Document:

2006 Equity Compensation Plan

 

Exhibit 4.1

Viragen, Inc.

2006 Equity Compensation Plan

 

 

Viragen, Inc.

2006 Equity Compensation Plan

1. Purpose.

     1.1 Purpose. The purpose of the Viragen, Inc. 2006 Equity Compensation Plan is to
enable the Company to offer to its employees, officers, directors and consultants whose past,
present and/or potential contributions to the Company and its Subsidiaries have been, are or will
be important to the success of the Company, an opportunity to acquire a proprietary interest in the
Company. The types of long-term incentive Awards that may be provided under the Plan will enable
the Company to respond to changes in compensation practices, tax laws, accounting regulations and
the size and diversity of its businesses.

2. Definitions.

     2.1 Definitions. For purposes of the Plan, the following terms shall be defined as
set forth below:

          (a) “Agreement” means the agreement between the Company and the Holder setting forth the terms
and conditions of an Award under the Plan. Agreements shall be in the form(s) attached hereto.

          (b) “Award” means Stock Options, Restricted Stock and/or other Stock Based Awards Awarded
under the Plan.

          (c) “Board” means the Board of Directors of the Company.

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

          (e) “Committee” means the Compensation Committee of the Board or any other committee of the
Board that the Board may designate to administer the Plan or any portion thereof. If no Committee
is so designated, then all references in this Plan to “Committee” shall mean the Board.

          (f) “Common Stock” means the common stock of the Company, $.01 par value per share.

          (g) “Company” means Viragen, Inc., a corporation organized under the laws of the State of
Delaware.

          (h) “Disability” means physical or mental impairment as determined under procedures
established by the Committee for purposes of the Plan.

          (i) “Effective Date” means the date set forth in Section 12.1, below.

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          (j) “Fair Market Value”, unless otherwise required by any applicable provision of the Code or
any regulations issued thereunder, means, as of any given date: (i) if the Common Stock is listed
on a national securities exchange, the closing price of the Common Stock in the principal trading
market for the Common Stock on such date, as reported by the exchange (or on the last preceding
trading date if such security was not traded on such date); (ii) if the Common Stock is not listed
on a national securities exchange, but is traded in the over-the-counter market, the closing bid
price for the Common Stock on such date, as reported by the OTC Bulletin Board or the National
Quotation Bureau, Incorporated or similar publisher of such quotations; and (iii) if the fair
market value of the Common Stock cannot be determined pursuant to clause (i) or (ii) above, such
price as the Committee shall determine, in good faith.

          (k) “Holder” means a person who has received an Award under the Plan.

          (l) “Incentive Stock Option” means any Stock Option intended to be and designated as an
“incentive stock option” within the meaning of Section 422 of the Code.

          (m) “Nonqualified Stock Option” means any Stock Option that is not an Incentive Stock Option.

          (n) “Normal Retirement” means retirement from active employment with the Company or any
Subsidiary, other than for Cause or due to death or disability, of a Holder who; (i) has reached
the age of 65; (ii) has reached the age of 62 and has completed 5 years of service with the
Company; or (iii) has reached the age of 60 and has completed 10 years of service with the Company.

          (o) “Other Stock-Based Award” means an Award under Section 9, below, that is valued in whole
or in part by reference to, or is otherwise based upon, Common Stock.

          (p) “Parent” means any present or future “parent corporation” of the Company, as such term is
defined in Section 424(e) of the Code.

          (q) “Plan” means the Viragen, Inc. 2006 Equity Compensation Plan, as hereinafter amended from
time to time.

          (r) “Repurchase Value” shall mean the Fair Market Value in the event the Award to be
repurchased under Section 10.2 is comprised of shares of Common Stock and the difference between
Fair Market Value and the Exercise Price (if lower than Fair Market Value) in the event the Award
is a Stock Option or Stock Appreciation Right; in each case, multiplied by the number of shares
subject to the Award.

          (s) “Restricted Stock” means Common Stock, received under an Award made pursuant to Section 8,
below that is subject to restrictions under said Section 8.

          (t) “SAR Value” means the excess of the Fair Market Value (on the exercise date) over the
exercise price that the participant would have otherwise had to pay to exercise the related Stock
Option, multiplied by the number of shares for which the Stock Appreciation Right is exercised.

          (u) “Stock Appreciation Right” means the right to receive from the Company, on surrender of
all or part of the related Stock Option, without a cash payment to the Company, a number of shares
of Common Stock equal to the SAR Value divided by the Fair Market Value (on the exercise date).

          (v) “Stock Option” or “Option” means any option to purchase shares of Common Stock that is
granted pursuant to the Plan.

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          (w) “Subsidiary” means any present or future “subsidiary corporation” of the Company, as such
term is defined in Section 424(f) of the Code.

3. Administration.

     3.1 Committee Membership. The Plan shall be administered by the Committee, the Board
or a committee designated by the Board. Committee members shall serve for such term as the Board
may in each case determine, and shall be subject to removal at any time by the Board. The
Committee members, to the extent deemed to be appropriate by the Board, shall be “non-employee
directors” as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as
amended (“Exchange Act”), and “outside directors” within the meaning of Section 162(m) of the Code.
The Committee shall conduct itself in conformance with the provisions of the Compensation
Committee Charter.

