EXHIBIT 10.2
 
NEOSTEM, INC.

2009 EQUITY COMPENSATION PLAN

1.           Purposes of the Plan.  The purposes of this NeoStem, Inc. 2009
Equity Compensation Plan (the “Plan”) are: to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentives to Employees, Directors and Consultants, and to promote
the success of the Company and any Parent or Subsidiary.  Options granted under
the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as
determined by the Administrator at the time of grant.  Stock Awards,
Unrestricted Shares and Stock Appreciation Rights may also be granted under the
Plan.1

2.           Definitions.  As used herein, the following definitions shall
apply:

“Administrator” means a Committee which has been delegated the responsibility of
administering the Plan in accordance with Section 4 of the Plan or, if there is
no such Committee, the Board.

“Applicable Laws” means the requirements relating to the administration of
equity compensation plans under the applicable corporate and securities laws of
any of the states in the United States, U.S. federal securities laws, the Code,
any stock exchange or quotation system on which the Common Stock is listed or
quoted and the applicable laws of any foreign country or jurisdiction where
Awards are, or will be, granted under the Plan.

“Award” means an Option, a Stock Award, a Stock Appreciation Right and/or the
grant of Unrestricted Shares.

“Board” means the Board of Directors of the Company.

“Cause”, with respect to any Service Provider, means (unless otherwise
determined by the Administrator) such Service Provider’s (i) conviction of, or
plea of nolo contendere to, a felony or crime involving moral turpitude;
(ii) fraud on or misappropriation of any funds or property of the Company;
(iii) personal dishonesty, willful misconduct, willful violation of any law,
rule or regulation (other than minor traffic violations or similar offenses) or
breach of fiduciary duty which involves personal profit; (iv) willful misconduct
in connection with the Service Provider’s duties; (v) chronic use of alcohol,
drugs or other similar substances which affects the Service Provider’s work
performance; or (vi) material breach of any provision of any employment,
non-disclosure, non-competition, non-solicitation or other similar agreement
executed by the Service Provider for the benefit of the Company, all as
reasonably determined by the Committee, which determination will be
conclusive.  Notwithstanding the foregoing, if a Service Provider and the
Company (or any of its Affiliates) have entered into an employment agreement,
consulting agreement, advisory agreement or other similar agreement that
specifically defines “cause,” then with respect to such Service Provider,
“Cause” shall have the meaning defined in that employment agreement, consulting
agreement, advisory agreement or other agreement.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means a committee of Directors appointed by the Board in accordance
with Section 4 of the Plan.

“Common Stock” means the common stock, par value $.001 per share, of the
Company.
 
 
1
By action of the Administrator on December 15, 2010, all options granted to
consultants shall carry a term of three years unless otherwise expressly
provided in the applicable Grant Agreement.

 
 

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“Company” means Neostem, Inc., a Delaware corporation.

“Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity, other than an Employee
or a Director.

“Director” means a member of the Board.

“Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.

“Employee” means any person, including officers and Directors, serving as an
employee of the Company or any Parent or Subsidiary.  An individual shall not
cease to be an Employee in the case of (i) any leave of absence approved by the
Company or (ii) transfers between locations of the Company or between the
Company, its Parent, any Subsidiary or any successor.  For purposes of an Option
initially granted as an Incentive Stock Option, if a leave of absence of more
than three months precludes such Option from being treated as an Incentive Stock
Option under the Code, such Option thereafter shall be treated as a Nonstatutory
Stock Option for purposes of this Plan.  Neither service as a Director nor
payment of a director’s fee by the Company shall be sufficient to constitute
“employment” by the Company.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, as of any date, the value of Common Stock determined
as follows:

(i)           if the Common Stock is listed on any established stock exchange or
a national market system, including without limitation the NYSE Amex, Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, or any
successor to any of them, the Fair Market Value of a Share of Common Stock shall
be the closing sales price of a Share of Common Stock as quoted on such exchange
or system for such date (or the most recent trading day preceding such date if
there were no trades on such date), as reported in The Wall Street Journal or
such other source as the Committee deems reliable, including without limitation,
Yahoo! Finance;

(ii)           if the Common Stock is regularly quoted by a recognized
securities dealer but is not listed in the manner contemplated by clause (i)
above, the Fair Market Value of a Share of Common Stock shall be the mean
between the high bid and low asked prices for the Common Stock for such date (or
the most recent trading day preceding such date if there were no trades on such
date), as reported in The Wall Street Journal or such other source as the
Committee deems reliable, including without limitation Yahoo! Finance; or

(iii)           if neither clause (i) above nor clause (ii) above applies, the
Fair Market Value shall be determined in good faith by the Administrator based
on the reasonable application of a reasonable valuation method.

