EXHIBIT 10.13

 

PURADYN FILTER TECHNOLOGIES INCORPORATED

2010 STOCK OPTION PLAN

 

 

1.             Grant of Options; General.  In accordance with the provisions
hereinafter set forth in this stock option plan, the name of which is the
Puradyn Filter Technologies Incorporated 2010 Stock Option Plan (the ‘Plan’),
the Board of Directors (the ‘Board’) or, the Compensation Committee (the
‘Committee’) of Puradyn Filter Technologies Incorporated (‘the Corporation’) is
hereby authorized to issue from time to time on the Corporations behalf to any
one or more Eligible Persons, as hereinafter defined, options to acquire shares
of the Corporation’s  $.001 par value common stock (the ‘Stock’).

 

2.             Type of Options.  The Board or the Committee is authorized to
issue options which meet the requirements of Section §422 of the Internal
Revenue Code of 1986, as amended (the ‘Code’), which options are hereinafter
referred to collectively as ISOs, or singularly as an ISO.  The Board or the
Committee is also, in its discretion, authorized to issue options which are not
ISOs, which options are hereinafter referred to collectively as NSOs, or
singularly as an NSO.  Except where the context indicates to the contrary, the
term ‘Option’ or ‘Options’ mean ISOs and NSOs.

 

3.             Amount of Stock.  The aggregate number of shares of Stock which
may be purchased pursuant to the exercise of Options shall be 2,000,000 shares. 
Of this amount, the Board or the Committee shall have the power and authority to
designate whether any Options so issued shall be ISOs or NSOs, subject to the
restrictions on ISOs contained elsewhere herein.  If an Option ceases to be
exercisable, in whole or in part, the shares of Stock underlying such Option
shall continue to be available under this Plan.  Further, if shares of Stock are
delivered to the Corporation as payment for shares of Stock purchased by the
exercise of an Option granted under this Plan, such shares of Stock shall also
be available under this Plan.  If there is any change in the number of shares of
Stock on account of the declaration of stock dividends, recapitalization
resulting in stock split-ups, or combinations or exchanges of shares of Stock,
or otherwise, the number of shares of Stock available for purchase upon the
exercise of Options, the shares of Stock subject to any Option and the exercise
price of any outstanding Option shall be appropriately adjusted by the Board or
the Committee ; provided however that the Board or Committee shall in its sole
discretion determine whether such change requires an adjustment in the aggregate
number of shares reserved for issuance under the Plan or to retain the number of
shares reserved and available under the Plan..  The Board or the Committee shall
give notice of any adjustments to each Eligible Person granted an Option under
this Plan, and such adjustments shall be effective and binding on all Eligible
Persons.  If because of one or more recapitalizations, reorganizations or other
corporate events, the holder of outstanding Stock receive something other than
shares of Stock then, upon exercise of an Option, the Eligible Person will
receive what the holder would have owned if the holder had exercised the Option
immediately before the first such corporate event and not disposed of anything
the holder received as a result of the corporate event.

 

 

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4.             Eligible Persons.

 

(a)           With respect to ISOs, an Eligible Person means any individual who
is employed by the Corporation or by any subsidiary of the Corporation.

 

(b)           With respect to NSOs, an Eligible Person means:

i.              any individual who has been employed by the Corporation or by
any subsidiary of the Corporation;

ii.             any director of the Corporation or any subsidiary of the
Corporation;

iii.            any member of the Corporation’s advisory board member or of any
of the Corporation’s subsidiary(ies); or

iv.            any consultant of the Corporation or by any subsidiary of the
Corporation.