     3.2 Powers of Committee. The Committee shall have the authority and responsibility to
recommend to the Board for approval, Awards for Board members, executive officers, non-executive
employees and consultants of the Company, pursuant to the terms of the Plan: (i) Stock Options,
(ii) Stock Appreciation Rights, (iii) Restricted Stock, and/or (iv) Other Stock-Based Awards. For
purposes of illustration and not of limitation, the Committee shall have the authority (subject to
the express provisions of this Plan):

          (a) to select the officers, employees, directors and consultants of the Company or any
Subsidiary to whom Stock Options, Stock Appreciation Rights, Restricted Stock, and/or Other
Stock-Based Awards may from time to time be Awarded hereunder.

          (b) to determine the terms and conditions, not inconsistent with the terms of the Plan or
requisite Board approval, of any Award granted hereunder including, but not limited to, number of
shares, share exercise price or types of consideration paid upon exercise of Stock Options and the
purchase price of Common Stock Awarded under the Plan (including without limitation by a Holder’s
conversion of deferred salary or other indebtedness of the Company to the Holder), such as other
securities of the Company or other property, any restrictions or limitations, and any vesting,
exchange, surrender, cancellation, acceleration, termination, exercise or forfeiture provisions, as
the Committee shall determine;

          (c) to determine any specified performance goals or such other factors or criteria which need
to be attained for the vesting of an Award granted hereunder;

          (d) to determine the terms and conditions under which Awards granted hereunder are to operate
on a tandem basis and/or in conjunction with or apart from other equity Awarded under this Plan and
cash Awards made by the Company or any Subsidiary outside of this Plan; and

          (e) to determine the extent and circumstances under which Common Stock and other amounts
payable with respect to an Award hereunder shall be deferred that may be either automatic or at the
election of the Holder; and

     3.3 Interpretation of Plan.

          (a) Committee Authority. Subject to Section 11, below, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and practices governing
the Plan as it shall, from time to time, deem advisable, to interpret the terms and provisions of
the Plan and any Award issued under the Plan (and to determine the form and substance of all
Agreements relating

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thereto), and to otherwise supervise the administration of the Plan. Subject to Section 11,
below, all decisions made by the Committee pursuant to the provisions of the Plan shall be made in
the Committee’s sole discretion, subject to Board authorization if indicated, and shall be final
and binding upon all persons, including the Company, its Subsidiaries and Holders.

          (b) Incentive Stock Options. Anything in the Plan to the contrary notwithstanding, no
term or provision of the Plan relating to Incentive Stock Options (including but limited to Stock
Appreciation rights granted in conjunction with an Incentive Stock Option) or any Agreement
providing for Incentive Stock Options shall be interpreted, amended or altered, nor shall any
discretion or authority granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the Holder(s) affected, to disqualify any
Incentive Stock Option under such Section 422.

4 Stock Subject to Plan.

     4.1 Number of Shares. The total number of shares of Common Stock reserved and
available for issuance under the Plan shall be four (4) million shares. Shares of Common Stock
under the Plan may consist, in whole or in part, of authorized and unissued shares or treasury
shares. If any shares of Common Stock that have been granted pursuant to a Stock Option cease to
be subject to a Stock Option, or if any shares of Common Stock that are subject to any Stock
Appreciation Right, Restricted Stock, Deferred Stock Award, or Other Stock-Based Award granted
hereunder are forfeited or any such Award otherwise terminates without a payment being made to the
Holder in the form of Common Stock, such shares shall again be available for distribution in
connection with future grants and Awards under the Plan.

     4.2 Adjustment Upon Changes in Capitalization, Etc. In the event of any dividend
(other than a cash dividend) payable on shares of Common Stock, stock split, reverse stock split,
combination or exchange of shares, or other similar event (not addressed in Section 4.3, below)
occurring after the grant of an Award, which results in a change in the shares of Common Stock of
the Company as a whole, the number of shares issuable in connection with any such Award and the
purchase price thereof, if any, shall be proportionately adjusted to reflect the occurrence of any
such event. Any adjustment required by this Section 4.2 shall be made by the Committee, in good
faith,subject to Board authorization if indicated, whose determination will be final, binding and
conclusive.

     4.3 Certain Mergers and Similar Transactions. In the event of (a) a dissolution or
liquidation of the Company, (b) a merger or consolidation in which the Company is not the surviving
corporation (other than a merger or consolidation with a wholly-owned subsidiary, a reincorporation
of the Company in a different jurisdiction, or other transaction in which there is no substantial
change in the stockholders of the Company or their relative stock holdings and the Awards granted
under this Plan are assumed, converted or replaced by the successor corporation, which assumption
will be binding on all Awardees, (c) a merger in which the Company is the surviving corporation but
after which the stockholders of the Company immediately prior to such merger (other than any
stockholder that merges, or which owns or controls another corporation that merges, with the
Company in such merger) cease to own their shares or other equity interest in the Company, (d) the
sale of substantially all of the assets of the Company, or (e) the acquisition, sale, or transfer
of more than 50% of the outstanding shares of the Company by tender offer or similar transaction,
any or all outstanding Awards may be assumed, converted or replaced by the successor corporation
(if any), which assumption, conversion or replacement will be binding on all Awardees. In the
alternative, the successor corporation may substitute equivalent Awards or provide substantially
similar consideration to Awardees as was provided to stockholders (after taking into account the
existing provisions of the Awards). The successor corporation may also issue, in place of
outstanding Shares of the Company held by the Holder, substantially similar shares or other
property subject to

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repurchase restrictions no less favorable to the Holder. In the event such successor
corporation (if any) refuses or otherwise declines to assume or substitute Awards, as provided
above, (i) the vesting of any or all Awards granted pursuant to this Plan will accelerate
immediately prior to the effective date of a transaction described in this Section 4.3 and (ii) any
or all Options granted pursuant to this Plan will become exercisable in full prior to the
consummation of such event at such time and on such conditions as the Committee determines. If such
Options are not exercised prior to the consummation of the corporate transaction, they shall
terminate at such time as determined by the Committee. Subject to any greater rights granted to
Awardees under the foregoing provisions of this Section 4.3, in the event of the occurrence of any
transaction described in this Section 4.3, any outstanding Awards will be treated as provided in
the applicable agreement or plan of merger, consolidation, dissolution, liquidation, or sale of
assets.

