

 

23. Effective Date. This Plan shall be effective as of April 28, 2003, which is
the date as of which the Plan was adopted by the Board, provided that the Plan
is approved by the shareholders of the Company at its 2003 annual meeting of
shareholders, and such approval of shareholders shall be a condition to the
right of each Participant to receive an Award hereunder.

 

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