“Grant Agreement” means an agreement between the Company and a Participant
evidencing the terms and conditions of an individual Option or Stock
Appreciation Right grant.  Each Grant Agreement shall be subject to the terms
and conditions of the Plan.

 
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“Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.

“Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

“Notice of Grant” means a written or electronic notice evidencing certain terms
and conditions of an individual Option grant, Stock Award grant or grant of
Unrestricted Shares or Stock Appreciation Rights.  The Notice of Grant
applicable to Stock Options or Stock Appreciation Rights shall be part of the
Grant Agreement.

“Option” means a stock option granted pursuant to the Plan.

“Optioned Stock” means the Common Stock subject to an Option.

“Optionee” means the holder of an outstanding Option granted under the Plan.

“Parent” means a “parent corporation” of the Company (or, for purposes of
Section 16(b) of the Plan, a successor to the Company), whether now or hereafter
existing, as defined in Section 424(e) of the Code.

“Participant” shall mean any Service Provider who holds an Option, Restricted
Stock, a Stock Award, Unrestricted Shares or a Stock Appreciation Right granted
or issued pursuant to the Plan.

“Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to such Rule
16b-3, as such rule is in effect when discretion is being exercised with respect
to the Plan.

“Section 16(b)” means Section 16(b) of the Exchange Act.

“Service Provider” means an Employee, Director or Consultant.

“Share” means a share of the Common Stock, as adjusted in accordance with
Section 16 of the Plan.

“Stock Appreciation Right” means a right awarded pursuant to Section 14 of the
Plan.

“Stock Award” means an Award of Shares pursuant to Section 11 of the Plan or an
award of Restricted Stock Units pursuant to Section 12 of the Plan.

“Stock Award Agreement” means an agreement, approved by the Administrator,
providing the terms and conditions of a Stock Award.

“Stock Award Shares” means Shares subject to a Stock Award.

“Stock Awardee” means the holder of an outstanding Stock Award granted under the
Plan.

“Subsidiary” means a “subsidiary corporation” of the Company (or, for purposes
of Section 16(b) of the Plan, a successor to the Company), whether now or
hereafter existing, as defined in Section 424(f) of the Code.

 
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“Unrestricted Shares” means a grant of Shares made on an unrestricted basis
pursuant to Section 13 of the Plan.

3.           Stock Subject to the Plan.  Subject to the provisions of Section
16(a) of the Plan, the maximum aggregate number of Shares that may be issued
under the Plan is 23,750,000 Shares, all of which may be issued in respect of
Incentive Stock Options.  The Shares may be authorized but unissued, or
reacquired, shares of Common Stock.  The maximum number of Shares subject to
Options and Stock Appreciation Rights which may be issued to any Participant
under the Plan during any calendar year is 1,900,000 Shares. If an Option or
Stock Appreciation Right expires or becomes unexercisable without having been
exercised in full or is canceled or terminated, or if any Shares of Restricted
Stock or Shares underlying a Stock Award are forfeited or reacquired by the
Company, the Shares that were subject thereto shall be added back to the Shares
available for issuance under the Plan.  The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

4.           Administration of the Plan.

(a)       Appointment.  The Plan shall be administered by a Committee to be
appointed by the Board, which Committee shall consist of not less than two
members of the Board and shall be comprised solely of members of the Board who
qualify as both non-employee directors as defined in Rule 16b-3(b)(3) of the
Exchange Act and outside directors within the meaning of Department of Treasury
Regulations issued under Section 162(m) of the Code.  The Board shall have the
power to add or remove members of the Committee, from time to time, and to fill
vacancies thereon arising; by resignation, death, removal, or
otherwise.  Meetings shall be held at such times and places as shall be
determined by the Committee.  A majority of the members of the Committee shall
constitute a quorum for the transaction of business, and the vote of a majority
of those members present at any meeting shall decide any question brought before
that meeting.

(b)      Powers of the Administrator.  The Administrator shall have the
authority, in its discretion:

(i)              to determine the Fair Market Value of Shares;

(ii)             to select the Service Providers to whom Options, Stock Awards,
Unrestricted Shares and/or Stock Appreciation Rights may be granted hereunder;

(iii)            to determine the number of shares of Common Stock to be covered
by each Award granted hereunder;

(iv)            to approve forms of agreement for use under the Plan;

(v)             to determine the terms and conditions, not inconsistent with the
terms of the Plan or of any Award granted hereunder.  Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Options and Stock Appreciation Rights may be exercised (which may be based on
performance criteria), any vesting, acceleration or waiver of forfeiture
provisions, and any restriction or limitation regarding any Option, Stock
Appreciation Right or Stock Award, or the Shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole
discretion, shall determine;

 
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(vi)            to construe and interpret the terms of the Plan, Awards granted
pursuant to the Plan and agreements entered into pursuant to the Plan;

