Document:

CONSTRUCTION AGREEMENT

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                Civil construction standard contracting Agreement
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     CONSTRUCTION: LCOS LINE CONSTRUCTION

     CONSTRUCTION SITE: BLOCK 9 FOREIGNERS COMPLEX JINSA, BANGJI-RI,
     SEONAM-MYEON, SACHEON-SI, GYEONGNAM

     DATE OF COMMENCEMENT: OCTOBER 4, 2004

     DATE OF COMPLETION: JANUARY 2005

     CONTRACT AMOUNT: 4,400,000,000 WON

     PROVISION COST: 4,000,000,000 WON

     VAT: 400,000,000 WON

     PREPAYMENT: 400,000,000 WON (10% OF THE CONTRACT AMOUNT, EXCLUDING VAT)

     PAYMENTS ON PARTIAL COMPLETION: ONCE MONTHLY

     DEFECT WARRANTY RATE: 5% OF THE CONTRACT AMOUNT

     DEFECT WARRANTY LIABILITY PERIOD: 24 MONTHS AFTER THE COMPLETION OF
     CONSTRUCTION

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     THE CLIENT AND THE CONTRACTOR HEREBY EXECUTE THE AGREEMENT ATTACHED HERETO
     PURSUANT TO MUTUAL AGREEMENT AND COVENANT TO PERFORM THEIR OBLIGATIONS
     UNDER THE AGREEMENT IN A SPIRIT OF GOOD FAITH AND MUTUAL TRUST, AND IN
     WITNESS WHEREOF, BOTH PARTIES SHALL PREPARE TWO COPIES OF THE AGREEMENT,
     WITH EACH PARTY MAINTAINING ONE COPY.

     ATTACHED DOCUMENTATION

     1. ONE COPY OF THE CONSTRUCTION STANDARD AGREEMENT GENERAL CONDITIONS

     2. ONE COPY OF THE CONSTRUCTION CONTRACT SPECIAL CONDITIONS

     3. ONE COPY OF THE DESIGN AND PRODUCTION DETAILS

<TABLE>
<CAPTION>

                                                               OCTOBER 4, 2004
---------------------------------------------------------------------------------------------------------------
<S>  <C>                                                    <C>
    CLIENT:                                                CONTRACTOR:
     ADDRESS: 161-6 JEONGOE-RI, SACHEON-EUP,                ADDRESS: 165-2 SAMSUNG-DONG, GANGNAM GU, SEOUL
     SACHEON-SI, GYEONGNAM
     COMPANY: SPATIALIGHT KOREA CO., LTD.                   COMPANY: SUNGDO ENGINEERING & CONSTRUCTION CO.,
     NAME: ROBERT A. OLINS, REPRESENTATIVE DIRECTOR         LTD.
     [COMPANY SEAL]                                         NAME: IN SU SEO, REPRESENTATIVE DIRECTOR
                                                            [COMPANY SEAL]

-------------------------------------------------------- ------------------------------------------------------
</TABLE>

                                       2
<PAGE>

               CONSTRUCTION STANDARD AGREEMENT GENERAL CONDITIONS

ARTICLE 1         GENERAL PRINCIPLES

    The Client and the Contractor shall implement the terms and conditions of
    this Agreement in a spirit of mutual trust and cooperation on equivalent
    positions hereunder.

ARTICLE 2         GUARANTEES

    (1)    In order to guarantee the performance of obligations hereunder, by
           the date of execution herein, the Client and the Contractor shall
           mutually deliver the requisite security deposits for this Agreement,
           provided that the amount of the security deposit to the Contract
           Amount shall be determined upon mutual consultation between the
           parties.

    (2)    The security deposit in the preceding Paragraph 1 may be replaced by
           a guarantee certificate issued by any of the financial institutions
           in Article 24 upon consent of both parties hereto.

ARTICLE 3         GUARANTORS

    If guarantors are arranged for this Agreement, such guarantors shall be
    jointly and severally liable with the parties hereto for damages arising in
    connection to the non-performance of the terms and conditions of this
    Agreement by either party.

ARTICLE 4         CONSTRUCTION SUPERVISORS

(1)        The Client may appoint a representative (hereafter "Construction
           Supervisor") to perform the following items:

               1.   General supervision of the course of construction and
                    presence on site

               2.   Inspection of construction and materials used; presence at
                    inspections and examinations

               3.   Inspection of completed portions, final inspection, and
                    presence upon delivery of the construction objective

               4.   Other matters entrusted by the Client to the Construction
                    Supervisor

(2)        When a Construction Supervisor is appointed as per the preceding
           Paragraph 1, the Client shall provide immediate notification of the
           fact thereof to the Contractor.

(3)        If the Contractor deems that the Construction Supervisor's activities
           or instructions are significantly inappropriate to the course of
           construction, it may request necessary measures after providing
           notification of the grounds thereof to the Client.

                                       3
<PAGE>

ARTICLE 5         SITE REPRESENTATIVE

(1)        The Contractor shall appoint a Site Representative and shall notify
           the Client of the fact thereof.

(2)        The Site Representative shall be stationed at the Construction Site,
           and shall represent the Contractor regarding all matters with respect
           to the course of construction.

(3)        If the Client deems that the Site Representative designated by the
           Contractor in the above Paragraph 1 is incompetent to perform duties
           due to poor health or lack of abilities, the Client may demand
           replacement thereof, and the Contractor, without any just cause for
           refusal, shall respond to such requests forthwith.

ARTICLE 6         ANTICIPATED WORK SCHEDULE AND COST ESTIMATE

(1)        The Contractor shall present an anticipated work schedule and cost
           estimate based on the blueprints (blueprints and site manuals
           according to Article 2.14 of the Construction Act, including diagrams
           and construction specifications) to the Client from the date of
           execution herein to the Date of Commencement of the construction.

(2)        Notwithstanding the above Paragraph 1, in the event that the
           production details setting forth the quantity of construction are
           presented to the Client and the Contract Amount is determined
           pursuant to such production details, likewise the case of the Total
           Unit Price Agreement, the aforementioned production details shall be
           included in the blueprints mentioned in the preceding Paragraph 1. In
           this regard, the Contractor shall present the anticipated work
           schedule to the Client by the date when the Contractor files a
           construction report with the relevant authority.

ARTICLE 7         PREPAYMENT

(1)        If the Client provides prepayments, the Contractor shall not use such
           prepayments for any purpose other than contracting, and shall use
           such prepayments first for provision of wages and securing of
           materials.

(2)        The prepayment shall be assessed in the following manner as
           remuneration for completed portions:

           Prepayment settlement amount = Prepayment x (Remuneration for
completed portions / Contract Amount) ARTICLE 8 INSPECTION OF MATERIALS

                                       4
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(3)        If the Client designates certain items for materials used in the
           construction and demands inspection thereof, such items shall be
           inspected by the Client in advance. If there are significant
           disparities with the blueprints or if the quality of the materials is
           low and fails to conform to the specifications, the materials in
           question shall be immediately replaced and inspection shall be
           performed again.

(4)        The Contractor shall bear expenses required for the inspection of
           materials in the preceding Paragraph 1 and shall not demand an
           extension of the contract period due to an inspection or
           re-inspection.

(5)        Among the materials used in construction, those requiring assembly
           and/or testing shall be assembled and tested in the presence of the
           Client.

(6)        Underwater or underground construction, or construction which cannot
           be confirmed from plain view of the Client after completion by the
           Contractor shall be conducted in the Client's presence.

ARTICLE 9         MATERIALS PROVIDED AND LEASED ITEMS

(1)        Pursuant to this Agreement, materials and leased items provided by
           the Client shall be delivered in a timely fashion to avoid any
           disruptions to the construction schedule. Materials and leased items
           shall be delivered on site unless otherwise provided in the
           construction specifications.