5. Eligibility.

     Awards may be made or granted to employees, officers, directors and consultants who are deemed
to have rendered or to be able to render significant services to the Company or its Subsidiaries
and who are deemed to have contributed or to have the potential to contribute to the success of the
Company. No Incentive Stock Option shall be granted to any person who is not an employee of the
Company or a Subsidiary at the time of grant. Notwithstanding anything to the contrary contained
in the Plan, Awards covered or to be covered under a registration statement on Form S-8 may be made
under the Plan only if (a) they are made to natural persons, (b) who provide bona fide services to
the Company or its Subsidiaries, and (c) the services are not in connection with the offer and sale
of securities in a capital-raising transaction, and do not directly or indirectly promote or
maintain a market for the Company’s securities.

6. Stock Options.

     6.1 Grant and Exercise. Stock Options granted under the Plan may be of two types:
(i) Incentive Stock Options and (ii) Nonqualified Stock Options. Any Stock Option granted under
the Plan shall contain such terms, not inconsistent with this Plan, or with respect to Incentive
Stock Options, not inconsistent with the Plan and the Code, as the Committee may from time to time
approve. The Committee shall have the authority to grant Incentive Stock Options or Non-qualified
Stock Options, or both types of Stock Options, which may be granted alone or in addition to other
Awards granted under the Plan. To the extent that any Stock Option intended to qualify as an
Incentive Stock Option does not so qualify, it shall constitute a separate Nonqualified Stock
Option.

     6.2 Terms and Conditions. Stock Options granted under the Plan shall be subject to
the following terms and conditions:

          (a) Option Term. The term of each Stock Option shall be fixed by the Committee;
provided, however, that an Incentive Stock Option may be granted only within the ten-year period
commencing from the Effective Date and may only be exercised within ten years of the date of grant
(or five years in the case of an Incentive Stock Option granted to an optionee who, at the time of
grant, owns Common Stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company (“10% Stockholder”).

          (b) Exercise Price. The exercise price per share of Common Stock purchasable under a
Stock Option shall be determined by the Committee at the time of grant and may not be less than
100% of the Fair Market Value on the day of grant; provided, however, that the exercise price of an
Incentive Stock Option granted to a 10% Stockholder shall not be less than 110% of the Fair Market
Value on the date of grant.

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          (c) Exercisability. Stock Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the Committee and as set forth in
Section 10, below. If the Committee provides, in its discretion, that any Stock Option is
exercisable only in installments, i.e., that it vests over time, the Committee may waive such
installment exercise provisions at any time at or after the time of grant in whole or in part,
based upon such factors as the Committee shall determine.

          (d) Method of Exercise. Subject to whatever installment, exercise and waiting period
provisions are applicable in a particular case, Stock Options may be exercised in whole or in part
at any time during the term of the Option, by giving written notice of exercise to the Company
specifying the number of shares of Common Stock to be purchased. Such notice shall be accompanied
by payment in full of the purchase price, which shall be in cash or, if provided in the Agreement,
either in shares of Common Stock (including Restricted Stock and other contingent Awards under this
Plan) or partly in cash and partly in such Common Stock, or such other means which the Committee
determines are consistent with the Plan’s purpose and applicable law. Cash payments shall be made
by wire transfer, certified or bank check or personal check, in each case payable to the order of
the Company; provided, however, that the Company shall not be required to deliver certificates for
shares of Common Stock with respect to which an Option is exercised until the Company has confirmed
the receipt of good and available funds in payment of the purchase price thereof. Payments in the
form of Common Stock shall be valued at the Fair Market Value on the date prior to the date of
exercise. Such payments shall be made by delivery of stock certificates in negotiable form that
are effective to transfer good and valid title thereto to the Company, free of any liens or
encumbrances. A Holder shall have none of the rights of a Stockholder with respect to the shares
subject to the Option until such shares shall be transferred to the Holder upon the exercise of the
Option.

          (e) Transferability. Except as may be set forth in the Agreement, no Stock Option
shall be transferable by the Holder other than by will or by the laws of descent and distribution,
and all Stock Options shall be exercisable, during the Holder’s lifetime, only by the Holder (or,
to the extent of legal incapacity or incompetency, the Holder’s guardian or legal representative).

          (f) Termination by Reason of Death. If a Holder’s employment by the Company or a
Subsidiary terminates by reason of death, any Stock Option held by such Holder, unless otherwise
determined by the Committee at the time of grant and set forth in the Agreement, shall thereupon
automatically terminate, except that the portion of such Stock Option that has vested on the date
of death may thereafter be exercised by the legal representative of the estate or by the legatee of
the Holder under the will of the Holder, for a period of one year (or such other greater or lesser
period as the Committee may specify at grant) from the date of such death or until the expiration
of the stated term of such Stock Option, whichever period is the shorter.