 

5.             Grant of Options.  The Board or the Committee has the right to
issue the Options established by the Plan to Eligible Persons.  The Board or the
Committee shall follow the procedures prescribed for it elsewhere in this Plan. 
A grant of Options shall be set forth in writing signed on behalf of the
Corporation or by a majority of the members of the Committee.  The writing shall
identify whether the Option being granted is an ISO or an NSO and shall set
forth the terms which govern the Option.  The terms shall be determined by the
Board or the Committee, and may include, among other terms, the number of shares
of Stock that may be acquired pursuant to the exercise of the Options, when the
Options may be exercised, the period for which the Option is granted and
including the expiration date, the effect on the Options if the Eligible Person
terminated employment and whether the Eligible Person may deliver shares of
Stock to pay for the shares of Stock to be purchased by the exercise of the
Option.  However, no term shall be set forth in the writing which is
inconsistent with ay of the terms of this Plan.  The terms of an Option granted
to an Eligible Person may differ from the terms of an Option granted to another
Eligible Person, and may differ from the terms of an earlier Option granted to
the same Eligible Person.

 

6.             Option Price.  The option price per share shall be determined by
the Board or the Committee at the time any Option is granted, and shall be not
less than:

 

(a)           In the case of an ISO , the fair market value,

 

(b)           In the case of an ISO granted to a 10% or greater stockholder,
110% of the fair market value, or

 

(c)           In the case of an NSO, not less than 75% of the fair market value
(but in no event less than the par value) of one share of Stock on the date the
Option is granted, as determined by the Board or the Committee.  Fair Market
Value as used herein shall be:

i.              If shares of Stock shall be traded on an exchange or over the
counter (OTC) market, the closing price or the closing bid price of such Stock
on such exchange or OTC market on which such shares shall be traded on that
date, or if such exchange of OTC market is closed or if no shares shall have
traded on such date, on the last preceding date on which such shares shall have
traded.

ii.             If shares of Stock shall not be traded on an exchange or OTC
market, the value as determined by the Board of Directors or the Committee of
the Corporation.

 

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7.             Purchase of Shares.  An Option shall be exercised by the tender
to the Corporation of the full purchase price of the Stock with respect to which
the Option is exercised and written notice of the exercise.  The purchase price
of the Stock shall be in United States dollars, payable in cash or by check, or
in property or Corporation stock, if so permitted by the Board or the Committee
in accordance with the discretion granted in Paragraph 5 hereof, having a value
equal to such purchase price. The Corporation shall not be required to issue or
deliver any certificates for shares of Stock purchased upon the exercise of an
Option prior to:

 

(a)           If requested by the Corporation, the filing with the Corporation
by the Eligible Person of a representation in writing this is the Eligible
Persons’ then present intention to acquire the Stock being purchased for
investment and not for resale, and/or

 

(b)           The completion of any registration or other qualification of such
shares under any government regulatory body, which the Corporation shall
determine to be necessary or advisable.

 

8.             Compensation Committee.  The Committee may be appointed from time
to time by the Corporation’s Board of Directors.  The Board may from time to
time remove members from or add members to the Committee.  The Committee shall
be constituted so as to permit the Plan to comply in all respects with the
provisions set forth in Paragraph 19 herein.  The members of the Committee may
elect one of its members as its chairman.  The Committee shall hold its meetings
at such times and places as its chairman shall determine.  A majority of the
Committee’s members present in person shall constitute a quorum for the
transaction of business.  All determinations of the Committee will be made by
the majority vote of the members constituting the quorum.  The members may
participate in a meeting of the Committee by conference telephone of similar
communications equipment by means of which all members participating in the
meeting can hear each other.  Participation in a meeting in that manner will
constitute presence in person at the meeting.  Any decision or determination
reduced to writing and signed by all members of the Committee will be effective
as if it had been made by a majority vote of all members of the Committee at a
meeting which is duly called and held.

 

9.             Administration of Plan.  In addition to granting Options and to
exercising the authority granted to it elsewhere in this Plan, the Board or the
Committee is granted the full right and authority to interpret and construe the
provisions of this Plan, promulgate, amend and rescind rules and procedures
relating to the implementation of the Plan and to make all other determinations
necessary or advisable for the administration of the Plan, consistent, however,
with the intent of the Corporation that Options granted or awarded pursuant to
the Plan comply with the provisions of Paragraph 19.  All determinations made by
the Board or the Committee shall be final, binding and conclusive on all persons
including the Eligible Person, the Corporation and its stockholders, employees,
officers and directors and consultants.  No member of the Board or the committee
will be liable for any act or omission in connection with the administration of
the Plan unless it is attributable to that member’s willful misconduct.