(2)        If the Contractor deems the requirements or the quality of the
           materials provided or the leased items to be inappropriate to the
           construction, it shall report this immediately to the Client and
           request replacement of the items concerned.

(3)        If there is concern that the construction may be delayed due to
           delays in the provision of materials, the Contractor may use its own
           materials upon written consent of the Client. In this case, the
           Client shall provide the same materials used by the Contractor or
           remuneration for the cost thereof without delay.

(4)        The Contractor shall manage the materials and leased items provided
           by the Client in good faith and shall use them only for purposes of
           this Agreement.

(5)        The Contractor shall return any unused materials or used items
           rendered unnecessary upon any change in the details of construction
           to the Client without delay.

                                       5
<PAGE>

ARTICLE 10        PREPARATION OF DETAILED CONSTRUCTION BLUEPRINTS

(1)        If the Contractor receives a request for preparation of detailed
           construction blueprints from the construction superintendent pursuant
           to Article 19.2.4 of the Building Act, the Contractor shall prepare a
           detailed construction blueprint, and upon receiving confirmation from
           the construction superintendent, shall perform the construction
           accordingly.

(2)        The Client shall specify matters regarding the scope of preparation
           for the detailed construction blueprints in the construction
           specifications under this Agreement taking into consideration the
           opinion of the designer and the construction superintendent, as well
           as the characteristics of the construction itself.

ARTICLE 11        SAFETY MANAGEMENT AND COMPENSATION FOR ACCIDENTS

(1)        The Client shall take appropriate measures, including installation of
           safety facilities and purchase of insurance policy for prevention of
           industrial accidents.

(2)        Liabilities regarding industrial accidents occurring on the
           Construction Site shall be the responsibility of the Contractor;
           provided that this shall not apply to defects in design or accidents
           from operations according to the Client's request.

ARTICLE 12        EMERGENCY MEASURES

(1)        Should the Contractor deem it specifically necessary to prevent
           accidents, it shall take preemptive emergency measures and shall
           provide notification to the Client forthwith.

(2)        If the Client deems it necessary to prevent accidents or deems that
           urgent unavoidable circumstances have occurred, it may request
           emergency measures from the Contractor.

(3)        Expenses arising in the preceding Paragraphs 1 and 2 shall comply
           with the provisions of Article 16.2 herein.

ARTICLE 13        EXTENSION OF THE CONSTRUCTION PERIOD

(1)        If the progress of the construction is interrupted due to reasons
           beyond the Contractor's control, including negligence or misconduct
           on the part of the Client, natural disasters, or incidents of force
           majeure, the Contractor may request extension of the construction
           period from the Client.

                                       6
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(2)        If the construction period is extended based on the above Paragraph
           1, additional expenses, including site management expenses, shall be
           adjusted as set forth in Article 18.

ARTICLE 14        NON-CONFORMING CONSTRUCTION

(1)        If any part of the construction does not conform to the blueprints,
           the Client may request rectification thereof to the Contractor and
           the Contractor shall respond to such requests forthwith.

(2)        In the event that construction is non-conforming to the blueprints as
           per the preceding Paragraph 1 and such non-conformance is due to the
           request or instruction of the Client, the Contractor shall not be
           liable therefore.

ARTICLE 15        DAMAGES DUE TO FORCE MAJEURE

(1)        Upon the occurrence of damages due to natural disaster or force
           majeure to completed portions that have been inspected or to leased
           items, the Contractor shall provide notification of such fact to the
           Client forthwith.

(2)        If the Client is notified as per Paragraph 1 above, it shall
           investigate and confirm the allegations as presented, and shall
           negotiate the indemnification for damages with the Contractor.

(3)        If an agreement is not reached in connection with the preceding
           Paragraph 2, the provisions of Article 32 shall prevail.

ARTICLE 16        ADJUSTMENT OF THE CONTRACT AMOUNT DUE TO DESIGN CHANGES

(1)        If the details of the blueprints differ from the construction
           situation at the Construction Site; there are unclear matters,
           omissions, or errors; or if unanticipated situations with respect to
           the construction or changes in the business plan have occurred, the
           design shall be changed.

(2)        If changes in the construction occur due to changes in the previous
           Paragraph 1, the Contract Amount shall be adjusted according to the
           following criteria:

           1.         The unit price for the changed construction shall be based
                      on the unit price of the cost estimate pursuant to Article
                      6 herein.

           2.         New expense unit prices not included in the cost estimate
                      shall be the assessed unit prices at the time of the
                      design change.

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           3.         General expense management and returns regarding changed
                      construction shall apply the rate in the assessment
                      specification.

ARTICLE 17        ADJUSTMENT OF THE CONTRACT AMOUNT UPON CHANGES IN MATERIALS
                  PRICES

(1)        If after 60 days from the date of this Agreement, the price of items
           and expenditures included in the cost estimate fluctuate by more than
           5% of the Contract Amount for the uncompleted construction, the
           construction amount shall be adjusted.

(2)        Adjustments of the Contract Amount pursuant to Paragraph 1 shall
           apply to uncompleted construction after the change in prices for the
           anticipated work schedule, provided that adjustment shall not apply
           to construction completed prior to the date of such price change;
           further provided that in cases where delays occur due to the
           negligence or misconduct by the Client or due to natural disaster or
           force majeure, no adjustments shall be made.

ARTICLE 18        ADJUSTMENT OF THE CONTRACT AMOUNT ON CHANGES IN OTHER DETAILS

    If the Contract Amount must be adjusted for situations aside from those
    delineated in Articles 16 and 17, adjustment of the Contract Amount shall be
    made pursuant to such changes and, in this case, Article 16.2.3 shall apply.

ARTICLE 19        PARTIAL PAYMENT

(1)        If matters regarding partial payment are specified in this Agreement,
           the Contractor may request inspection of completed works, and the
           Client shall make inspections forthwith.

(2)        The Contractor may demand payment for partially completed works based
           on the unit price of the cost estimate in Article 6 and the results
           of inspection in the preceding Paragraph 1, and the Client shall pay
           in accordance with the provisions of this Agreement.

(3)        If the Client delays partial payment pursuant to the preceding
           Paragraph 2, the provisions of Article 22.4 shall apply.

ARTICLE 20        PARTIAL USE

(1)        The Client may make use of all or part of the constructed works prior
           to delivery with the consent of the Contractor.

(2)        In the case of the preceding Paragraph 1, the Client shall use the
           portion of the constructed works with reasonable care.

                                       8
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(3)        If the Client causes damage to the Contractor in connection with the
           use of the constructed works in the preceding Paragraph 1, or
           increases the Contractor's costs, the Client shall provide damages or
           restitution thereof.

ARTICLE 21        COMPLETION OF CONSTRUCTION

(1)        Upon completion of construction, the Contractor shall provide
           notification thereof to the Client and the Client, upon receiving
           notification, shall commence inspection of the construction in the
           Contractor's presence.

(2)        If the Contractor is unable to pass inspection in the preceding
           Paragraph 1, it shall immediately repair or reconstruct the
           deficiency immediately and undergo another inspection.

(3)        If the Contractor objects to the results of inspection, it may demand
           reinspection, and the Client must comply therewith.

ARTICLE 22        PAYMENT

(1)        After inspection, the Contractor shall immediately remove or return
           any surplus materials, waste, and temporary structures, and upon
           cleanup of the Construction Site, shall demand payment for the
           construction from the Client.

(2)        Lacking any other special agreements to the contrary, the Client
           shall pay for the construction simultaneously upon delivery of the
           construction objective.

(3)        If the Client pays for the construction in bills, such bills shall be
           limited to those that can be discounted by financial institutions and
           the Client shall pay the discount charges from the payment date to
           the maturity date of the bills to the Contractor upon delivery of the
           bills.