          (g) Termination by Reason of Disability. If a Holder’s employment by the Company or
any Subsidiary terminates by reason of Disability, any Stock Option held by such Holder, unless
otherwise determined by the Committee at the time of grant and set forth in the Agreement, shall
thereupon automatically terminate, except that the portion of such Stock Option that has vested on
the date of termination may thereafter be exercised by the Holder for a period of one year (or such
other greater or lesser period as the Committee may specify at the time of grant) from the date of
such termination of employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter.

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          (h) Other Termination. Subject to the provisions of Section 13, below, and unless
otherwise determined by the Committee at the time of grant and set forth in the Agreement, if a
Holder is an employee of the Company or a Subsidiary at the time of grant and if such Holder’s
employment by the Company or any Subsidiary terminates for any reason other than death or
Disability, the Stock Option shall thereupon automatically terminate, except that if the Holder’s
employment is terminated by the Company or a Subsidiary without cause or due to Normal Retirement,
then the portion of such Stock Option that has vested on the date of termination of employment may
be exercised for the lesser of three months after termination of employment or the balance of such
Stock Option’s term.

          (i) Additional Incentive Stock Option Limitation. In the case of an Incentive Stock
Option, the aggregate Fair Market Value (on the date of grant of the Option) with respect to which
Incentive Stock Options become exercisable for the first time by a Holder during any calendar year
(under all such plans of the Company and its Parent and Subsidiary) shall not exceed $100,000.

          (j) Buyout and Settlement Provisions. The Committee may at any time, subject to Board
authorization, if indicated, offer to repurchase a Stock Option previously granted, based upon such
terms and conditions as the Committee shall establish and communicate to the Holder at the time
that such offer is made.

7. Stock Appreciation Rights.

     7.1 Grant and Exercise. The Committee, subject to Board authorization, if indicated,
may grant Stock Appreciation Rights to participants who have been, or are being granted, Stock
Options under the Plan as a means of allowing such participants to exercise their Stock Options
without the need to pay the exercise price in cash. In the case of a Nonqualified Stock Option, a
Stock Appreciation Right may be granted either at or after the time of the grant of such
Nonqualified Stock Option. In the case of an Incentive Stock Option, a Stock Appreciation Right
may be granted only at the time of the grant of such Incentive Stock Option.

     7.2 Terms and Conditions. Stock Appreciation Rights shall be subject to the following
terms and conditions:

          (a) Exercisability. Stock Appreciation Rights shall be exercisable as shall be
determined by the Committee and set forth in the Agreement, subject to the limitations, if any,
imposed by the Code, with respect to related Incentive Stock Options.

          (b) Termination. A Stock Appreciation Right shall terminate and shall no longer be
exercisable upon the termination or exercise of the related Stock Option.

          (c) Method of Exercise. Stock Appreciation Rights shall be exercisable upon such
terms and conditions as shall be determined by the Committee and set forth in the Agreement and by
surrendering the applicable portion of the related Stock Option. Upon such exercise and surrender,
the Holder shall be entitled to receive a number of shares of Common Stock equal to the SAR Value
divided by the Fair Market Value on the date the Stock Appreciation Right is exercised.

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          (d) Shares Affected Upon Plan. The granting of a Stock Appreciation Right shall not
affect the number of shares of Common Stock available for Awards under the Plan. The number of
shares available for Awards under the Plan will, however, be reduced by the number of shares of
Common Stock acquirable upon exercise of the Stock Option to which such Stock Appreciation Right
relates.

8. Restricted Stock.

     8.1 Grant. Shares of Restricted Stock may be Awarded either alone or in addition to
other Awards granted under the Plan. The Committee, subject to Board authorization, if indicated,
shall determine the eligible persons to whom, and the time or times at which, grants of Restricted
Stock will be Awarded, the number of shares to be Awarded, the price (if any) to be paid by the
Holder, the time or times within which such Awards may be subject to forfeiture (“Restriction
Period”), the vesting schedule and rights to acceleration thereof, and all other terms and
conditions of the Awards.

     8.2 Terms and Conditions. Each Restricted Stock Award shall be subject to the
following terms and conditions:

          (a) Certificates. Restricted Stock, when issued, will be represented by a stock
certificate or certificates registered in the name of the Holder to whom such Restricted Stock
shall have been Awarded. During the Restriction Period, certificates representing the Restricted
Stock and any securities constituting Retained Distributions (as defined below) shall bear a legend
to the effect that ownership of the Restricted Stock (and such Retained Distributions), and the
enjoyment of all rights appurtenant thereto, are subject to the restrictions, terms and conditions
provided in the Plan and the Agreement. Such certificates shall be deposited by the Holder with the
Company, together with stock powers or other instruments of assignment, each endorsed in blank,
which will permit transfer to the Company of all or any portion of the Restricted Stock and any
securities constituting Retained Distributions that shall be forfeited or that shall not become
vested in accordance with the Plan and the Agreement.

