Exhibit 10.2

 
American CryoStem Corporation
 
ANNUAL BONUS PERFORMANCE PLAN
FOR EXECUTIVE OFFICERS
 
 
 

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

 
 
ANNUAL BONUS PERFORMANCE PLAN FOR EXECUTIVE OFFICERS
 
SECTION 1
PURPOSE OF PLAN

The purpose of the Plan is to promote the success of the Company by providing to
participating executives bonus incentives that qualify as performance-based
compensation within the meaning of Section 162(m) of the Code.1

SECTION 2
DEFINITIONS AND TERMS

2.1           Accounting Terms.  Except as otherwise expressly provided or the
context otherwise requires, financial and accounting terms are used as defined
for purposes of, and shall be determined in accordance with, generally accepted
accounting principles, as from time to time in effect, as applied and reflected
in the consolidated financial statements of the Company, prepared in the
ordinary course of business.

2.2           Specific Terms.  The following words and phrases as used herein
shall have the following meanings unless a different meaning is plainly required
by the context:

“Bonus” means a cash payment or a payment opportunity as the context requires.

“Bonus Pool” means the total aggregate of cash payments or payment opportunities
in any Year that may be allowed under the Plan.

“Business Criteria” means any one or any combination of Income before Taxes, Net
Income, Return on Equity, Return on Assets, Pre-tax Margin, Free Cash Flow,
Valuation or EPS.
 
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
 
“Committee” means the Performance Plan Subcommittee which has been established
to administer the Plan in accordance with Section 3.1 and Section 162(m) of the
Code.

“Company” means American CryoStem Corporation and any successor, whether by
merger, ownership of all or substantially all of its assets, or otherwise.

“EBITDA” for any Year means the consolidated earnings before interest, tax,
depreciation, and amortization as reported in the financial statements of the
Company for the Year.

“EPS” for any Year means earnings per share of the Company, as reported in the
Company’s Consolidated Statement of Income set forth in the financial statements
of the Company for the Year.

“Executive” means a key employee (including any officer) of the Company who is
(or in the opinion of the Committee may during the applicable Performance Period
become) an “executive officer” as defined in Rule 3b-7 under the Securities
Exchange Act of 1934, as amended.

“Free Cash Flow” for any Year means the Consolidated Net Income plus the sum of
the decrease in working capital and depreciation and amortization less the sum
of capital expenditures, mandatory debt payments and the increase in working
capital as reported in the financial statements of the Company for the Year.
 

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

1 The bonus incentives cannot qualify as “performance based compensation within
the meaning of Section 162(m) of the Code” until CRYO has a Committee consisting
of “outside directors.”
 
 
 

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

 
 
“Income before Taxes” for any Year means the consolidated income before taxes of
the Company, as reported in the financial statements of the Company for the
Year.

“Net Income” for any Year means the consolidated net income of the Company, as
reported in the financial statements of the Company for the Year.

“Participant” means an Executive selected to participate in the Plan by the
Committee.

“Performance Period” means the Year or Years with respect to which the
Performance Targets are set by the Committee.

“Performance Target(s)” means the specific objective goal or goals (which may be
cumulative and/or alternative) that are timely set in writing by the Committee
for each Executive for the Performance Period in respect of any one or more of
the Business Criteria.

“Plan” means this Annual Bonus Performance Plan for Executive Officers of the
Company, as amended from time to time.

“Pre-tax Margin” for any Year means the Income before Taxes of the Company
divided by Consolidated Sales of the Company, as reported in the financial
statements of the Company for the Year.
 
“Return on Assets” means Net Income divided by the average of the total assets
of the Company at the end of the four fiscal quarters of the Year, as reported
by the Company in its consolidated financial statements.

“Return on Equity” means the Net Income divided by the average of the common
stockholders equity of the Company at the end of each of the four fiscal
quarters of the Year, as reported by the Company in its consolidated financial
statements.

“Section 162(m)” means Section 162(m) of the Code, and the regulations
promulgated thereunder, all as amended from time to time.

“Shares” means shares of common stock of the Company or any securities or
property, including rights into which the same may be converted by operation of
law or otherwise.

“Valuation” for any Year means the product of consolidated EBITDA, as reported
in the financial statements of the Company for the Year, and six.

