Exhibit 10.1

 

SUNTERRA CORPORATION

 

NON-STATUTORY STOCK OPTION AGREEMENT

 

[Date of Grant]    [No. of Options Granted]    [Option Price]

 

1. Grant of Option. Sunterra Corporation, a Maryland corporation (the
“Company”), hereby grants to [OPTIONEE] (the “Optionee”) an option, pursuant the
Company’s 2002 Stock Option Plan (the “Plan”), to purchase an aggregate of [No.
of Options Granted] shares of Common Stock (“Common Stock”) of the Company at a
price of $[            Option Price] per share, purchasable as set forth in and
subject to the terms and conditions of this option and the Plan. Except where
the context otherwise requires, the term “Company” shall include the parent and
all present and future subsidiaries of the Company as defined in Sections 424(e)
and 424(f) of the Internal Revenue Code of 1986, as amended or replaced from
time to time (the “Code”).

 

2. Non-Statutory Stock Option. This option is not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

 

3. Exercise of Option and Provisions for Termination.

 

(a) Vesting Schedule. Except as otherwise provided in this Agreement, this
option may be exercised prior to the tenth anniversary of the date of grant
(hereinafter the “Expiration Date”) in installments as to not more than the
number of shares set forth in the table below during the respective installment
periods set forth in the table below.

 

VESTING SCHEDULE

 

[Vesting Period]

[Term in Months]

[Number of shares vested per month]

[Date fully Vested]

[Expiration Date]

 

The right of exercise shall be cumulative so that if the option is not exercised
to the maximum extent permissible during any exercise period, it shall be
exercisable, in whole or in part, with respect to all shares not so purchased at
any time prior to the Expiration Date or the earlier termination of this option.
This option may not be exercised at any time on or after the Expiration Date,
except as otherwise provided in Section 3(e) below.

 

(b) Exercise Procedure. Subject to the conditions set forth in this Agreement,
this option shall be exercised by the Optionee’s delivery of written notice of
exercise to the Secretary of the Company, specifying the number of shares to be
purchased and the purchase price to be paid therefore and accompanied by payment
in full in accordance with Section 4. Such exercise shall be effective upon
receipt by the Secretary of the Company of such written notice together with the
required payment. The Optionee may purchase less than the number of shares
covered hereby, provided that no partial exercise of this option may be for any
fractional share or for fewer than ten whole shares.

 

(c) Continuous Relationship with the Company Required. Except as otherwise
provided in this Section 3, this option may not be exercised unless the

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Optionee, at the time he or she exercises this option, is, and has been at all
times since the date of grant of this option, an employee, officer or director
of, or consultant or advisor to, the Company (an “Eligible Optionee”).

 

(d) Termination of Relationship with the Company. If the Optionee ceases to be
an Eligible Optionee for any reason, then, except as provided in paragraphs (e)
below, the right to exercise this option shall terminate 90 days after such
cessation (but in no event after the Expiration Date), provided that this option
shall be exercisable only to the extent that the Optionee was entitled to
exercise this option on the date of such cessation.

 

(e) Exercise Period Upon Death or Disability. If the Optionee dies or becomes
disabled (within the meaning of Section 22(e)(3) of the Code) prior to the
Expiration Date while he or she is an Eligible Optionee, or if the Optionee dies
within three months after the Optionee ceases to be an Eligible Optionee, this
option shall be exercisable, within the period of one year following the date of
death or disability of the Optionee (whether or not such exercise occurs before
the Expiration Date), by the Optionee or by the person to whom this option is
transferred by will or the laws of descent and distribution, provided that this
option shall be exercisable only to the extent that this option was exercisable
by the Optionee on the date of his or her death or disability. Except as
otherwise indicated by the context, the term “Optionee”, as used in this option,
shall be deemed to include the estate of the Optionee or any person who acquires
the right to exercise this option by bequest or inheritance or otherwise by
reason of the death of the Optionee.

 

4. Payment of Purchase Price.

 

(a) Method of Payment. Payment of the purchase price for shares purchased upon
exercise of this option shall be made (i) by delivery to the Company of cash or
a check to the order of the Company in an amount equal to the purchase price of
such shares, (ii) subject to the consent of the Company, by delivery to the
Company of shares of Common Stock of the Company then owned by the Optionee
having a fair market value equal in amount to the purchase price of such shares,
(iii) by any other means which the Board of Directors determines are consistent
with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Rule 16b-3 under the
Securities Exchange Act of 1934 and Regulation T promulgated by the Federal
Reserve Board), or (iv) by any combination of such methods of payment.

 

(b) Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of
Purchase Price. For the purposes hereof, the fair market value of any share of
the Company’s Common Stock or other non-cash consideration which may be
delivered to the Company in exercise of this option shall be determined in good
faith by the Board of Directors of the Company.