(vii)           to prescribe, amend and rescind rules and regulations relating
to the Plan, including rules and regulations relating to sub-plans established
for the purpose of qualifying for preferred tax treatment under foreign tax
laws;

(viii)          to modify or amend each Award (subject to Section 19(c) of the
Plan), including the discretionary authority to extend, subject to the terms of
the Plan, the post-termination exercisability period of Options or Stock
Appreciation Rights longer than is otherwise provided for in a Grant Agreement
and to accelerate the time at which any outstanding Option or Stock Appreciation
Right may be exercised;

(ix)             to allow grantees to satisfy withholding tax obligations by
having the Company withhold from the Shares to be issued upon exercise of an
Option or Stock Appreciation Right, upon vesting of a Stock Award, or upon the
grant of Unrestricted Shares that number of Shares having a Fair Market Value
equal to the amount required to be withheld, provided that withholding is
calculated at the minimum statutory withholding level.  The Fair Market Value of
the Shares to be withheld shall be determined on the date that the amount of tax
to be withheld is to be determined.  All determinations to have Shares withheld
for this purpose shall be made by the Administrator in its discretion;

(x)             to reduce the exercise price of any Option or Stock Appreciation
Right;

(xi)            to authorize any person to execute on behalf of the Company any
agreement entered into pursuant to the Plan and any instrument required to
effect the grant of an Award previously granted by the Administrator; and

(xii)           to make all other determinations deemed necessary or advisable
for administering the Plan.

(c)       Effect of Administrator’s Decision.  The Administrator’s decisions,
determinations and interpretations shall be final and binding on all holders of
Awards and Restricted Stock.  None of the Board, the Committee or the
Administrator, nor any member or delegate thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with the Plan, and each of the foregoing shall be entitled in all
cases to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including without limitation reasonable
attorneys’ fees) arising or resulting therefrom to the fullest extent permitted
by law and/or under any directors’ and officers’ liability insurance coverage
which may be in effect from time to time.

(d)       Delegation of Grant Authority.  Notwithstanding any other provision in
the Plan, the Board may authorize the Company’s Chief Executive Officer or
another executive officer of the Company or a committee of such officers
(“Authorized Officers”) to grant Options under the Plan; provided, however, that
in no event shall the Authorized Officers be permitted to grant Options to (i)
any Director, (ii) any person who is identified by the Company as an executive
officer of the Company or who is subject to the restrictions imposed under
Section 16 of the Exchange Act, (iii) any person who is not an employee of the
Company or any Subsidiary, or (iv) such other person or persons as may be
designated from time to time by the Board.  If such authority is provided by the
Board, the Board shall establish and adopt written guidelines setting forth the
maximum number of shares for which the Authorized Officers may grant Options to
any individual during a specified period of time and such other terms and
conditions as the Board deems appropriate for such grants.  Such guidelines may
be amended by the Board prospectively at any time.  Subject to the foregoing,
the Authorized Officers shall have the same authority as the Administrator under
this Section 4 with respect to the grant of Options under the Plan.

 
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5.           Eligibility.  Nonstatutory Stock Options, Stock Awards,
Unrestricted Shares and Stock Appreciation Rights may be granted to Service
Providers.  Incentive Stock Options may be granted only to
Employees.  Notwithstanding anything contained herein to the contrary, an Award
may be granted to a person who is not then a Service Provider; provided,
however, that the grant of such Award shall be conditioned upon such person
becoming a Service Provider at or prior to the time of the execution of the
agreement evidencing such Award.

6.           Limitations.

(a)         Each Option shall be designated in the Grant Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding
such designation, if a single Employee becomes eligible in any given year to
exercise Incentive Stock Options for Shares having a Fair Market Value in excess
of $100,000, those Options representing the excess shall be treated as
Nonstatutory Stock Options.  In the previous sentence, “Incentive Stock Options”
include Incentive Stock Options granted under any plan of the Company or any
Parent or any Subsidiary.  For the purpose of deciding which Options apply to
Shares that “exceed” the $100,000 limit, Incentive Stock Options shall be taken
into account in the same order as granted.  The Fair Market Value of the Shares
shall be determined as of the time the Option with respect to such Shares is
granted.

(b)         Neither the Plan nor any Award nor any agreement entered into
pursuant to the Plan shall confer upon a Participant any right with respect to
continuing the Participant’s relationship as a Service Provider with the
Company, nor shall they interfere in any way with the Participant’s right or the
Company’s right to terminate such relationship at any time, with or without
cause.

7.           Term of the Plan.  Subject to Section 22 of the Plan, the Plan
shall become effective upon its adoption by the Board.  It shall continue in
effect for a term of ten (10) years unless terminated earlier under Section 19
of the Plan.