“Working Capital” for any Year means the consolidated current assets of the
Company less the consolidated current liabilities of the Company, as reported in
the financial statements of the Company for the Year.

“Year” means any one or more fiscal years of the Company commencing on or after
January 1, 2011 that represent(s) the applicable Performance Period and end(s)
no later than December 31, 2014.2

SECTION 3
ADMINISTRATION OF THE PLAN

3.1           The Committee.  The Plan shall be administered by a Committee
consisting of at least one member of the board of directors of the Company (the
“Board”), duly authorized by the Board to administer the Plan, who are “outside
directors” within the meaning of Section 162(m). Should the Company have no
“outside directors” then the Board shall serve as the Committee until such time
as outside directors are added to the Board.
 

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

2 Assumes CRYO will be switching to a calendar year end within the near future.

 
- 2 -

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

 
 
3.2           Powers of the Committee.  The Committee shall have the sole
authority to establish and administer the Performance Target(s) and the
responsibility of determining from among the Executives those persons who will
participate in and receive Bonuses under the Plan and, subject to Section 4 and
Section 5 of the Plan, the amount of such Bonuses, and the time or times at
which and the form and manner in which Bonuses will be paid (which may include
elective or mandatory deferral alternatives) and shall otherwise be responsible
for the administration of the Plan, in accordance with its terms.  The Committee
shall have the authority to construe and interpret the Plan (except as otherwise
provided herein) and any agreement or other document relating to any Bonus under
the Plan, may adopt rules and regulations governing the administration of the
Plan, and shall exercise all other duties and powers conferred on it by the
Plan, or which are incidental or ancillary thereto. For each Performance Period,
the Committee shall determine, at the time the Business Criteria and the
Performance Target(s) are set, those Executives who are selected as Participants
in the Plan.

3.3           Requisite Action.  A majority of the members of the Committee
shall constitute a quorum. The vote of a majority of those present at a meeting
at which a quorum is present or the unanimous written consent of the Committee
shall constitute action by the Committee.

3.4           Express Authority (and Limitations on Authority) to Change Terms
and Conditions of Bonus; Acceleration or Deferral of Payment.  Without limiting
the Committee’s authority under other provisions of the Plan, but subject to any
express limitations of the Plan and Section 5.8, the Committee shall have the
authority to accelerate a Bonus (after the attainment of the applicable
Performance Target(s)) and to waive restrictive conditions for a Bonus
(including any forfeiture conditions, but not Performance Target(s)), in such
circumstances as the Committee deems appropriate.  In the case of any
acceleration of a Bonus after the attainment of the applicable Performance
Target(s), the amount payable shall be discounted to its present value using an
interest rate equal to Moody’s Average Corporate Bond Yield for the month
preceding the month in which such acceleration occurs.  Any deferred payment
shall be subject to Section 4.9 and, if applicable, Section 4.10.

SECTION 4
BONUS PROVISIONS

4.1            Maximum Total Bonus.  In any Year the aggregate amount of bonuses
awarded by the Company to all Participants may not exceed the Bonus Pool. In any
year the Bonus Pool is the product of 10% of Income before Taxes.

4.2            Provision for Bonus.  Each Participant may receive a Bonus if and
only if the Performance Target(s) established by the Committee, relative to the
applicable Business Criteria, are attained.  The applicable Performance Period
and Performance Target(s) shall be determined by the Committee consistent with
the terms of the Plan and Section 162(m).  Notwithstanding the fact that the
Performance Target(s) have been attained, the Company may pay a Bonus of less
than the amount determined by the formula or standard established pursuant to
Section 4.2 or may pay no Bonus at all, unless the Committee otherwise expressly
provides by written contract or other written commitment.

4.3           Selection of Performance Target(s).  The specific
Performance  Target(s) with respect to the Business Criteria must be established
by the Committee in advance of the deadlines applicable under Section 162(m) and
while the performance relating to the Performance Target(s) remains
substantially uncertain within the meaning of Section 162(m).  At the time the
Performance Target(s) are selected, the Committee shall provide, in terms of an
objective formula or standard for each Participant, and for any person who may
become a Participant after the Performance Target(s) are set, the method of
computing the specific amount that will represent the maximum amount of Bonus
payable to the Participant if the Performance Target(s) are attained, subject to
Sections 4.1, 4.2, 4.3, 4.8, 5.1 and 5.8.