 

(c) Delivery of Shares Tendered in Payment of Purchase Price. If the Optionee
exercises this option by delivery of shares of Common Stock of the Company, the
certificate or certificates representing the shares of Common Stock of the
Company to be delivered shall be duly executed in blank by the Optionee or shall
be accompanied by a stock power duly executed in blank suitable for purposes of
transferring such shares to the Company. Fractional shares of Common Stock of
the Company will not be accepted in payment of the purchase price of shares
acquired upon exercise of this option.

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(d) Restrictions on Use of Option Stock. Notwithstanding the foregoing, no
shares of Common Stock of the Company may be tendered in payment of the purchase
price of shares purchased upon exercise of this option if the shares to be so
tendered were acquired within twelve (12) months before the date of such tender,
through the exercise of an option granted under the Plan or any other stock
option or restricted stock plan of the Company.

 

5. Delivery of Share; Compliance With Securities Laws, Etc.

 

(a) General. The Company shall, upon payment of the option price for the number
of shares purchased and paid for, make prompt delivery of such shares to the
Optionee, provided that if any law or regulation requires the Company to take
any action with respect to such shares before the issuance thereof, then the
date of delivery of such shares shall be extended for the period necessary to
complete such action.

 

(b) Listing, Qualification, Etc. This option shall be subject to the requirement
that if, at any time, counsel to the Company shall determine that the listing,
registration or qualification of the shares subject hereto upon any securities
exchange or under any state or federal law, or the consent or approval of any
governmental or regulatory body, or that the disclosure of non-public
information or the satisfaction of any other condition is necessary as a
condition of, or in connection with, the issuance or purchase of shares
hereunder, this option may not be exercised, in whole or in part, unless such
listing, registration, qualification, consent or approval, disclosure or
satisfaction of such other condition shall have been effected or obtained on
terms acceptable to the Board of Directors. Nothing herein shall be deemed to
require the Company to apply for, effect or obtain such listing, registration,
qualification or disclosure, or to satisfy such other condition.

 

6. Nontransferability of Option. This option is personal and no rights granted
hereunder may be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) nor shall any such rights be subject
to execution, attachment or similar process, except that this option may be
transferred (i) by will or the laws of descent and distribution or (ii) pursuant
to a qualified domestic relations order as defined in Section 414(p) of the
Code. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this option or of such rights contrary to the provisions hereof, or
upon the levy of any attachment or similar process upon this option or such
rights, this option and such rights shall, at the election of the Company,
become null and void.

 

7. No Special Employment or Similar Rights. Nothing contained in the Plan or
this option shall be construed or deemed by any person under any circumstances
to bind the Company to continue the employment or other relationship of the
Optionee with the Company for the period within which this option may be
exercised.

 

8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder
with respect to any shares which may be purchased by exercise of this option
(including, without limitation, any rights to receive dividends or non-cash
distributions with respect to such shares) unless and until a certificate
representing such shares is duly issued and delivered to the Optionee. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.

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9. Adjustment Provisions.

 

(a) General. If, through or as a result of any merger, consolidation, sale of
all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are increased or decreased or are exchanged for a different number or kind of
shares or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, the
Optionee shall, with respect to this option or any unexercised portion hereof,
be entitled to the rights and benefits, and be subject to the limitations, set
forth in Section 7(b) of the Plan.

 

(b) Board Authority to Make Adjustments. Any adjustments under this Section 9
will be made by the Board of Directors, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final, binding
and conclusive. No fractional shares will be issued pursuant to this option on
account of any such adjustments.

 

10. Mergers, Consolidation, Distributions, Liquidations, Etc. In the event of a
merger or consolidation or sale of all or substantially all of the assets of the
Company in which outstanding shares of Common Stock are exchanged for
securities, cash or other property of any other corporation or business entity,
or in the event of a liquidation of the Company, prior to the Expiration Date or
termination of this option, the Optionee shall, with respect to this option or
any unexercised portion hereof, be entitled to the rights and benefits, and be
subject to the limitations, set forth in Section 7(b) of the Plan.

 

11. Withholding Taxes. The Company’s obligation to deliver shares upon the
exercise of this option shall be subject to the Optionee’s satisfaction of all
applicable federal, state and local income and employment tax withholding
requirements.

 

12. Miscellaneous.

 

(a) Except as provided herein, this option may not be amended or otherwise
modified unless evidenced in writing and signed by the Company and the Optionee.

 

(b) This option shall be governed by and construed in accordance with the laws
of the State of Maryland.

 

Date of Issue:

 

IssueDate

  

SUNTERRA CORPORATION

 

  By:        

Frederick C. Bauman

Its:

 

Secretary

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OPTIONEE’S ACCEPTANCE

 

The undersigned hereby accepts the foregoing option and agrees to the terms and
conditions thereof. The undersigned hereby acknowledges receipt of a copy of the
Company’s 2002 Stock Option Plan.

 

OPTIONEE:   

ADDRESS:

 

OptioneeAddress1

OptioneeAddress2

OptioneeAddress3

 

  

Optionee