Document:

Exhibit 10.6

 

June 6,
2002

 

INO THERAPEUTICS LONG TERM INCENTIVE PLAN

 

Purpose

 

The INO Therapeutics Long Term Incentive Plan (the “Plan”) is
established effective as January 1, 2001, to give Employees an incentive
to contribute to the success and profitability of INO Therapeutics (the “Company”)
and the Participating Affiliated Companies, and as a reward for doing so; and
to assist these companies in attracting and retaining the highest caliber of
Employees.

 

Article 1 - Definitions

 

For purposes of the Plan, the following terms shall mean the following:

 

1.1           “Annual
Grant” means the annual grant of Units, if any, to a Participant pursuant
to the Plan.

 

1.2           “Affiliated
Company” means a Subsidiary, or a parent of the Company that owns fifty
(50%) percent or more of the total combined voting power of all classes of
stock of the Company (the “Parent”).

 

1.3           “Board”
means the AGA Healthcare Board of Directors.

 

1.4           “Code”
means the Internal Revenue Code of 1986, as amended from time to time.

 

References to any section of the Code include
corresponding successor provisions.

 

1.5           “Change of
Control” means the occurrence of any of the following:

 

(a)           the Board votes
to approve:

 

(i)            any
consolidation or merger of the Company or the Parent pursuant to which less
than fifty (50%) percent of the outstanding voting securities of the surviving
or 

 

 

resulting
company are owned by the individuals or entities that were shareholders of the
Company or the Parent prior to the consolidation or merger;

 

(ii)           any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all, or substantially all, of the assets of the Company or the
Parent other than any sale, lease, exchange or other transfer to any company in
which the Company or the Parent owns, directly or indirectly, one hundred
(100%) percent of the outstanding voting securities of such company after any
such transfer;

 

(b)           any person (as
such term is used in Section 13(d) of the Securities Exchange Act of
1934, as amended (the Exchange Act”)) other than one or more current
shareholders, the Company, or an Affiliated Company, or one or more employee
benefit plans established by the Company, or an Affiliated Company, for the
benefit of its employees, shall become the beneficial owner (within the meaning
of Rule 13d-3 under the Exchange Act) whether directly, indirectly,
beneficially or of record, of thirty-five (35%) percent or more of outstanding
common stock (other than as the result of an initial public offering); or

 

(c)           commencement by
any entity, person, or group of a tender offer or exchange offer by which the
offeree acquires more than fifty (50%) percent of the outstanding voting
securities of the Company or the Parent.

 

1.6           “Committee”
means the committee under Article 2.

 

1.7           “Company”
means INO Therapeutics and any successor thereto.

 

1.8           “Company
Value” means the value of the Company as of a Valuation Date determined in
accordance with a valuation method established by the Board for the Annual
Grant.  The Board, in its exclusive
discretion, may change the valuation method used to determine Company Value at
any time and from time to time. 
Notwithstanding the foregoing, if 

 

2

 

the
method used to determine Company Value as of any Valuation Date is
substantially changed from the method used to determine the Company Value as of
the immediately preceding Valuation Date, then the number of Equity Stakes and
the number of the Participant’s Units under each prior Annual Grant shall be
adjusted so that after the change (a) the ratio of the number of the
Equity Stakes covered by the Participant’s Units awarded under each prior
Annual Grant to the total number of Equity Stakes remains the same, and (b) the
total amount of Unit Appreciation (as defined below) on all the Units granted
to the Participant from before the change remains the same. The Unit
Appreciation for any Unit shall be an amount equal to the excess, if any,
of:  (a) the Equity Stake Value as
of the specified Valuation Date, over (b) the Equity Stake Value as of the
Valuation Date immediately preceding the effective date of the Annual Grant of
which the Unit is a part.

 

1.9           “Disability”
means a long term disability that qualifies the Participant to receive benefits
under the long term disability income plan maintained by Participating Company
by which he or she is employed.  In the
absence of a long term disability income plan, Disability means a mental or
physical condition that, in the opinion of the Committee, renders a Participant
unable to carry out the job responsibilities he or she held, or the tasks to
which he or she was assigned at the time the disability was incurred, and which
is expected to be permanent or last for an indefinite duration exceeding one (1) year.