4.4           Maximum Individual Bonus.  Notwithstanding any other provision
hereof, no Executive shall receive a Bonus under the Plan for the Year in excess
of $1 million.  No Executive shall receive aggregate bonuses under this Plan for
the Year in excess of $1 million.

 
- 3 -

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

 
 
4.5           Selection of Participants.  For each Performance Period, the
Committee shall determine, at the time the Business Criteria and the Performance
Target(s) are set, those Executives who will participate in the Plan.

4.6           Effect of Mid-Year Commencement of Service.  To the extent
compatible with Section 4.3 and Section 5.8, if services as an Executive
commence after the adoption of the Plan and the Performance Target(s) are
established for a Performance Period, the Committee may grant a Bonus that is
proportionately adjusted based on the period of actual service during the Year;
the amount of any Bonus paid to such person shall not exceed that proportionate
amount of the applicable maximum individual bonus under Section 4.1 and Section
4.4.

4.7           Changes Resulting From Accounting Changes.  Subject to Section
5.8, if, after the Performance Target(s) are established for a Performance
Period, a change occurs in the applicable accounting principles or practices,
the amount of the Bonuses paid under this Plan for such Performance Period shall
be determined without regard to such change.

4.8           Committee Discretion to Determine Bonuses.  The Committee has the
sole discretion to determine the standard or formula pursuant to which each
Participant’s Bonus shall be calculated (in accordance with Section 4.3),
whether all or any portion of the amount so calculated will be paid, and the
specific amount (if any) to be paid to each Participant, subject in all cases to
the terms, conditions and limits of the Plan and of any other written commitment
authorized by the Committee.  To this same extent, the Committee may at any time
establish additional conditions and terms of payment of Bonuses (including but
not limited to the achievement of other financial, strategic or individual
goals, which may be objective or subjective) as it may deem desirable in
carrying out the purposes of the Plan and may take into account such other
factors as it deems appropriate in administering any aspect of the Plan. The
Committee may not, however, increase the maximum amount permitted to be paid to
any individual under Section 4.3 or Section 4.4 of the Plan or award a Bonus
under this Plan if the applicable Performance Target(s) have not been satisfied.

4.9           Committee Certification.  No Executive shall receive any payment
under the Plan unless the Committee has certified, by resolution or other
appropriate action in writing, that the amount thereof has been accurately
determined in accordance with the terms, conditions and limits of the Plan and
that the Performance Target(s) and any other material terms previously
established by the Committee or set forth in the Plan were in fact satisfied.

4.10         Time of Payment; Deferred Amounts.  Any Bonuses granted by the
Committee under the Plan shall be paid as soon as practicable following the
Committee’s determinations under this Section 4 and the certification of the
Committee’s findings under Section 4.9. Any such payment shall be in cash or
cash equivalent or in such other form of equal value on such payment date as the
Committee may approve or require.  Notwithstanding the foregoing, the Committee
may, in its sole discretion (but subject to any prior written commitments and to
any conditions consistent with Sections 3.4, 4.1, 4.4 and 5.8 that it deems
appropriate), defer the payout or vesting of any Bonus and/or provide to
Participants the opportunity to elect to defer the payment of any Bonus under a
nonqualified deferred compensation plan.  In the case of any deferred payment of
a Bonus after the attainment of the applicable Performance Target(s), any amount
in excess of the amount otherwise payable shall be based on either Moody’s
Average Corporate Bond Yield over the deferral period or one or more
predetermined actual investments (including Shares) such that the amount payable
at the later date will be based upon actual returns, including any decrease or
increase in the value of the investment(s), unless the alternative deferred
payment is otherwise exempt from the limitations under Section 162(m).