          (b) Rights of Holder. Restricted Stock shall constitute issued and outstanding shares
of Common Stock for all corporate purposes. The Holder will have the right to vote such Restricted
Stock, to receive and retain all regular cash dividends and other cash equivalent distributions as
the Board may in its sole discretion designate, pay or distribute on such Restricted Stock and to
exercise all other rights, powers and privileges of a holder of Common Stock with respect to such
Restricted Stock, with the exceptions that (i) the Holder will not be entitled to delivery of the
stock certificate or certificates representing such Restricted Stock until the Restriction Period
shall have expired and unless all other vesting requirements with respect thereto shall have been
fulfilled; (ii) the Company will retain custody of the stock certificate or certificates
representing the Restricted Stock during the Restriction Period; (iii) other than regular cash
dividends and other cash equivalent distributions as the Board may in its sole discretion
designate, pay or distribute, the Company will retain custody of all distributions (“Retained
Distributions”) made or declared with respect to the Restricted Stock (and such Retained
Distributions will be subject to the same restrictions, terms and conditions as are applicable to
the Restricted Stock) until such time, if ever, as the Restricted Stock with respect to which such
Retained Distributions shall have been made, paid or declared shall have become vested and with
respect to which the Restriction Period shall have expired; (iv) a breach of any of the
restrictions, terms or conditions contained in this Plan or the Agreement or otherwise established
by the Committee with respect to any Restricted Stock or Retained Distributions will cause a
forfeiture of such Restricted Stock and any Retained Distributions with respect thereto.

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          (c) Vesting; Forfeiture. Upon the expiration of the Restriction Period with respect
to each Award of Restricted Stock and the satisfaction of any other applicable restrictions, terms
and conditions (i) all or part of such Restricted Stock shall become vested in accordance with the
terms of the Agreement, subject to Section 10, below, and (ii) any Retained Distributions with
respect to such Restricted Stock shall become vested to the extent that the Restricted Stock
related thereto shall have become vested, subject to Section 10, below. Any such Restricted Stock
and Retained Distributions that do not vest shall be forfeited to the Company and the Holder shall
not thereafter have any rights with respect to such Restricted Stock and Retained Distributions
that shall have been so forfeited.

9. Other Stock-Based Awards.

     Other Stock-Based Awards may be Awarded, subject to limitations under applicable law, that are
denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or
related to, shares of Common Stock, as deemed by the Committee to be consistent with the purposes
of the Plan, including, without limitation, purchase rights, shares of Common Stock Awarded which
are not subject to any restrictions or conditions, or other rights convertible into shares of
Common Stock and Awards valued by reference to the value of securities of or the performance of
specified Subsidiaries. Other Stock-Based Awards may be Awarded either alone or in addition to or
in tandem with any other Awards under this Plan or any other plan of the Company. Each other
Stock-Based Award shall be subject to such terms and conditions as may be determined by the
Committee.

10. Accelerated Vesting and Exercisability.

     10.1 Non-Approved Transactions. If any “person” (as such term is used in Sections
13(d) and 14(d) of the Exchange Act of 1934, as amended (“Exchange Act”)), is or becomes the
“beneficial owner” (as referred in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 30% or more of the combined voting power of the Company’s
then outstanding securities in one or more transactions, and the Board does not authorize or
otherwise approve such acquisition, then the vesting periods of any and all Stock Options and other
Awards granted and outstanding under the Plan shall be accelerated and all such Stock Options and
Awards will immediately and entirely vest, and the respective holders thereof will have the
immediate right to purchase and/or receive any and all Common Stock subject to such Stock Options
and Awards on the terms set forth in this Plan and the respective agreements respecting such Stock
Options and Awards.

     10.2 Approved Transactions. The Committee may, subject to Board authorization, if
indicated, in the event of an acquisition of substantially all of the Company’s assets or at least
50% of the combined voting power of the Company’s then outstanding securities in one or more
transactions (including by way of merger or reorganization) which has been approved by the
Company’s Board of Directors, (i) accelerate the vesting of any and all Stock Options and other
Awards granted and outstanding under the Plan, and (ii) require a Holder of any Award granted under
this Plan to relinquish such Award to the Company upon the tender by the Company to Holder of cash
in an amount equal to the Repurchase Value of such Award.

11. Amendment and Termination.

     The Board may at any time, and from time to time, amend alter, suspend or discontinue any of
the provisions of the Plan, but no amendment, alteration, suspension or discontinuance shall be
made that would impair the rights of a Holder under any Agreement theretofore entered into
hereunder, without the Holder’s consent.

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12. Term of Plan.

     12.1 Effective Date. The Plan shall become effective at such time as the Plan is
approved and adopted by the Company’s Board of Directors (the “Effective Date”), subject to the
following provisions:

          (a) to the extent that the Plan authorizes the Award of Incentive Stock Options, stockholder
approval for the Plan shall be obtained within 12 months of the Effective Date; and

          (b) the failure to obtain stockholder for the Plan as contemplated by subparagraph (a) of this
Section 12 shall not invalidate the Plan; provided, however, that (i) in the absence of such
stockholder approval, Incentive Stock Options may not be Awarded under the Plan and (ii) any
Incentive Stock Options theretofore Awarded under the Plan shall be converted into Non-Qualified
Options upon terms and conditions determined by the Committee to reflect, as nearly as is
reasonably practicable in its sole determination, the terms and conditions of the Incentive Stock
Options being so converted.

     12.2 Termination Date. Unless otherwise terminated by the Board, this Plan shall
continue to remain effective until the earlier of ten (10) years from the Effective Date or such
time as no further Awards may be granted and all Awards granted under the Plan are no longer
outstanding. Notwithstanding the foregoing, grants of Incentive Stock Options may be made only
during the ten-year period following the Effective Date.