 

1.10         “Employee”
means a person who is a common law employee of the Company or an Affiliated
Company; provided, however, that Employee does not include any person who is (a) a
person who is classified by the Company or any Affiliated Company as employed
on a temporary basis, regardless of how long the person actually works for the
Company or Affiliated Company; (b) a person who is classified by the
Company or any Affiliated Company as an 

 

3

 

independent
contractor, as evidenced by its action in not withholding taxes from his or her
compensation or other action, regardless of whether the person is the Company’s
or Affiliated Company’s common law employee; (c) a person working for an
organization that provides goods or services (including without limitation
temporary employee services) to the Company or any Affiliated Company and whom
the Company or Affiliated Company does not regard to be its common law
employee, as evidenced by its action in not withholding taxes from his or her
compensation or other action, regardless of whether the person is the Company’s
or Affiliated Company’s common law employee; (d) a person who is a leased
employee within the meaning of Code Section 414(n), as amended; and (e) a
person to whom the Company or any Affiliated Company did not extend the
opportunity to participate in this Plan and who agreed orally or in writing to
nonparticipant status.

 

1.11         “Equity
Appreciation Unit” or “Unit” means the equity appreciation unit granted
under the Plan.  A Unit shall, upon
becoming nonforfeitable, entitle the holder to payment in cash of an amount
equal to the excess, if any, of: (a) the Equity Stake Value as of the
Valuation Date immediately preceding the date the Unit becomes vested, over (b) the
Equity Stake Value as of the Valuation Date immediately preceding the effective
date of the Annual Grant of which the Unit is a part.

 

1.12         “Equity
Stake” means a stake representing a portion of the Company Value as of a
Valuation Date.  The Committee shall, in
its exclusive discretion, determine the number of Equity Stakes as of any
Valuation Date (the “Equity Stake Value”). 
The number of Equity Stakes shall remain fixed unless (a) there is
a substantial change in the valuation method to determine the Company Value and
a change in the number of Equity Stakes is necessary to preserve the total
amount of Unit Appreciation (as defined in Section 1.8) on all of the
Units 

 

4

 

granted
to the Participant, or (b) there is a change in capitalization of the
Company.  The Committee shall, in its
exclusive discretion, determine whether an adjustment because of the reasons
described in (a) or (b) is necessary or appropriate.

 

1.13         “Equity
Stake Value” means the value of an Equity Stake determined as of a
specified Valuation Date equal to (a) the Company Value as of that
Valuation Date, divided by (b) the total number of Equity Stakes as of
that Valuation Date.

 

1.14         “Grant
Agreement” means any written agreement, contract or other document that
sets forth the terms of an Annual Grant to a Participant.

 

1.15         “Maximum
Payout Amount” means an amount determined with respect to a Unit equal to
fifty (50%) percent of the Equity Stake Value determined as of the Valuation
Date immediately preceding the date that the Unit becomes vested.

 

1.16         “Participant”
means an Employee who is granted Units as part of an Annual Grant.

 

1.17         “Participating
Company” means the Company, or any Affiliated Company that the Board
authorizes to adopt the Plan and which has Employees who have received Units in
an Annual Grant.  The Board shall
determine each calendar year whether Employees of the Company and any
Affiliated Company shall receive Annual Grants for that year.

 

1.18         “Plan”
means the INO Therapeutics Long Term Incentive Plan as it may be amended from
time to time.

 

1.19         “Retirement”
means a Participant’s retirement as defined in the tax-qualified defined
benefit plan maintained by the Participating Company by which the Participant
is employed.  If no such defined benefit
plan exists then retirement means the Termination of Employment on or after the
Participant’s sixty-fifth (65th) birthday other than due to death,

 

5

 

Disability, or Termination for Cause.

 

1.20         “Subsidiary”
means (a) any corporation that the Company owns, directly or indirectly,
fifty (50%) percent or more of the total combined voting power of all classes
of stock, and (b) any entity that the Board reasonably expects to become a
Subsidiary under clause (a).