 
- 4 -

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

 
 
SECTION 5
GENERAL PROVISIONS

5.1           No Right to Bonus or Continued Employment.  Neither the
establishment of the Plan nor the provision for or payment of any amounts
hereunder nor any action of the Company (including, for purposes of this Section
5.1, any predecessor or subsidiary), the Board or the Committee in respect of
the Plan, shall be held or construed to confer upon any person any legal right
to receive, or any interest in, a Bonus or any other benefit under the Plan, or
any legal right to be continued in the employ of the Company.  The Company
expressly reserves any and all rights to discharge an Executive in its sole
discretion, without liability of any person, entity or governing body under the
Plan or otherwise.  Notwithstanding any other provision hereof and
notwithstanding the fact that the Performance Target(s) have been attained
and/or the individual maximum amounts pursuant to Section 4.2 have been
calculated, the Company shall have no obligation to pay any Bonus hereunder nor
to pay the maximum amount so calculated or any prorated amount based on service
during the period, unless the Committee otherwise expressly provides by written
contract or other written commitment.

5.2           Discretion of Company, Board and Committee.  Any decision made or
action taken by the Company, the Board or the Committee arising out of or in
connection with the creation, amendment, construction, administration,
interpretation and effect of the Plan shall be within the absolute discretion of
such entity and shall be conclusive and binding upon all persons. No member of
the Committee shall have any liability for actions taken or omitted under the
Plan by the member or any other person.

5.3           Absence of Liability.  No member of the Board, the Committee or
any officer of the Company shall be liable for any act or inaction hereunder,
whether of commission or omission.

5.4           No Funding of Plan.  The Company shall not be required to fund or
otherwise segregate any cash or any other assets which may at any time be paid
to Participants under the Plan.  The Plan shall constitute an “unfunded” plan of
the Company.  The Company shall not, by any provisions of the Plan, be deemed to
be a trustee of any property, and any obligations of the Company to any
Participant under the Plan shall be those of a debtor and any rights of any
participant or former Participant shall be no greater than those of a general
unsecured creditor.

5.5           Non-Transferability of Benefits and Interests.  Except as
expressly provided by the Committee, no benefit payable under the Plan shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge, and any such attempted action be void and no such
benefit shall be in any manner liable for or subject to debts, contracts,
liabilities, engagements or torts of any Participant or former Participant. This
Section 5.5 shall not apply to an assignment of a contingency or payment due
after the death of the Executive to the deceased Executive’s legal
representative or beneficiary.

5.6           Law to Govern.  All questions pertaining to the construction,
regulation, validity and effect of the provisions of the Plan shall be
determined in accordance with the laws of the State of Nevada, without regard to
principles of conflicts of law.

5.7           Non-Exclusivity.  Subject to Section 5.8, the Plan does not limit
the authority of the Company, the Board or the Committee, or any subsidiary of
the Company to grant awards or authorize any other compensation under any other
plan or authority, including, without limitation, awards or other compensation
based on the same Performance Target(s) used under the Plan.  In addition,
Executives not selected to participate in the Plan may participate in other
plans of the Company.

5.8           Section 162(m) Conditions; Bifurcation of Plan.  It is the intent
of the Company that the Plan and Bonuses paid hereunder satisfy and be
interpreted in a manner, that, in the case of Participants who are or may be
persons whose compensation is subject to Section 162(m), satisfies any
applicable requirements as performance-based compensation. Any provision,
application or interpretation of the Plan inconsistent with this intent to
satisfy the standards in Section 162(m) of the Code shall be disregarded.
Notwithstanding anything to the contrary in the Plan, the provisions of the Plan
may at any time be bifurcated by the Board or the Committee in any manner so
that certain provisions of the Plan or any Bonus intended (or required in order)
to satisfy the applicable requirements of Section 162(m) are only applicable to
persons whose compensation is subject to Section 162(m).

 
- 5 -

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

 
 
SECTION 6
AMENDMENTS, SUSPENSION OR TERMINATION OF PLAN

The Board or the Committee may from time to time amend, suspend or terminate in
whole or in part, and if suspended or terminated, may reinstate, any or all of
the provisions of the Plan.  Notwithstanding the foregoing, no amendment may be
effective without Board and/or shareholder approval if such approval is
necessary to comply with the applicable rules of Section 162(m) of the Code.
 
 
- 6 -

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

 
 
CERTIFICATION

The undersigned Secretary of the Company certifies that the foregoing
constitutes a complete and correct copy of the Plan as adopted on September 18,
2011 by the Board of Directors of American CryoStem Corporation.
 
 

    Secretary  

 
Date: September 18, 2011

 
- 7 -

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