13. General Provisions.

     13.1 Written Agreements. Each Award granted under the Plan shall be confirmed by, and
shall be subject to the terms, of the Agreement executed by the Company and the Holder. The
Committee may terminate any Award made under the Plan if the Agreement relating thereto is not
executed and returned to the Company within 10 days after the Agreement has been delivered to the
Holder for his or her execution.

     13.2 Unfunded Status of Plan. The Plan is intended to constitute an “unfunded” plan
for incentive and deferred compensation. With respect to any payments not yet made to a Holder by
the Company, nothing contained herein shall give any such Holder any rights that are greater than
those of a general creditor of the Company.

     13.3 Employees.

          (a) Engaging in Competition With the Company; Disclosure of Confidential Information.
If a Holder’s employment with the Company or a Subsidiary is terminated for any reason whatsoever,
and within three months after the date thereof such Holder either (i) accepts employment with any
competitor of, or otherwise engages in competition with, the Company or (ii) discloses to anyone
outside the Company or uses any confidential information or material of the Company in violation of
the Company’s policies or any agreement between the Holder and the Company, the Committee, in its
sole discretion, may require such Holder to return to the Company the economic value of any Award
that was realized or obtained by such Holder at any time during the period beginning on that date
that is six months prior to the date such Holder’s employment with the Company is terminated.

          (b) Termination for Cause. The Committee may, if a Holder’s employment with the
Company or a Subsidiary is terminated for cause, annul any Award granted under this Plan to such
employee and, in such event, the Committee, in its sole discretion, may require such Holder to
return to the Company the economic value of any Award that was realized or obtained by such Holder
at any time

10

 

during the period beginning on that date that is six months prior to the date such Holder’s
employment with the Company is terminated.

          (c) No Right of Employment. Nothing contained in the Plan or in any Award hereunder
shall be deemed to confer upon any Holder who is an employee of the Company or any Subsidiary any
right to continued employment with the Company or any Subsidiary, nor shall it interfere in any way
with the right of the Company or any Subsidiary to terminate the employment of any Holder who is an
employee at any time.

     13.4. Investment Representations; Company Policy. The Committee may require each
person acquiring shares of Common Stock pursuant to a Stock Option or other Award under the Plan to
represent to and agree with the Company in writing that the Holder is acquiring the shares for
investment without a view to distribution thereof. Each person acquiring shares of Common Stock
pursuant to a Stock Option or other Award under the Plan shall be required to abide by all policies
of the Company in effect at the time of such acquisition and thereafter with respect to the
ownership and trading of the Company’s securities.

     13.5 Additional Incentive Arrangements. Nothing contained in the Plan shall prevent
the Board from adopting such other or additional incentive arrangements as it may deem desirable,
including, but not limited to, the granting of Stock Options and the Awarding of Common Stock and
cash otherwise than under the Plan; and such arrangements may be either generally applicable or
applicable only in specific cases.

     13.6 Withholding Taxes. Not later than the date as of which an amount must first be
included in the gross income of the Holder for Federal income tax purposes with respect to any
option or other Award under the Plan, the Holder shall pay to the Company, or make arrangements
satisfactory to the Committee regarding the payment of, any Federal, state and local taxes of any
kind required by law to be withheld or paid with respect to such amount. If permitted by the
Committee, tax withholding or payment obligations may be settled with Common Stock, including
Common Stock that is part of the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditioned upon such payment or arrangements
and the Company or the Holder’s employer (if not the Company) shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind otherwise due to the
Holder from the Company or any Subsidiary.

     13.7 Governing Law. The Plan and all Awards made and actions taken thereunder shall
be governed by and construed in accordance with the laws of the State of Delaware.

     13.8 Other Benefit Plans. Any Award granted under the Plan shall not be deemed
compensation for purposes of computing benefits under any retirement plan of the Company or any
Subsidiary and shall not affect any benefits under any other benefit plan now or subsequently in
effect under which the availability or amount of benefits is related to the level of compensation
(unless required by specific reference in any such other plan to Awards under this Plan).

     13.9 Non-Transferability. Except as otherwise expressly provided in the Plan or the
Agreement, no right or benefit under the Plan may be alienated, sold, assigned, hypothecated,
pledged, exchanged, transferred, encumbranced or charged, and any attempt to alienate, sell,
assign, hypothecate, pledge, exchange, transfer, encumber or charge the same shall be void.

     13.10 Applicable Laws. The obligations of the Company with respect to all Stock
Options and Awards under the Plan shall be subject to (i) all applicable laws, rules and
regulations and such approvals by any governmental agencies as may be required, including, without
limitation, the Securities Act of

11

 

1933, as amended, and (ii) the rules and regulations of any securities exchange on which the
Common Stock may be listed.

     13.11 Conflicts. If any of the terms or provisions of the Plan or an Agreement
conflict with the requirements of Section 422 of the Code, then such terms or provisions shall be
deemed inoperative to the extent they so conflict with such requirements. Additionally, if this
Plan or any Agreement does not contain any provision required to be included herein under Section
422 of the Code, such provision shall be deemed to be incorporated herein and therein with the same
force and effect as if such provision had been set out at length herein and therein. If any of the
terms or provisions of any Agreement conflict with any terms or provisions of the Plan, then such
terms or provisions shall be deemed inoperative to the extent they so conflict with the
requirements of the Plan. Additionally, if any Agreement does not contain any provision required
to be included therein under the Plan, such provision shall be deemed to be incorporated therein
with the same force and effect as if such provision had been set out at length therein.