8.           Term of Options.  Unless otherwise provided in the applicable Grant
Agreement, the term of each Option granted to anyone other than a Consultant
shall be ten (10) years from the date of grant and the term of each Option
granted to any Consultant shall be five (5) years from the date of grant.  In
the case of an Incentive Stock Option, the term shall be ten (10) years from the
date of grant or such shorter term as may be provided in the applicable Grant
Agreement.  However, in the case of an Incentive Stock Option granted to an
Optionee who, at the time the Incentive Stock Option is granted, owns, directly
or indirectly, stock representing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Parent or
Subsidiary, the term of the Incentive Stock Option shall be five (5) years from
the date of grant or such shorter term as may be provided in the applicable
Grant Agreement.

9.           Option Exercise Price; Exercisability.

(a)         Exercise Price.  The per share exercise price for the Shares to be
issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

(i)         In the case of an Incentive Stock Option

 
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(A)           granted to an Employee who, at the time the Incentive Stock Option
is granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant, or

(B)           granted to any Employee other than an Employee described in
paragraph (A) immediately above, the per Share exercise price shall be no less
than 100% of the Fair Market Value per Share on the date of grant.

(ii)         In the case of a Nonstatutory Stock Option, the per Share exercise
price shall be determined by the Administrator; provided, however, that in the
case of a Nonstatutory Stock Option intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the per Share
exercise price of a Nonstatutory Stock Option shall be no less than 100% of the
Fair Market Value per Share on the date of grant, as determined by the
Administrator in good faith.

(iii)        Notwithstanding the foregoing, Options may be granted with a per
Share exercise price of less than 100% (or 110%, if clause (i)(A) above applies)
of the Fair Market Value per Share on the date of grant pursuant to a merger or
other comparable corporate transaction.

(b)         Exercise Period and Conditions.  At the time that an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions that must be satisfied before the
Option may be exercised.

(c)         Reload Options.  The Administrator 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 10(f)) or by
having  the  Company reduce the number of shares otherwise issuable to an
Optionee (as provided for in Section 10(f)) (a “Net Exercise”).  The Grant
Agreement for the Options containing the reload feature shall provide that the
Option holder shall receive, contemporaneously with the payment of the exercise
price in shares of Common  Stock or in the event of a Net Exercise, 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 (or not issued in the case of a Net Exercise), 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 exercise 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 10% 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 10% 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 Grant 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.

 
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10.           Exercise of Options; Consideration.

(a)         Procedure for Exercise; Rights as a Shareholder.  Any Option granted
hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as determined by the Administrator and set forth
in the Grant Agreement.  Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of
absence.  An Option may not be exercised for a fraction of a Share.  An Option
shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Grant Agreement) from the person
entitled to exercise the Option, and (ii) full payment for the Shares with
respect to which the Option is exercised.  Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Grant Agreement and Section 10(f) of the Plan.  Shares issued
upon exercise of an Option shall be issued in the name of the Optionee.  Until
the Shares are issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.  The
Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised.  No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 16 of the Plan.  Exercising an Option in any manner shall
decrease the number of Shares thereafter available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

(b)         Termination of Relationship as a Service Provider.  Unless otherwise
specified in the Grant Agreement or provided by the Administrator, if an
Optionee ceases to be a Service Provider, other than as a result of (x) the
Optionee’s death or Disability, or (y) termination of such Optionee’s employment
or relationship with the Company with Cause, or (z) the Optionee’s voluntary
termination of employment other than as a result of retirement, the Optionee may
exercise his or her Option for up to ninety (90) days following the date on
which the Optionee ceases to be a Service Provider to the extent that the Option
is vested on the date of termination (but in no event later than the expiration
of the term of such Option as set forth in the Grant Agreement).  If, on the
date that the Optionee ceases to be a Service Provider, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan.  If, after the date that the
Optionee ceases to be a Service Provider the Optionee does not exercise his or
her Option in full within the time set forth herein or the Grant Agreement, as
applicable, the unexercised portion of the Option shall terminate, and the
Shares covered by such unexercised portion of the Option shall revert to the
Plan.  An Optionee who changes his or her status as a Service Provider (e.g.,
from being an Employee to being a Consultant) shall not be deemed to have ceased
being a Service Provider for purposes of this Section 10(b), nor shall a
transfer of employment among the Company and any Subsidiary be considered a
termination of employment; however, if an Optionee holding Incentive Stock
Options ceases being an Employee but continues as a Service Provider, such
Incentive Stock Options shall be deemed to be Nonstatutory Stock Options three
months after the date of such cessation.