 

1.21         “Termination
Due to Change of Control” means, within twelve (12) months after a Change
of Control (a) a Termination of Employment from the Company and all
Affiliated Companies, other than Termination for Cause, by the Company and all
Affiliated Companies, or (b) resignation from the Company and all
Affiliated Companies by an Employee for Good Reason.  For purposes of the Plan, Good Reason means
any one of the following:

 

(i)            the assignment
by the board of directors of the Company or Affiliated Company that employs the
Employee (the “Employer Board”) of duties that result in a significant adverse
change or diminution in the Employee’s authority and responsibilities;

 

(ii)           the change of
the Employee’s site of principal employment to a location more than fifty (50)
miles from the location at which the Employee was principally employed
immediately prior to the date of the Change of Control;

 

(iii)          a reduction of
the Employee’s base salary; and

 

(iv)          nonpayment of
base salary when due other than for an inadvertent and insubstantial failure
that is cured within thirty (30) days after the Employee notifies the Employer
Board in writing of the nonpayment.

 

1.22         “Termination
of Employment” means a termination of employment or Retirement with the
Company and all Participating Companies for any reason other than death or
Disability.  For Purposes of Section 1.23
(definition of Termination for Cause) a Termination of Employment shall mean a
termination of Employment with the Company and all Affiliated Companies.

 

6

 

1.23         “Termination
for Cause” means a Termination of Employment of a Participant with the
Company or any Affiliated Company by reason of (a) that person’s material
dishonesty (including, without limitation, embezzlement, financial
misrepresentation, fraud, theft, or other similar action) in his or her
dealings with the Company or any Affiliated Company or any other entity that
the Company or any Affiliated Company is engaged in or be attempting to engage
in commerce; (b) that person’s conviction of, or entry of a plea of nolo contendere to, the commission of a felony; (c) any
act or omission by that person that actually has, and which either that person
intends to have or that person or a reasonable person would expect to have, a
material adverse effect on the Company or any Affiliated Company; or (d)if any
Participant is party to an employment agreement governing the terms of his or
her employment with the Company or any Affiliated Company, and the employment
agreement includes a definition of termination for cause, then for purposes
hereof Cause also includes those grounds not inconsistent with the foregoing
provisions of this Section 1.23.  If
the provisions of the employment agreement and this Plan are inconsistent, the
provisions of this Plan shall control.

 

1.24         “Threshold
Level” means a level of Company performance for a calendar year as
specified by the Board by the February 1st of that year.

 

1.25         “Valuation
Date” —means the December 31st of each
calendar year, or any other date determined by the Committee.

 

Article 2 - Administration

 

2.1           The Plan shall
be administered by the Board, or a committee of the Board (as the Board in its
exclusive discretion determines). The Board may delegate to the committee
described in the prior sentence or to one or more persons, the authority and
discretion to perform those functions as the Board determines.  For purposes of the Plan, the Board acting in
this 

 

7

 

capacity
or its delegate shall be referred to as the “Committee.” Notwithstanding any
other provision of this Plan, if the Company registers any class of equity
security pursuant to Section 12 of the Exchange Act, and if the Plan is to
be administered by a committee, then such committee shall consist of two or
more members of the Board, each of whom shall each qualify as a “Non-employee
Director” within the meaning of Rule 16b-3 of the Exchange Act and also
qualify as an “outside director” within the meaning of Code Section 162(m) and
the regulations thereunder.

 

2.2           The Committee
shall have the exclusive authority and discretion to interpret the provisions
of the Plan and to decide all questions of fact arising in its application; to
determine whether and to what extent Units will be granted under the Plan; to
determine the number, terms and conditions of each Unit; to adopt, alter and
repeal such administrative rules, guidelines and practices governing the Plan
as it from time to time determines appropriate; and to make all other
determinations necessary or appropriate for the administration of the Plan.

 

2.3           The Committee
shall have the exclusive authority and discretion to vary the terms of the Plan
to the extent necessary to comply with federal, state, or local law.

 

2.4           Notwithstanding
anything in the Plan to the contrary, with respect to any Participant who is
resident outside of the United States, the Committee may, in its exclusive
discretion, amend the terms of the Plan to conform to such terms with the
requirements of local law or to meet the objectives of the Plan.  The Committee may, when appropriate,
establish one or more sub-plans for this purpose.