     13.12 Non-Registered Stock. The shares of Common Stock to be distributed under this
Plan have not been, as of the Effective Date, registered under the Securities Act of 1933, as
amended, or any applicable state or foreign securities laws and the Company has no obligation to
any Holder to register the Common Stock or to assist the Holder in obtaining an exemption from the
various registration requirements, or to list the Common Stock on a national securities exchange or
any other trading or quotation system.

12

 

Plan Amendments

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Date Approved	 	 	 	 	 	 
	Date Approved	 	by Stockholders, if	 	 	 	 	 	Description of
	by Board	 	necessary	 	Sections Amended	 	Amendments
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 

13

 

FORM OF OPTION AWARD AGREEMENT

VIRAGEN, INC.

865 SW 78th Avenue, Suite 100

Plantation, FL 33324

[DATE]

 

 

 

          Re:    Stock Option

Dear __________:

     We are pleased to advise you that, on [___], the Board of Directors of Viragen, Inc.
authorized the Award to you of an option to purchase [___] shares of our common stock, par
value $.01 per share (the “Option”), upon the following terms and conditions:

     1. The Option is granted in accordance with and subject to the terms and conditions of the
Company’s 2006 Equity Compensation Plan (the “Plan”).

     2. The Option is [an incentive] [non-qualified] stock option.

     3. The Option is exercisable commencing on [___] and terminating at 5:00 pm New York
time on [___].

     4. The price at which the Option may be exercised is $[___] per share.

     5. The Option is non-transferable and may be exercised, in whole or in part, during the
exercise period, only by you, except that upon your death, the Option may be exercised strictly in
accordance with the terms and conditions of the Plan.

     6. The exercise price and number of shares issuable upon exercise of the Option (the “Option
Shares”) are subject to adjustment in accordance with the Plan in the event of stock splits,
dividends, reorganizations and similar corporate events.

     7. If, neither the Option nor the Option Shares have been registered under the Securities Act
of 1933, as amended (the “Act”), and the Option Shares may not be sold, assigned, pledged,
transferred or otherwise disposed of absent registration under the Act or the availability of an
applicable exemption from registration. All certificates evidencing the Option Shares will contain
a legend describing this restriction on resale of the Option Shares. There is no assurance that
there will be a public market into which you may sell the Option Shares or that you will be able to
sell your Option Shares at a profit or at all.

14

 

     8. In order to exercise the Option, you must provide us with written notice that you are
exercising all or a portion of your Option. The written notice must specify the number of Option
Shares that you are exercising your Option for, and must be accompanied by the exercise price
described in paragraph 4, above. Your Option Shares will be issued to you within approximately one
week following our receipt of your exercise notice and cleared funds evidencing the exercise price.

     9. No rights or privileges of a stockholder of the Company are conferred by reason of the
grant of the Option to you. You will have no rights of a stockholder until you have delivered your
exercise notice to us and we have received the exercise price of the Option in cleared funds.

     You understand that the Plan contains important information about your Option and your rights
with respect to the Option. The Plan includes terms relating to your right to exercise the Option;
important restrictions on your ability to transfer the Option or Option Shares; provisions relating
to adjustments in the number of Option Shares and the exercise price; and early termination of the
Option following the occurrence of certain events; including the termination of your relationship
with us. By signing below, you acknowledge your receipt of a copy of the Plan. By acceptance of
your Option, you agree to abide by the terms and conditions of the Plan.

     10. We are a research and development based company and as such are subject to many risks and
uncertainties. We may never operate profitably. The exercise of your Option is a speculative
investment and there is no assurance that you will realize a profit on the sale of Option Shares
received upon exercise of your Option.

     11. We file financial reports and other information with the United States Securities and
Exchange Commission (“SEC”). The reports that we file contain information that is important in
making a decision whether to exercise the Option or to sell the Option Shares. We urge you to
review our reports and other information we file with the SEC. These documents may be viewed at
the SEC’s website at www.sec.gov or at the Company’s website at www.viragen.com.

     12. The Option will become effective upon your acknowledgment of the terms and conditions of
this Agreement and your delivery to us of a signed counterpart of this Agreement.

     13. This Agreement and Plan contain all of the terms and conditions of your Option and
supercedes all prior agreements or understandings relating to your Option. This Agreement shall be
governed by the laws of the State of Delaware without regard to the conflicts of laws provisions
thereof.

     14. This Agreement may not be amended orally.

     We are grateful for your continued support and are hopeful that your Option will provide
financial benefits to you in the future.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/
 	 
	 	Charles A. Rice 	 
	 	Chief Executive Officer 	 
	 

AGREED TO AND ACCEPTED THIS

___ DAY OF ___ 20___

 

(Signature)

 

(Print Name)

15

 

FORM OF STOCK AWARD AGREEMENT

VIRAGEN, INC.

865 SW
78th
Avenue, Suite 100

Plantation, FL 33324

[DATE]

 

 

 

          Re:    Stock Award

Dear __________:

     We are pleased to advise you that, on [___], the Board of Directors of Viragen, Inc.
authorized the Award to you of [___] shares of our common stock, par value $.01 per share (the
“Shares”), upon the following terms and conditions:

     1. The Shares are Awarded in accordance with and subject to the terms and conditions of the
Company’s 2006 Equity Compensation Plan (the “Plan”).