(c)         Disability of an Optionee.  Unless otherwise specified in the Grant
Agreement, if an Optionee ceases to be a Service Provider as a result of the
Optionee’s Disability, the Optionee may exercise his or her Option, to the
extent the Option is vested on the date that the Optionee ceases to be a Service
Provider, up until the one-year anniversary of the date on which the Optionee
ceases to be a Service Provider (but in no event later than the expiration of
the term of such Option as set forth in the Grant Agreement).  If, on the date
that the Optionee ceases to be a Service Provider, the Optionee is not vested as
to his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan.  If, after the Optionee ceases to be a Service
Provider, the Optionee does not exercise his or her Option in full within the
time set forth herein or the Grant Agreement, as applicable, the unexercised
portion of the Option shall terminate, and the Shares covered by such
unexercised portion of the Option shall revert to the Plan.

 
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(d)         Death of an Optionee.  Unless otherwise specified in the Grant
Agreement, if an Optionee dies while a Service Provider, the Option may be
exercised, to the extent that the Option is vested on the date of death, by the
Optionee’s estate or by a person who acquires the right to exercise the Option
by bequest or inheritance up until the one-year anniversary of the Optionee’s
death (but in no event later than the expiration of the term of such Option as
set forth in the Notice of Grant).  If, at the time of death, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall revert to the Plan.  If the Option is not so
exercised in full within the time set forth herein or the Grant Agreement, as
applicable, the unexercised portion of the Option shall terminate, and the
Shares covered by the unexercised portion of such Option shall revert to the
Plan.

(e)         Termination for Cause or Voluntary Termination. If a Service
Provider’s relationship with the Company is terminated for Cause, or if a
Service Provider voluntarily terminates his or her relationship with the Company
other than as a result of retirement, then, unless otherwise provided in such
Service Provider’s Grant Agreement or by the Administrator, such Service
Provider shall have no right to exercise any of such Service Provider’s Options
at any time on or after the effective date of such termination.

(f)         Form of Consideration.  The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment.  In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant.  Such
consideration may consist entirely of:

(i)          cash;

(ii)         check;

(iii)        other Shares which (A) in the case of Shares acquired upon exercise
of an option at a time when the Company is subject to Section 16(b) of the
Exchange Act, have been owned by the Optionee for more than six months on the
date of surrender, and (B) have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option
shall be exercised;

(iv)        consideration received by the Company under a cashless exercise
program implemented by the Company in connection with the Plan;

(v)         a reduction in the number of Shares otherwise issuable by a number
of Shares having a Fair Market Value equal to the exercise price of the Option
being exercised;

(vi)        any combination of the foregoing methods of payment; or

(vii)       such other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Laws.

11.           Stock Awards.  The Administrator may, in its sole discretion,
grant (or sell at par value or such higher purchase price as it determines)
Shares to any Service Provider subject to such terms and conditions as the
Administrator sets forth in a Stock Award Agreement evidencing such
grant.  Stock Awards may be granted or sold in respect of past services or other
valid consideration or in lieu of any cash compensation otherwise payable to
such individual.  The grant of Stock Awards under this Section 11 shall be
subject to the following provisions:

 
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(a)  At the time a Stock Award under this Section 11 is made, the Administrator
shall establish a vesting period (the “Restricted Period”) applicable to the
Stock Award Shares subject to such Stock Award.  The Administrator may, in its
sole discretion, at the time a grant is made, prescribe restrictions in addition
to the expiration of the Restricted Period, including the satisfaction of
corporate or individual performance objectives.  None of the Stock Award Shares
may be sold, transferred, assigned, pledged or otherwise encumbered or disposed
of during the Restricted Period applicable to such Stock Award Shares or prior
to the satisfaction of any other restrictions prescribed by the Administrator
with respect to such Stock Award Shares.

(b)  The Company shall issue, in the name of each Service Provider to whom Stock
Award Shares have been granted, stock certificates representing the total number
of Stock Award Shares granted to such person, as soon as reasonably practicable
after the grant.  The Company, at the direction of the Administrator, shall hold
such certificates, properly endorsed for transfer, for the Stock Awardee’s
benefit until such time as the Stock Award Shares are forfeited to the Company,
or the restrictions lapse.

(c)  Unless otherwise provided by the Administrator, holders of Stock Award
Shares shall have the right to vote such Shares and have the right to receive
any cash dividends with respect to such Shares.  All distributions, if any,
received by a Stock Awardee with respect to Stock Award Shares as a result of
any stock split, stock distribution, combination of shares, or other similar
transaction shall be subject to the restrictions of this Section 11.