(4)        If the Client is unable to pay for the construction by the scheduled
           payment date, a late payment penalty interest, as applied generally
           by banks, shall be assessed on the unpaid amount until the actual
           payment date, and the Client shall pay such interest.

ARTICLE 23        COMPENSATION FOR DELAYS

(1)        If the Contractor is unable to finish the construction by the
           scheduled Date of Completion, the Contractor shall pay an amount
           (hereafter "Delayed Construction Compensation") obtained by
           multiplying the Delayed Construction Compensation ratio by the
           Contract Amount for each day in arrears to the Client; provided that
           this shall not apply to delays caused by events beyond the
           Contractor's control, including natural disaster, war, closure of
           ports, epidemics, and restrictions on travel due to quarantine.

                                       9
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(2)        The Client may deduct an amount corresponding to the portion
           completed and inspected for works in the preceding Paragraph 1 that
           are divisible.

(3)        The Client may set off construction payment or the late payment
           interest in Article 22 for Delayed Construction Compensation.

ARTICLE 24        DEFECT WARRANTIES

(1)        The Contractor shall provide an amount (hereafter "Defect Warranty
           Amount") obtained by multiplying the Defect Warranty Rate defined in
           this Agreement with the Contract Amount in cash or through one of the
           certificates delineated below to the Client following an inspection
           of the completed construction before payment thereof.

           1.         Warranties from the Korea Construction Finance Cooperative

           2.         Guarantee insurance policies

           3.         Bank payment guarantees

           4.         Bank regular deposit certificates

           5.         Trust company beneficiary certificates

           6.         Securities firm beneficiary certificates

           7.         Warranties from the Korea Specialty Contractor Financial
                      Cooperative

           8.         Warranties from the Korea Credit Guarantee Fund

(2)        The Contractor shall repair any defects related to the construction
           during the Defect Warranty Liability Period specified herein from the
           construction Date of Completion; provided that this shall not apply
           for natural disasters, force majeure, or other factors beyond the
           Contractor's control subsequent to delivery of the constructed
           subject matter.

(3)        If the Contractor fails to respond to demands for repair of defects
           pursuant to the preceding Paragraph 2, the Client may make repairs
           itself at the Contractor's expense. In this case, the expenses
           incurred shall be appropriated first from the Defect Warranty Amount,
           and should this be insufficient, the Client may demand the remainder
           from the Contractor.

                                       9
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(4)          Pursuant to the preceding Paragraph 1, the Defect Warranty Amount
           must be returned upon the expiry of the Defect Warranty Liability
           Period at the Contractor's request; provided that expenses for repair
           of defects directly performed by the Client pursuant to Paragraph 3
           shall be deducted.

ARTICLE 25        RESTRICTIONS ON SUBCONTRACTING

(1)        If the Contractor intends to subcontract part of the construction to
           a subcontractor, the consent of the Client must first be obtained;
           provided that if subcontracting for specialized construction is
           implemented via a specialized construction entity pursuant to the
           regulations of the Framework Act on the Construction Industry,
           notification to the Client may substituted for the aforementioned
           consent of the Client.

(2)        If the Client deems that the subcontractor for which it has been
           notified pursuant to the preceding Paragraph 1 is inappropriate, it
           may demand the replacement thereof and, in this case, the Contractor
           must replace the subcontractor absent just cause.

ARTICLE 26        TERMINATION OF THE AGREEMENT BY THE CLIENT

(1)        The Client may terminate or cancel all or part of this Agreement for
           any of the following reasons:

           1.         If the Contractor has failed to commence construction
                      after the Date of Commencement without just cause.

           2.         If it is clear that the Contractor will be unable to
                      complete construction by the scheduled Date of Completion
                      due to its neglect or wrongdoing.

           3.         If the objectives of the construction cannot be achieved
                      due to violation of the terms and conditions of this
                      Agreement by the Contractor.

(2)        Termination or cancellation of this Agreement shall be effective upon
           notification to the Contractor stating the cause thereof.

(3)        The Contractor shall comply with the following upon receiving
           notification pursuant to the preceding Paragraph 2:

           1.         The construction in question shall be suspended forthwith,
                      and all construction tools and materials must be removed
                      from the Construction Site.

           2.         The remaining materials and leased items under Article 9
                      shall be returned to the Client forthwith.

                                       11
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ARTICLE 27 TERMINATION OF  THE AGREEMENT BY THE CONTRACTOR

(1)        The Contractor may cancel or terminate the Agreement in part or in
           whole for any of the following reasons:

           1.         If the Contract amount is reduced more than 40% thereof
                      due to changes in the construction specifications.

           2.         If construction is suspended for more than 90 days due to
                      the neglect or wrongdoing of the Client, or more than 50%
                      of the construction period has exceeded during such
                      suspension.

           3.         If it is clear that the construction cannot be adequately
                      performed due to failure by the Client to fulfill its
                      obligations in this Agreement without just cause

(2)        Termination or cancellation of the Agreement pursuant to the
           preceding Paragraph 1 shall be effective upon notice to the Client of
           the causes thereof.

ARTICLE 28        COMPENSATION FOR DAMAGES

(1)        If this Agreement is terminated or cancelled pursuant to Articles 26
           and 27, both parties shall settle the Contract amount for the
           partially completed portions forthwith.

(2)        Should damages arise due to termination or cancellation of this
           Agreement pursuant to Articles 26 and 27, both parties may demand
           compensation for such damages.

ARTICLE 29        TRANSFER OF RIGHTS AND OBLIGATIONS

    Rights and obligations hereunder may not be transferred or entrusted to a
    third party, provided that such shall not apply where the written consent of
    the other party and the consent of the guarantor have been attained.

ARTICLE 30        COMPLIANCE WITH RELEVANT LEGISLATION

(1)        Both parties shall comply with relevant laws and regulations,
           including the Framework Act on the Construction Industry, in the
           performance of the construction and the terms of this Agreement.

(2)        The Contractor shall comply with relevant laws and regulations,
           including the Framework Act on the Construction Industry and the Fair
           Transactions in Subcontracting Act, in the performance of the
           construction and the terms of this Agreement even if the contracted
           work is subcontracted.

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<PAGE>

ARTICLE 31        MITIGATION OF APPLICATION

    With respect to structures which do not apply to the Framework Act on the
    Construction Industry, the application of Articles 4, 5, 6, 10, 11, 17, 24,
    and 30.2. may be mitigated upon mutual consultation between the parties

ARTICLE 32        RESOLUTION OF DISPUTES

(1)        Disputes arising in relation to this Agreement other than
           stipulations made separately therewith shall be resolved upon mutual
           consultation between the parties.

(2)        If agreement cannot be reached as per the preceding Paragraph 1, the
           dispute in question shall be resolved through mediation or
           arbitration by a mediator or an arbitrating institution established
           pursuant to the relevant laws and regulations.

ARTICLE 33        ENTITIES THAT CAN BE DEEMED AS THE CLIENT

    In the application of Articles 8, 12, 14, 19.1, 21, and 25, the construction
    superintendent appointed by the construction supervisory agreement executed
    by the Client and the construction superintendent in accordance with the
    Building Act can be regarded as the Client.

ARTICLE 34        SPECIALLY AGREED MATTERS

    Other matters not specifically agreed herein may be agreed to through a
    separate agreement upon negotiation between the parties.

                                       13
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                             CONTRACT SPECIFICATIONS

                                       14
<PAGE>

CONDITION OF QUOTATION

           1.1        Common items

                      (1)        If a construction firm is designated after this
                                 Agreement has commenced, Sungdo ENG and the
                                 designated construction firm shall renew
                                 jointly, and construction shall proceed under
                                 the responsibility of Sungdo ENG for the
                                 overall Agreement.