     2. If the Shares have not been registered under the Securities Act of 1933, as amended (the
“Act”) (a) the Shares may not be sold, assigned, pledged, transferred or otherwise disposed of
absent registration under the Act or the availability of an applicable exemption from registration
and (b) all certificates evidencing the Shares will contain a legend describing this restriction on
resale of the Shares.

     3. There is no assurance that there will be a public market into which you may sell the Shares
or that you will be able to sell your Shares at a profit or at all.

     4. Your Shares are subject to the following restrictions:

 

 

 

     5. You understand that the Plan contains important information about your Shares. By signing
below you acknowledge your receipt of a copy of the Plan. By signing this Agreement, you agree to
abide by the terms and conditions of the Plan.

     6. We are a research and development company and as such are subject to many risks and
uncertainties. We may never operate profitably. Ownership of the Shares is a speculative
investment and there is no assurance that you will realize a profit on the sale of your Shares.

16

 

     7. We file financial reports and other information with the United States Securities and
Exchange Commission (“SEC”). The reports that we file contain information that is important in
making a decision whether to sell the Shares. We urge you to review our reports and other
information we file with the SEC. These documents may be viewed at the SEC’s website at
www.sec.gov or the Company’s website at www.viragen.com.

     8. A certificate evidencing your Shares will be delivered upon your acknowledgment of the
terms and conditions of this Agreement and your delivery to us of a signed counterpart of this
Agreement.

     9. This Agreement and Plan contain all of the terms and conditions relating to your receipt of
the Shares and supercedes all prior agreements or understandings relating to the Shares. This
Agreement shall be governed by the laws of the State of Delaware without regard to the conflicts of
laws provisions thereof.

     10. This Agreement may not be amended orally.

     We are grateful for your continued support and are hopeful that your Shares will provide
financial benefits to you in the future.

	 	 	 	 	 
	 	Very truly yours,

 	 
	 	/s/
 	 
	 	Charles A. Rice 	 
	 	Chief Executive Officer 	 
	 

AGREED TO AND ACCEPTED THIS

___ DAY OF ___ 20___

 

(Signature)

 

(Print Name)

172006 Incentive Bonus Calculation

 

EXHIBIT 10.1

EXHIBIT A

2006 INCENTIVE BONUS CALCULATION

The annual bonus payout for Charles A. Rice, Chief Executive Officer, shall be calculated by
applying the target bonus to performance against agreed standards. For the calendar year 2006
payout, targeting $75,000, the standards shall include three factors, each with its respective
weighting: (i) Multiferon® sales (50%); (ii) International Multiferon Development (25%), and; (iii)
qualitative performance evaluations (25%). The total payout shall be the sum of the payout
determined for each of the three performance factors.

	 	1.	 	Multiferon Sales — If consolidated Multiferon net sales (as reported in U.S. dollars
in the Viragen, Inc. consolidated financial statements) (“Multiferon Sales”) are less than
$500,000, the bonus payout shall be $0.00. For Multiferon Sales between $500,000 and
$1,500,000, the bonus payout shall be 3.750% (.0375) of Multiferon Sales. For sales above
$1,500,000, the bonus payout shall be $56,250. Using this formula, representative payouts
ahll be as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Multiferon	 	 	Bonus Payout	 	 	Comments	 
	 	$	499,999	 	 	 	$	0.0	 	 	 	Does not meet $500,000 threshold
	 
	 	$	500,000	 	 	 	$	18,750	 	 	 	50% payout
	 
	 	$	1,000,000	 	 	 	$	37,500	 	 	 	Target payout
	 
	 	$	1,500,000	 	 	 	$	56,250	 	 	 	150% — maximum payout
	 
	 

	 	2.	 	International Multiferon Development — Filing for Mutual Recognition in the EU and
gaining approval are critical to the Company during 2006 and into 2007, in order to open up
significant markets for the Multiferon product. This objective is broken down into three
subparts, with three separate target dates for accomplishments:

	 	 	 	a.) If successful in negotiations with an appropriate Contract Research
Organization (CRO) to provide regulatory services of a sufficient quality to enable
the preparation of the regulatory application to be filed with the EMEA for MRP no
later than September, 2006, the bonus payout will be $9,375 (50% of $18,750).
	 
	 	 	 	b.) If successful in licensing Multiferon marketing rights to a suitable
European marketing company on a exclusive basis no later than November 30, 2006 in
preparation for a 2007 MRP approval, the bonus payout will be $9,375 (50% of
$18,750).
	 
	 	 	 	c.) If successful in licensing Multiferon marketing rights to a suitable
European marketing company for an “upfront” licensing fee in excess of $5,000,000,
the bonus payout will be $28,125 (150% of $18,750).

	 	3.	 	Qualitative Performance Evaluation — At the end of calendar year 2006, a performance
evaluation will be conducted by surveying two sets of constituents: Viragen employees and
Viragen Board of Directors. If the composite rating is “Below Expectations,” the payout
shall be $0.00; “Meets Expectations” the payout shall be $18,750 (100%), and; “Exceeds
Expectations” the payout shall be $28,125 (150%).

The Compensation Committee, with the approval of the Board shall have discretion in applying the
performance criteria to reflect extenuating circumstances.

For years after calendar year 2006, prior to the beginning of each year, Incentive Bonus
Calculation Procedures shall be prepared by the Compensation Committee and approved by the Board.

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