(d)  Any Stock Award Shares granted to a Service Provider pursuant to the Plan
shall be forfeited if the Stock Awardee voluntarily terminates employment with
the Company or its subsidiaries or resigns or voluntarily terminates his
consultancy or advisory arrangement or directorship with the Company or its
subsidiaries, or if the Stock Awardee’s employment or the consultant’s or
advisor’s consultancy or advisory arrangement or directorship is terminated for
Cause, in each case prior to the expiration or termination of the applicable
Restricted Period and the satisfaction of any other conditions applicable to
such Stock Award Shares.  Upon such forfeiture, the Stock Award Shares that are
forfeited shall be retained in the treasury of the Company and be available for
subsequent awards under the Plan.  If the Stock Awardee’s employment,
consultancy or advisory arrangement or directorship terminates for any other
reason prior to the expiration or termination of the applicable Restricted
Period and the satisfaction of any other conditions applicable to such Stock
Award Shares, the Stock Award Shares held by such person shall be forfeited,
unless the Administrator, in its sole discretion, shall determine otherwise.

(e)  Upon the expiration or termination of the Restricted Period and the
satisfaction of any other conditions prescribed by the Committee, the
restrictions applicable to the Stock Award Shares shall lapse and, at the Stock
Awardee’s request, a stock certificate for the number of Stock Award Shares with
respect to which the restrictions have lapsed shall be delivered, free of all
such restrictions, to the Stock Awardee or his beneficiary or estate, as the
case may be.

(f)  Prior to the delivery of any shares of Common Stock in connection with a
Stock Award under this Section 11, the Company shall be entitled to require as a
condition of delivery that the Stock Awardee shall pay or make adequate
provision acceptable to the Company for the satisfaction of the statutory
minimum prescribed amount of federal and state income tax and other withholding
obligations of the Company, including, if permitted by the Administrator, by
having the Company withhold from the number of shares of Common Stock otherwise
deliverable in connection with a Stock Award, a number of shares of Common Stock
having a Fair Market Value equal to an amount sufficient to satisfy such tax
withholding obligations.

 
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12.           Restricted Stock Units.  The Committee may, in its sole
discretion, grant Restricted Stock Units to a Service Provider subject to such
terms and conditions as the Committee sets forth in a Stock Award Agreement
evidencing such grant.  “Restricted Stock Units” are Awards denominated in units
evidencing the right to receive Shares of Common Stock, which may vest over such
period of time and/or upon satisfaction of such performance criteria or
objectives as is determined by the Committee at the time of grant and set forth
in the applicable Stock Award Agreement, without payment of any amounts by the
Stock Awardee thereof (except to the extent required by law).  Prior to delivery
of shares of Common Stock with respect to an award of Restricted Stock Units,
the Stock Awardee shall have no rights as a stockholder of the Company.

Upon satisfaction and/or achievement of the applicable vesting requirements
relating to an award of Restricted Stock Units, the Stock Awardee shall be
entitled to receive a number of shares of Common Stock that are equal to the
number of Restricted Stock Units that became vested.  To the extent, if any, set
forth in the applicable Stock Award Agreement, cash dividend equivalents may be
paid during, or may be accumulated and paid at the end of, the applicable
vesting period, as determined by the Committee.

Unless otherwise provided by the Stock Award Agreement, any Restricted Stock
Units granted to a Service Provider pursuant to the Plan shall be forfeited if
the Stock Awardee’s employment or service with the Company or its Subsidiaries
terminates for any reason prior to the expiration or termination of the
applicable vesting period and/or the achievement of such other vesting
conditions applicable to the award.

Prior to the delivery of any shares of Common Stock in connection with an award
of Restricted Stock Units, the Company shall be entitled to require as a
condition of delivery that the Stock Awardee shall pay or make adequate
provision acceptable to the Company for the satisfaction of the statutory
minimum prescribed amount of federal and state income tax and other withholding
obligations of the Company, including, if permitted by the Administrator, by
having the Company withhold from the number of shares of Common Stock otherwise
deliverable in connection with an award of Restricted Stock Units, a number of
shares of Common Stock having a Fair Market Value equal to an amount sufficient
to satisfy such tax withholding obligations.

13.           Unrestricted Shares. The Administrator may grant Unrestricted
Shares in accordance with the following provisions:

(a)  The Administrator may cause the Company to grant Unrestricted Shares to
Service Providers at such time or times, in such amounts and for such reasons as
the Administrator, in its sole discretion, shall determine. No payment shall be
required for Unrestricted Shares.

(b)  The Company shall issue, in the name of each Service Provider to whom
Unrestricted Shares have been granted, stock certificates representing the total
number of Unrestricted Shares granted to such individual, and shall deliver such
certificates to such Service Provider as soon as reasonably practicable after
the date of grant or on such later date as the Administrator shall determine at
the time of grant.

(c)  Prior to the delivery of any Unrestricted Shares, the Company shall be
entitled to require as a condition of delivery that the Stock Awardee shall pay
or make adequate provision acceptable to the Company for the satisfaction of the
statutory minimum prescribed amount of federal and state income tax and other
withholding obligations of the Company, including, if permitted by the
Administrator, by having the Company withhold from the number of Unrestricted
Shares otherwise deliverable, a number of shares of Common Stock having a Fair
Market Value equal to an amount sufficient to satisfy such tax withholding
obligations.