 

2.5           All decisions
made by the Committee pursuant to the provisions of the Plan shall be final and
binding on all Participants.

 

8

 

2.6           All expenses
and liabilities incurred by the Committee in the administration of the Plan
shall be borne by the Company or the Participating Companies.  The Committee may employ attorneys,
consultants, accountants or other persons in the administration of the
Plan.  The Company and all Affiliated
Companies, and their officers and directors, are entitled to rely upon the
advice, opinions or valuations of any such persons.

 

Article 3 - Eligibility.

 

The Committee shall, in its exclusive discretion, determine the
Employees of the Company and Affiliated Companies who are eligible to
participate in the Plan and receive an Annual Grant in any year.  The grant of Units pursuant to an Annual
Grant in any year does not give any Employee any right to grants of Units in
future years.

 

Article 4 - Grant and Payment of Units.

 

4.1           Grant of Units.  For each calendar year in which the Company’
s performance achieves the Threshold Level, the Committee may, in its exclusive
discretion, grant to the eligible Employees in the following calendar year an
Annual Grant of Units.  The effective
date of an Annual Grant is the January 1 of the calendar year for which
the Board makes the Annual Grant.

 

4.2           Nonforfeitability
of Units.

 

(a)           Subject to
Articles 5 and 6, Section 4.2(b) and (c), and the Participant’s Grant
Agreement, a Participant must remain an Employee a Participating Company until
the fifth (5th) anniversary of the effective date of the Annual Grant of Units
(the “Vesting Date”) for these Units to become vested.  If the Participant has a Termination of
Employment for any 

 

9

 

reason
(other than due to death, Disability, or a Termination Due to a Change of
Control) prior to the Vesting Date, the Participant shall forfeit all rights to
the unvested Units.

 

(b)           Subject to a
Participant’s Grant Agreement, if, while an Employee of a Participating
Company, a Participant dies or becomes Disabled before the Vesting Date
applicable to his or her Units granted under the Annual Grant, the Participant
shall become vested in a prorated portion of these Units.  The prorated portion shall be equal to a
fraction (i) the numerator of which is the number of months (rounded up to
the nearest whole month) elapsed for the period beginning on the January 1
of the calendar year of the Annual Grant of which the Units are a part and
ending on the date of death or Disability, and (ii) the denominator of
which is sixty (60).

 

(c)           Subject to a
Participant’s Grant Agreement, if an Employee of a Participating Company
transfers to an Affiliated Company that is not a Participating Company (“Nonparticipating
Company”), before the Vesting Date applicable to his or her Units granted under
the Annual Grant, the Participant shall become vested in a prorated portion of
these Units.  The prorated portion shall
be equal to a fraction (i) the numerator of which is the number of months
(rounded up to the nearest whole month) elapsed for the period beginning on the
January 1 of the calendar year of the Annual Grant of which the Units are
a part and ending on the date of transfer to the Nonparticipating Company, and (ii) the
denominator of which is sixty (60).

 

4.3           Payment of
Units.

 

(a)           Subject to Section 4.3(b) and
the Participant’s Grant Agreement, the Participating Company that employs a
Participant on the date his or her Units become vested shall pay the
Participant in cash in a single lump sum the amount due the Participant under Section 1.9
as soon as practicable after the date that the Units become vested.

 

10

 

(b)           Notwithstanding
the foregoing, in no event shall the lump sum payment to a Participant under
paragraph (a) for any Unit exceed the Maximum Payout Amount applicable to
that Unit.  If, in accordance with the
prior sentence, a Participant’s lump sum payment is limited to the Maximum
Payout Amount, he or she shall receive the balance of the payment in three
equal annual installments of principal, together with interest thereon at the
prime rate as published in The Wall Street Journal on the date the
Participating Company makes the initial payment.  The installment payments do not reduce or
otherwise affect the determination of the Maximum Payment Amount in any
subsequent year.  No further employment
or other service is required for a Participant to receive the installment
payments.  Notwithstanding the foregoing
provisions, the payment of Units that become vested as a result of a Change to
Control shall not be subject to the Maximum Payment Amount, and all unpaid
installment payments of previously vested Units, and accrued interest thereon,
shall become immediately payable in full as a single lump sum on a Change of
Control.