 

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10.           

Provisions Applicable to ISOs.  The following provisions shall apply to all ISOs
granted by the Board or the Committee and are incorporated by reference into any
writing granting and ISO:

 

 

           

 

 

(a)           

An ISO may only be granted within ten (10) years from July 29, 2010, the date
that this Plan was originally adopted by the Corporation’s Board of Directors.

 

 

 

 

 

(b)

An ISO may not be exercised after the expiration of ten (10) years from the date
the ISO is granted.

 

 

 

 

 

(c)

The option price may not be less than the FMV of the Stock at the time the ISO
is granted.

 

 

 

 

 

(d)

An ISO is not transferrable by the Eligible Person to whom it is granted except
by will, or the laws of descent and distribution, and is exercisable during his
or her lifetime only by the Eligible Person.

 

 

 

 

 

(e)

If the Eligible Person receiving the ISO owns at the time of the grant stock
possessing more than ten (10%) percents of the total combined voting power of
all classes of stock of the employer corporation or of its parent or subsidiary
corporation (as those terms are defined in the Code), then the option price
shall be at least 110% of the FMV of the Stock, and the ISO shall not be
exercisable after the expiration of five (5) years from the date the ISO is
granted.

 

 

 

 

 

(f)

The aggregate FMV (determined at the time the ISO is granted) of the Stock with
respect to which the ISO is first exercisable by the Eligible Person during any
calendar year (under this Plan and any other incentive stock option plan of the
Corporation) shall not exceed $100,000.

 

 

 

 

 

(g)

Even if the shares of Stock which are issued upon exercise of an ISO are sold
within one year following the exercise of such ISO so that the sale constitutes
a disqualifying disposition for ISO treatment under the Code, no provision of
this Plan shall be construed as prohibiting such a sale.

 

 

 

 

 

(h)

This Plan was adopted by the Corporation July 29, 2010, by virtue of its
approval by the Corporation’s Board of Directors, subject to the following
provisions:

 

 

 

 

 

 

(1)     to the extent that the Plan authorizes the Award of an ISO, stockholder
approval for the Plan shall be obtained within 12 months of the Effective Date;
and

 

 

 

 

 

(2)     the failure to obtain stockholder approval for the Plan as contemplated
by subparagraph (h)(1) of this Section 10 shall not invalidate the Plan;
provided, however, that (i) in the absence of such stockholder approval, ISOs
may not be awarded under the Plan and (ii) any ISO theretofore awarded under the
Plan shall be converted into NSOs 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 ISO being so converted.

 

 

 

 

 

 

 

 

11.

Determination of Fair Market Value.  In granting ISOs under this Plan, the Board
or the Committee shall make a good faith determination as to the FMV of the
Stock at the time of granting the ISO.

 

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12.          Restrictions on Issuance of Stock.  The Corporation shall not be
obligated to sell or issue any shares of Stock pursuant to the exercise of an
Option unless the Stock with respect to which the Option is being exercised is
at that time effectively registered or exempt from registration under the
Securities Act of 1933, as amended, and any other applicable laws, rules and
regulation.  The Corporation may condition the exercise of an Option granted in
accordance herewith upon receipt from the Eligible Person, or any other
purchaser thereof, of a written representation that at the time of such exercise
it is his or her then-present intention to acquire the shares of Stock for
investment and not with a view to, or for sale in connection with, any
distribution thereof; except that, in the case of a legal representative of an
Eligible Person, ‘distribution’ shall be defined to exclude distribution by will
or under the laws of descent and distribution.  Prior to issuing any shares of
Stock pursuant to the exercise of an Option, the Corporation shall takes such
steps as it deems necessary to satisfy any withholding tax obligations imposed
upon it by any level of government.