 
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14.           Stock Appreciation Rights.  A Stock Appreciation Right may be
granted by the Committee either alone, in addition to, or in tandem with other
Awards granted under the Plan.  Each Stock Appreciation Right granted under the
Plan shall be subject to the following terms and conditions:

(a)  Each Stock Appreciation Right shall relate to such number of Shares as
shall be determined by the Committee.

(b)  The Award Date (i.e., the date of grant) of a Stock Appreciation Right
shall be the date specified by the Committee, provided that that date shall not
be before the date on which the Stock Appreciation Right is actually
granted.  The Award Date of a Stock Appreciation Right shall not be prior to the
date on which the recipient commences providing services as a Service
Provider.  The term of each Stock Appreciation Right shall be determined by the
Committee, but shall not exceed ten years from the date of grant.  Each Stock
Appreciation Right shall become exercisable at such time or times and in such
amount or amounts during its term as shall be determined by the
Committee.  Unless otherwise specified by the Committee, once a Stock
Appreciation Right becomes exercisable, whether in full or in part, it shall
remain so exercisable until its expiration, forfeiture, termination or
cancellation.

(c)  A Stock Appreciation Right may be exercised, in whole or in part, by giving
written notice to the Committee.  As soon as practicable after receipt of the
written notice, the Company shall deliver to the person exercising the Stock
Appreciation Right stock certificates for the Shares to which that person is
entitled under Section 14(d) hereof.

(d)  A Stock Appreciation Right shall be exercisable for Shares only.  The
number of Shares issuable upon the exercise of the Stock Appreciation Right
shall be determined by dividing:

(i)  the number of Shares for which the Stock Appreciation Right is exercised
multiplied by the amount of the appreciation per Share (for this purpose, the
“appreciation per Share” shall be the amount by which the Fair Market Value of a
Share on the exercise date exceeds (x) in the case of a Stock Appreciation Right
granted in tandem with an Option, the exercise price or (y) in the case of a
Stock Appreciation Right granted alone without reference to an Option, the Fair
Market Value of a Share on the Award Date of the Stock Appreciation Right); by

(ii)  the Fair Market Value of a Share on the exercise date.

15.           Non-Transferability.  Unless determined otherwise by the
Administrator, an Option or Stock Appreciation Right may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.  If the Administrator makes an
Option or Stock Appreciation Right transferable, such Option or Stock
Appreciation Right shall contain such additional terms and conditions as the
Administrator deems appropriate.  Notwithstanding the foregoing, the
Administrator, in its sole discretion, may provide in the Grant Agreement
regarding a given Option that the Optionee may transfer, without consideration
for the transfer, his or her Nonstatutory Stock Options to members of his or her
immediate family, to trusts for the benefit of such family members, or to
partnerships in which such family members are the only partners, provided that
the transferee agrees in writing with the Company to be bound by all of the
terms and conditions of this Plan and the applicable Option.  During the period
when Shares of Restricted Stock and Stock Award Shares are restricted (by virtue
of vesting schedules or otherwise), such Shares may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution.

 
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16.           Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.

(a)         Changes in Capitalization.  Subject to any required action by the
shareholders of the Company, the number of Shares of Common Stock covered by
each outstanding Option, Stock Appreciation Right and Stock Award, the number of
Shares of Restricted Stock outstanding and the number of Shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options, Stock Appreciation Rights or Stock Awards have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, Stock Appreciation Right or Stock Award, as well as the price per share
of Common Stock covered by each such outstanding Option or Stock Appreciation
Right, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration.”  Such
adjustment shall be made by the Administrator, whose determination in that
respect shall be final, binding and conclusive.  Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares of Common Stock subject to an Award hereunder.  Except as expressly
provided herein, the issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property,
or for labor or services either upon direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obligations
of the Company convertible into sub-shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of Shares of Common Stock then subject to outstanding Options
and Stock Appreciation Rights.

(b)           Corporate Transactions.  If the Company merges or consolidates
with another corporation, whether or not the Company is the surviving
corporation, or if the Company is liquidated or sells or otherwise disposes of
substantially all its assets, or if any “person” (as that term is used in
Section 13(d) and 14(d)(2) of the Exchange Act) is or becomes the beneficial
owner, directly or indirectly, of securities of the Company representing greater
than 50% of the combined voting power of the Company’s then outstanding
securities (each such event a “Corporate Transaction Event”) then (i) after the
effective date of such Corporate Transaction Event, each holder of an
outstanding Option or Stock Appreciation Right shall be entitled, upon exercise
of such Option or Stock Appreciation Right to receive, in lieu of Shares of
Common Stock, the number and class or classes of shares of such stock or other
securities or property to which such holder would have been entitled if,
immediately prior to such Corporate Transaction Event, such holder had been the
holder of record of a number of Shares of Common Stock equal to the number of
shares as to which such Option and Stock Appreciation Right may be exercised;
and (ii) the Board may waive any limitations set forth in or imposed pursuant
hereto so that all Options and Stock Appreciation Rights from and after a date
prior to the effective date of such Corporate Transaction Event, as specified by
the Board, shall be exercisable in full.  Notwithstanding anything contained
herein to the contrary, the proposed transaction between the Company and China
Biopharmaceutical Holdings, Inc. shall not constitute a Corporate Transaction
Event.