 

Article 5 - Change Of Control

 

5.1           Effect of
Change of Control.  If a Change
of Control occurs and a Participant has a Termination Due to a Change of
Control before the Participant’s Vesting Date, then the Participant shall
become fully vested in all unvested Units.

 

5.2           Limits on
Payments Due to a Change of Control.  Notwithstanding any other provision of the
Plan, if a Participant would be subject to the excise tax under Code Section 4999
on the amounts payable under this Plan, and on any other amounts and benefits
received and to be received from the Company and all other entities by reason
of the provisions of Code Section 280G (the “Other 280G Amounts”), the
amounts payable under this Plan shall be reduced to an 

 

11

 

amount
one dollar less than the amount which, when combined with the Other 280G
Amounts, would subject the Participant to the excise tax under Code Section 4999.

 

Article 6 - Amendment And Termination

 

6.1           Termination and
Amendment.  The Board
in its sole discretion may terminate or amend the Plan at any time and from
time to time, including but not limited to amendments to the Plan necessary to
comply with the requirements of Section 16(b) of the Exchange Act, to
correct any defect, to reflect adjustments as a result of a Change of Control
or change in capitalization, and to supply an omission or reconcile any
inconsistency in the Plan or any Annual Grant of Units, without approval of the
shareholders of the Company, unless shareholder approval is required by Rule 16b-3
of the Exchange Act, applicable stock exchange or NASDAQ or other quotation
system rules, or applicable Code provisions. 
No amendment, termination or modification of the Plan shall affect any
Units previously granted in any material adverse way without the written
consent of the Participant.

 

Article 7 Other Provisions

 

7.1           No Right to
Continue Employment.  Nothing in
the Plan, any Grant Agreement, or any instrument shall confer upon any Employee
any right to continue to serve the Company or any Affiliated Company in the
capacity in effect at the time a Unit was granted, or shall affect the right of
the Company or any Affiliated Company to terminate the employment of an
Employee with or without notice and with or without cause.

 

7.2           Withholding.  The Participating Company’s obligation to pay
cash in payment of any Unit shall be subject to the statutory withholding
requirements under applicable foreign, federal, state, and local law.

 

12

 

7.3           Indemnification.  No member of the Board or the Committee, nor
any officer or employee of the Company or any Affiliated Company acting on
behalf of the Board or the Committee, shall be personally liable for any
action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Board or the Committee and each
officer or employee of the Company and any Affiliated Company acting on their
behalf shall, to the fullest extent permitted by law, be indemnified and
protected by the Company or Affiliated Company in respect of any such action, determination,
or interpretation.

 

7.4           Nonassignability.  No Units shall be assignable or transferable
by a Participant.  No payment with
respect to a vested Unit shall be assignable or transferable by a Participant
except by will, the laws of descent and distribution, and such other means as
the Committee approves from time to time.

 

7.5           Severability.  With respect to Participants subject to Section 16
of the Exchange Act, (a) the Plan is intended to comply with all
applicable conditions of Rule 16b-3 or its successors, (b) all
transactions involving Participants who are subject to Section 16(b) of
the Exchange Act are subject to such conditions, regardless of whether the
conditions are expressly set forth in the Plan, and (c) any provision of
the Plan that is contrary to a condition of Rule 16b-3 shall not apply to
Participants who are subject to Section 16(b) of the Exchange
Act.  If any of the provisions of this
Plan, or grants of Units, conflict with the requirements of Code Section 162(m) with
respect to Units governed by Code Section 162(m), then such terms or
provisions shall be inoperative to the extent they conflict with the
requirements of Code Section 162(m).

 

7.6           Other Plans.  Any Units and payments therefor shall not be
used in determining the benefits provided under any other benefit or incentive
plan of the Company or any Affiliated Company unless specifically provided by
that other plan or other agreement.

 

13

 

7.7           Governing Law.  The Plan and all agreements executed pursuant
to the Plan shall be governed by, and construed in accordance with, the laws of
the State of Delaware, without regard to its conflicts of law principles.