 

13.          Exercise in the Event of Death or Termination of Employment.   

 

(a)           If an optionee shall die:

i.              While an employee of the Corporation or a subsidiary, or

ii.             Within three months after termination of his employment with the
Corporation or a subsidiary because of his/her disability, or retirement or
otherwise, his/her Options may be exercised, to the extent that the optionee
shall have been entitled to do so on the date of his death or such termination
of employment, by the person or persons to whom the optionee’s right under the
Option pass by will or applicable law, or if no such persona has such right, by
his executors or administrators, at any time, or from time to time.  In the
event of termination of employment because of his/her death while an employee or
because of disability, his/her Options may be exercised not later than the
expiration date specified in Paragraph 5 or one year after the optionee’s death,
whichever date is earlier, or in the event of termination of employment because
of retirement or otherwise, not later than the expiration date specified in
Paragraph 5 hereof or one year after the optionee’s death, whichever date is
earlier.

 

(b)           If an optionee’s employment by the Corporation or a Subsidiary
shall terminate because of his disability and such optionee has not died within
the following three months, he may exercise his Options, to the extent that he
shall have been entitled to do so at the date of the termination of his
employment, at any time, or from time to time, but not later than the expiration
date specified in Paragraph 5 hereof or one year after termination of
employment, whichever date is earlier.

 

(c)           If an optionee’s employment shall terminate by reason of his/her
retirement in accordance with the terms of the Corporation’s tax-qualified
retirement plans or with the consent of the Board or the Committee or
involuntarily other than by termination for cause,  and such optionee has not
died within the following three months, he may exercise his Option to the extent
he shall have been entitled to do so at the date of the termination of his
employment, at any time and from to time, but not later than the expiration date
specified in Paragraph 5 hereof or thirty (30) days after termination of
employment, whichever date is earlier.  For purposes of this Paragraph 13,
termination for cause shall mean termination of employment by reason of the
optionee’s commission of a felony, frauds or willful misconduct which has
resulted, or is likely to result, in substantial and material damage to the
Corporation or a Subsidiary, all as the Board or the Committee in its sole
discretion may determine.

 

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(d)           If an optionee’s employment shall terminate for any reason other
than death, disability, retirement or otherwise, all right to exercise his
Option shall terminate at the date of such termination of employment.

 

14.          Corporate Events.  In the event of the proposed dissolution or
liquidation of the Corporation, a proposed sale of all or substantially all of
the assets of the Corporation, a merger or tender for the Corporation’s shares
of Common Stock the Board of Directors shall declare that each Option granted
under this Plan shall terminate as of a date to be fixed by the Board of
Directors; provided that not less than thirty (30) days written notice of the
date so fixed shall be given to each Eligible Person holding an Option, and each
such Eligible Person shall have the right, during the period of thirty (30) days
preceding such termination, to exercise his Option as to all or any part of the
shares of Stock covered thereby, including shares of Stock as to which such
Option would not otherwise be exercisable.  Nothing set forth herein shall
extend the term set for purchasing the shares of Stock set forth in the Option. 

 

15.          No Guarantee of Employment.  Nothing in this Plan or in any writing
granting an Option will confer upon any Eligible Person the right to continue in
the employ of the Eligible Person’s employer, or will interfere with or restrict
in any way the right of the Eligible Person’s employer to discharge such
Eligible Person at any time for any reason whatsoever, with or without cause.

 

16.          Non-transferability.  No Option granted under the Plan shall be
transferable other than by will or by the laws of descent and distribution. 
During the lifetime of the optionee, an Option shall be exercisable only by him.

 

17.          No Rights as Stockholder.  No optionee shall have any rights as a
stockholder with respect to any shares subject to his Option prior to the date
of issuance to him of a certificate or certificates for such shares.