                      (2)        All assessments of construction shall be as per
                                 the attached blueprints.

                      (3)        Upon subsequent revision of the design by the
                                 Client, unit prices for the changed quantity
                                 shall be as per pricing data and government
                                 standard rates.

                      (4)        The charges imposed on the construction by
                                 relevant laws shall be borne by the Client.

                      (5)        VAT shall be assessed separately.

                      (6)        Prepayment: 10%; Monthly payment: 90%

           1.2        Construction

                      (1)        Excess soil, rocks, sand and similar materials
                                 shall be carried off premises after
                                 constructing the foundations.

                      (2)        Pile construction shall be excluded from the
                                 construction.

                      (3)        Urethane panels shall be assessed as smooth
                                 Grade 3.

                      (4)        Clean room urethane panels shall be assessed as
                                 general grade (panel color to be determined by
                                 Client).

                      (5)        Steel structure paint criteria.

           1.3        Site civil engineering works

                      (1)        One side for the boundary stones, fences, and
                                 site is included and construction on
                                 neighboring plants shall be exempted.

                      (2)        Landscaping shall be assessed based on the
                                 legal criteria (master blueprints).

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<PAGE>

           1.4        Machinery and equipment

                      (1)        Capacity for ventilation facilities shall be
                                 based on utility consumption and establishment
                                 conditions shall be based on the basic scheme.

                      (2)        The ventilation duct for the clean room shall
                                 be a high speed duct.

                      (3)        Automatic control for ventilation facilities
                                 shall be based on conventional methods.

                      (4)        Installation of facilities provided by the
                                 Client shall be exempted.

           1.5        Utility construction

                      (1)        Design estimates were based on utility
                                 consumption criteria

                      (2)        Piping includes the main and secondary hookup
                                 factory expenses (piping only).

                      (3)        N2, O2, and air bottles shall be lease based.

           1.6        Electricity facilities construction

                      (1)        The Client shall bear amounts to be paid to
                                 KEPCO and pre-use inspection expenses.

                      (2)        Host system for communications shall be
                                 excepted.

                                       16
<PAGE>

<TABLE>
<CAPTION>

A. DIRECT COST
------------------------------------------ ----------------------------- -----------------------------------
                                           WON                           USD
------------------------------------------ ----------------------------- -----------------------------------
<S>                                        <C>                           <C>
A-1 Architecture & Civil Works             1,741,262,800
------------------------------------------ ----------------------------- -----------------------------------
A-2 Landscape Architecture                 31,000,000
------------------------------------------ ----------------------------- -----------------------------------
A-3 Electricity & Control Systems          288,343,459
------------------------------------------ ----------------------------- -----------------------------------
A-4 Utility Systems                        627,113,410
------------------------------------------ ----------------------------- -----------------------------------
A-5 Hvac System                            453,721,886
------------------------------------------ ----------------------------- -----------------------------------
A-6 Plumbing System                        108,446,676
------------------------------------------ ----------------------------- -----------------------------------
A-7 Fire Fighting System                   9,459,255
------------------------------------------ ----------------------------- -----------------------------------
A-8 Engineering Fees                       123,500,000
------------------------------------------ ----------------------------- -----------------------------------
A-9 Temporary Facilities                   29,000,000
------------------------------------------ ----------------------------- -----------------------------------
A-10 T.A.B                                 25,000,000
------------------------------------------ ----------------------------- -----------------------------------
A-11 Supervising Fees                      35,000,000
------------------------------------------ ----------------------------- -----------------------------------

------------------------------------------ ----------------------------- -----------------------------------

------------------------------------------ ----------------------------- -----------------------------------
Total Direct Costs                         3,471,647,486
------------------------------------------ ----------------------------- -----------------------------------

INDIRECT COST
------------------------------------------ ----------------------------- -----------------------------------
B-1 Refuse Disposal Fee                    20,000,000
------------------------------------------ ----------------------------- -----------------------------------
B-2 Government Permit                      25,000,000
------------------------------------------ ----------------------------- -----------------------------------
B-3 Insurance Fees                         37,541,088
------------------------------------------ ----------------------------- -----------------------------------
B-4 Safety Control Fees                    50,794,614
------------------------------------------ ----------------------------- -----------------------------------
B-5 Company Business Taxes
------------------------------------------ ----------------------------- -----------------------------------
B-6 Stamp Duties
------------------------------------------ ----------------------------- -----------------------------------

------------------------------------------ ----------------------------- -----------------------------------

------------------------------------------ ----------------------------- -----------------------------------
Total Indirect Costs                       133,335,702
------------------------------------------ ----------------------------- -----------------------------------

------------------------------------------ ----------------------------- -----------------------------------
Total Direct and Indirect Costs            3,605,183,188
------------------------------------------ ----------------------------- -----------------------------------

------------------------------------------ ----------------------------- -----------------------------------
Site & Project Management Fee
------------------------------------------ ----------------------------- -----------------------------------

------------------------------------------ ----------------------------- -----------------------------------
Overhead & Profit                          394,816,812
------------------------------------------ ----------------------------- -----------------------------------

------------------------------------------ ----------------------------- -----------------------------------
Total Amount                               4,000,000,000
------------------------------------------ ----------------------------- -----------------------------------
</TABLE>

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<TABLE>
<CAPTION>
BREAKDOWN OF PRICING SCHEDULE
-------------------------------------- ------------ ------------ ------------------------------ ------------
Description                            Unity        Qty          Cost                           Remarks
-------------------------------------- ------------ ------------ ------------------------------ ------------
                                                                 Unit       Amount
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
<S>                                    <C>          <C>          <C>        <C>                 <C>
"LcoS Line Project"
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A. Direct Costs
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1 Architecture & Civil Work          L/S          1                       1,741,262,800
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-1 Joint temporary structures work  L/S          1                       29,677,752
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-2 Temporary construction           L/S          1                       73,983,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-3                                  L/S          1                       28,536,300
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-4 Recent concrete                  L/S          1                       154,255,612
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-5 Steel frameworks                 L/S          1                       404,223,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-6 Structural                       L/S          1                       22,194,900
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-7 Waterproofing                    L/S          1                       20,926,620
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-8 Tile                             L/S          1                       27,797,527
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-9 Stonework                        L/S          1                       19,251,434
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-10 Metal                           L/S          1                       103,488,477
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-11 Plaster                         L/S          1                       44,314,760
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-12 Windows                         L/S          1                       71,520,423
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-13 Glass                           L/S          1                       22,053,275
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-14 Painting                        L/S          1                       19,337,042
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-15 Storage                         L/S          1                       217,357,826
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-16 Roof                            L/S          1                       95,494,006
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-17 Site                            L/S          1                       95,493,029
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-18 Civil Work                      L/S          1                       242,153,757
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-1-19 Security facilities             L/S          1                       49,203,980
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-2 Landscape Architecture             L/S          1                       31,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
</TABLE>

                                       18
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
<S>                                    <C>          <C>          <C>        <C>                 <C>
A-3 Electric & Control Systems                                              288,343,459
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-3-1 Mains and power work             L/S          1                       140,382,743
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-3-2 Grounding facilities             L/S          1                       4,735,969
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-3-3 Lighting                         L/S          1                       75,588,431
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-3-4 Electric heater installation     L/S          1                       8,983,650
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-3-5 Light electricity installation   L/S          1                       12,677,516
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-3-6 Fire fighting equipment          L/S          1                       6,869,850
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-3-7 Visiting facilities              L/S          1                       39,105,300
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4 Utility System                                                          627,113,410
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-1 N2 System                        L/S          1                       4,438,980
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-2 O2 System                        L/S          1                       581,295
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-3 Ar System                        L/S          1                       581,295
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-4 CDA System                       L/S          1                       116,047,620
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-5 P-VAC System                     L/S          1                       11,573,055
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-6 PCW System                       L/S          1                       17,812,993
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-7 DI System                        L/S          1                       144,795,300
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-8 Drain Treatment System           L/S          1                       90,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-9 Exhaust System                   L/S          1                       38,047,400
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-10 Main Piping Work                L/S          1                       114,708,528
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-4-11 Hook-up Piping Work             L/S          1                       88,525,944
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
</TABLE>