In the event of a Corporate Transaction Event, then each outstanding Stock Award
shall be assumed or an equivalent agreement or award substituted by the
successor corporation or a Parent or Subsidiary of the successor
corporation.  In the event that the Committee determines that the successor
corporation or a Parent or a Subsidiary of the successor corporation has refused
to assume or substitute an equivalent agreement or award for each outstanding
Stock Award, all vesting periods and conditions under Stock Awards shall be
deemed to have been satisfied.  The Board may also, in its discretion, cause all
vesting periods and conditions under Stock Awards to be deemed to have been
satisfied.

 
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17.           Substitute Options.  In the event that the Company, directly or
indirectly, acquires another entity, the Board may authorize the issuance of
stock options (“Substitute Options”) to the individuals performing services for
the acquired entity in substitution of stock options previously granted to those
individuals in connection with their performance of services for such entity
upon such terms and conditions as the Board shall determine, taking into account
the conditions of Code Section 424(a), as from time to time amended or
superseded, in the case of a Substitute Option that is intended to be an
Incentive Stock Option.  Shares of capital stock underlying Substitute Stock
Options shall not constitute Shares issued pursuant to the Plan for any purpose.

18.           Date of Grant.  The date of grant of an Option, Stock Appreciation
Right, Stock Award or Unrestricted Share shall be, for all purposes, the date on
which the Administrator makes the determination granting such Option, Stock
Appreciation Right, Stock Award or Unrestricted Share, or such other later date
as is determined by the Administrator.  Notice of the determination shall be
provided to each grantee within a reasonable time after the date of such grant.

19.           Amendment and Termination of the Plan.

(a)         Amendment and Termination.  The Board may at any time amend, alter,
suspend or terminate the Plan.

(b)         Shareholder Approval.  The Company shall obtain shareholder approval
of any Plan amendment to the extent necessary to comply with Applicable Laws.

(c)         Effect of Amendment or Termination.  No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any grantee,
unless mutually agreed otherwise between the grantee and the Administrator,
which agreement must be in writing and signed by the grantee and the
Company.  Termination of the Plan shall not affect the Administrator’s ability
to exercise the powers granted to it hereunder with respect to Awards granted
under the Plan prior to the date of such termination.

20.           Conditions Upon Issuance of Shares.

(a)         Legal Compliance.  Shares shall not be issued in connection with the
grant of any Stock Award or Unrestricted Share or the exercise of any Option or
Stock Appreciation Right unless such grant or the exercise of such Option or
Stock Appreciation Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.

(b)         Investment Representations.  As a condition to the grant of any
Stock Award or Unrestricted Share or the exercise of any Option or Stock
Appreciation Right, the Company may require the person receiving such Award or
exercising such Option or Stock Appreciation Right to represent and warrant at
the time of any such exercise or grant that the Shares are being purchased only
for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required.

 
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(c)         Additional Conditions.  The Administrator shall have the authority
to condition the grant of any Award in such other manner that the Administrator
determines to be appropriate, provided that such condition is not inconsistent
with the terms of the Plan.

(d)         Trading Policy Restrictions.  Option and or Stock Appreciation Right
exercises and other Awards under the Plan shall be subject to the terms and
conditions of any insider trading policy established by the Company or the
Administrator.

21.           Inability to Obtain Authority.  The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

22.           Shareholder Approval.  The Plan shall be subject to approval by
the shareholders of the Company within twelve (12) months after the date the
Plan is adopted.  Such shareholder approval shall be obtained in the manner and
to the degree required under Applicable Laws.  Notwithstanding any provision in
the Plan to the contrary, any exercise of an Option or Stock Appreciation Right
granted before the Company has obtained shareholder approval of the Plan in
accordance with this Section 22 shall be conditioned upon obtaining such
shareholder approval of the Plan in accordance with this Section 22.

23.           Withholding; Notice of Sale.  The Company shall be entitled to
withhold from any amounts payable to an Employee or other Service Provider any
amounts which the Company determines, in its discretion, are required to be
withheld under any Applicable Law as a result of any action taken by a holder of
an Award.

24.           Governing Law.  This Plan shall be governed by the laws of the
State of Delaware, without regard to conflict of law principles.
 
 
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