 

18.          Amendment and Discontinuance of Plan.  The Corporation’s Board of
Directors may amend, suspend or discontinue this Plan at any time.  However, no
such action may prejudice the rights of any Eligible Person who has prior
thereto been granted Options under this Plan.  Further, no amendment to this
Plan which has the effect of

 

(a)           Increasing the aggregate number of shares of Stock subject to this
Plan (except for adjustments pursuant to Paragraph 3 herein), or

 

(b)           Changing the definition of Eligible Person under this Plan, may be
effective unless and until approval of the stockholders of the Corporation is
obtained in the same manner as approval of this Plan is required.  The
Corporation’s Board of Directors is authorized to seek the approval of the
Corporation’s stockholders for any other changes it proposes to make to this
Plan which require such approval, however, the Board of Directors may modify the
Plan, as necessary, to effectuate the intent of the Plan as a result of any
changes in the tax, accounting or securities laws treatment of Eligible Persons
and the Plan, subject to the provisions set forth in this Paragraph 18 and
Paragraph 19.

 

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19.          Compliance with Code.  The aspects of this Plan on ISOs are
intended to comply in every respect with Section 422 of the Code and the
regulations promulgated hereunder.  In the event any future statute or
regulation shall modify the existing statute, the aspects of this Plan on ISOs
shall be deemed to incorporate by reference such modification.  Any stock option
agreement relating to any Option granted pursuant to this Plan outstanding and
unexercised at the time any modifying statute or regulation becomes effective
shall also be deemed to incorporate by reference such modification and no notice
of such modification need by given to optionee.

 

If any provision of the aspects of this Plan on ISOs is determined to disqualify
the shares purchasable pursuant to the Options granted under this Plan from the
special tax treatment provided by Code Section 422, such provision shall be
deemed null and void and to incorporate by reference the modification required
to qualify the shares for said tax treatment.

 

20.          Compliance with Other Laws and Regulations.  The Plan, the grant
and exercise of Options thereunder, and the obligation of the Corporation to
sell and deliver Stock under such options, shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required.  The Corporation shall not
be required to issue or deliver any certificates for shares of Stock prior to

 

(a)           The listing of such shares on any stock exchange or
over-the-counter market on which the Stock may then be listed and

 

(b)           The completion of any registration or qualification of such shares
under any federal or state law, or any ruling or regulation of any government
body which the Corporation shall, in its sole discretion, determine to be
necessary or advisable.  Moreover, no Option may be exercised if its exercise or
the receipt of Stock pursuant thereto would be contrary to applicable laws.

 

21.          Disposition of Shares.  In the event any share of Stock acquired by
an exercise of an ISO granted under the Plan shall be transferable other than by
will or by the laws of descent and distribution within two years of the date
such ISO was granted or within one year after the transfer of such Stock
pursuant to such exercise, the optionee shall give prompt written notice thereof
to the Corporation or the Committee. 

 

22.          Name.  The Plan shall be known as the ‘Puradyn Filter Technologies
Incorporated 2010 Stock Option Plan.’

 

23.          Notices.  Any notice hereunder shall be in writing and sent by
certified mail, return receipt requested or by facsimile transmission (with
electronic or written confirmation of receipt) and when addressed to either the
Corporation or the Committee shall be sent to it at the Corporation’s main
office, 2017 High Ridge Road, Boynton Beach, FL 33426,  subject to the right of
either party to designate at any time hereafter in writing some other address,
facsimile number or  person to whose attention such notice shall be sent.

 

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24.          Headings.  The headings preceding the text of Sections and
subparagraphs hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Plan nor shall they affect its meaning,
construction or effect.

 

25.          Effective Date.  This Plan, the Puradyn Filter Technologies
Incorporated 2010 Stock Option Plan, was adopted by the Board of Directors of
the Corporation on July 29, 2010.  The effective date of the Plan shall be the
same date.

 

26.          Governing Law.  The Plan, and all Option agreements issued under
the Plan, shall be governed by, and construed in accordance with, the laws of
the State of Florida.

 

Dated as of July 29, 2010

 

 

 

 

 

Puradyn Filter Technologies Incorporated

 

 

  

/s/  Joseph V. Vittoria

 

By:

Joseph V. Vittoria

 

Its:

Chairman and Chief Executive Officer

 

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