                                       19
<PAGE>

<TABLE>
<CAPTION>
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-5 HVAC System                                                             453,721,885
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
<S>                                    <C>          <C>          <C>        <C>                 <C>
A-5-1 Facilities installation          L/S          1                       310,797,299
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-5-2 Duck Work                        L/S          1                       142,924,587
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-6 Plumbing System                                                         108,446,676
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-6-1 Facilities installation          L/S          1                       11,138,669
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-6-2 Sewage facilities                L/S          1                       4,016,220
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-6-3 Water supply pipes               L/S          1                       15,832,382
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-6-4 Sanitary facilities              L/S          1                       10,427,375
installation
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-6-5 Steam pipe work                  L/S          1                       20,609,550
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-6-6 Kitchen facilities installation  L/S          1                       20,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-6-7 Gas pipe construction            L/S          1                       21,138,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-6-8 Smoke vent installation          L/S          1                       5,284,500
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-7 Fire Fighting System               L/S          1                       9,459,255
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-8 Engineering Fee                    L/S          1                       123,500,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-9 Temporary Facilities                                                    29,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-9-1 Temporary power                  L/S          1                       15,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-9-2 Temporary office installation    L/S          1                       14,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-10 T.A.B Work                        L/S          1                       25,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A-11 Supervising Fees                  L/S          1                       35,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
A. Direct Cost Sub Totals 3,471,847,486
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
</TABLE>

                                       20
<PAGE>

<TABLE>
<CAPTION>

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
B. Indirect Costs 133,335,702
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
<S>                                    <C>          <C>          <C>        <C>                 <C>
B-1 Refuse Disposal Fees               L/S          1                       20,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
B-2 Government Permits                 L/S          1                       25,000,000
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
B-3 Insurance Fees                     L/S          1                       37,541,088
-------------------------------------- ------------ ------------ ---------- ------------------- ------------
B-4 Safety Control Fees                L/S          1                       50,794,614
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
B. Indirect Costs Sub Total 133,335,702
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
C. Site & Project Managing Fees
(Direct Cost 3%)
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
D. Overhead & Profit 384,816,812
-------------------------------------- ------------ ------------ ---------- ------------------- ------------

-------------------------------------- ------------ ------------ ---------- ------------------- ------------
</TABLE>

                                       21Unassociated Document

Exhibit 10.6

 

HANA BIOSCIENCES, INC.

 

2004 STOCK INCENTIVE PLAN

 

1.  Purpose. The purpose of the 2004 Stock Incentive Plan (the “Plan”) of Hana Biosciences, Inc. (the “Company”) is to increase stockholder value and to advance the interests of the Company by furnishing a variety of economic incentives
(“Incentives”) designed to attract, retain and motivate employees, certain key consultants and directors of the Company. Incentives may consist of opportunities to purchase or receive shares of Common Stock, $.001 par value, of the Company (“Common Stock”) on terms determined under this Plan.

 

2.  Administration. The Plan shall be administered by the board of directors of the Company (the “Board of Directors”) or by a stock option or compensation committee (the “Committee”) of the Board of Directors. The Committee shall
consist of not less than two directors of the Company and shall be appointed from time to time by the Board of Directors. Each member of the Committee shall be (i) a “non-employee director” within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934 (including the regulations promulgated thereunder, the “1934 Act”) (a “Non-Employee Director”), and (ii) shall be an “outside director” within the meaning of Section 162(m) under the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations promulgated thereunder. The Committee shall have complete authority to award Incentives under the Plan, to interpret the Plan, and to make any other determination which it believes necessary and advisable for the proper administration of the Plan. The Committee’s decisions and matters relating to the Plan shall be final and conclusive on the Company and its participants. If at any time there is no stock option or compensation committee, the term “Committee”, as used in the Plan, shall refer to the Board of
Directors.

 

3.  Eligible Participants. Officers of the Company, employees of the Company or its subsidiaries, members of the Board of Directors, and consultants or other independent contractors who provide services to the Company or its subsidiaries shall be eligible to receive Incentives under the Plan when designated by the Committee. Participants may be designated individually or by groups or categories (for example, by pay grade) as the Committee deems appropriate. Participation by officers of the Company or its subsidiaries and any performance objectives relating to such officers must be approved by the
Committee. Participation by others and any performance objectives relating to others may be approved by groups or categories (for example, by pay grade) and authority to designate participants who are not officers and to set or modify such targets may be delegated.

 

4.  Types of Incentives. Incentives under the Plan may be granted in any one or a combination of the following forms: (a) incentive stock options and non-statutory stock options (Section 6); (b) stock appreciation rights (“SAR s”) (Section 7); (c) stock awards (Section 8); (d) restricted stock (Section 8); and (e) performance shares (Section 9).

 

5.  Shares Subject to the Plan.

 

5.1  Number of Shares. Subject to adjustment as provided in Section 10.6, the number of shares of Common Stock which may be issued under the Plan shall not exceed 2,500,000 shares of Common Stock. Shares of Common Stock that are issued under the Plan or are subject to outstanding Incentives will be applied to reduce the maximum number of shares of Common Stock
remaining available for issuance under the Plan.

 

5.2  Cancellation. To the extent that cash in lieu of shares of Common Stock is delivered upon the exercise of an SAR pursuant to Section 7.4, the Company shall be deemed, for purposes of applying the limitation on the number of shares, to have issued the greater of the number of shares of Common Stock which it was entitled to issue upon such exercise or on the
exercise of any related option. In the event that a stock option or SAR granted hereunder expires or is terminated or canceled unexercised as to any shares of Common Stock, such shares may again be issued under the Plan either pursuant to stock options, SARs or otherwise. In the event that shares of Common Stock are issued as restricted stock or pursuant to a stock award and thereafter are forfeited or reacquired by the Company pursuant to rights reserved upon issuance thereof, such forfeited and reacquired shares may again be issued under the Plan, either as restricted stock, pursuant to stock awards or otherwise. The Committee may also determine to cancel, and agree to the cancellation of, stock options in order to make a participant eligible for the grant of a stock option at a lower price than the option to be canceled.

	 
	 	 	 
	

	 

 

5.3  Type of Common Stock. Common Stock issued under the Plan in connection with stock options, SARs, performance shares, restricted stock or stock awards, may be authorized and unissued shares or treasury stock, as designated by the Committee.

 

6.  Stock Options. A stock option is a right to purchase shares of Common Stock from the Company. The Committee may designate whether an option is to be considered an incentive stock option or a non-statutory stock option. To the extent that any incentive stock option granted under the Plan ceases for any reason to qualify as an “incentive stock option” for purposes of Section 422 of the Code, such incentive stock option will continue to be outstanding for purposes of the Plan but will thereafter be deemed to be a non-statutory stock option. Each stock option granted by the Committee under
this Plan shall be subject to the following terms and conditions:

 

6.1  Price. The option price per share shall be determined by the Committee, subject to adjustment under Section 10.6.

 

6.2  Number. The number of shares of Common Stock subject to the option shall be determined by the Committee, subject to adjustment as provided in Section 10.6. The number of shares of Common Stock subject to a stock option shall be reduced in the same proportion that the holder thereof exercises a SAR if any SAR is granted in conjunction with or related to the stock
option. Notwithstanding the foregoing, no person shall receive grants of Stock Options under the Plan that exceed 1,000,000 shares during any one fiscal year of the Company.