 

7.8           Gender and
Number.  Words denoting the masculine
gender shall include the feminine gender, and words denoting the feminine
gender shall include the masculine gender.

 

Words in the plural shall include the singular, and
the singular shall include the plural.

 

7.9           Acceleration of
Vesting.  The Committee may accelerate
the time at which a Unit will become nonforfeitable, notwithstanding the
provisions in the Plan.

 

7.10         No Rights of a
Shareholder.  No
Participant shall have rights of a shareholder with respect to any Units.

 

7.11         Unfunded Plan.  The Plan is unfunded.  The Company and all other Participating
Companies shall not segregate any of its assets for payment of Units, and no
Participant has any right, title, or interest in any asset of the Company and
Affiliated Company.  Participants have
only the rights of general unsecured creditors for the payment of Units.

 

7.12         Successors.  This Plan is binding on and shall inure to
the benefit of any successor to a Participating Company, whether by way of
merger, consolidation, purchase, or otherwise.

 

7.13         Headings.  The headings and captions used in the Plan
are for convenience only, are not a part of the Plan, and shall not
characterize, limit, or affect in any way the Plan’s provisions.

 

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IN WITNESS WHEREOF, the INO Therapeutics Long Term Incentive Plan, by
the authority of the Board of Directors of AGA Healthcare, is executed as of
the          day of June, 2002.

 

	
   

  	
  AGA HEALTHCARE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
  Attest

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Secretary

  	
   

  
	
  [Corporate Seal]

  	
   

  
				

 

15Exhibit 10.7

 

INO Therapeutics

 

Long Term Incentive Plan
Grant Certificate

 

 

	
  Employee
  Name:

  	
   

  	
  Elizabeth
  Larkin

  
	
   

  	
   

  	
   

  
	
  Effective
  Date of Grant:

  	
   

  	
  January 1,
  2006

  
	
   

  	
   

  	
   

  
	
  Grant
  Amount:

  	
   

  	
  19,600
  units

  
	
   

  	
   

  	
   

  
	
  Baseline
  Value:

  	
   

  	
  $5.64

  
	
   

  	
   

  	
   

  
	
  Vesting Date:

  	
   

  	
  January 1, 2011

  

 

We are very pleased to
present you with this Long-term Incentive Plan Grant.  As a recipient of this grant, you share in
the growth and performance of our Company. 
The potential value of your Long-term Incentive Plan units depends on
the success of our organization.

 

We congratulate you on your
performance to date.  As we progress as a
Company, we’re counting on every employee to make a difference for our future.

 

Shown below is a statement
of your Long Term Incentive Plan account balance:

 

	
  Grant
  Date

  	
   

  	
  Grant Amount

  	
   

  	
  Baseline Value

  	
   

  	
  Vesting Date

  	
   

  
	
  Jan
  1, 2002

  	
   

  	
  17,400 units

  	
   

  	
  $

  	
  2.84

  	
   

  	
  Jan
  1, 2007

  	
   

  
	
  Jan
  1, 2003

  	
   

  	
  25,400 units

  	
   

  	
  $

  	
  2.80

  	
   

  	
  Jan
  1, 2008

  	
   

  
	
  Jan
  1, 2004

  	
   

  	
  19,800 units

  	
   

  	
  $

  	
  4.32

  	
   

  	
  Jan
  1, 2009

  	
   

  
	
  Jan
  1, 2005

  	
   

  	
  19,000 units

  	
   

  	
  $

  	
  5.12

  	
   

  	
  Jan
  1, 2010

  	
   

  
	
  Jan
  1, 2006

  	
   

  	
  19,600 units

  	
   

  	
  $

  	
  5.64

  	
   

  	
  Jan
  1, 2011

  	
   

  

 

When your units vest, you
will receive a cash payout equal to the appreciation of the units.  This year you will receive an LTIP payout of
$24,426.00 (less taxes) with respect to 6,900 units granted on January 1,
2001.

 

This grant is
non-transferable and has no cash value. 
The Company makes no guarantee on the future performance of the Company,
or on the appreciation of Long-term Incentive Plan units.  This certificate does not represent a
contract of employment or assurance of future programs or grants.  All aspects of this plan are governed by the
INO Long-Term Inventive Plan document.

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