 

6.3  Duration and Time for Exercise. Subject to earlier termination as provided in Section 10.4, the term of each stock option shall be determined by the Committee but shall not exceed ten years and one day from the date of grant. Each stock option shall become exercisable at such time or times during its term as shall be determined by the Committee at the time of
grant. The Committee may accelerate the exercisability of any stock option. Subject to the foregoing and with the approval of the Committee, all or any part of the shares of Common Stock with respect to which the right to purchase has accrued may be purchased by the Company at the time of such accrual or at any time or times thereafter during the term of the option.

 

6.4  Manner of Exercise. A stock option may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of shares of Common Stock to be purchased and accompanied by the full purchase price for such shares. The option price shall be payable (a) in United States dollars upon exercise of the option and may be paid by cash, uncertified or certified check or bank draft; (b) at the discretion of the Committee, by delivery of shares of Common Stock in payment of all or any part of the option price, which shares shall be valued for this purpose at the Fair Market Value on the date such
option is exercised; or (c) at the discretion of the Committee, by instructing the Company to withhold from the shares of Common Stock issuable upon exercise of the stock option shares of Common Stock in payment of all or any part of the exercise price and/or any related withholding tax obligations, which shares shall be valued for this purpose at the Fair Market Value or in such other manner as may be authorized from time to time by the Committee. The shares of Common Stock delivered by the participant pursuant to Section 6.4(b) must have been held by the participant for a period of not less than six months prior to the exercise of the option, unless otherwise determined by the Committee. 

	 
	 	2 	 
	

	 

 

6.5  Not a Stockholder. Prior to the issuance of Common Stock upon exercise of a stock option, a participant shall have no rights as a stockholder of the Company. 

 

6.6  Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options (as such term is defined in Section 422 of the Code):

 

(a)  The aggregate Fair Market Value (determined as of the time the option is granted) of the shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any participant during any calendar year (under the Plan and any other incentive stock option plans of the Company or any subsidiary or parent corporation of the Company) shall not exceed $100,000. The determination will be made by taking incentive stock options into account in the order in which they were granted. If such excess only applies to a portion of an Incentive Stock Option, the Committee, in its discretion, will designate which shares will be treated as shares to be acquired upon exercise of an
Incentive Stock Option.

 

(b)  Any Incentive Stock Option certificate authorized under the Plan shall contain such other provisions as the Committee shall deem advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the options as Incentive Stock Options.

 

(c)  All Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by Board of Directors or the date this Plan was approved by the stockholders.

 

(d)  Unless sooner exercised, all Incentive Stock Options shall expire no later than 10 years after the date of grant.

 

(e)  The option price for Incentive Stock Options shall be not less than the Fair Market Value of the Common Stock subject to the option on the date of grant.

 

(f)  If Incentive Stock Options are granted to any participant who, at the time such option is granted, would own (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the employer corporation or of its parent or subsidiary corporation, (i) the option price for such Incentive Stock Options shall be not less than 110% of the Fair Market Value of the Common Stock subject to the option on the date of grant and (ii) such Incentive Stock Options shall expire no later than five years after the date of grant.

 

7.  Stock Appreciation Rights. An SAR is a right to receive, without payment to the Company, a number of shares of Common Stock, cash or any combination thereof, the amount of which is determined pursuant to the formula set forth in Section 7.4. An SAR may be granted (a) with respect to any stock option granted under this Plan, either concurrently with
the grant of such stock option or at such later time as determined by the Committee (as to all or any portion of the shares of Common Stock subject to the stock option), or (b) alone, without reference to any related stock option. Each SAR granted by the Committee under this Plan shall be subject to the following terms and conditions:

	 
	 	3 	 
	

	 

 

7.1  Number. Each SAR granted to any participant shall relate to such number of shares of Common Stock as shall be determined by the Committee, subject to adjustment as provided in Section 10.6. In the case of an SAR granted with respect to a stock option, the number of shares of Common Stock to which the SAR pertains shall be reduced in the same proportion that the
holder of the option exercises the related stock option.

 

7.2  Duration. Subject to earlier termination as provided in Section 10.4, the term of each SAR shall be determined by the Committee but shall not exceed ten years and one day from the date of grant. Unless otherwise provided by the Committee, each SAR shall become exercisable at such time or times, to such extent and upon such conditions as the stock option, if any,
to which it relates is exercisable. The Committee may in its discretion accelerate the exercisability of any SAR.

 

7.3  Exercise. An SAR may be exercised, in whole or in part, by giving written notice to the Company, specifying the number of SARs which the holder wishes to exercise. Upon receipt of such written notice, the Company shall, within 90 days thereafter, deliver to the exercising holder certificates for the shares of Common Stock or cash or both, as determined by the Committee, to which the holder is entitled pursuant to Section 7.4 .

 

7.4  Payment. Subject to the right of the Committee to deliver cash in lieu of shares of Common Stock (which, as it pertains to officers and directors of the Company, shall comply with all requirements of the 1934 Act), the number of shares of Common Stock which shall be issuable upon the exercise of an SAR shall be determined by dividing:

 

(a)  the number of shares of Common Stock as to which the SAR is exercised multiplied by the amount of the appreciation in such shares (for this purpose, the “appreciation” shall be the amount by which the Fair Market Value of the shares of Common Stock subject to the SAR on the exercise date exceeds (1) in the case of an SAR related to a stock option, the purchase price of the shares of Common Stock under the stock option or (2) in the case of an SAR granted alone, without reference to a related stock option, an amount which shall be determined by the Committee at the time of grant, subject to adjustment under Section 10.6); by

 

(b)  the Fair Market Value of a share of Common Stock on the exercise date.

 

In lieu of issuing shares of Common Stock upon the exercise of a SAR, the Committee may elect to pay the holder of the SAR cash equal to the Fair Market Value on the exercise date of any or all of the shares which would otherwise be issuable. No fractional shares of Common Stock shall be issued upon the exercise of an SAR; instead, the holder of the SAR shall be entitled to receive a cash adjustment equal to the same fraction of the Fair Market Value of a share of Common Stock on the exercise date or to purchase the portion necessary to make a whole share at its Fair Market Value on the date of exercise.

 

7.5  Not Stockholder. The grant of an SAR to a participant shall not create any rights in such participant as a stockholder of the Company, until the payment of shares of Common Stock, if any, with respect to an award.

 

8.  Stock Awards and Restricted Stock. A stock award consists of the transfer by the Company to a participant of shares of Common Stock, without other payment therefor, as additional compensation for services to the Company. A share of restricted stock consists of shares of Common Stock which are sold or transferred by the Company to a participant at a price determined by the Committee (which price shall be at least equal to the minimum price required by applicable law for the issuance of a share of Common Stock) and subject to restrictions on their sale or other transfer by the participant. The
transfer of Common Stock pursuant to stock awards and the transfer and sale of restricted stock shall be subject to the following terms and conditions:

	 
	 	4 	 
	

	 

 

8.1  Number of Shares. The number of shares to be transferred or sold by the Company to a participant pursuant to a stock award or as restricted stock shall be determined by the Committee.

 

8.2  Sale Price. The Committee shall determine the price, if any, at which shares of restricted stock shall be sold to a participant, which may vary from time to time and among participants and which may be below the Fair Market Value of such shares of Common Stock at the date of sale.

 

8.3  Restrictions. All shares of restricted stock transferred or sold hereunder shall be subject to such restrictions as the Committee may determine, including, without limitation any or all of the following:

 

(a)  a prohibition against the sale, transfer, pledge or other encumbrance of the shares of restricted stock, such prohibition to lapse at such time or times as the Committee shall determine (whether in annual or more frequent installments, at the time of the death, disability or retirement of the holder of such shares, or otherwise);

 

(b)  a requirement that the holder of shares of restricted stock forfeit, or (in the case of shares sold to a participant) resell back to the Company at his or her cost, all or a part of such shares in the event of termination of his or her employment or consulting engagement during any period in which such shares are subject to restrictions;

 

(c)  such other conditions or restrictions as the Committee may deem advisable.

 

8.4  Escrow. In order to enforce the restrictions imposed by the Committee pursuant to Section 8.3, the participant receiving restricted stock shall enter into an agreement with the Company setting forth the conditions of the grant. Shares of restricted stock shall be registered in the name of the participant and deposited, together with a stock power endorsed in
blank, with the Company. Each such certificate shall bear a legend in substantially the following form:

 

The transferability of this certificate and the shares of Common Stock represented by it are subject to the terms and conditions (including conditions of forfeiture) contained in the 2004 Stock Incentive Plan of Hana Biosciences, Inc. (the “Company”), and an agreement entered into between the registered owner and the Company. A copy of the Plan and the agreement is on file in the office of the secretary of the Company.

 

8.5  End of Restrictions. Subject to Section 10.5, at the end of any time period during which the shares of restricted stock are subject to forfeiture and restrictions on transfer, such shares will be delivered free of all restrictions to the participant or to the participant’s legal representative, beneficiary or heir.

 

8.6  Stockholder. Subject to the terms and conditions of the Plan, each participant receiving restricted stock shall have all the rights of a stockholder with respect to shares of stock during any period in which such shares are subject to forfeiture and restrictions on transfer, including without limitation, the right to vote such shares. Dividends paid in cash or property other than Common Stock with respect to shares of restricted stock shall be paid to the participant currently. Unless the Committee determines otherwise in its sole discretion, any dividends or distributions (including regular quarterly cash
dividends) paid with respect to shares of Common Stock subject to the restrictions set forth above will be subject to the same restrictions as the shares to which such dividends or distributions relate. In the event the Committee determines not to pay dividends or distributions currently, the Committee will determine in its sole discretion whether any interest will be paid on such dividends or distributions. In addition, the Committee in its sole discretion may require such dividends and distributions to be reinvested (and in such case the participant consents to such reinvestment) in shares of Common Stock that will be subject to the same restrictions as the shares to which such dividends or distributions relate.

	 
	 	5 	 
	

	 

 

9.  Performance Shares. A performance share consists of an award which shall be paid in shares of Common Stock, as described below. The grant of performance share shall be subject to such terms and conditions as the Committee deems appropriate, including the following:

 

9.1  Performance Objectives. Each performance share will be subject to performance objectives for the Company or one of its operating units to be achieved by the end of a specified period. The number of performance shares granted shall be determined by the Committee and may be subject to such terms and conditions, as the Committee shall determine. If the performance objectives are achieved, each participant will be paid in shares of Common Stock or cash. If such objectives are not met, each grant of performance shares may provide for lesser payments in accordance with formulas established in the award.

 

9.2  Not Stockholder. The grant of performance shares to a participant shall not create any rights in such participant as a stockholder of the Company, until the payment of shares of Common Stock with respect to an award.

 

9.3  No Adjustments. No adjustment shall be made in performance shares granted on account of cash dividends which may be paid or other rights which may be issued to the holders of Common Stock prior to the end of any period for which performance objectives were established.

 

9.4  Expiration of Performance Share. If any participant’s employment or consulting engagement with the Company is terminated for any reason other than normal retirement, death or disability prior to the achievement of the participant’s stated performance objectives, all the participant’s rights on the performance shares shall expire and terminate unless otherwise determined by the Committee. In the event of termination of employment or consulting by reason of death, disability, or normal retirement, the Committee, in its own discretion may determine what portions, if any, of the performance shares
should be paid to the participant.

 

10.  General.

 

10.1  Effective Date. The Plan will become effective upon its approval by the Company’s stockholders. Unless approved by the stockholders within one year after the date of the Plan’s adoption by the Board of Directors, the Plan shall not be effective for any purpose.

 

10.2  Duration. The Plan shall remain in effect until all Incentives granted under the Plan have either been satisfied by the issuance of shares of Common Stock or the payment of cash or been terminated under the terms of the Plan and all restrictions imposed on shares of Common Stock in connection with their issuance under the Plan have lapsed. No Incentives may be granted under the Plan after the tenth anniversary of the date the Plan is approved by the stockholders of the Company.

 

10.3  Non-transferability of Incentives. No stock option, SAR, restricted stock or performance award may be transferred, pledged or assigned by the holder thereof (except, in the event of the holder’s death, by will or the laws of descent and distribution to the limited extent provided in the Plan or the Incentive), or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder, and the Company shall not be required to recognize any attempted assignment of such rights by any participant. Notwithstanding the preceding
sentence, stock options may be transferred by the holder thereof to Employee’s spouse, children, grandchildren or parents (collectively, the “Family Members”), to trusts for the benefit of Family Members, to partnerships or limited liability companies in which Family Members are the only partners or stockholders, or to entities exempt from federal income taxation pursuant to Section 501(c)(3) of the Internal Revenue Code of 1986, as amended. During a participant’s lifetime, a stock option may be exercised only by him or her, by his or her guardian or legal representative or by the transferees permitted by the preceding sentence.

	 
	 	6 	 
	

	 

 

10.4  Effect of Termination or Death. In the event that a participant ceases to be an employee of or consultant to the Company for any reason, including death or disability, any Incentives may be exercised or shall expire at such times as may be determined by the Committee.

 

10.5  Additional Conditions. Notwithstanding anything in this Plan to the contrary: (a) the Company may, if it shall determine it necessary or desirable for any reason, at the time of award of any Incentive or the issuance of any shares of Common Stock pursuant to any Incentive, require the recipient of the Incentive, as a condition to the receipt thereof or to the receipt of shares of Common Stock issued pursuant thereto, to deliver to the Company a written representation of present intention to acquire the Incentive or the
shares of Common Stock issued pursuant thereto for his or her own account for investment and not for distribution; and (b) if at any time the Company further determines, in its sole discretion, that the listing, registration or qualification (or any updating of any such document) of any Incentive or the shares of Common Stock issuable pursuant thereto is necessary on any securities exchange or under any federal or state securities or blue sky law, or that the consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with the award of any Incentive, the issuance of shares of Common Stock pursuant thereto, or the removal of any restrictions imposed on such shares, such Incentive shall not be awarded or such shares of Common Stock shall not be issued or such restrictions shall not be removed, as the case may be, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company. Notwithstanding any other provision of the Plan or any agreements entered into pursuant to the Plan, the Company will not be required to issue any shares of Common Stock under this Plan, and a participant may not sell, assign, transfer or otherwise dispose of shares of Common Stock issued pursuant to any Incentives granted under the Plan, unless (a) there is in effect with respect to such shares a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), and any applicable state or foreign securities laws or an exemption from such registration under the Securities Act and applicable state or foreign securities laws, and (b) there has been obtained any other consent, approval or permit from any other regulatory body which the Committee, in
its sole discretion, deems necessary or advisable. The Company may condition such issuance, sale or transfer upon the receipt of any representations or agreements from the parties involved, and the placement of any legends on certificates representing shares of Common Stock, as may be deemed necessary or advisable by the Company in order to comply with such securities law or other restrictions.

 

10.6  Adjustment. In the event of any recapitalization, stock dividend, stock split, combination of shares or other change in the Common Stock, the number of shares of Common Stock then subject to the Plan, including shares subject to restrictions, options or achievements of performance shares, shall be adjusted in proportion to the change in outstanding shares of Common Stock. In the event of any such adjustments, the purchase price of any option, the performance objectives of any Incentive, and the shares of Common Stock issuable pursuant to any Incentive shall be adjusted as and to the extent appropriate, in the
discretion of the Committee, to provide participants with the same relative rights before and after such adjustment.

 

10.7  Incentive Plans and Agreements. Except in the case of stock awards, the terms of each Incentive shall be stated in a plan or agreement approved by the Committee. The Committee may also determine to enter into agreements with holders of options to reclassify or convert certain outstanding options, within the terms of the Plan, as Incentive Stock Options or as non-statutory stock options and in order to eliminate SARs with respect to all or part of such options and any other previously issued options.

	 
	 	7 	 
	

	 

 

10.8  Withholdin.

 

(a)  The Company shall have the right to withhold from any payments made under the Plan or to collect as a condition of payment any taxes required by law to be withheld. At any time when a participant is required to pay to the Company an amount required to be withheld under applicable income tax laws in connection with a distribution of Common Stock or upon exercise of an option or SAR, the participant may satisfy this obligation in whole or in part by electing (the “Election”) to have the Company withhold from the
distribution shares of Common Stock having a value up to the minimum amount of withholding taxes required to be collected on the transaction. The value of the shares to be withheld shall be based on the Fair Market Value of the Common Stock on the date that the amount of tax to be withheld shall be determined (“Tax Date”).

 

(b)  Each Election must be made prior to the Tax Date. The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Incentive that the right to make Elections shall not apply to such Incentive. An Election is irrevocable.

 

(c)  If a participant is an officer or director of the Company within the meaning of Section 16 of the Exchange Act, then an Election is subject to the following additional restrictions:

 

(i)  No Election shall be effective for a Tax Date which occurs within six months of the grant or exercise of the award, except that this limitation shall not apply in the event death or disability of the participant occurs prior to the expiration of the six-month period.

 

(ii)  The Election must be made either six months prior to the Tax Date or must be made during a period beginning on the third business day following the date of release for publication of the Company’s quarterly or annual summary statements of sales and earnings and ending on the twelfth business day following such date.

 

10.9  No Continued Employment, Engagement or Right to Corporate Assets. No participant under the Plan shall have any right, because of his or her participation, to continue in the employ of the Company for any period of time or to any right to continue his or her present or any other rate of compensation. Nothing contained in the Plan shall be construed as giving an employee, a consultant, such persons’ beneficiaries or any other person any equity or interests of any kind in the assets of the Company or creating a trust of any kind or a fiduciary relationship of any kind between the Company and any such
person.

 

10.10  Deferral Permitted. Payment of cash or distribution of any shares of Common Stock to which a participant is entitled under any Incentive shall be made as provided in the Incentive. Payment may be deferred at the option of the participant if provided in the Incentive.

 

10.11  Amendment of the Plan. The Board may amend or discontinue the Plan at any time. However, no such amendment or discontinuance shall adversely change or impair, without the consent of the recipient, an Incentive previously granted. Further, no such amendment shall, without approval of the stockholders of the Company, (a) increase the maximum number of shares of Common Stock which may be issued to all participants under the Plan, (b) change or expand the types of Incentives that may be granted under the Plan, (c) change the class of persons eligible to receive Incentives under the Plan, or (d) materially
increase the benefits accruing to participants under the Plan.

	 
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10.12  Sale, Merger, Exchange or Liquidation. Unless otherwise provided in the agreement for an Incentive, in the event of an acquisition of the Company through the sale of substantially all of the Company’s assets or through a merger, exchange, reorganization or liquidation of the Company or a similar event as determined by the Committee (collectively a “transaction”), the Committee shall be authorized, in its sole discretion, to take any and all action it deems equitable under the circumstances, including but not limited to any one or more of the following:

 

(a)  providing that the Plan and all Incentives shall terminate and the holders of (i) all outstanding vested options shall receive, in lieu of any shares of Common Stock they would be entitled to receive under such options, such stock, securities or assets, including cash, as would have been paid to such participants if their options had been exercised and such participant had received Common Stock immediately prior to such transaction (with appropriate adjustment for the exercise price, if any), (ii) performance shares and/or SARs that entitle the participant to receive Common Stock shall receive, in lieu of any shares of Common Stock each participant was entitled to receive as of the date of the
transaction pursuant to the terms of such Incentive, if any, such stock, securities or assets, including cash, as would have been paid to such participant if such Common Stock had been issued to and held by the participant immediately prior to such transaction, and (iii) any Incentive under this Agreement which does not entitle the participant to receive Common Stock shall be equitably treated as determined by the Committee. 

 

(b)  providing that participants holding outstanding vested Common Stock based Incentives shall receive, with respect to each share of Common Stock issuable pursuant to such Incentives as of the effective date of any such transaction, at the determination of the Committee, cash, securities or other property, or any combination thereof, in an amount equal to the excess, if any, of the Fair Market Value of such Common Stock on a date within ten days prior to the effective date of such transaction over the option price or other amount owed by a participant, if any, and that such Incentives shall be cancelled, including the cancellation without consideration of all options that have an exercise price below
the per share value of the consideration received by the Company in the transaction. 

 

(c)  providing that the Plan (or replacement plan) shall continue with respect to Incentives not cancelled or terminated as of the effective date of such transaction and provide to participants holding such Incentives the right to earn their respective Incentives on a substantially equivalent basis (taking into account the transaction and the number of shares or other equity issued by such successor entity) with respect to the equity of the entity succeeding the Company by reason of such transaction.

 

(d)  providing that all unvested, unearned or restricted Incentives, including but not limited to restricted stock for which restrictions have not lapsed as of the effective date of such transaction, shall be void and deemed terminated, or, in the alternative, for the acceleration or waiver of any vesting, earning or restrictions on any Incentive.

 

The Board may restrict the rights of participants or the applicability of this Section  10.12 to the extent necessary to comply with Section 16(b) of the Securities Exchange Act of 1934, the Internal Revenue Code or any other applicable law or regulation. The grant of an Incentive award pursuant to the Plan shall not limit in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge, exchange or consolidate or to dissolve, liquidate, sell or transfer all or
any part of its business or assets. 

	 
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10.13  Definition of Fair Market Value. For purposes of this Plan, the “Fair Market Value” of a share of Common Stock at a specified date shall, unless otherwise expressly provided in this Plan, be the amount which the Committee or the Board of Directors determines in good faith to be 100% of the fair market value of such a share as of the date in question; provided, however, that notwithstanding the foregoing, if such shares are
listed on a U.S. securities exchange or are quoted on the Nasdaq National Market or Nasdaq Small-Cap Market (“Nasdaq”), then Fair Market Value shall be determined by reference to the last sale price of a share of Common Stock on such U.S. securities exchange or Nasdaq on the applicable date. If such U.S. securities exchange or Nasdaq is closed for trading on such date, or if the Common Stock does not trade on such date, then the last sale price used shall be the one on the date the Common Stock last traded on such U.S. securities exchange or Nasdaq.

 

10.14  Breach of Confidentiality, Assignment of Inventions, or Non-Compete Agreements. Notwithstanding anything in the Plan to the contrary, in the event that a participant materially breaches the terms of any confidentiality, assignment of inventions, or non-compete agreement entered into with the Company or any subsidiary of the Company, whether such breach occurs before or after termination of such participant’s employment or other service with the Company or any subsidiary, the Committee in its sole discretion may immediately terminate all rights of the participant under the Plan and any agreements
evidencing an Incentive then held by the participant without notice of any kind.

 

10.15  Governing Law. The validity, construction, interpretation, administration and effect of the Plan and any rules, regulations and actions relating to the Plan will be governed by and construed exclusively in accordance with the laws of the State of Delaware, notwithstanding the conflicts of laws principles of any jurisdictions.

 

10.16  Successors and Assigns. The Plan will be binding upon and inure to the benefit of the successors and permitted assigns of the Company and the participants in the Plan.

	 
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